Nissan Motor (NSANY) maintained its full-year profit outlook, insisting that it could sufficiently boost its earnings power sufficiently to offset a strong yen and slowing growth in major markets.
"Despite strong headwinds in the first half, particularly on the FX front, we have delivered solid business performance and financial results leveraging improved operational efficiency," co-CEO Hiroto Saikawa said. "Looking forward, we are committed to growing our business in a sustainable way delivering solid earnings, positive automotive free cash flow and attractive shareholder returns."
The Tokyo-based maker of the Leaf and Note models maintained its full-year earnings guidance for full-year net profit of ¥525 billion ($5.03 billion) on sales of ¥11.8 trillion but cautioned that sales in key markets in the U.S. and China would slow in 2017.
Nissan joins the ranks of Honda Motor (HMC - Get Report) , which raised its profit outlook on October 31, attributing part of the boost to cost reduction efforts. Rival Mazda (MZDAY) , however, which cut its profit outlook last week, blaming the downgrade solely on an unexpected strong yen.
That said, Nissan saw second quarter net profit fall 15% year-on-year to ¥146 billion on a 12% sales drop to ¥2.67 trillion. That compares with the consensus of 22 analysts compiled by FactSet of ¥125 billion and ¥2.8 trillion.
The automaker, led by CEO Carlos Ghosn, admitted that cost reductions and other streamlining efforts had been enough to fully offset weaker sales and profits caused by a strong yen in the second quarter.
However, the company insisted that it saw significant improvements in efficiency.
Operating profit margin stood at 6.4% in the first half of the year, down from 6.7% in the previous year. On a constant currency basis, however, the margin jumped to 8.5% from 6.7%, the company said.
Reductions in marketing and production costs represented much of the cost reductions.
Meanwhile, Nissan reiterated R&D spending would increase 5.3% annually in the full year.
For the full year, Nissan assumes ¥105.0 against the dollar and ¥120.0 against the euro. That compares with ¥120.2 and ¥132.6 in the previous year.
Nissan shares closed at ¥1,029 each Monday in Tokyo, up 1.73% on the session. However, the shares have fallen 18% over the past 12 months.