Industry Report: Nissan Announces Strong Profits for 2002/2003

Despite Being Down 5.4% in Its Final Fiscal Quarter, Nissan Forecasts Growth in the Coming Year

Yesterday Nissan Motor Co. reported a 51% increase in operating profit over the 2002/2003 fiscal year, confirmation of its strong comeback in North America and abroad.

Specifically, the 44.4% Renault owned Japanese automaker announced a 737.23 billion yen ($6.32 billion) operating profit for the year ending March 31, 2003, with sales of 6.829 trillion yen (58.229 billion) yielding a 495.17 billion yen (4.22 billion) net profit, a gain of 33%.

Despite the positive results Nissan expects operating profit growth to slip during the current year by as much 11%, due to a weak American market and the U.S. governments willingness to let its dollar value continue to slide downward.

The only positive forecast is a booming euro, but this will only affect Nissan mildly, as the majority of its export business is in the United States. Nissan will need to continue expanding its market share to make up for the losses.

But that may pose a problem. Despite its new focus on style and performance and an ever increasing product portfolio that includes eight new models, most of which are top-profit vehicles such as the Nissan Maxima sport sedan, Murano SUV, Quest minivan, full-size Titan pickup and full-size Pathfinder Armada sport utility, plus the Infiniti G35 Coupe, M45 sport sedan and FX35/45 sport utility, Nissan has underperformed the market in the first quarter of 2003, its own sales falling 5.4% from the same three months last year.

Still the companys sales forecast for the current 2003/2004 fiscal year is bullish, with an expected global improvement of 9.7% to 3.04 million vehicles, including a 17% increase in the U.S. much due to new models. And with respect Nissan has a history of conservative sales projections, which adds credibility to their forecast.

Nissan also continues on its profits first path, forsaking incentives that could lead to higher sales volumes even though some of its Japanese rivals are choosing to embrace the controversial North American sales programs - that incidentally originated with the Big 3 domestic automakers.

Reuters also reported yesterday that Nissan will be seeking shareholder approval to buy back up to 1.7% of its outstanding shares, which could result in a repurchase of up to 75 million shares equal to 100 billion yen ($853 million).

This aggressive buyback further shows that the Japanese automakers bold sales forecast amid a fluctuating auto market is no smoke screen to lure in investors. Once again, Nissan will be the one to watch for throughout the coming year.