(Bloomberg) -- Nissan Motor Co. shares fell by the most since February after the automaker slashed its full-year profit target, citing weak sales in Japan and the US.
The Japanese automaker cut its operating-profit outlook to ¥500 billion ($3.3 billion) for the year through March 2025, down from its prior forecast of ¥600 billion and below the market consensus of about ¥570 billion. In the first quarter through June, Nissan’s profit unexpectedly fell to ¥995 million, missing even the lowest analyst estimate in a Bloomberg survey.
“It has been a challenging quarter for Nissan,” Chief Executive Officer Makoto Uchida said at a press conference Thursday, adding that the “most important factor” for the company going forward will be its business in the US where it aims to clear inventory.
“With the introduction of new models in the second half of the year, we expect to boost volumes and stabilize profit,” he said.
Still, the company revised down its full-year sales target slightly from 3.7 million units to 3.65 million units.
Nissan shares plummeted after the results, falling as much as 11% at one point before recovering to close down almost 7%, their biggest decline since February.
“It was a negative surprise as evidenced by the stock movement,” said Bloomberg Intelligence auto analyst Tatsuo Yoshida. “The company set a 100 million-sales target in its mid-term plan but we are seeing ‘a red light’ from the first quarter.”
If Nissan doesn’t revise its plans early and realistically, it risks falling into “the depths” of increased incentives and lower operation rates, he added.
In its mid-term plan announced in March, Nissan set a target of selling an additional 1 million vehicle and introducing 30 new models over the next three years, 16 of which are to be electric vehicles.
‘Aging Products’
The number of vehicles the company sold in its two largest markets declined in the most recent quarter, with Japan sales declining 8%, and US sales by about 3%. Chief Financial Officer Stephen Ma attributed the falls to “aging products and market momentum towards hybrid vehicles.”
Nissan has also been struggling in China where it faces a tough battle from local battery electric vehicle makers with stronger features such as BYD Co. Uchida emphasized the strength of the competition in the world’s largest car market, saying, “local carmakers are launching new models every three months.”
Nissan also adjusted its foreign-exchange forecast from ¥145 against the dollar set in May to ¥155. Nissan may change its forecast again if the Bank of Japan decides to raise interest rates, the CFO said.
As for ongoing business alliance talks with Honda Motor Co. on electric vehicles, Uchida said the two companies are having “concrete discussions” and will try to come up with an announcement before the end of the summer.
(Updates with further information, quotes throughout the story)
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