Peugeot, Nissan smarting after Japan quake

PARIS/YOKOHAMA Wed Jul 27, 2011 6:41am EDT

A man walks past a logo of Nissan Motor Co at the company showroom in Yokohama, south of Tokyo June 23, 2011. REUTERS/Toru Hanai

A man walks past a logo of Nissan Motor Co at the company showroom in Yokohama, south of Tokyo June 23, 2011.

Credit: Reuters/Toru Hanai

PARIS/YOKOHAMA (Reuters) - Car makers showed the impact of the Japan disaster with France's PSA Peugeot Citroen (PEUP.PA) warning 2011 profits would be hit and Japan's Nissan Motor (7201.T) posting a 10 percent profit fall.

The earthquake and tsunami that devastated Japan in March had a knock-on effect on the global automotive industry, as many electronics suppliers' factories were damaged, leading to disruption and parts shortages for car makers across the globe.

Peugeot, Europe's second-biggest car maker, said its cars division would take a 300 million euro hit in the second half from the disaster as well as rising costs for raw materials.

Nissan, Japan's second-biggest car maker, posted an operating profit of 150.37 billion yen ($1.93 billion) for the April-June quarter, down 10.4 percent from a year earlier but still better than the average 70 billion yen consensus of eight analysts polled by Thomson Reuters IBES.

Nissan kept its forecasts for operating profit at 460 billion yen and net profit at 270 billion yen for the full year to March 2012.

Thousands of kilometers away from the site of the devastating earthquake, Peugeot Chief Executive Philippe Varin told a news conference in Paris that the automobile division's recurring operating profit in 2011 would be lower than the 621 million euros achieved in 2010.

The group said its long-term productivity improvement plan, unveiled in 2009, would only partially offset the negative Japan impact and a rise in raw materials prices, is set to have a 700 million euro negative effect on the year as a whole, 200 million euros more than the group previously forecast.

"Like everyone else, we underestimated the impact of raw material price increase," Varin told analysts. "And I don't expect the pressure to reduce, so in 2012 I think the price of raw materials will remain high," he added.

"We had some room for maneuver," head of strategy and finance Frederic Saint-Geours told a conference call. "Today, that has been reduced by these headwinds."

While 2011 group recurring operating income would still be better than 2010 "we are not defining 'better,'" he said.

Credit Suisse's David Arnold said: "Broadly speaking, the numbers are in line for the first half, but no one's going to care about that; there's a profit warning in the second half."

Bernstein analyst Max Warburton wrote: "PSA under CEO Varin has chosen to give only directional guidance but today's comments make it clear the performance of the company in 2011 will fall short of his original hopes."

PSA shares were down 7.9 percent at 27.16 euros at 0958 GMT, underperforming a sector index .SXAP down 0.9 percent.

"Daimler (DAIGn.DE) numbers are in line, and it has not impacted them to the same extent," Arnold added.

But the German premium car maker is facing its own headwinds. Second quarter profits were healthy enough but revenues fell short of expectations, raising concerns that demand for luxury cars in Asian markets is starting to cool. Daimler shares were up 0.2 percent at 51.92 euros.

At PSA revenues were up 9.7 percent in the first half at 31.1 billion euros ($45.01 billion), helped by market share gains outside Europe.

New car sales in the European Union suffered their biggest drop in eight months in June as economic uncertainty prompted caution among consumers and some markets suffered from the withdrawal of state-sponsored scrappage schemes.

Earlier this month PSA said it increased the proportion of cars and light commercial vehicles it sold outside Europe in the first half as it scrambles to boost its presence in fast-growing regions such as China, Latin America and India.

PSA confirmed it expected the European market to remain stable for the full year. It pared its forecast for growth in China, the world's largest auto market, to around 7 percent, from a previous forecast of 10 percent growth.

It boosted its forecast for the Latin American market to about 6 percent growth from 4 percent and said the Russian market would increase about 30 percent compared with a previous 15 percent forecast.

Saint-Geours said he expected an end to any Japan impact in the autumn.

"On Japan, we have had negative effects, and we continue to have negative effects, because a certain number of components is lacking, which forces us to modify our product offering," he said.

In the first half, the automobile division's recurring operating income slipped to 405 million euros from 525 million euros in a year earlier. Excluding the impact of Japan it reached 552 million euros, the company said.

(Reporting by Helen Massy-Beresford and Chang-Ran Kim; Additional Reporting by Gilles Guillaume; Editing by Will Waterman and Chris Wickham)

($1=.6909 Euro)

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