Nissan profit beats estimates on U.S. boost; eyes China recovery
YOKOHAMA, Japan (Reuters) - Nissan Motor Co (7201.T) beat expectations with a 14 percent rise in quarterly net profit on Thursday, bolstered by a jump in U.S. sales, and expressed confidence it was on track for a recovery in its key Chinese market.
Japan's second-biggest automaker by sales volume said net profit had increased to 82.02 billion yen ($819 million) in its April-June first quarter, topping the average estimate of 63.8 billion yen in a Thomson Reuters I/B/E/S poll of five analysts.
"Positive signs of improving sales volume in China, as well as expected contributions from the full ramp-up of US operations, should enhance Nissan's performance in the coming quarters of fiscal year 2013 - in line with the company's previously announced guidance," the company said in a statement.
Japanese carmakers have suffered a plunge in China sales since a diplomatic row between Tokyo and Beijing last September, and Nissan in particular has been hit hard. China was Nissan's biggest market for the last four years and accounted for about a quarter of its sales volume last year, making Nissan the most reliant on that country among Japan's carmakers.
Nissan's China sales slid 15 percent from a year earlier to 284,000 vehicles in the January-March period, with its market share slipping 2 percentage points to 5.5 percent. Because of a difference in the Chinese and Japanese financial years, Nissan's January-March sales in China are reflected in its April-June results.
But the drop in its China sales narrowed markedly in the latest quarter. Sales fell 1 percent year-on-year in the April-June period to 308,000 vehicles, giving it a market share of 6.2 percent, down 0.7 percentage point. Nissan stuck to its view that its China business would return to pre-diplomatic row levels in the fourth quarter.
Corporate Vice President Joji Tagawa said Nissan expects its annual market share in China to rise to 6.5 percent. He declined to comment on the future of China's macroeconomy or the impact on Nissan.
Nissan makes vehicles in China in partnership with Dongfeng Automobile Group Co Ltd (0489.HK).
In the United States, Nissan has been enjoying a jump in sales as it recovers from vehicle launch hiccups last year and after it cut prices on seven models in May including the Altima sedan, its best-selling vehicle in the U.S.
Its U.S. sales rose 20 percent year-on-year in the April-June quarter to 306,000 vehicles, driven by sales of the Altima and Pathfinder. Its U.S. market share was 7.4 percent, up 0.7 percentage point, Nissan said.
In Japan, Tagawa said Nissan has increased the number of temporary and short-term workers by 900 people compared with March-April levels as it ramps up production. Employee pay has risen by around 10 percent in general because of more shifts and overtime, and at some plants it has increased by 30 percent - a good sign for Prime Minister Shinzo Abe's government, which wants to boost wages to conquer deflation.
For its fiscal year ending in March 2014, Nissan stuck to its forecast for 420 billion yen in net profit, below expectations of 467 billion yen in a survey of 21 analysts.
Nissan, owned 43.4 percent by French alliance partner Renault SA (RENA.PA), is the first of Japan's big three automakers to announce quarterly results. Japan's No. 3 automaker Honda Motor Co (7267.T) will report results on July 31 and market leader Toyota Motor Corp (7203.T) on August 2.
Shares of Nissan have risen 37 percent in the year to date, compared with a 40 percent rise in the benchmark Nikkei .N225. The stock closed down 0.5 percent before the results on Thursday, against the Nikkei's 1.1 percent fall. ($1 = 100.1650 Japanese yen)
(Reporting by Yoko Kubota; Editing by Chris Gallagher)