2005 NAIAS: Nissan's Ghosn Predicts Fifth Year of Record Profit

Detroit January 9, 2005; Kae Inoue writing for Bloomberg reorted that Nissan Motor Co. Chief Executive Carlos Ghosn said he expects a fifth consecutive year of record net income this business year, helped by rising sales of new and redesigned models.

Nissan's net income will rise 1.3 percent in the year ending March 2005 to 510 billion yen ($4.7 billion), Ghosn said, reiterating a forecast made in April last year. Sales will increase 10 percent to 8.18 trillion yen, Tokyo-based Nissan said at the time.

``I am confident and certain in meeting our earnings forecast, and the earnings are three months away,'' Ghosn told reporters in an interview today at the North American International Auto Show in Detroit.

Nissan, Japan's second-biggest automaker, is cutting costs as it spends more on purchase incentives in the U.S. and the yen gains against the U.S. dollar, eroding overseas earnings. The company plans to increase global vehicle sales this financial year by 11 percent to 3.38 million units after releasing nine new models, including the Lafesta minivan in November and its Armada sport-utility vehicle.

Ghosn, 50, will add another role in April, when he becomes chief executive of Paris-based Renault SA, which owns 44.4 percent of Nissan. He will remain in charge of Nissan after his move to Paris.

``Ghosn hasn't made a major mistake so far, and it's difficult to assume that there will be one in the future with his move,'' said Graeme Maxton, managing director of the London-based consulting firm Autopolis.

1 Million Units

Ghosn said the automaker is ``confident, but not certain'' of meeting its goal of selling 3.6 million vehicles globally in the 12 months ending September 2005. That would mark an increase of 1 million units from the 2.6 million vehicles sold in the year ended in March 2002.

Shares of Nissan fell about 9 percent in 2004, while the Nikkei 225 Stock Average gained 7 percent. Nissan shares rose 1.6 percent to 1,135 yen in Tokyo on Jan. 7, and its U.S.-traded stock rose 1.2 percent to $21.57 in New York Stock Exchange composite trading. Trading was halted today in Tokyo for a public holiday.

Mitsubishi Motors

Nissan and Mitsubishi Motors Corp., Japan's sole unprofitable automaker, have been discussing an alliance to make minicars, vehicles with engines smaller than 0.66-liter capacity. The two companies already build gearboxes together and Nissan sells a Mitsubishi commercial van under its own brand.

Ghosn said he is still interested in Mitsubishi Motors' minicar business, after talks were suspended at the end of December. Nissan's executive committee will meet this week to discuss further details of the proposed collaboration, Ghosn said, without elaborating.

``Discussions with Mitsubishi are going on, and it may be in the form of supply of OEM or forming a joint venture,'' Ghosn said.

Steel

Nissan and Mitsubishi Motors are in talks about using Mitsubishi Motors' Mizushima factory in Japan's Okayama prefecture to make minicars. The two companies are negotiating how large their respective stakes in the joint venture would be.

Nissan's further cooperation on mini-cars with Mitsubishi Motors would be cheaper than developing its own business in that vehicle category, Ghosn said.

Nissan may still be forced to cut Japan production in March, the biggest month for production and sales in Japan, because it won't be able to get enough steel. The company may be forced to reduce output by 15,000 units in March in Japan, which would trim profit by 6 billion yen, Ghosn said last month.

``The risk is there, but that unit number we gave out is the maximum number of vehicles at risk, and we don't want to give out a bad surprise,'' Ghosn said.