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Nissan shares tumble 12% after guidance disappoints

FILE PHOTO: The logo of Nissan Motor Corp. is displayed the company's showroom in Tokyo

TOKYO (Reuters) -Nissan Motor Co shares slumped as much as 12.2% on Wednesday to their lowest in five months after the Japanese automaker's weaker-than-expected guidance for the current fiscal year.

Nissan defied expectations on Tuesday for a return to profitability in the year ending March 2022, as the global chip shortage and raw material price increases curb its recovery from a record annual operating loss.

The forecast by Japan's No.3 car maker by sales to break even for the year that began on April 1 was lower than a 241.7 billion yen ($2.23 billion) profit predicted by SmartEstimate.

Nissan CEO Uchida said on Tuesday that the automaker foresees an operating profit even as it faces a huge impact from business risks including semiconductor supply issues. He added that the company will give updates on its outlook guidance after the first quarter.

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Toshihide Kinoshita, analyst at SMBC Nikko, wrote in a note that Nissan's "somewhat conservative guidance" was within expectations as the automaker faces uncertainty as it tries to improve profitability, but its break-even guidance was a negative surprise.

"While global OEMs continue to post strong results, Nissan's slow recovery stands out, though the low-ball guidance may include an impression strategy while aiming for an upward revision ahead," Jefferies analyst Takaki Nakanishi wrote in a note, adding that the stock's fall will be short-lived.

"Despite no clear disclosure being made, we estimate that the company may have factored in about ¥150bn in risk factors as a basis of the breaking-even guidance," Nakanishi wrote.

The company said its annual operating loss in the year ended March 31 widened to 150.65 billion yen from a 40 billion yen shortfall in the previous year, though it beat its February forecast.

(Reporting by Eimi Yamamitsu, Hideyuki Sano; Editing by Muralikumar Anantharaman)