Nissan profits fall on rising costs, higher yen

Nissan in May warned that a strong yen was likely to affect its bottom line, and analysts said Japan’s auto industry as a whole was facing hard times. (AFP)
Updated 26 July 2018
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Nissan profits fall on rising costs, higher yen

TOKYO: Japanese automaker Nissan reported a drop in first quarter profits Thursday, under pressure from rising material costs and a higher yen.
Nissan said sales were up in China in the three months to June, but fell in North America and Europe.
The firm’s quarterly net profit in the period dropped 14.1 percent to ¥115.8 billion ($1.05 billion).
Operating profit was down 28.8 percent to ¥109.1 billion, with sales also down slightly to ¥2.7 trillion.
Unit sales fell in the US, and development costs rose during the quarter, said Joji Tagawa, corporate vice president.
“That was offset by increased sales in other regions and efforts to reduce procurement costs,” he told a press conference.
“But it was not enough to offset the rising prices of raw materials, which we have been seeing since last year, and the negative impacts of currency exchange rates. We saw falling income and falling profits as a result,” he said.
While US tariffs on steel and aluminum, and threatened tariffs on automobiles, have roiled markets and upset trade relations, Tagawa said the firm saw little impact.
It “was not zero” but was minimal, he said.
“We have long made efforts to localize production around the world. This has proven to be an effective way to avoid trade problems, forex problems and changes in local demand,” he said.
Nissan maintained its annual forecasts, with net profit forecast at ¥500 billion.
Operating profit is expected at ¥540 billion on annual sales of ¥12 trillion.
Nissan in May warned that a strong yen was likely to affect its bottom line, and analysts said Japan’s auto industry as a whole was facing hard times.
“For the past fiscal year, Japanese carmakers enjoyed US tax cuts, which boosted their bottomline profits, but they can’t expect that for the current year,” Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm, said before the results.
“Japanese carmakers need to step up their investment in new technologies, such as self-driving systems, in order to compete with their global rivals, while growing costs of raw materials are pressuring their earnings.”
Nissan has struggled to recover trust after an inspection scandal last year, and suffered a new blow when it acknowledged earlier this month that data on emissions and fuel economy had been deliberately “altered.”
But it said the alterations only involved just over 1,100 vehicles, and none of its models would be subject to recall, tempering fears of another scandal.


Former Nissan chairman Ghosn appears in Tokyo court

Updated 15 sec ago
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Former Nissan chairman Ghosn appears in Tokyo court

  • It is the first of a series of hearings to iron out logistics for Carlos Ghosn’s actual trial
  • Nissan’s former chairman has hired a strong legal team as he fights to clear his name
TOKYO: Nissan’s former chairman, Carlos Ghosn, appeared in a Japanese courtroom Thursday for a hearing ahead of his trial on accusations of financial misconduct.
It was the first of a series of hearings to iron out logistics for Ghosn’s actual trial. The trial date has not been set, and experts say it could be months away.
Ghosn, who led the Japanese automaker for two decades, was arrested in November and charged with underreporting his income and breach of trust. He was released on bail in March, rearrested in April on fresh accusations and then released again on bail on April 25.
Ghosn insists he is innocent and says he was targeted in a “conspiracy” by others at Nissan Motor Co.
Nissan, which is allied with Renault of France, has seen profits nose-dive amid the fallout from Ghosn’s arrest.
Ghosn has hired a strong legal team as he fights to clear his name. One of his top lawyers, Junichiro Hironaka, was seen walking into the courtroom Thursday with Ghosn.
One of the conditions of Ghosn’s release on bail is that he is forbidden to contact his wife. Prosecutors say that’s to prevent evidence tampering.
Ghosn’s lawyers challenged that restriction, saying it is a violation of human rights, but the Supreme Court rejected their appeal Tuesday.
The lawyers can appeal again to have the restriction removed.
In a briefing Thursday, Deputy Chief Prosecutor Shin Kukimoto welcomed the Supreme Court’s decision.
“For married people to be together is important, but I feel there was enough reason for the Supreme Court to support us in this restriction,” he said.
Kukimoto declined comment on the hearing, which was closed to reporters and the public.
Kukimoto also said the maximum penalty upon conviction of all 15 counts of the charges Ghosn is facing is 15 years in prison and a fine of ¥150 million ($1.4 million).