Nissan hit by strong pound

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The Independent Online
PROFITS AT Nissan's Sunderland car plant fell by 70 per cent last year because of the strength of sterling and are not expected to recover markedly this year, writes Michael Harrison.

The Japanese car maker said yesterday that Sunderland earned only pounds 23m last year compared with pounds 77.3m in 1997, despite becoming the UK's biggest car-producing plant with output of just under 290,000 vehicles.

Out of the pounds 54m decline in profits, about pounds 50m was attributable to the strength of sterling, which affected Nissan's sales in Europe and also enabled importers to undercut it in the UK market.

More than two-thirds of Sunderland's output is for export markets. This year production is forecast to drop slightly to 265,000 because it is phasing out the old Primera model and introducing a new one. But next year output will shoot up to 350,000 when Sunderland begins production of a third model - the new medium-sized Almera - in addition to the existing Primera and Micra.

News of the drop in Sunderland's profits came as the parent company announced a net loss of Y27.7bn (pounds 145m) worldwide last year compared with a profit of Y14bn in 1997 and warned of a further 2,500 job losses this year in Japan.

However, Nissan's operation in the US moved back into the black with an operating profit of Y23bn compared with the previous year's loss of Y86bn. In Europe, Nissan made an overall profit of Y5bn (pounds 26m).