Nissan Motor Co. shares rose the most in almost a year after the carmaker raised its operating profit forecast for the current fiscal year, exceeding projections from analysts.
The stock climbed as much as 5.4% in early morning trading in Tokyo on Friday, biggest jump on an intraday basis since June. Nissan projected a ¥520 billion ($3.9 billion) operating profit for the period through March 2024, topping the ¥403 billion average estimate. Sales should be ¥12.4 trillion, more than the ¥11.2 trillion the market is looking for.
Nissan embarked on a cost-cutting plan three years ago and shifted its focus toward making more money from each car it sells, departing from the high-volume strategy embraced by former Chairman Carlos Ghosn. The question now is whether the auto manufacturer can expand production and profitability while rolling out new electric vehicles, especially for buyers in China and the US.
“Nissan used to sell its cars at a discount but it doesn’t have to discount anymore,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Institute Co. “They’re actually raising their prices tremendously, so that’s more beneficial.”
For the fiscal year that ended in March, operating profit was ¥377 billion on sales of ¥10.6 trillion, in line with the company’s guidance issued last month, as well as analyst estimates.
For the current fiscal year, Nissan is looking to produce 4 million units, in line with its existing sales target. That still falls short of the company’s goal of reaching 80% of its production capacity of 5.4 million units.
Nissan sold 3.3 million cars in the latest financial year. It lowered its global vehicle sales target to 3.4 million units from 3.7 million units in February.
“The prolonged shortage of semiconductors and tight supply of parts due to the shutdown in China had a sizable impact on production plans and vehicle supply,” the company said in Thursday’s statement.
The automaker’s outlook also fell shy of its target of reaching a 5% operating margin for the current fiscal year. Chief Executive Officer Makoto Uchida is planning to announce a new mid-term growth plan in the fall.
(Corrects time period for operating margin target in final paragraph.)