Nissan Motor Corp. (NASDAQ: NSANY), Japan's third-largest automaker, announced this morning higher fourth quarter profit, but forecast a decline in profit for the current year, blaming an unfavorable rising yen and soaring material costs.
Nissan Motor announced that its profit during the quarter jumped 67% to 137.6 billion yen ($1.3 billion). And its income figures were definitely something to cheer about. During its fourth quarter last year, the company had a profit of 82.2 billion yen. Excluding one-time "fifth-quarter" numbers, the company's earnings figures would have showed a surge of 95%.
Despite the positive results, the automaker isn't optimistic about its future earnings and issued a gloomy outlook. The company expects net income for the current year to drop 30% to 340 billion yen ($3.3 billion), which is below the 368 billion yen that analysts at Factset Research predicted. Nissan cited unfavorable currency exchange, higher commodity and energy prices, and increased material expenses.
Nissan's pessimistic guidance is driven by the challenging market conditions. Rival Toyota Motor Corp. (NYSE: TM) also warned it expects its first annual profit decline in seven years. While Toyota predicted a drop of 27% for its profit, Honda Motor (NYSE: HMC) joined the negative side too and anticipated a plunge of 18% in its profit for the current fiscal year.
Given the current weak economy and traders' growing worries about a recession, we won't be surprised to hear even more bad news coming from the major automakers.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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