Nissan’s operating margin to return to pre-crisis levels of about 6 to 7%

Article by Christian A., on August 27, 2010

Nissan Motor Co.'s operating margin is expected to soon return to pre-crisis levels of about 6% to 7% as China, Russia and other emerging markets contribute more to its earnings, according to CEO Carlos Ghosn. Last Wednesday, Nissan, held 43% by Renault SA, announced a much improved balance sheet and a return to the black for the year ended March 31.

However, analysts say that the company gave a conservative outlook for the new year. With an assumption for a stronger yen against the dollar and euro (at 90 yen and 120 yen, respectively), Nissan predicts an operating profit of 350 billion yen ($3.75 billion) for the 2010-2011 business year, for a profit margin of 4.3%.

Ghosn said that this is down from a peak of 11% to 12% several years ago but he says that this may not be so bad, considering the depressed US market and unfavorable exchange rates last year.

At Nissan's headquarters in Yokohama, south of Tokyo, Nissan told reporters that the Japanese makers will return to a high level of profit regardless of what happens in the US because part of their profit will come from China, Russia, India, and South America.

In particular, Nissan's potential for profit in the midterm is "big," according to Ghosn who cited its aggressive expansion plans in China, Russia and India in the near term.

He further clarified that last year, the company had a 4% (operating margin) with the US market at 10.7 million cars and the yen at 93 (to the dollar.) He pointed out that 6 or 7% "is not something that is really very far in the horizon." [via autonews - sub. required]

Topics: nissan, profit

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