Nissan Motor Co <7201.T> bucked the optimistic trend among Japanese carmakers reporting quarterly earnings, leaving its annual profit forecast unchanged as sluggish sales weighed on its bottom line while others got a boost from a weakening yen.
The cheaper yen is improving the competitiveness of cars made by Nissan, Toyota Motor Corp <7203.T>, Honda Motor Co Ltd <7203.T> and other Japanese brands when exported to key markets such as the United States, and adding to pressure on their South Korean rivals.
Shares in South Korea's biggest carmaker Hyundai Motor Co <005380.KS> have fallen around 20 percent since the start of October; by contrast, Toyota shares are up more than 50 percent.
The revivifying effect of the falling yen is being felt throughout Japan's auto industry supply chain. Last week the world's second-biggest auto parts supplier Denso Corp <6902.T> - part-owned by Toyota - raised its annual profit forecast by 6.7 percent, saying the currency move would help it and its customers.
This week a South Korean finance ministry official warned of possible market intervention as the yen's slump against the won - by more than 22 percent last year and another 5.6 percent so far this year - was cutting into South Korea's export competitiveness.
Adding to the discomfort for the South Korean industry, in January Toyota's Camry model won the "Korea Car of the Year Award", industry press reported, bagging a prize usually handed to domestically made vehicles.
DRAMATIC IMPACT AT MAZDA
Among Japan's carmakers, currency moves are expected to have the most dramatic impact at Japan's fifth-ranked firm Mazda Motor Corp <7261.T>, which raised its operating profit outlook for the year ending in March by 80 percent.
Fuji Heavy Industries Ltd <7270.T>, which makes Subaru cars, lifted its operating profit outlook by 30 percent, Toyota by 10 percent, and Suzuki Motor Corp <7269.T> and Daihatsu Motor Corp <7262.T> by 8 percent apiece.
Nissan left its annual net profit forecast unchanged at 320 billion yen ($3.43 billion) and reported a 35 percent year-on-year drop in third quarter net profit, citing weak demand in Europe, China and the United States.
"Everyone faces the same yen moves, but for Nissan, there are regions in which it is selling below its target," said J.P. Morgan analyst Kohei Takahashi, referring to Japan and the United States.
"It has been running with aggressive targets for all markets. For the past year or two, that worked out. But now the company is entering a cycle in which it is underperforming its target," he said.
Nissan sold 4.94 million vehicles in calendar year 2012 globally, up 5.8 percent from 2011, but sales in China, its biggest market, fell 31.3 percent on average in October-December from a year ago after anti-Japan protests broke out in September in response to a dispute between the countries over the ownership of islands.
"Looking forward, we have important vehicle launches," Nissan Chief Executive Carlos Ghosn said in a statement. "We anticipate further yen correction. We have made swift organizational changes to help stimulate our business performance. And we remain confident that we will meet our full-year outlook."
In the United States, although its redesigned Altima sedan is selling well, Nissan is struggling to shift its older models such as the Rogue crossover SUV. The firm is expected to launch a redesigned Rogue, and in China a new-look Teana sedan, later this year.
Shares in Nissan have risen about 45 percent since mid-November on hopes the weakening yen will boost its bottom line, far ahead of the 30 percent rise in Tokyo's benchmark Nikkei index <.N225> over the same period.
Toyota, Honda and Mazda have also posted big gains.
The Japanese currency has lost around 20 percent of its value versus the dollar since October, which helps exporters because they can convert profits made overseas back into yen at a more favorable rate.
(Editing by Daniel Magnowski)