TOKYO, May 11 (Reuters) – Nissan Motor Co reported a better-than-expected 38% profit increase this year on Thursday on stronger sales, a brighter outlook for the Japanese automaker as it restructures its often troubled alliance with Renault and faces headwinds in China.
The bullish forecast, which comes as Nissan (7201.T) pushes to turn itself around after years of turmoil, was based on expectations of nearly 30% sales growth in both North America and Europe. In the main Chinese market, however, the forecast was much less optimistic, at just 8%.
Nissan, like other global automakers, is under intense pressure in the world’s largest auto market, where nimble local players are increasingly challenging thanks to a rapid rollout of battery electric vehicles (EVs).
The speed of change in the Chinese market is now far greater than what Nissan had previously anticipated, chief executive Makoto Uchida told an earnings briefing.
The automaker needs to “break free” from conventional methods and switch to a more flexible structure to better respond, he said.
Nissan now sees the switch to electric cars in China coming from consumers themselves and not just being driven by things like incentives and license plate restrictions, Chief Operating Officer Ashwani Gupta said at the briefing.
![Shanghai auto show, in Shanghai](https://cloudfront-us-east-2.images.arcpublishing.com/reuters/KSX5AFV3CBMGXC6MYEPLIXPQVU.jpg)
[1/2] A Nissan Arizon concept is shown at the Auto Shanghai show in Shanghai, China April 18, 2023. REUTERS/Aly Song
The company needs to accelerate the way it designs, manufactures and sells cars in China, he added.
Nissan sees operating profit rise to 520 billion yen ($3.85 billion) in the financial year that began last month, compared to an average profit forecast of 396.21 billion yen in a poll of 19 analysts by Refinitiv. That would also be a big jump from a profit of 377 billion yen just last year.
The improved sales outlook is driven by expectations of 29% more car sales in North America, or 1.32 million vehicles, and 27% more in Europe. In China, Nissan expects volumes to grow 8% to 1.1 million vehicles.
A positive contribution to the optimistic forecast also comes from an improved outlook for material prices. That, in turn, will help offset pressure from a stronger yen.
Nissan is developing growth plans in areas such as software and EVs independently of Renault (RENA.PA), sources have said, as the two companies work to finalize the terms of their rebalanced alliance by mid-year.
Nissan’s operating income for the three months ended March 31 was 87.4 billion yen, versus the average forecast of 89.81 billion yen in a poll of 11 analysts. It also compares to a profit of 56 billion yen in the same period a year earlier.
($1 = 135,0500 yen)
Reporting by Daniel Leussink; Edited by David Dolan