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Nissan raises profit outlook as production cut lifts margins

Nissan raises profit outlook as production cut lifts margins

FILE PHOTO: A visitor is seen at a Nissan Motor Corp. showroom in Tokyo, Japan November 11, 2020. REUTERS/Issei Kato

TOKYO: Nissan Motor on Tuesday raised its full-year operating profit outlook by a fifth as its margins got a boost from newer models and lower sales incentives due to tight supplies of vehicles.

Nissan like other big global carmakers has been forced to cut production because of a shortage of semiconductors and other components. But vehicle demand in key markets such as China and the United States is growing as consumer spending rebounds following a pandemic-induced slump.

"Two years ago, we had a problem of how to sell, and that is not the problem today," Chief Operating Officer Ashwani Gupta told a news conference.

Nissan had also benefited as it revamps its ageing model line-up as part of a business plan to improve profitability by reducing global production and model types by a fifth, he added.

Nissan's break even point is now around 3.7 million vehicles a year, down from 4.4 million, Chief Financial Officer Stephen Ma said.

Nissan now expects a full-year operating profit of ¥180 billion (US$1.59 billion) compared with an earlier prediction for ¥150 billion. That is higher than a mean ¥161 billion profit based on forecasts from 23 analysts, Refinitiv data shows.

Last week, Honda Motor Co cut its full-year operating profit outlook 15 per cent to 660 billion because of the chip shortage, while Toyota Motor cut its annual vehicle sales target and warned that the lack of semiconductors still posed a risk to its production plans.

Nissan's Gupta cautioned that the lack of chips remained "a challenge" as competition for the key component grows among automakers and electronic device makers.

Japan's No 3 carmaker lowered its global sales target to 3.8 million vehicles from 4.4 million.

Nissan posted an operating profit of ¥62.8 billion for the three months to Sep 30 compared with a loss of ¥4.8 billion a year earlier. That result was better than an average ¥4.4 billion loss forecast from 10 analysts, Refinitiv data shows.

Source: Reuters

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