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Nissan Quarterly Profit Rises 4.2 Percent - ASHARQ AL-AWSAT English Archive
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TOKYO, AP – Nissan Motor Co. said Tuesday its net profit rose 4.2 percent in the most recent quarter on improved sales and a lack of one-time charges that hurt earnings the previous year.

Group net profit at Japan’s second-biggest automaker during the April-June quarter totaled 110.2 billion yen ($945 million), up from 105.7 billion yen a year ago.

The results come amid keen interest about a possible three-way alliance among Nissan, its partner Renault SA of France and General Motors Corp.

If the talks pan out, the emerging alliance will cover all three major auto regions — the U.S., Japan and Europe — and will be the biggest ever in sheer size, boasting a combined production of 15 million vehicles, or nearly one-fourth of world production.

Nissan’s quarterly sales rose 3.1 percent to 2.2 trillion yen ($18.9 billion) from 2.1 trillion yen. But the actual number of vehicles sold during the quarter fell 6 percent from a year ago to 826,000.

Sales held up because of a boost of about 100 billion yen ($858 million) from the yen’s weakness against the dollar. Without currency fluctuations, sales would have dropped from a year ago, said company executive Joji Tagawa.

Despite past warnings that the first-half of the fiscal year would be rough, Nissan maintained its profit forecast for the full fiscal year ending March 2007 at 523 billion yen ($4.5 billion).

Carlos Ghosn, who heads both Nissan and Renault, said last week that the initial, 90-day talks with GM Chief Executive Rick Wagoner will focus on the potential advantages of having the three automakers work together, but won’t address the possibility of taking a capital stake in each other. Renault owns 44 percent of Nissan, which in turn owns 15 percent of Nissan.

Nissan said net profit for the latest quarter also got help from the lack of losses for accounting changes and a pension plan in fiscal 2005. Its operating profit dipped 25.7 percent due to a one-time charge for an engine warranty in North America, the company said in a statement.

Nissan has said the first half of fiscal 2006 will be a challenge because of a lack of new models but has promised better news for the second half, when Nissan will release eight new models around the world.

“As we predicted, the first half is proving to be challenging as we face significant headwinds and only one new model introduction,” Ghosn said.

The proposal for GM to join the Nissan-Renault alliance came last month from American billionaire investor Kirk Kerkorian, major GM shareholder.

Ghosn won’t elaborate on details but he said what’s being looked at are benefits similar to what was gained from the Renault-Nissan alliance, which have included cost savings from buying auto parts together and sharing research while keeping the separate identities of the Nissan and Renault brands.

Detroit-based GM is struggling to revive its business after losing $10.6 billion last year and seeing its market share dwindle in North America. About 35,000 hourly workers recently agreed to retire or take buyouts and GM has announced plans to close a dozen plants by 2008.

Nissan shares, which have recently lost gains to settle at about the same level they were a year ago, gained 2.4 percent to finish in Tokyo at 1,180 yen ($10).

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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