Nissan expects rise in annual operating profit despite challenges

Nissan Motor expects to beat analysts’ forecasts, after raising its operating profit forecast by 5.5% for the year buoyed by strong sales globally. The carmaker however warned that fierce competition and inflationary pressures would continue. The company predicts small growth in China’s vehicle sales, which underscores the obstacles it faces in the world’s largest auto market. On the other hand, Nissan is optimistic of a strong financial performance driven by fast expansion in North America.

In the fiscal year that started on April 1, Nissan expects an operating profit of 600 billion yen (USD 3.85 billion), exceeding the average of 577.3 billion yen from estimates of 18 analysts surveyed by LSEG while also foreboding foreign exchange influence will boost yearly results reducing inflationary effects.

For Q1 ending March 31, Nissan announced an operating profit of 90.3 billion yen, well behind consensus expectations of 118.2 billion yen, according to Bloomberg data from eight banks surveyed by LSEG.

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Nissan sales worldwide are projected to reach three point seven million units for this fiscal year, up by 7.5% from the previous fiscal year’s 3.4 million units. It is particularly projecting a strong growth of North America sales at 1.4 million vehicles or 13.3%. Meanwhile, demand in China is only expected to rise by about 0.8%, recovering from a sharp drop of 24% in the last financial year to nearly under eight hundred thousand.

Nissan and Honda Motor, Japan’s automakers had difficulties in Chinese market, allowing quick footed local rivals with cheaper electric vehicles embedded with advanced hardware to gain market share.

At a recent Beijing motor show, Nissan revealed four concept cars made for China and announced a memorandum of understanding with Baidu on research cooperation regarding artificial intelligence (AI) and “smart cars.” The company also stated its plans to invest in Kasai—a car interior products manufacturer—to buy new shares worth six billion yen should the deal receive regulatory approvals.

In April Nissan cut down its operating profit forecast for the preceding fiscal year by 14.5 percent due to unexpectedly low vehicle sales.