Japan's Nissan Motor Co. said Tuesday its net profits slumped for a
third straight quarter, hit by higher costs, weak domestic sales and
the popularity of cheaper cars.
The results showed that Nissan, now Japan's third-largest automaker
after being overtaken by Honda in 2006, continues to struggle after
suffering its first drop in annual profits under chief executive Carlos
Ghosn last year.
But the automaker maintained its forecasts for a recovery in profits for the full year, helped by new model launches.
Nissan, 44 percent owned by France's Renault, said net profit fell
16.2 percent in the three months to June from a year earlier to 92.31
billion yen (765 million dollars).
Operating profit dipped 3.2 percent to 148.44 billion yen while revenue gained 10.7 percent to 2.45 trillion yen.
Nissan said the earnings fall was the result of higher raw material
and tax costs and the popularity of less profitable smaller cars. That
offset the weaker yen which contributed about 30 billion yen to
operating profits.
“Our results for the first quarter were in line with our
expectations, considering factors such as weaker product mix, higher
raw material prices and the change in effective tax rate,” Ghosn said
in an earnings statement.
“We are encouraged by the momentum building globally for our new
products such as the Qashqai, Altima, Livina and Infiniti G35 (models)
and we maintain our forecast for the full fiscal year,” he added.
Ghosn, a Brazilian-born Frenchman of Lebanese decent, was the first
foreigner to head a major Japanese company and oversaw an impressive
recovery at Nissan, which was once on the cusp of bankruptcy.
But he has reduced the amount of time he spends at the Japanese
automaker and in April 2005 he also took the helm of French partner
Renault.
Nissan expects a 4.2 percent rebound in net profits in the year to
March 2008 to 480 billion yen and a 3.0 percent gain in operating
profit to 800 billion yen but revenue is forecast to fall 1.6 percent
to 10.3 trillion yen.
“We have high hopes for future growth in sales. We will be
introducing new models in various markets,” said Nissan corporate vice
president Joji Tagawa.
Analysts said there were signs of recovery at Nissan but whether
the automaker meets its forecasts may depend on the performance of the
yen.
“Exports have declined pretty sharply in the first quarter (to
June). We would expect that to improve in the second half and that
should help improve profitability,” said Kurt Sanger, auto analyst at
Macquarie Securities.
“How challenging those (profit forecasts) are in part depends on where the yen ends up,” he added.
Nissan sold 875,000 vehicles worldwide in the three months to June, up 5.9 percent from a year earlier.
“We are seeing more (demand for) smaller vehicles, which are less profitable than other vehicles,” Tagawa told reporters.
The company struggled in its home market Japan, where sales fell
6.9 percent to 147,353. Sales in North America dipped 0.9 percent to
302.63, with Europe and other regions driving overall sales growth.
The automaker blamed the weak performance in the United States
on falling truck sales which offset a rise in passenger vehicle sales.
Nissan shares closed up seven yen or 0.5 percent at 1,311 ahead of the results which were announced after the market closed.
