Nissan’s profit drops – Bound to reduce production and employment?

August 5th, 2008 admin

Nissan Nissan Motor Company, Limited, Japan’s third-largest automaker, announced 1st August, Friday its second-quarter, April-June, net profit dropped 42.8% to 52.8 billion yen(around $500 million Canadian) beat by a rising yen with accounting provisions for the declining charge of leased automobile as 42 billion yen or $402 million. At the same time sales fell 4.1% from a year earlier to 2.3 trillion yen or $22.4 billion. Though Nissan ensured its July vehicle sales increased 8.5% during a month on the other hand Toyota said an 11% sales decline.

In spite of a slump in demand in the U.S.A. and Japanese car markets with soaring material costs, production costs as well as maintenance costs Nissan kept its revenue forecasts for the running fiscal year through March 2009 with a net income of 340 billion yen or $3.3 billion. Vehicles sales are expected to stay at 10.4 trillion yen or $99 billion.

Nissan’s overall sales for the April-June quarter increased 6.9% from a year earlier to 936,000 automobiles. Alternatively its sales in the U.S. car market fell 1.5% to 253,000 vehicles. The company said the U.S car market decreased by 12% during the quarter but North American sales edged up 1.9% to 330,000 vehicles. On the other hand sales in Japan fell 2.2% to 148,000 vehicles though that time in Europe were flat at 156,000 vehicles. The company said foreign exchange losses around to 54.7 billion yen or $523 million in the quarter. And it shares fell 1.4% to 828 yen Friday at Tokyo in Japan.

Although its July sales were better than any other major automobile company in the U.S.A. but this country’s unstable car market is dragging down Nissan Motor Company, Ltd. income and bound the company to condense production and reduce entire employment. That’s why Nissan Motor Co. announced that it would reduce a shift of truck production at its plant in Smyrna and Tenn. The company also offers buyouts worth $100,000 to $125,000 to workers at Smyrna, Decherd as well as Tenn. Nisssan expects 1,200 employees will accept the offer.