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Nissan reports first annual loss in a decade

Nissan Motor Co., Japan’s No. 3 automaker, reported a $2.4 billion (233.7 billion yen) annual net loss, its first yearly loss in a decade.
/ Source: The Associated Press

Nissan Motor Co., Japan’s No. 3 automaker, reported a $2.4 billion (233.7 billion yen) annual net loss, its first yearly loss in a decade — but expects the red ink to lessen in the current fiscal year.

“We are beginning to see some signs of improved access to credit, the impact of government stimulus packages and a gradual return in consumer confidence,” said Chief Executive Carlos Ghosn, while remaining cautious about the future.

“The crisis is ongoing and market conditions are still volatile,” he told reporters at Nissan’s Tokyo headquarters.

It was the first time Nissan had sunk to an annual loss since Ghosn took the helm a decade ago under an alliance with Renault SA of France, and wrested Nissan out of near-bankruptcy.

For the January-March quarter, Nissan lost $2.8 billion (276.89 billion yen).

Chief Operating Officer Toshiyuki Shiga blamed the loss on three factors — the U.S. financial crisis, the global slowdown and the strong yen. The fiscal fourth quarter loss was larger than the annual loss because the automaker turned a profit in earlier quarters.

But Nissan projects a smaller loss of 170 billion yen for the fiscal year through March 2010, he said.

The automaker had recorded a 482.3 billion yen profit for the previous fiscal year ended March 2008. The latest annual results were better Nissan’s projection in February for a 265 billion yen loss. Analysts’ forecasts were close to Nissan’s.

But Mamoru Katou, auto analyst with Tokai Tokyo Research, said Nissan was controlling losses merely by cutting costs and compared to other automakers had fallen behind on hybrids and other models that can build toward future growth.

“It needs to have more hybrids fast,” he said. “Consumer tastes have definitely shifted toward ecological vehicles.”

Nissan already sells hybrids in the U.S., but buys its hybrid system from Toyota. Nissan has focused more on electric vehicles, although it plans to introduce models packed with its own hybrid system next year.

Demand for such green cars are expected to pick up as governments, including the U.S. and Japan, introduce incentives for consumers switching from gas-guzzlers to green cars.

Also Tuesday, Nissan said it will start making electric vehicles at its Oppama Plant in Yokosuka, just south of Tokyo, from the fall 2010, with production capacity of 50,000 vehicles a year. Nissan plans to boost production toward what it calls “mass-marketing” levels in 2012.

Nissan is not the only Japanese automaker battered by the global slowdown.

Also Tuesday, Mazda Motor Corp. Japan’s fifth biggest automaker, reported a 71.5 billion yen loss for the fiscal year.

Toyota Motor Corp., the world’s largest automaker, has fared worse, racking up a 436.9 billion yen annual loss, partly because of its size and its past success that had fueled an ambitious expansion drive. It projects an even bigger loss for this fiscal year.

Honda Motor Co., by contrast, has done better, managing to stay in the black for the fiscal year with a 137 billion yen profit.

Nissan’s annual sales plunged 22 percent to 8.437 trillion yen. That was also better than its initial sales forecast.

Worldwide, Nissan sold 3.4 million vehicles, down 9.5 percent from the previous year, as sales dropped in the U.S., Japan and Europe.

But sales grew in China, according to Nissan, which makes the March subcompact and Infiniti luxury models.

Nissan said it expects to sell even fewer vehicles — 3.08 million — in the current fiscal year.

Ghosn said the priorities for the year ahead would be to preserve cash, reduce losses and take advantage of the alliance with Renault.

He said Nissan remains focused on its own turnaround and was not entering any projects or partnerships with General Motors Corp.

The deal that Nissan has with Chrysler LLC to produce vehicles for each other will be reviewed because Chrysler may emerge from bankruptcy a “different” entity, Ghosn said. Fiat is acquiring a 20 percent stake in Chrysler.

Ghosn expressed hopes that demand would pick up and the yen’s strength would abate.

The global auto industry is undergoing drastic change, and the key to determining the winners is profitability, not just excellent technology and qualified engineers, he said.

“It is unclear who is going to emerge the winner,” he told reporters.

Nissan shares fell nearly 1 percent to 510 yen. Earnings were announced shortly after trading closed in Tokyo.