* Sees 2014/15 net profit growth 4.1 pct, below forecast
* Sees 2014/15 op margin at 5 pct, lowest of Japan peers
* Buoyed by emerging market growth, hit by expansion costs
(Recasts, adds information on mid-term goals, new CEO comment,
regional sales information)
By Yoko Kubota
YOKOHAMA, Japan, May 12 Nissan Motor Co
will prioritise boosting profit margins over market share, its
CEO said on Monday, signalling a shift in emphasis after the
Japanese automaker forecast the lowest operating margin among
its peers for this financial year.
Profitability at Japan's second-biggest carmaker has been
squeezed by the cost of a rapid expansion drive aimed at lifting
its global market share to 8 percent by 2016-17, compared with
6.2 percent in the year ended March.
However, chief executive Carlos Ghosn indicated on Monday
the push for sales growth had nudged down the list of priorities
as the company also tries to lift its operating margin to 8
percent by 2016-17.
"We obviously can't reach 8 percent operating margin without
growing, but at the same time we don't want the growth to be in
contradiction with the profit goal," he told a news conference.
"I think the most important is the 8 percent operating
Ghosn said Nissan had yet to fully realise its potential,
and its investments would start to bear fruit as new plants in
emerging markets enter production and new models are launched.
Promising greater effort on technology, products, synergies
and cost reductions, he said Nissan could hit its operating
margin target, compared with an estimated margin of about 5.5 to
6.0 percent for the year ending March 2015 including profit from
China, which accounts four about one-quarter of its sales. China
is excluded from Nissan's reported operating profit figure under
existing accounting rules, but included in the 8 percent target.
"If you take a look at all the products we are bringing, all
the technologies we are developing, all the expansion that took
place even including in terms of capacity investments, presence
into the emerging markets, strengthening the brand, I don't
think personally an 8 percent operating margin is a very
ambitious goal," Ghosn told Reuters.
Nissan, a leader among Japanese carmakers in profit margin
just two years ago, forecast an operating margin of 5.0 percent
for this financial year excluding China, up 0.2 percentage
points from last year but still well below Toyota Motor Corp's
forecast 8.9 percent and Honda Motor Co's
projected 6.0 percent. Those figures also exclude China.
Nissan predicted 405 billion yen ($3.98 billion) in net
profit for this financial year, up 4.1 percent from the same
period a year ago but short of the 425.4 billion yen mean
estimate of 21 analysts polled by Thomson Reuters I/B/E/S.
"We were expecting Nissan's guidance to fall short of
analyst expectations and it seems it has turned out to be true.
We think Nissan will be having a hard time, unlike some of its
competitors," said a trader at a European asset management
As its margins lagged, Nissan's share price has risen only
27 percent since mid-November 2012, when reflationary policies
pushed by Prime Minister Shinzo Abe spurred a slide in the yen
and sharply boosted Japanese exporters' shares.
Toyota shares are up 80 percent over that period and Honda
stock is up 41 percent, although since the start of this year
Nissan has outperformed the other two.
Shares of Nissan ended 0.2 percent lower before the results
announcement, compared with a 0.4 percent decline in the
benchmark Nikkei average.
Like its Japanese rivals, Nissan said foreign exchange moves
would negatively affect its earnings this year after providing a
major lift last year. Currency moves are expected to cut its
operating profit by 55 billion yen for 2014/15, after providing
a 247.6 billion yen boost the year before.
Nissan forecast its global sales would grow 8.9 percent this
financial year to 5.65 million vehicles for a market share of
6.7 percent, backed by growth in China and several Asian
emerging markets where it struggled last year.
Sales in Japan are expected to drop 11 percent as demand
shrinks after an April sales tax hike, but Nissan expects a 17.6
percent rise in China, bouncing back after sales plunged in late
2012 following a diplomatic row and surpassing the United States
to become its biggest market.
The company is expanding its dealer network to new Chinese
cities and expects strong sales of redesigned and new vehicles
such as the X-Trail. Nissan has also started up new plants in
recent months in Mexico and Brazil, and is expanding
manufacturing capacity in Thailand, China and Russia.
Nissan will soon start sales of its low-cost Datsun brand in
a number of emerging markets, helping to boost sales but
potentially weighing on operating margins. Nissan expects a 4 to
7 percent operating profit margin on the Datsun models.
Ghosn said Datsun vehicles will likely boost Nissan's
business substantially in rapidly growing economies such as
India and Indonesia, although in Russia a slowdown in growth is
casting a shadow over the auto market.
($1 = 101.7100 Japanese Yen)
(Editing by Edmund Klamann, Christopher Cushing and Mark