Nissan is forecasting a third straight year of lower operating profit on expectations a stronger yen and higher raw material prices will outweigh a rise in global vehicle sales to a record high.
Japan’s second-biggest automaker expects operating profit to fall 6 percent to 540 billion yen ($4.9 billion) in the year to March 2019, based on an assumption the yen will trade around 105 against the U.S. dollar during the year, from around 111 yen in the year just ended.
Currency swings will result in a 135 billion yen hit to annual operating profit, pushing earnings to their lowest since the year ended March 2014 and underperforming analyst forecasts.
Operating profit fell 22.6 percent to 574.8 billion yen in the year ended March 2018, weighed by costs from a domestic compliance scandal, weakness in North America, a key market, and higher materials costs.
Nissan expects a 2.7 percent rise in global sales to 5.93 million vehicles in the current year, its highest ever, as an expected 11.5 percent increase in Chinese sales outweighs a forecast 2.7 percent drop in the United States — which would also see China become Nissan’s biggest market again.
Nissan has seen U.S. sales slide 6.5 percent so far in 2018, partly due to sluggish demand for its high-volume Altima sedan, a revamped model of which will be released later this year.
Price discounts for the Altima, the popular Rogue crossover SUV, and other models were a big factor in the 30.5 percent drop in Nissan’s North American operating profit in the year just ended.
The automaker has roughly doubled car sales in the region since 2010, in line with a target to corner around a 10 percent share of the U.S. vehicle market.
But achieving that has come at the cost of hefty discounting in the region, and Nissan has said it now plans to focus on improving profitability in North America, while also expanding sales in China, the world’s biggest car market.