Nissan Quarterly Profits Fall More-Than-Predicted 43 Percent
August 01, 2008
By Michelle Krebs
TOKYO -- Nissan Motor Co., Ltd., reported a nearly 43 percent decline in profits for quarter that ended June 30. Nissan blamed the decline on the negative impact of foreign exchange rates and losses on leased vehicles in the U.S. and Canada.
"In the face of the severe operating environment, Nissan remains resilient but cautious on the outlook for our industry," said Nissan President and CEO Carlos Ghosn in a statement. "We have identified the major risks and taken actions to address them, particularly in the U.S. market."
Nissan said its consolidated net income after tax totaled 52.8 billion yen -- the equivalent of $505 million in the first quarter of fiscal year 2008, which ends March 31, 2009.
Globally, Nissan sold a total of 936,000 vehicles in the April-to-June period, up 6.9 percent from the 2007 period.
In North America, sales were 330,000 units, up 1.9 percent. U.S. sales were 253,000 units, down 1.5 percent in a market which was down by 12 percent for the quarter. Nissan's market share in the U.S. grew by 0.7 percentage points to 6.6 percent.
In Japan, sales were 148,000 units, down by 2.2 percent. European sales remained flat at 156,000 units. Growth continues in other overseas markets where sales rise 23.6 percent to 302,000 units.
Despite an increase in sales volume, Nissan's net revenue fell 4.1 percent to the equivalent of $22.4 billion due mainly, Nissan said, to the negative impact of foreign exchange rates. Operating profit declined 46.1 percent to the equivalent of $764 million, driven by foreign exchange and residual value risk from leases. The operating profit margin came to 3.4 percent. Ordinary profit amounted to $789 million, down 45.5 percent.
Nissan has made a number of moves in the U.S. to address the weak market.
On Wednesday, Nissan announced it was offering an attractive buyout program to its 6,600 workers at two plants in Tennessee in hopes of eliminating 1,200 jobs.
Earlier in the year, Nissan announced it would end Nissan Titan production and use the Canton, Mississippi, plant instead as its center for commercial vehicles. It also announced a deal whereby Chrysler will provide Nissan with a version of the upcoming Dodge Ram to replace its Titan. Ghosn said recently the arrangement means Nissan will spend only a quarter of what it would cost to develop a Titan replacement on its own. In turn, Nissan will provide Chrysler with a version of the Versa small car.
Meantime, Nissan says it is staying the course on product launches. In 2008, Nissan will launch a total of nine new products globally. The first quarter saw the launch of three products -- Teana, Maxima and Infiniti FX. Under the Nissan GT 2012 mid-term business plan, Nissan will launch 60 all-new models in the next five years.
Nissan's forecast for the full fiscal year also remains, with an anticipated operating profit of 550 billion yen and net income of 340 billion yen.
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