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Nissan annual profit soars to $4.2 bn on weak yen, new models

People view  displayed cars at the showroom of the Nissan headquarters in Yokohama, Japan/XINHUA

People view displayed cars at the showroom of the Nissan headquarters in Yokohama, Japan/XINHUA

Nissan on Wednesday said its fiscal-year net profit soared a better-than-expected 17.6 percent to $4.2 billion, crediting a weak yen and new model rollouts for buoyant results that drove past its own earlier forecasts.

However, the news was overshadowed by the carmaker’s announcement that it had recalled 1.56 million vehicles globally over concerns about exploding airbags.

Japan’s number-two automaker reported a 457.6 billion yen profit in the year to March on sales of 11.38 trillion yen, up 8.5 percent. It had been expecting earnings of 420 billion yen.

The company projected an even stronger 485.0 billion yen profit this business year.

“Robust demand, especially for new products in North America and Western Europe, along with cost efficiencies and the continued correction in the yen-dollar exchange rate, offset challenging market conditions in Japan and several emerging markets,” Nissan said.

A sharp drop in the yen has made Japanese automakers more competitive overseas and inflated the value of repatriated overseas profits.

But Japan’s automakers have struggled to deal with the effects of a sales tax hike last year that pushed many motorists to rush to buy vehicles before April, causing a sudden and prolonged drop of sales at home.

On Wednesday, Nissan said it moved a total of 5.3 million vehicles globally last fiscal year, up 2.5 percent, with sales to the US market jumping 8.9 percent and 11.7 percent in Europe including Russia, but they fell 6.9 percent in Japan.

“Without a doubt, North America has been a bright spot,” Nissan president and chief executive officer Carlos Ghosn told reporters at the firm’s headquarters south of Tokyo.

“But there are a lot of headwinds in Japan, Russia and Brazil,” he added.

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Competition in China has also accelerated, with Nissan saying it sold 1.22 million vehicles in the world’s biggest auto market, inching up just 0.5 percent from a year earlier, while its market share edged down.

“I’m not worried, but the competition is much tougher (now),” Ghosn said, referring to the Chinese market.

Nissan’s results come less than a week after Toyota, the world’s biggest automaker, said its annual net profit rose to a record $18.1 billion.

But both automakers and domestic rival Honda are grappling with costs tied to the recall of millions of vehicles due to a defect in airbags made by supplier Takata.

On Wednesday before Nissan published its results, the carmaker and Toyota separately announced more airbag-linked recalls, the latest chapter in a crisis linked to at least five deaths.

Nissan said it was calling back 1.56 million vehicles while Toyota recalled five million vehicles globally.

The announcement comes after about 20 million vehicles produced by a string of major automakers were recalled because of the risk that their Takata-made airbags could improperly inflate and rupture, potentially firing deadly shrapnel at the occupants.

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