Nissan predicts rising costs, flats due to equipment shortages

On Thursday, Nissan Motor Co. forecast flat operating profit for the current fiscal year, significantly lower than analysts had predicted, as the company faces tougher trading conditions due to global chip shortages, rising material costs and China’s Cowid restrictions.

Nissan has joined a growing list of companies worldwide that warns of worsening profits because they cannot fully pass on rising input costs to consumers and prepares for more supply chain hold-ups after the Ukraine conflict and prolonged COVID lockdown in China.

Its biggest rival, Toyota Motor, said on Wednesday that an “unprecedented” increase in raw material costs could cut profits by a full year.

Nissan expects sales to grow 18.7% to 10 trillion yen ($ 77.6 billion) in the current fiscal year, which begins in April. But operating profit will increase by only 1% to 250 billion yen, less than the average estimate of 318.5 billion yen from 19 analysts surveyed by Refinitiv.

Japan’s third-largest carmaker posted an operating profit of 56 billion yen in the fourth quarter, helped by cost cuts and a sliding yen, compared to a loss of 19 billion yen at the same time a year earlier.

The results were better than the average profit forecast of 38.3 billion yen from the eight analysts surveyed by Refinitive.

Nissan said its global production had previously declined for the fourth consecutive business year due to a shortage of global semiconductors, the latest fall being 11% year on year.

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