Nissan Confident to Hit Profit Goal

by : RyanThomas

The Nissan Motor Co. Ltd. is confident to hit its net profit target for the current fiscal year, Chief Executive Carlos Ghosn said last Thursday, after missing last year's target by about ten percent.

Last month, the automaker forecast net profit of 480 billion yen or $3.95 billion for the year to end March next year. Asked if Nissan would hit that target, Ghosn said: "We are pretty confident, but it's only two months into the fiscal year so we'll have to see."

Japan's No.3 automaker missed its $4.4 billion profit target for 2006-07 by a tenth and its fourth-quarter profit dropped by about half as the company announced employee buyout programs in both Japan and in the United States.

After rescuing the near-bankrupt Nissan into one of the industry's most profitable automakers, Ghosn is under pressure to show he can maneuver the company to sustainable and steady growth. Nissan was overtaken by the Honda Motor Co. Ltd. as Japan's second-biggest automaker last year. It also lags larger domestic rivals in brand image after having lost years of aggressive research and development in the late 1990s as it strived to stay buoyant in the auto industry.

Ghosn, speaking to reporters, said that he expected industry-wide sales in the United States, its biggest market, to grow weaker this year. The world's biggest car market is expected to be tough as a weak housing market and higher gasoline prices keep enthusiasts away from showrooms.

The Japanese automaker's sales in the United States plummeted more than eleven percent on an adjusted basis in April and were roughly flat in January to April. Toyota, which passed the General Motors Corp. as the world's largest automaker in the first quarter, posted in April its lowest monthly sales increase since August 2004. Overall U.S. light vehicle sales slipped to an annualized rate of 16.27 million units in April, down from 16.69 million in 2006, according to tracking service Autodata Corp.

Ghosn, who is also Renault SA CEO, said that he had not had any talks with Cerberus Capital Management over either an alliance with Chrysler Group or a separate deal for Nissan. Cerberus earlier acquired DaimlerChrysler AG's Chrysler Group and other private-equity firms have been funding auto industry consolidation. The acquisition of Chrysler, early this month has $7.4 billion consideration.

But Ghosn foresees auto industry consolidation. In 2006, he led an effort to forge an alliance with GM in which Nissan/Renault could take up to a 20 percent stake in the Detroit automaker. But the talks ended when GM sought payment for what it said would have been a disproportionate share of the benefits of an alliance.

The U.S. market is critical for Nissan and Japanese competitors in terms of profit and sales volume growth. This is why the automaker is pretty cautious so as not to spoil sales. Like the sifting power of , the automaker is thoroughly examining its strategies.