Nissan predicts falling profit but record sales

Reuters (Yokohama) - Nissan Motor said Thursday that it expected a 15.4 percent fall in profit for the current financial year but projected another year of record sales.

Nissan forecast a net profit of ¥270 billion, or $3.4 billion, down from ¥319 billion in the previous financial year.

Revenue is expected to rise 7.1 percent, to ¥9.4 trillion, and Nissan plans to double its dividend to ¥20 this year.

Nissan also forecast an operating profit of ¥460 billion for the financial year ending in March 2012, a 14.4 percent drop from the previous year.

Carlos Ghosn, the Nissan chief executive, had flagged a positive surprise for sales a day earlier, saying in a speech that the numbers would call for "significantly higher" volumes this year. He also said that Nissan was "very near" normal production levels after the March 11 earthquake and tsunami disrupted the industry's supply chain.

Before the forecasts, Nissan's shares ended 1.3 percent higher, taking their cue from Mr. Ghosn's bullish comments on Wednesday.

Nissan has been charging ahead in China and laying the groundwork for industry-beating growth in other emerging markets, like India and Russia.

For the 2011-12 business year, Nissan said that it expected sales to rise 9.9 percent, to 4.6 million vehicles, and for production to climb 11.2 percent, to 4.613 million vehicles. Nissan sold a record 4.185 million vehicles in the previous financial year.

"The volume is stronger than what anyone expected," said Kurt Sanger, analyst at Deutsche Securities, a brokerage and investment banking company based in Tokyo.

Nissan's operating profit exceeds the guidance provided by its domestic rivals, Toyota and Honda, which have forecast operating profits of ¥300 billion and ¥200 billion, respectively.

Toyota and Honda, unlike Nissan, report under U.S. accounting standards, meaning their profits made in China are excluded from the operating line.

"What is emerging since the quake is that everyone's reality is different," Mr. Sanger said. "You could say that Honda may be erring on the side of conservatism, but then you also have to note that they still can't build the Civic, their core product, and that’s 20 percent of their U.S. sales."

By region, Nissan sees sales in China, its biggest market, rising 12.3 percent, to 1.150 million vehicles, and in the United States growing 7.7 percent, to 1.04 million vehicles.

In Europe, it expects growth of 10.4 percent, to 670,000 cars, while sales in Japan are seen as rising 1.7 percent, to 610,000.

Mr. Ghosn, who is also chief executive of Renault, is due to outline a road map for the next six years at Nissan on Monday.