Sales in China push Nissan back into the black

Tokyo: Japanese automaker Nissan Motor Co climbed into the black last quarter and forecast a smaller yearly loss as surging sales in China helped offset sluggish demand in the West.

The country's No 3 car company posted net income of 25.5 billion yen (Dh1.03 billion) in the July to September period after three straight quarters in the red. The result was 65 per cent lower compared with last year but far better than Nissan's 16.5 billion yen loss in the April to June quarter.

Revenue, meanwhile, totalled 1.87 trillion yen ($19.57 billion).

The automaker sold 901,000 vehicles in the quarter, down 6.8 per cent from the previous year.

"Our performance in the first half of fiscal 2009 is encouraging, demonstrating that Nissan's recovery plan is on track," President and CEO Carlos Ghosn said in a statement. "Our outlook will remain cautious until we see evidence that economic recovery can be sustained in world markets."

With its results better than originally expected, Nissan became the latest Japanese car company to boost its outlook for the year as automakers benefit from robust Chinese demand, aggressive cost cutting, and cash-for-clunkers programmes around the world.

Nissan now expects a narrower net loss of 40 billion yen for the fiscal year through March 2010 compared with its previous estimate of a 170 billion yen loss. Revenues were pegged at 7 trillion yen.

Sales forecast

The company also raised its global sales forecast to 3.3 million vehicles from 3.08 million. In the US, Nissan expected to sell 765,000 vehicles as opposed to its previous prediction of 750,000.

Rivals Honda Motor Co, Suzuki Motor Corp and Subaru-maker Fuji Heavy Industries Ltd have also upgraded their outlooks in recent days.

The results underscored the growing importance of emerging markets like China, where massive government stimulus measures have buoyed demand at a time when more developed markets are slumping.

Nissan's sales in China surged 48 per cent to 396,826 units in the six months through September compared with the year-ago period, whereas the company suffered declines in Japan, the US and Europe.

"In terms of units sold, China has become a major contribution to Nissan," said Philippe Barrier, an analyst at Societe Generale. "It's been a big success in China."

Executive Vice President Hiroto Saikawa credited the Yokohama-based company's performance in China to successful product launches and strong distribution channels among smaller inland cities.

"We believe that we will be able to raise our presence in this main market," Saikawa told analysts at an earnings briefing.

A new report on Tuesday showed that the US auto market may be brightening as well. Total US sales of cars and light trucks rose 12 per cent from a dismal September 2009, though were little changed compared to a year ago, according to Autodata Corp.

Nissan was one of the biggest winners of the month, posting a 5.6 per cent gain in auto sales. Demand for Nissan models offset falling sales of its Infiniti model, the carmaker said.

In the longer term, Nissan is banking on electric vehicles to propel future growth.