China boom drives Nissan back into profit

ONE day after Toyota announced a return to profit, rival Nissan also revealed a positive result for the 2009-10 financial year, with booming sales in China helping to drive it to an operating profit of ¥350 billion ($A4.2b).

This was more than double Toyota’s ¥147 billion ($A1.8b) return on less than half the sales volume, and also higher than forecast by Japan’s third-largest motor company.

The profit marks a ¥488 billion ($A5.8b) turnaround from last year’s ¥138 billion ($A1.6b) operating loss, which was the first negative outcome under the 11-year reign of president and CEO Carlos Ghosn and Renault SA, which owns 44 per cent of the company.

However, sales revenues were down 10.9 per cent on the previous year, reflecting the global financial crunch and the stronger yen that hit exports.

And while Nissan’s full-year result was in the black, its recovery is still obviously fragile. In the latest quarter ending March 31, Nissan recorded a loss of ¥11.6 billion ($A139m).

While Toyota global vehicle sales were down four per cent for the year, Nissan swam against the tide, with sales up three per cent to 3.5 million units, despite a 5.8 per cent decline in its biggest market, North America, to 1.06 million vehicles.

Left: Nissan Leaf EV.

Emerging markets made up the shortfall and then some, with Nissan sales in China up a whopping 38 per cent to 756,000 – more than it sold in Japan (630,000, up 2.9 per cent).

Like Toyota, cost cutting was crucial to Nissan’s latest result in an “extremely challenging year”.

Announcing the figures in Tokyo, Mr Ghosn said Nissan had maintained its focus on recovery.

“Though we are still operating in crisis mode, Nissan is well on track toward complete recovery without any compromise to our strategic priorities,” he said.

“Although we continue to operate in an environment that is volatile and uncertain, fiscal year 2010 will be an important year in which we launch an affordable, mass-market, all-electric, zero-emission vehicle, extend our presence in emerging markets and develop additional synergies in the Renault-Nissan Alliance.” Nissan forecast an 8.1 per cent sales volume increase in 2010-11, driven by the debut of 10 new vehicles, including the all-electric Leaf in Japan, US and Europe. This will drive an increase of about nine per cent in revenues.

Despite this activity, the company expects operating profit to remain flat, at about ¥350 billion ($4.2b).