Nissan Earnings Outperform Estimates On High China And US Sales
By: Micheal Kaufman
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Nissan Motor Co., Ltd. (ADR) (NSANY) revealed its quarterly results for the second quarter of fiscal year 2014 (2QFY14, ended June 30, 2014) earlier today. The Japanese auto manufacturer’s profit beat consensus estimates, as shipments by the Yokohama-based automobile company to China and the US increased.

Nissan’s net income increased 37% year-over-year (YoY) to ¥112.13 billion ($1.1 billion), which topped the consensus estimate of ¥84.3 billion by 33%. On the other hand, revenues increased 11% to ¥2.47 trillion ($24.2 billion), and beat analysts’ estimate of ¥2.26 billion by over 9%. Nissan is the first major Japanese auto-manufacturer to report its quarterly earnings, and the positive results on fellow Japanese automobile companies like Honda Motor Co Ltd (ADR) (HMC) and Toyota Motor Corp (ADR) (TM).

During the quarter, Nissan’s revenues from Asia and North America rose 19.1% and 10.4%, respectively, and the company has been able to outperform Toyota and Honda in both these regions. From the North American region, the company generated operating income of ¥51 billion, an increase of 22% YoY from ¥41.8 billion.

During the quarter, Nissan’s sales from China increased 21% to 283,000 units, primarily due to rising sale of the X-trail SUV. The company looks forward to getting a market share of 10% in the largest automobile market in the world by selling 1.4 million in the Chinese Republic. From the European region, the company reported operating loss of ¥1.6 billion as compared to a net operating loss of ¥6.7 billion, which indicates economic revival from the recession-hit region.

Nissan has also become a beneficiary of the return of Datsun, which was taken offline around three decades back, but recently revived it for the emerging markets around the world. The brand received heavy sales in India, which also had a positive bearing on quarterly financial results. The company saw domestic sales decline 0.5% because of 300 basis points (bps) rise in domestic sales tax to 8% a couple of months ago.

Nissan is targeting an operating margin of 8%, and an increase in its global market share. It expects global deliveries to increase 8.9% to 5.65 million by the end of FY14, which will give it a market share of approximately 6.7%. The automaker expects revenue to increase 3% YoY to ¥10.79 trillion, which is 73bps lower than consensus estimates of ¥10.87 trillion.

Since the start of the year, Nissan’s stock price has picked up 15.85% and has outperformed the First Trust NASDAQ Global Index Fund (CARZ), which has risen 2.52% only.

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