Nissan's Ghosn Says Automaker Will Meet Forecasts - Bloomberg

July 31, 2003; Bloomberg reported that Nissan Motor Co. Chief Executive Officer Carlos Ghosn said the automaker is ``on track'' to meet its full-year earnings forecasts as first-quarter car sales rose 2.7 percent and demand increased for its more expensive models.

Nissan, Japan's third-largest automaker, said in a statement it sold 700,215 vehicles globally in the three months ended June 30, generating sales of 1.65 trillion yen ($13.7 billion). The Tokyo-based automaker, 44 percent owned by Renault SA, didn't provide a year-earlier revenue comparison.

``There's no particular apprehension,'' Ghosn said in a telephone interview. ``It's going to be a challenging year, as we said at the very beginning and we feel good about it.''

The maker of Altima and Infiniti G35 sedans expects a fourth straight record year of sales and operating profit, even as gains in the yen erode profit in the U.S., its most lucrative market. The company is closing in on its bigger rival Honda Motor Co., which said Tuesday its unit sales rose 2 percent to 708,000.

``So far the automaker is doing well and will probably be able to meet its forecasts,'' said Norihito Kanai, who helps manage the equivalent of $2.5 billion at Meiji Dresdner Asset Management Co. ``What investors will be looking for is whether the U.S. will really improve later in the year as Nissan says.''

Yen Effect

Nissan's first-quarter results were hurt by the average 7 percent stronger yen against the dollar, which cut the value of overseas earnings when repatriated. Rivals such as Honda and Toyota Motor Corp. also had currency losses.

``We had a negative impact from the exchange rate, but the positive impact from the model mix helped'' as Nissan sold more profitable vehicles, Ghosn said. The gain in first-quarter unit sales is ``a good representation'' of what happened to revenue in the period, he said.

The automaker said in today's statement it will keep its full-year earnings and sales forecasts for this year unchanged.

Nissan shares, the best performing auto stock in 2002, have risen about 27 percent this year and rose 1.3 percent to 1,175 yen in Tokyo today. Nissan's 1 percent bond due 2010 rose 0.086 points to 100.472 yen per 100 yen face amount, to yield 0.928 percent, according to the Japan Securities Dealers Association.

U.S. Touchstone

Investors say the performance of the new U.S. plant is the touchstone for whether Nissan will succeed in raising annual unit sales by 40 percent, or 1 million units, to 3.6 million by 2005, one of the goals laid out in Ghosn's three-year ``Nissan 180'' business plan.

Ghosn, who will become Chief Executive of both Nissan and Renault in 2005, has led the Japanese company to record profit from its worst ever loss in 2000.

Nissan on May 27 opened its first new North American auto plant in 20 years to help raise market share in the region, where it makes as much as 80 percent of operating profit, according to analysts who cover the company.

The automaker plans to release six models in North America this year: the Quest minivan, Pathfinder Armada sport-utility, two versions of the Titan pickup, a large Infiniti sport-utility and the Altima sedan.

``We love that people are looking at the U.S. and seeing if Nissan is progressing,'' Ghosn said. ``It's going to be the year of the U.S.''

Nissan's U.S. sales in the quarter rose 7.6 percent to 200,706 units, helped by models such as the Maxima sedan and Infiniti FX sport-utility. Ghosn said growth will continue in the U.S.

``We have the Quest that started selling in July which will heavily impact (sales in) August and September,'' said Ghosn.

Domestic Sales

In Japan, Nissan's vehicle sales including minicars fell 5.9 percent to 169,786 units, during the first-quarter, as its best- selling models such as the March compact start to age.

``Sales are up in (most) markets, U.S., Europe and general overseas markets, but Japan for the moment is down,'' Ghosn said. ``We are in the middle of product releases and we have new cars such as the Presage that went on sale this month, which will impact the sales in August'' in its domestic market, he said.

Nissan's European sales rose 3.4 percent to 130,875 units sales in other overseas markets, including Mexico and Canada, rose 5.6 percent to 198,848 units, the company said.

In the first six months of 2003, Nissan's domestic car sales rose for the second consecutive year, up 7.8 percent to 429,259 units, beating Honda, Japan's second-largest carmaker, for the first time in three years.

``In terms of profit contribution, Japan is relatively small for companies like Nissan and Honda,'' Meiji Dresdner's Kanai said.

Annual Forecasts

Nissan is basing its earnings forecasts on an exchange rate of 120 yen to the dollar and 125 to the euro for this business year.

The automaker forecast net income will be 495 billion yen in the year to March 2004, unchanged from last year, while operating profit will rise 11 percent to 820 billion yen. Current profit will probably increase 10 percent to 781 billion yen and sales will rise 9.1 percent to 7.45 trillion yen, Nissan said.

``In October we can unveil much more about what's happening, but we feel good about,'' the forecasts, Ghosn said.