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.


Oil prices rise on Libyan export interruption, but markets remain weak

Updated 11 December 2018
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Oil prices rise on Libyan export interruption, but markets remain weak

  • The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts
  • Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang

SINGAPORE: Oil prices edged up on Tuesday after Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.
Despite that, overall sentiment on oil prices remained weak amid worries over global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.
International Brent crude oil futures were at $60.19 per barrel at 0336 GMT, up 19 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $51.16 per barrel, up 16 cents, or 0.3 percent.
Libya’s National Oil Company (NOC) late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.
NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.
The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.
Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.
In a show of no confidence, money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4, the US Commodity Futures Trading Commission (CFTC) said on Monday.
The financial speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. That is the lowest level since Sept. 20, 2016.
In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia
“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
“The general risk-off tone in global markets and the stronger dollar ... are contributing to the selling pressure.”
The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels.