Nissan's profit drops by 16 percent

Japanese automaker Nissan said Tuesday its April-June quarter profit fell 16 percent because of higher material costs and taxes and a lack of new models.

Photo: Nissan's profit drops by 16 percent

Nissan's profit drops by 16 percent

Nissan said its group net profit for the fiscal first quarter slid to 92.3 billion yen (US$765 million; EUR 554 million) despite an on-year sales jump.

After marking a dramatic turnaround in recent years from near-bankruptcy under a 1999 alliance with Renault SA of France, Nissan Motor Co. has seen sliding sales amid a dearth of new models. Higher raw material costs and incentives, or discounts to woo buyers, have also hurt Japan's No. 3 automaker.

Quarterly sales climbed 10.7 percent to 2.45 trillion yen (US$20 billion; EUR 15 billion), it said in a statement.

Nissan kept unchanged its forecast for the fiscal year through March 2008 at 480 billion yen (US$4 billion; EUR 2.9 billion) profit, up more than 4 percent from the previous fiscal year. Last fiscal year, which ended March 31, Nissan reported its first on-year profit drop in seven years.

Nissan Chief Executive Carlos Ghosn, who is also CEO of Renault, said the Tokyo-based automaker was on the right track toward revival with models that have rolled in showrooms recently, such as the Altima and Infiniti G35, and more models in the pipeline. Nissan is launching 11 new global products this year.

"Our results in the first quarter were in line with our expectations," Ghosn said in a statement. "We are encouraged by the momentum building globally for our new products."

Nissan, which makes the Z sportscar and X-Trail sport utility vehicle, faces fierce competition from Japanese rivals Honda Motor Co. and Toyota Motor Corp., which appears to be on track to beat U.S.-based General Motors Corp. as the world's biggest 1 automaker. Toyota reports earnings next week, and Honda reports earnings Wednesday.

Nissan said it sold 875,000 vehicles in the April-June period, up 5.9 percent from the same period a year earlier. For the fiscal year through March 2007, the company sold 3.48 million vehicles worldwide, down 2.4 percent from the previous year.

Nissan has been investing aggressively in the future, including opening plants in emerging markets, introducing new models, developing green technology and building brand image.