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Nissan triples profit outlook to $1.6Bn despite cut in sales target

Nissan triples profit outlook to $1.6Bn despite cut in sales target
Nissan triples profit outlook to $1.6Bn despite cut in sales target

Nissan Motor Co., Ltd., the Japanese automobile manufacturer, has reportedly announced that it has raised its overall net profit outlook to more than $1.6 billion (~¥180 billion), almost triple its previous forecast, as the yen's depreciation helps the automaker offset the sting from a significant fall in its worldwide sales target.

Apparently, the third-largest automaker in Japan plans to sell 3.8 million vehicles worldwide, down 600,000 from its earlier estimate, highlighting the magnitude of component shortfalls that have also impacted Toyota Motor Corp. as well as Honda Motor Co.

Nissan is attempting to turn profit after two consecutive years of straight losses, veering away from the expansionist strategy espoused by ousted former Chairman, Carlos Ghosn.

Operating profit is now expected to reach ¥180 billion, up from ¥150 billion previously estimated, following a deficit the previous year. Sales are predicted to increase by 11.9% to ¥8.8 trillion, dropping from an earlier estimate of ¥9.75 trillion.

Ashwani Gupta, chief operating officer of Nissan, stated that the impact of the semiconductor shortage has been much more than anticipated. Gupta further added that revenue is declining at a slower rate than sales volume, indicating that the transition from volume to value is improving operating profit along with net income.

Automakers benefit from a weaker yen since their offshore profits are increased when repatriated but increasing raw material costs are generating concerns about decreasing the profitability.

Nissan updated its full-year expectations, assuming the US dollar will trade at ¥110, up from ¥108 in its previous estimate.

Gupta added that whenever the chip situation becomes clear, the carmaker will be ready to share its manufacturing strategy from a regional perspective.

Nissan posted a profit for the first time in two years in the first half of this year, with an operating profit of ¥168.65 billion, up from a staggering ¥329.96-billion loss the year before.

Operating profit was ¥139.13 billion, compared to a loss of ¥158.76 billion in the previous year, while sales increased 27.6% to ¥3.95 trillion.

Source credit: https://mainichi.jp/english/articles/20211109/p2g/00m/0bu/057000c

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