Nissan hikes net profit forecast again despite chip shortage

Nissan on Tuesday hiked its annual net profit forecast again on strong interim results, aiming to weather the global chip crunch as it shifts focus to electric vehicles.

The Japanese car giant’s earnings have been boosted by a weaker yen, but the semiconductor shortage has hit its production figures and analysts warn the chip crisis may take longer than expected to resolve.

“Given the unpredictable environment surrounding us, we are approaching a period ahead of us with cautious optimism,” Chief Operating Officer Ashwani Gupta told reporters.

With global demand for cars currently sky-high, “our problem isn’t how many we want to sell. Our problem is how many we can produce,” he said.

Nissan now expects an annual net profit to March 2022 of 205 billion yen ($1.77 billion), having already tripled its yearly profit outlook in November to 180 billion yen.

The automaker, which has faced a series of trials in recent years including weak demand and fallout from the arrest of former boss Carlos Ghosn, said its cost-cutting recovery plan had improved the profitability of its sales.

The “ongoing depreciation of the yen and a review of the impact of rising raw material prices” will also help it reach its targets, Nissan said in a statement.

It still aims to sell 3.8 million vehicles by the end of March — a target earlier revised down from 4.4 million — as the chip shortage and the spread of the Omicron coronavirus variant continue to impact plant operations.

– Electric vehicles –

Nissan reported a net profit of 201.3 billion yen in April-December 2021, compared with a net loss of 367.7 billion yen in the same period the previous year, when virus lockdowns hit the auto industry hard.

It also saw a year-on-year increase in revenue during the nine-month period, although revenue in the third quarter was slightly down at 2.2 trillion yen.

Nissan said its nine-month results were boosted by “favourable market conditions in the United States” and improvement in the quality of sales across the board.

This created “a significant increase in net revenue per unit of major, new models”, while strict financial discipline also helped hike profits.

Satoru Takada, an auto analyst at research and consulting firm TIW, told AFP ahead of Tuesday’s results that a good sales environment had allowed Nissan to avoid big discounts.

“What remains to be seen is whether it can stay competitive in the long run, especially once rival companies start using more incentives,” he said.

But Takada warned that the semiconductor situation “might take longer than expected” to improve as companies in different industries compete for the essential components.

Last month, Nissan and its alliance partners Renault and Mitsubishi Motors pledged to boost cooperation as they plough more than $25 billion into the development of electric vehicles over the next five years.

Major global carmakers are increasingly prioritising electric and hybrid vehicles as concern about climate change grows.

Some of the headline figures had already been announced by each company, but it marks the first concrete target set collectively by the trio since the reorganisation of top executives at Nissan and France’s Renault.

That restructuring was triggered by the saga surrounding the 2018 arrest of Ghosn, which exposed rifts in the alliance.

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Toyota overcomes chip shortage to beat Q3 net profit forecast

Toyota on Wednesday posted a forecast-beating net profit of $6.8 billion for the three months to December, even as a global chip crunch and a pandemic-driven parts shortage forced production cuts.

The Japanese auto giant, which kept its crown as the world’s top-selling carmaker in 2021, left its annual net profit outlook unchanged but slightly lowered its full-year vehicle sales and production targets.

It posted a 791.7 billion yen net profit for October-December, down 5.6 percent on-year but far better than the 619.2 billion predicted by Bloomberg analysts.

For the nine months to December, the firm logged net profit of 2.31 trillion yen — a jump of 57.8 percent from the previous year, when virus lockdowns battered the auto industry. Quarterly sales rose by a fifth on-year.

“Despite negative factors such as constraints on supply due to the shortage of semiconductors and the spread of Covid-19, as well as the sharp rise in raw material costs, we achieved higher sales and profits” in the first nine months of 2021-22, Toyota said in a statement.

A weaker yen, “supply chain efforts”, marketing initiatives and the appeal of its new products contributed to the profit increase, it added.

When Covid-19 first triggered a global drought of semiconductors — an essential component of modern cars — Toyota appeared better placed than its rivals to weather the crunch, having strengthened ties with its domestic suppliers after Japan’s 2011 earthquake and tsunami.

But with the crisis showing no signs of ending, the automaker has found itself unable to escape the effects.

Toyota cited “operation instability” on a decision to slightly lower its production projection for the year to 8.5 million units from nine million, having already reduced it from 9.3 million in November.

“Currently, customers have to wait for a very long time to receive our products,” Toyota acknowledged.

– ‘Adept’ procurement –

It said its production plans were as “robust” as possible but that the current challenges made it “very difficult” to predict future performance.

Satoru Takada, an auto analyst at research and consulting firm TIW, told AFP that Toyota has so far weathered a difficult year.

“Sales have been strong” and the company “has been able to offer attractive vehicles”, he explained. “Its procurement ability, including from parts makers, remains very adept.”

But the fourth quarter could prove more difficult, he warned, as production cuts and “uncertain factors” may take their toll on Toyota’s bottom line.

Toyota hung on to its title as the world’s top-selling automaker last year when it sold nearly 10.5 million vehicles — a jump of about 10 percent from 2020, including units made by its Daihatsu and Hino subsidiaries.

The firm increased its lead over German rival Volkswagen, which shifted 8.9 million vehicles in 2021, down 4.5 percent on-year owing to the chip drought.

Separately, smaller rival Honda also announced robust earnings and upgraded its annual profit forecast, thanks to cost-cutting efforts, favourable foreign exchange and the lower cost of sales.

For the nine months to December, Honda’s net profit surged 31.1 percent to 582.1 billion yen on sales of 10.68 trillion yen, up 11.8 percent.

It upgraded its annual net profit forecast to 670 billion yen from an earlier projection for 555.0 billion yen. It lowered its sales forecast to 17.04 trillion yen from 17.50 trillion yen.

Honda said the pandemic, rising raw material costs and parts shortages, including semiconductors, remain major challenges but pledged to cut costs and incentives to lift its bottomline.

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