Japanese auto giant Nissan said Thursday its net profit fell nearly 60 percent in the three months to June as pressures like a lockdown in Shanghai and chip shortages weighed on the business.
The company, which in May reported positive net income for the first time in three years, said it posted net income of 47.1 billion yen ($347 million), down 58.9 percent from a year earlier .
The slump was also the result of a one-off boost in the first quarter of last fiscal year when Nissan unloaded Daimler sales.
But the company said it faced a number of headwinds.
“During the first quarter, the extremely challenging business environment put pressure on earnings,” Nissan said in a statement.
“Production was constrained by the lockdown in Shanghai due to the spread of the novel coronavirus and semiconductor supply shortages, while external factors such as rising commodity prices and logistics costs also amplified their impact.”
“The pandemic understandably remains a priority challenge,” Chief Operating Officer Ashwani Gupta told reporters.
“At the same time, we have had a tailwind from favorable exchange rates,” he added, citing the yen’s recent slide against the dollar, which is helping to inflate overseas earnings for Japanese companies.
The company kept its full-year guidance unchanged, projecting net income of 150 billion yen.
However, that would be a 30.4 percent slump from last year’s 215.5 billion yen.
Operating profit fell 14.2 percent to 64.9 billion yen, but beat analyst estimates, according to Bloomberg.
Even before the pandemic and Ukraine conflicts, the company was on a rollercoaster ride.
The company has been struggling with rising distribution costs and is implementing a plan that includes model trimmings, cost cutting and restructuring.
“Nissan is making strides after a past excessive expansion policy in North America that caused it to lose money,” said Satoru Takada, auto analyst at TIW, a Tokyo-based research and advisory firm.
“Profits declined year-on-year compared to the robust recovery in the April-June quarter of last year as the impact of the pandemic and cost-cutting efforts recovered,” Takada told AFP ahead of the earnings report.
“Nissan’s challenge is to minimize the impact of the chip shortage and sell attractive new cars, including those recently launched,” he said.
The automaker has also been rocked by the saga surrounding its former boss Carlos Ghosn.
The one-time car tycoon was arrested in Japan in 2018 and charged with financial misconduct, which he denies, but jumped on bail and fled to Lebanon the following year.
A Tokyo court in March gave former Nissan executive Greg Kelly a six-month suspended sentence over allegations that he helped his boss attempt to hide earnings.
The company had pleaded guilty to another count and was ordered to pay a fine of 200 million yen.
In April, French authorities issued an international arrest warrant for Ghosn, who has been living in Lebanon since his daring escape from Japan, on charges including corruption, misappropriation of company assets and money laundering.
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