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Nissan raises earnings outlook, optimistic chip crunch will ease

Nissan raises earnings outlook, optimistic chip crunch will ease
Nissan raises earnings outlook, optimistic chip crunch will ease Copyright Thomson Reuters 2021
Copyright Thomson Reuters 2021
By Reuters
Published on Updated
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By Norihiko Shirouzu

TOKYO - Japanese automaker Nissan Motor Co on Wednesday raised its earnings outlook for the year, helped by a weaker yen and favourable demand in the United States and China, after reporting a surprise first-quarter operating profit.

The company also warned that a global shortage of semiconductor chips will significantly hurt sales volume in the July-September quarter, but added that demand for its newly launched, pricier models will mitigate the impact on profits.

Nissan hopes to make up for production and sales losses during the latter half of the fiscal year ending March 2022 and expects semiconductor shortages to ease during that period, Chief Operating Officer Ashwani Gupta told reporters.

"Nobody has got a crystal ball. Nobody. But there are some assumptions," he said, referring to an expected easing of the crisis, partly because a fire-hit Renesas Electronics chip plant in Japan is functioning again.

Nissan, Japan's No. 3 carmaker, maintained its global sales target of 4.4 million vehicles that it had set for the year in May.

Nissan sold 1.048 million vehicles in April-June, up 63% from a year earlier, when global demand was hit by the COVID-19 pandemic. It sold 378,000 vehicles in North America (U.S., Canada and Mexico), up 70% from a year earlier, while sales in China totaled 352,000 vehicles, a 71% increase.

Sales in the United States totaled 298,000 vehicles, up 68% from a year earlier.

Chief Executive Makoto Uchida said Nissan will have to live with business uncertainties, including higher raw materials costs, for the remainder of the year.

The auto industry has been grappling with a months-long shortage of semiconductor chips, which has forced them to cut production and delay car deliveries.

Some companies such as Stellantis, owner of brands including Peugeot and Jeep, have said they expect the shortage to easily drag into next year.

Some, though, like Taiwan chipmaker TSMC and Volkswagen said they are seeing some signs that the crunch is easing.

Despite that, Nissan had a good start to the year, Gupta said, attributing the surprise first-quarter profit partly to the company efficiently managing supply chains and strategically using its chip stockpile, minimizing the impact of the shortage.

Nissan reported an operating profit of 75.68 billion yen ($688.6 million) for the first quarter ended June 30. Analysts had expected a loss of 42.72 billion yen, according to Refinitive SmartEstimates.

For the year ending March 2022, Nissan now expects an operating profit of 150 billion yen. In May, the company had forecast that it would break even in the period.

($1 = 109.9100 yen)

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