Nissan Says Profit Drops on Weaker Product Mix, But Keeps Forecast
Nissan Motor, Japan's third-largest automaker, posted a 3.2% drop in quarterly operating profit as a worsening product mix favoring smaller, cheaper cars hit margins, and kept its full-year forecasts unchanged despite the weaker yen.
Carlos Ghosn, chief executive of both Nissan and controlling shareholder Renault, warned investors last month that first-quarter results would soften due to an industry-wide decline in sales of SUVs and other light trucks in the United States, its most profitable market.
Nissan's U.S. sales of light trucks, including the Titan pickup and Pathfinder SUV, skidded 12% in the first half of 2007 as high pump prices hurt demand for gas-guzzlers. Passenger car sales, meanwhile, rose an adjusted 17% thanks partly to the addition of the Versa subcompact.
Still, Nissan is expected to be alone among Japan's top automakers to report a quarterly drop in operating profit. Rivals Toyota Motor and Honda Motorare expected to weather pricier commodity costs and intensifying price wars with the weaker yen, cost cuts and brisk overseas sales.
In the April-June first quarter, Nissan made an operating profit of 148.44 billion yen ($1.23 billion), lagging a consensus estimate of 152.6 billion yen in a survey of six brokerages by Reuters.
Net profit sank 16% to 92.31 billion yen due to difficult comparisons from the year earlier when it had an exceptionally low tax rate. Revenue rose 11% to 2.446 trillion yen.
Operating profit would have suffered a bigger fall without a hefty one-off warranty charge a year earlier for engine troubles in North America.
For the business year to March 31, 2008, Nissan kept its operating profit forecast at 800 billion yen and net forecast at 480 billion yen. It left its dollar and euro exchange rate assumptions at 117 yen and 148 yen, respectively.
The dollar is trading at 120.6 yen and the euro at 166.6 yen.
Shares in Nissan, which was first to report quarterly results among Japanese automakers, gained 4.6% during the three months to June 30, compared with a 5.8% rise in Tokyo's transport sector subindex.