Nissan Motor Co.’s share price down, reveals a 4.8% profit increase, but posts conservative FY forecast

Nissan Motor Co., the second-largest car manufacturer in Japan made an official statement today, announcing its profit projections for the current fiscal year. The company revealed a profit forecast that missed analysts expectations, citing increasing competition and a strengthening yen.

Mr. Carlos Ghosn, the Chief Executive Officer of Nissan Motor Co. explained in the statement, which was cited by the Wall Street Journal: “We are taking determined steps to reach our (midterm goals) including greater focus on market-by-market execution, ramping up newly installed manufacturing capacity and strengthening our brand power.” As reported by Bloomberg, Mr. Ghosn also said: “Nissans performance will improve further in 2014.”

According to the companys statement, its net income for the year that is to end March 31st, is expected to increase by 4% and reach 405 billion yen (4 billion dollars), the strongest posted since 2008 FY. The forecast, however, is about 5% lower than the median analysts estimate. The company also set a goal of achieving an operating margin of 8% until March 2017, as well as an 8% global market share.

The global deliveries of Nissan were projected to increase by 8.9% to 5.65 million vehicles during the fiscal year. This forecast represents a global market share that amounts to 6.7%. Nissan Motor Co. revealed that it expects its operating profit to rise by 7% to 535 billion yen, and its revenue to increase by 3% to 10.79 trillion yen.

Nissan Motor Co. also posted a 4.8% increase in its net profit in the quarter ended March. The companys net profit for the period amounted to 114.9 billion yen (1.12 billion dollars) in comparison to the 109.7-billion-yen profit posted over the same period a year ago. The operating profit of the company has risen by 20.3% reaching 197.7 billion yen on revenue of 3.204 trillion yen.

Nissan is not the only Japanese company, which predicts smaller profits compared to the analysts estimates. Recently, Toyota Motor Corp. and Honda Motor Co. did the same as benefits from a weaker yen started to fade. One of the analysts, who work in Advanced Research Japan – Koji Endo – commented on the situation for Bloomberg: “Everybody seems to be conservative in their forecasts. The yen is stabilizing, the competition in the U.S. is getting fierce and the domestic market will decline this year.”

Nissan Motor Co. Ltd was 0.23% down to close at 869.00 Japanese yen per share yesterday, marking a one-year change of -18.25%. According to the information published on the Financial Times, the 20 analysts offering 12-month price targets for Nissan Motor Co. Ltd have a median target of 1,000.00, with a high estimate of 1,250 and a low estimate of 900.00. The median estimate represents a 14.81% increase from the last price of 871.00.