Strong sales boosts Nissan profit for quarter
TOKYO – Nissan Motor Co.’s profit climbed 8 percent in its second fiscal quarter as strong sales around the world offset rising raw material costs and discount incentives to sell cars in North America, Japan’s second biggest automaker said Friday.Nissan reported group net profit of 125 billion yen ($1 billion) for the July-September period, up from 115.6 billion yen the same period a year ago. Sales jumped 11.5 percent to 2.3 trillion yen ($20 billion) from 2.1 trillion yen.But its operating profit dropped 5.5 percent to 205.2 billion yen ($1.8 billion), reflecting the effect of the rising costs of incentives and materials. Its net income was higher in part because a special charge for plant closures depressed results a year ago.Tokyo-based Nissan, second only to Toyota Motor Corp. among Japanese automakers, has been on a roll since embarking on a revival under the leadership of Chief Executive Carlos Ghosn, who was sent in by alliance partner Renault SA of France in 1999. Before his arrival, Nissan had lost money for years, but the company has returned to profitability in recent years.Earlier this month, Nissan said it had reached a key target in its turnaround plan – called “Nissan 180″ – by increasing its annual global sales by 1 million vehicles compared to three years ago.For the year through September, the company sold 3.67 million vehicles worldwide – more than 1 million from the 2.6 million vehicles sold in the fiscal year ended March 2002.”At the end of September, we declared the revival of Nissan complete,” Ghosn, who also heads Renault, told a news conference. “Nissan continues to move at the right pace in the right direction.”Nissan kept its financial outlook unchanged for a profit of 517 billion yen ($4.5 billion) on sales of 9 trillion yen ($78 billion) for the full fiscal year through March 2006.In its latest quarter, Nissan sold 955,000 vehicles worldwide, up 15.6 percent from the previous year.Prospects were bright for coming years, Ghosn said, because 10 new models will go on sale next year and 12 more in 2007, he said. Weighing as risks were incentives especially in North America, rising interest rates and surging oil prices.Like other Japanese automakers, Nissan’s good fortunes come at a time when U.S. counterparts General Motors Corp. and Ford Motor Co. are losing money and struggling to maintain market share in the United States.GM, the world’s largest automaker, said last week it lost $1.6 billion in the July-September quarter, while Ford lost $284 million. Earlier this week, DaimlerChrysler AG reported a $910 million profit for the quarter.Ghosn acknowledged GM’s problems could offer some opportunities for Nissan when asked whether GM’s woes were good news or bad news for his company.But he said a major automaker’s troubles could rock the entire industry, noting that Delphi Corp., a parts supplier which was spun off from GM, has filed for bankruptcy. Delphi also supplies other automakers, including Nissan, Ghosn said.”It’s a risk for the whole industry,” he said.Atsushi Kawai, analyst at Mizuho Investors Securities in Tokyo, warned that incentives may be eroding Nissan’s earnings and noted he had expected profits to be much better. The second half is likely to remain tough for Nissan, and its results aren’t as positive as Toyota’s or Honda’s, he said.”The numbers are bad,” said Kawai. “Nissan tried too hard to sell an additional million vehicles, and that hurt profits.”While acknowledging that the business environment remains tough for all automakers, Ghosn said the interest in fuel efficient cars among American drivers with rising oil prices is an advantage for the Japanese carmakers like Nissan that specialize in cars that deliver better mileage.For the fiscal half-year, Nissan posted profit of 230.7 billion yen ($2 billion), down 3.4 percent from 239 billion yen the same period a year ago. The dip came mainly from factors unrelated to its auto operations such as the introduction of a pension plan and charges related to a change in Japanese accounting standards, the company said. Fiscal first-half sales soared 12 percent to 4.49 trillion yen ($39 billion) from 4 trillion yen a year ago.During the April-September period, Nissan boosted sales in Japan, the United States, Europe, China, the Middle East and Mexico, Ghosn said.Sales expenses, including incentives, cost Nissan 30.7 billion yen ($266 million) during the first half, but a favorable exchange rate added 10.4 billion yen ($90 million), he said.Nissan shares, which have recently hovered at about the same level they were a year ago, rose nearly 1 percent to close at 1,222 yen ($11) on the Tokyo Stock Exchange, where trading ended before Nissan announced earnings.