By Daniel Leussink
TOKYO (Reuters) -Nissan Motor saw first-quarter profit almost completely wiped out on Thursday and slashed its annual outlook, as deep discounting in the United States shredded the Japanese automaker’s margins.
The results were far short of analyst expectations and sent Nissan’s shares down 7%. Investors will now likely have to worry about the car maker’s outlook in the United States, a fresh concern for a company already fighting to turn around its fortunes in another critical market, China.
Operating profit for the April-June period totalled 995 million yen ($6.5 million), compared with 128.6 billion yen in the same period a year earlier, and just a sliver of the 164.4 billion yen predicted in a poll of five analysts by LSEG.
“The first quarter was a very tough one for Nissan,” Chief Executive Makoto Uchida told a briefing. “However, we’ll recover our performance by taking clear measures to address the challenges and launching new models,” he said.
He said the automaker was “optimising inventory buildup” in the United States and would focus on the quality of sales. Nissan also plans to bolster sales from new and refreshed models in the second half of the financial year, including the Armada and Murano SUVs.
It was Nissan’s worst quarterly performance in more than three years. The automaker cut its operating profit forecast for the financial year by 17% to 500 billion yen from 600 billion yen.
While global sales remained even year-on-year at 787,000 vehicles, the profit from those sales was hit by an increase in discounts and marketing expenses as Nissan tried to ride out intense competition and move cars off lots, particularly in the United States.
Shares tumbled on the results at one point falling some 11% before finishing down 7% at 485 yen, marking their biggest one-day decline since February.
Nissan’s struggles in the United States – it said sales there were hurt by an ageing portfolio and a market shift to hybrid vehicles – add to woes in China, where it has been looking to regain ground amid tough competition from local giants.
The Yokohama-based automaker said last month it halted production at one of eight factories it operates through a joint venture with Chinese partner Dongfeng Motor as it seeks to optimise operations.
($1 = 152.8200 yen)
(Reporting by Daniel Leussink; Editing by David Dolan and Christopher Cushing)
