Nissan weighed down by lofty yen

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Nissan stocks fall
Photo Credit to AllWorldAuto

A weak dollar and strong yen has Nissan restating its profits to miss its estimates by as much as 30%. From weak sales in the US due to currency prices and a weak economy in general, Nissan is showing its reliance on the US market. Net income will fall from 482.3 Billion yen last year to a paltry 340 billion yen in the fiscal year that ended March 31.

All Japanese automakers feel the pain

The financial performance has little to do with the ongoing operations of Nissan. Both Honda and Toyota have also taken similar steps to lower earnings expectations as the yen continues to gain against the US Dollar. All eight of Japan’s car makers are expecting earnings to fall this year with the rising yen. Japanese automakers did particularly well last year with a devalued yen keeping exports cheap and guaranteeing that Japanese cars were some of the cheapest on the lot.

US companies show profits

This news also comes after the same quarter in which Ford showed a surprise profit of $100 Million. It is likely that the company is benefiting from high costs overseas, allowing it to compete with foreign cars that do not come with the same pension cost baggage.

For the individual investor, it is comforting to see for that the changes are not within one company, but instead the dynamics of an entire market. Though Nissan is posting lower earnings, so are the remainder of Japanese automakers, and they all have a similar explanation: their exports are becoming more expensive to the rest of the world as the yen heats up.

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