Nissan has reported a fall in operating profit in the third quarter of its fiscal year as it spent more on incentives in the US and was hit by a high yen.

Nissan’s operating profit fell 15.1% to 163.5bn yen in the October to December quarter. Quarterly revenue fell 2.2% to 2.9tn yen, while net profit rose 3.5% to 131.7bn yen.

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For the fiscal year ending in March 2017, Nissan continues to expect a 0.2 per cent gain in net profit to ¥525bn compared to analyst forecasts for a profit of ¥572bn.

The profit decline comes despite an improvement in domestic sales from a year earlier. The company has also enjoyed strong sales in North America, especially due to strong demand for its Rogue SUV in the US. 

Nissan Motor also announced financial results for the nine-month period to 31 December 2016. Revenues were off 7.6% on the same period a year earlier.

“In the first nine months of the fiscal year, Nissan generated an operating profit of JPY503.2bn, which represents a 6.1% margin on net revenues of JPY8.26 trillion,” said Carlos Ghosn, chairman and chief executive officer. “Although these results reflect continued currency headwinds, we remain confident of achieving our fiscal year guidance.”

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“On a constant currency basis, operating profit rose 30.1% to JPY764.6bn, equivalent to an 8.1% profit margin. Our underlying performance was enhanced by solid product demand in the US, China and Western Europe, along with the continued benefits of our strict cost controls and synergies from our Alliance strategy.”

Fiscal Year 2016 Nine-Month Financial Highlights
The following table summarises Nissan’s financial results for the nine-month period to 31 December 2016, calculated under the equity accounting method for the Group’s China joint venture.

  • Fiscal Year 2016 Nine-Month Financial Highlights to 31 December 2016
  • Revenues: 9M FY 2015 – JPY8,943.0bn; 9M FY 2016 – JPY8,264.8bn; YoY change – (-)7.6%; 9M FY 2016 at constant currency – JPY9,426.1bn; YoY change – 5.4%
  • Operating profit: 9M FY 2015 – JPY587.5bn; 9M FY 2016 – JPY503.2bn; YoY change – (-)14.3%; 9M FY 2016 at constant currency – JPY764.6bn; YoY change – 30.1%
  • Operating margin %: 9M FY 2015 – JPY6.6bn; 9M FY 2016 – JPY6.1bn; YoY change – (-)0.5%; 9M FY 2016 at constant currency – JPY8.1bn; YoY change – 1.5%
  • Ordinary profit: 9M FY 2015 – JPY631bn; 9M FY 2016 – JPY590.2bn; YoY change – (-)6.5%
  • Net income: 9M FY 2015 – JPY452.8bn; 9M FY 2016 – JPY414.2bn; YoY change – (-)8.5%

On a management pro forma basis, which includes the business results of Nissan’s operations in China, FY16 nine-month net revenue was JPY9.01 trillion. Operating profit was JPY601.9bn. The operating profit margin was 6.7%.

On a constant currency exchange rate basis, pro-forma net revenues were JPY10.34 trillion and operating profit was JPY882.2bn, equivalent to a profit margin of 8.5%.

Sales performance
In the first nine months of the fiscal year, Nissan’s total unit sales rose by 2.6% to 3.99m units.

In the US, Nissan’s sales rose by 4.2% to 1.16m units, equivalent to a market share of 8.7%, amid strong demand for the Rogue and Altima.

Nissan unit sales in China, which reports figures on a calendar year basis, rose 8.2% to 929,000 units, equivalent to market share of 5.0%. In Europe, excluding Russia, Nissan’s sales rose by 5.5% to 474,000 units, which resulted in a market share of 3.6%. The Qashqai SUV and X-Trail helped drive demand in the region.

Nissan’s performance in these key markets helped offset challenging conditions in the Japanese market. Total unit sales in the nine-month period for Japan were 344,000 units, representing a market share of 9.8%. In other markets including Asia and Oceania, Latin America, the Middle East and Africa, Nissan’s sales decreased 3.9% to 596,000 units.