Nissan Motor posted on Friday a much worse-than-expected 46 percent drop in quarterly operating profit, and stuck to its annual forecasts despite a severe downturn in the U.S. market.
Nissan, Japan's No.3 automaker controlled by Renault is forecasting its lowest operating profit in seven years due to a weaker dollar, high raw material prices and sinking U.S. demand.
A sales slowdown in the United States, its single biggest market, has deepened in recent months, with Chief Executive Carlos Ghosn last week forecasting total volumes near 14.3 million vehicles in 2008, the lowest level in more than a decade.
Nissan's vehicle sales grew 6.9 percent in the first quarter thanks to brisk sales of the Qashqai crossover and Versa subcompact.
But Nissan , like many of its rivals, faces falling demand for gas-guzzling vehicles and has been forced to significantly reduce production of light trucks.
Underscoring the severity of the U.S. market, Nissan this week said it would offer buyouts at two plants in Tennessee in the hope of eliminating 1,200 workers, or about one-fifth of its headcount.
It is operating far below capacity in North America as sales of pickups and other big vehicles slump.
Nissan also faces pressure from the fall in the resale value of big, used cars and said on Friday, a 42 billion yen ($390 million) provision against that risk was a major reason behind the big profit fall.
Nissan has a relatively high exposure to leased light trucks, the value of which has fallen sharply in just the past few months.
April-June operating profit fell to 79.95 billion yen, against an average estimate of 101.9 billion yen in a Reuters poll of nine brokerages.
First-quarter net profit fell 43 percent to 52.8 billion yen on revenues of 2.347 trillion yen, down 4.1 percent.
For the business year to end-March 2009, Nissan kept its forecast for an operating profit of 550 billion yen and net profit of 340 billion yen, both down 30 percent from last year.
Consensus forecasts from 18 brokerages call for an operating profit of 586 billion yen and net profit of 364 billion yen.
Shares of Nissan have fallen 32 percent in the year to date, worse than Tokyo's transport sub-index ITEQP. which has lost 21 percent.
Before the results, Nissan ended down 1.4 percent at 828 yen.