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May 12, 2021

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Nissan cuts loss, outlook clouded

Crisis-hit Japanese carmaker Nissan said yesterday it had trimmed its annual net loss but warned its outlook remained clouded by the global chip shortage that has hit the auto industry.

The firm has faced a series of trials, from weak demand during the pandemic to the fallout from the arrest of former boss Carlos Ghosn, now an international fugitive after jumping bail and fleeing Japan.

Nissan narrowed its net loss to 448.7 billion yen (US$4.1 billion) for the fiscal year to March, from a loss of 671.2 billion yen a year earlier, beating its own forecast.

“We are facing big business risks such as the semiconductor supply shortage and a surge in raw material costs,” CEO Makoto Uchida told reporters.

“We expect to face the impact mainly in the first quarter,” he said, adding that the company would continue to invest in sectors, including research and development.

For the current year, Nissan expects to stay in the red but move closer to profitability, projecting a net loss of 60 billion yen. The firm also forecast stronger sales for the current fiscal year, steadily recovering from the impact of coronavirus lockdowns.

Even as vaccine rollouts put the end of the pandemic within sight for the hard-hit auto sector, it is battling a chip shortage driven by a surge in demand for electronic devices during lockdowns.

Supply disruptions including a fire at a Japanese factory, an extreme cold snap in the United States and a drought in China’s Taiwan have compounded the mismatch between demand and availability.

Semiconductors are a key component in modern cars and the shortage has prompted Nissan to reduce production at home and furlough around 800 workers in Britain, Japanese media reports said.

Nissan has said its production has been affected but declined to provide details.

“Semiconductor supplies are expected to remain tight for now, because the global economic recovery from the coronavirus pandemic should further boost chip demand in many sectors,” said Yasuo Imanaka, chief analyst at Rakuten Securities.

“Nissan is on the path to recovery,” Satoru Takada, an auto analyst at Tokyo-based research and consulting firm TIW, said. “But the semiconductor shortage and growing shipping costs could pour cold water on its recovery.”

Sales fell 20.4 percent to 7.9 trillion yen in 2020-21 but are forecast to rise to 9.1 trillion yen in the current fiscal year.


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