Nissan sticking to forecast despite strong yen

TOKYO, July 16 Reuters reported that Nissan Motor Co Ltd, Japan's third-largest automaker, said on Tuesday it would not revise its forecast for a third straight year of record profits despite the recent surge in the yen against the dollar.

"We have not changed our forecasts for this fiscal year," Dominique Thormann, vice president of Nissan's investor relations department, told an automotive roundtable conference in Tokyo sponsored by The Economist.

The yen has recently risen as high as 115 to the dollar. Like most Japanese automakers, Nissan in May had forecast an exchange rate of 125 yen for 2002/03.

Nissan, 44.4-percent owned by France's Renault SA, expects to post a group operating profit of 553 billion yen ($4.76 billion) and group net profit of 380 billion yen in the current business year to March.

Auto analysts have said they do not expect a significant negative effect on Japanese automakers' profits in 2002/03 from the strengthening of the yen because most firms hedge currency risks three months in advance and made substantial gains when the yen was still trading at 130 to the dollar.

But concerns about the strengthening of the yen in recent weeks have weighed on the stock prices of automakers, which saw a weak yen provide an additional boost to their results in 2001/02.

Japan's leading automaker, Toyota Motor Corp, and second-largest Honda Motor Co Ltd joined Nissan in posting record profits in 2001/02, with major cost-cutting efforts also playing a key role in their strong performances.

Nissan has reaped the benefits of drastic restructuring since 1999 that has featured plant closures, 22,900 job cuts and the halving of its supplier base.

The automaker is now moving focus to aggressive product-led growth under its three-year business plan.

Thormann said Nissan was using an exchange rate of 115 yen to the dollar for the business year from April 2003 for planning purposes.