TOKYO - In an unusually blunt warning for a Japanese company, Nissan Motor Co. said late last week that it would not meet its forecast for operating profit for the fiscal year ending March 31.
On Nov. 22, Nissan forecast a group operating profit for the year of ¥90 billion, or about $830 million at current exchange rates, down 18 percent from the previous fiscal year.
Nissan did not say when it would revise the earnings forecast, or by how much, but cited weak sales in Japan stemming from 'increased competition and a poor Nissan model mix.'
In Japan, Tokyo Stock Exchange rules require companies to revise their earnings forecasts if the expected variance between actual profits and forecast profits exceeds 5 percent, or if the variance between actual and forecast revenue exceeds 10 percent.
Most Japanese companies, however, do not announce such revisions until after the fiscal year ends, shortly before they release their results.
In its statement, Nissan noted that preliminary Japan-market sales figures for January show its sales off 5 percent from a year earlier even as the overall market, excluding minivehicles with engines smaller than 660cc, is up 2.8 percent.
In other developments, a Nissan spokeswoman confirmed that the company is preparing to sell its aerospace operations but declined to say to whom. She also declined comment on a report that Nissan will consolidate its steel purchases to three suppliers.
While confirming the planned aerospace sale, spokeswoman Kaori Tsuji said the company 'could not comment on who we are negotiating with.' The daily Nihon Keizai Shimbun reported that Nissan would sell its aerospace business to Ishikawajima-Harima Heavy Industries Co. by this summer for slightly more than 40 billion, or about $369 million at current exchange rates.
Separately, the Nikkei Sangyo newspaper reported that Nissan will limit its steel suppliers to three companies. The newspaper said Nissan will split its annual steel purchases of approximately 1 million tons so that 60 percent will come from Nippon Steel Corp., 30 percent from Kawasaki Steel Corp. and 10 percent from NKK Corp.
NKK has long-standing ties to Nissan as a fellow member of the Fuyo Group connected to Fuji Bank Ltd. According to the report, NKK is threatening to curtail its fleet purchases of Nissan cars in retaliation.
Such mutual back-scratching, with suppliers buying cars from major automaker customers, has been the norm in Japan for decades. As Nissan trims its supplier ranks, therefore, its sales may suffer.