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Nissan Profits Fell 43% Despite Global Sales Growth

issan Motor Co. said Friday its net profit for the April-June quarter dropped 42.8 percent, hit by a rising yen and accounting provisions for the declining value of leased vehicles.

     Japan's third-largest automaker said net profit fell to 52.8 billion yen ($505 million) for the quarter, while sales fell 4.1 percent from a year earlier to 2.3 trillion yen ($22.4 billion).

     "In the face of the severe operating environment, Nissan remains resilient but cautious on the outlook for our industry," said Chief Executive Carlos Ghosn in a statement.

     "We have identified the major risks and taken actions to address them, particularly in the U.S. market," he said.

     Despite a slump in demand in the U.S. and Japanese markets and soaring material costs, Nissan kept its earnings forecasts for the current fiscal year through March 2009 with a net profit of 340 billion yen ($3.3 billion). Sales are likely to stay at 10.4 trillion yen ($99 billion).

     Nissan's global sales for the April-June quarter rose 6.9 percent from a year earlier to 936,000 vehicles.

     But its sales in the U.S. market fell 1.5 percent to 253,000 units, Nissan said. It said the American auto market shrank by 12 percent during the quarter.

     Nissan's North American sales edged up 1.9 percent to 330,000 units.

     Sales in Japan fell 2.2 percent to 148,000 units, while those in Europe were flat at 156,000 units.

     Nissan was hit hard by a stronger yen in the quarter compared with the same period last year. A strong yen makes Japanese goods less competitive abroad and eats into exporters' profits when repatriated.

     Nissan said foreign exchange losses amounted to 54.7 billion yen ($523 million) in the quarter. Accounting provisions booked for the declining value of leased vehicles in the United States and Canada totaled 42 billion yen ($402 million).

     Nissan shares fell 1.4 percent to 828 yen Friday in Tokyo. Earnings were announced after trading ended.

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