Nissan Motor slashed its annual operating profit estimate by 14.5%

Nissan Motor slashed its annual operating profit estimate by 14.5% on Friday, citing lower-than-expected vehicle sales and other factors.

Japan’s third-largest automaker by volume now estimates an operating profit of 530 billion yen ($3.43 billion) instead of 620 billion yen for the year that ended in March. Net profit is now estimated at 370 billion yen instead of 390 billion yen, reports Reuters.

Nissan said its vehicle sales would total 3.44 million vehicles for the year, lowering its estimate just two months after a revision down to 3.55 million units partly due to a weak performance in China.

CEO Makoto Uchida told a press conference that the impact of intensifying competition in the U.S. market, the New Year’s Day earthquake on Japan’s Noto peninsula and disruptions to shipping in the Red Sea hurt its sales.

Nissan’s quarterly sales performance was also hurt by stronger-than-expected U.S. demand for hybrids, Uchida said, a trend that has especially benefited rival Japanese automaker Toyota (7203.T), opens new tab.

The profit forecast downgrade was partly due to Nissan giving support to suppliers after finding that it would be hard to hit its original sales targets for some models in the latest update to its mid-term business plan, Uchida said.

He added that this support was not related to Japan’s fair trade watchdog, which called out Nissan last month for a violation of the subcontractor act by underpaying 36 suppliers by about 3 billion yen over a roughly two-year period from January 2021.

Nissan’s new expected full-year operating profit for the financial year that just ended would still be 40% higher than a 377 billion yen profit in the prior one that ran to March 31, 2023.