Nissan share price up, projects higher profit on weak yen

Nissan Motor Co lifted its full-year earnings guidance on Monday as favorable exchange rates and strong US sales helped the Japanese company to overcome a slowdown at home.

The Nishi-ku, Yokohama-based company projected net income for the financial year ending March to stand at ¥420 billion, up from its previous forecast of ¥405 billion. The new figure also represents an 8% increase compared to the last fiscal year.

The second largest car manufacturer by sales in Japan also improved its projections of net revenue to ¥11.15 trillion and operating profit to ¥570 billion.

However, Nissan said it expects to sell 5.3 million vehicles globally, 150 000 less units than previously targeted, which is still 2.2% up compared to financial 2013.

Nissan contributed the projected reduction to slower sales in Japan, China and Russia, where the company has been boosting its position as it purchased a majority stake, with partner Renault of France, in the largest car manufacturer in the country.

For the third quarter ended December Nissan posted almost doubled operating profit of ¥156 billion, up compared to the ¥119.6 billion analysts had projected. Net sales increased 17% to ¥2.94 trillion, also above expectations of ¥2.71 trillion.

Net income for the three months stood at ¥101.8 billion, 20% better than the third quarter of last financial year.

However, Nissan posted an operating loss of ¥10.3 billion in Europe, worse compared to last year when the company reported an operating loss of ¥7.3 billion.

The region has been hurt by weaker profitability from Russia. Although sales have increased in the country, the sharp fall in the rubles value has offset all gains. Nissan was even forced to stop taking orders for some vehicles in order to protect its profits at the end of 2014.

In December Russian sales jumped 45% as consumers wanted to spent their savings before they lose more value. However, sales are not expected to keep up at this rate.

In its domestic market operating profit fell to ¥70.1 billion during the third quarter, down from ¥87 billion a year earlier.

“We anticipate good full-year results as our product offensive and positive momentum in North America and Western Europe offsets volatility in other markets, said Chief Executive Carlos Ghosn.

Nissan gained 1.28% on Monday and closed at ¥1 064 in Tokyo, marking a one-year increase of 20.36%. The company is valued at ¥4.74 trillion.

According to the Financial Times, the 26 analysts offering 12-month price targets for Nissan have a median target of ¥1 150, with a high estimate of ¥1 500 and a low estimate of ¥980.00.