Nissan Motor Co, Japan's third-largest automaker, fell to the lowest in more than five years after profit declined more than analysts estimated, as it wrote down the value of leased vehicles. Three brokerages cut their price targets for the stock.
Shares of Nissan fell 40 yen, or 4.8 percent, to 788 yen at the 3 pm trading break on the Tokyo Stock Exchange.
Nissan cut the estimated resale value of leased vehicles in the US by 42 billion yen ($391 million) as $4 gasoline and a slumping housing market eroded demand for trucks and sport-utility vehicles, it said on Aug 1. Chief Executive Officer Carlos Ghosn is cutting jobs and production in North America, Nissan's biggest market, and turning to China and Russia for growth.
"We see an increasing possibility for earnings to miss management's plan" because of higher raw materials costs and slowing markets in the US and Western Europe, Tatsuo Yoshida, an analyst at Tokyo-based UBS Securities Japan Ltd, said in a report to clients on Aug 1. Yoshida cut the 12-month price target on Nissan shares 20 percent to 800 yen from 1,000 yen "based on reduced earnings power".
Yoshida maintained his "neutral" rating on Nissan on Aug 1. Merrill Lynch Japan Securities Co and Credit Suisse Securities (Japan) Ltd also cut their price targets on Nissan 15 percent to 780 yen and 18 percent to 900 yen, respectively.
Toyota, Honda slump
Net income dropped 43 percent to 52.8 billion yen for the three months ended June, from 92.3 billion yen a year earlier, Nissan said. Sales at Nissan, 44 percent owned by Renault SA, fell 4.1 percent to 2.35 trillion yen. Operating profit, or sales minus the cost of goods sold and administrative expenses, plunged 46 percent.
Nissan's earnings slide was followed by a second-quarter loss at General Motors Corp. The Detroit-based automaker on Aug 1 reported a quarterly loss of $15.5 billion, the third biggest in its 100-year history, because of plunging US sales and the declining value of leased vehicles. GM shares slumped 7.6 percent to $10.23 in New York Stock Exchange composite trading.
Shares of other Japanese carmakers also slumped. Honda Motor C, Japan's second-largest automaker, fell 5.8 percent to 3,280 yen. Toyota Motor Corp, Japan's biggest automaker, slumped 3.3 percent to 4,460 yen. Toyota plans to report earnings on Aug 7.
Source:China Daily/Agencies
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