Crisis-hit Japanese carmaker Nissan upgraded its annual outlook Wednesday, projecting a return to the black, after a strong first-quarter performance fueled by a recovery from the impact of the coronavirus crisis.
However, the firm warned that although it was upbeat, there were still headwinds while analysts warned a chip shortage could also pose problems and it faced “a crucial year.”
The firm has faced a series of trials in recent years, from weak demand during the pandemic to the fallout from the arrest of former boss Carlos Ghosn, now an international fugitive in Lebanon.
But CEO Makoto Uchida hailed a “strong performance in the first three months of our new fiscal year” as the company pursues a restructuring program.
For the three months to June, Nissan logged a 114.5 billion yen net profit, compared with a 285.6 billion yen net loss in the same period last year.
It also tipped stronger annual sales after its quarterly sales surged 71% to 2.0 trillion yen, but Uchida warned uncertainty would persist for the rest of the year.
Nissan now forecasts a 60 billion yen ($546 million) net profit for the year to March 2022, compared with its earlier estimate of a 60 billion yen net loss. It last made a profit in 2018-19, a fiscal year it had gone more than halfway thorugh under Ghosn before his October 2018 arrest.
“We will carefully monitor and manage potential risks as we continue to improve quality of sales and maintain financial discipline,” Uchida said, predicting a recovery in the second half driven by the release of new models in core markets.
In the year to March 2021, Nissan trimmed its annual loss after weathering the impact of virus lockdowns but stopped short of turning a profit.
Uchida told shareholders in June: “Our businesses are on a recovery path. We are working to avoid a net loss.”
But while Nissan could still return to the black in the current fiscal year, analysts say the global chip shortage could cloud its outlook.
Supply disruptions have compounded the mismatch between demand for and availability of chips, a key component in modern cars.
“If Nissan can steadily reduce costs, sell new models well and subdue the impact of the semiconductor shortage, profitability could be in sight,” said Satoru Takada, an auto analyst at Tokyo-based research and consulting firm TIW. “Nissan is facing a crucial year,” he added.
Analysts are also focusing on the recent shift to electric vehicles among leading automakers owing to growing concerns over emissions.
In early July, Nissan unveiled plans to build a massive battery factory in northeastern England, where it will also manufacture a new electric vehicle.
Rival Toyota, which pioneered hybrid cars, has announced plans for its first global line-up of battery electric vehicles, as other carmakers have pulled ahead in electrification.
Nissan has recovered from the effects of the pandemic more slowly than its rivals.
Even before the global crisis, the firm was struggling with increasing sales costs and the ongoing saga surrounding its former chief Ghosn.
The one-time auto tycoon was detained in Japan, accused of financial misconduct charges that he denies, but jumped bail and fled to Lebanon at the end of 2019.
He remains at large, but his one-time associate Greg Kelly and Nissan itself are facing court proceedings in Japan.
Earlier this month, an American father-son duo who helped Ghosn flee Japan were jailed by a Tokyo court, the first verdict handed down in Japan in the saga.
Shares of Nissan have jumped more than 40 percent over the past 12 months and closed up 3.88% on Wednesday ahead of the earnings announcement.
Toyota, which overtook Volkswagen last year as the world’s biggest-selling automaker, releases its earnings next Wednesday.