Nissan profits down 15% on strong yen

Nissan on Thursday posted a 15 percent drop in quarterly profit as a strong yen and weak European market dented earnings, but Japan's second-biggest automaker said its full-year forecast was on track. Nissan, part-owned by France's Renault, has announced plans to release 10 new products globally over the year as it locks horns with global heavyweights General Motors, Toyota and Volkswagen. But Japan's automakers have been hit hard by the value of the yen, which remains near record highs reached last year against the dollar, making their vehicles relatively more expensive overseas and shrinking foreign income. On Thursday, Nissan said its business in the debt-hit European market took a beating, with sales down 1.7 percent. In its fiscal first-quarter through June, Nissan said its net profit fell 15 percent to 72.3 billion yen ($927 million) with an operating profit of 120.7 billion yen, which is down 19.7 percent from a year earlier. Sales were 2.6 percent higher at 2.14 trillion yen, it said. "Operating profit declined chiefly because of the impact of historic high levels of the yen that continue until now and a temporary increase in sales costs in North America," Nissan said in a statement. On forex markets the dollar is currently sitting at the 78 yen level, just above the record low around 75 yen touched late last year. In the same release, Nissan president Carlos Ghosn said: "Nissan has delivered a respectable performance in the first quarter despite challenging macro-economic conditions. "Our innovative models remain in high demand, with further exciting vehicles due for launch. Against that background, we remain on track to achieve our full-year forecasts," he added. Nissan also said its outlook for the full-year to March remains unchanged, forecasting net profit of 400 billion yen on sales of 10.3 trillion yen. In its latest quarter, Nissan said it sold 1.2 million vehicles globally, up 14.6 percent from the same three months last year. Sales to the key China market, Nissan's biggest, rose 12.2 percent. Daiwa Securities auto analyst Eiji Hakomori said Nissan has so far been slow to release its promised new models. "Talking about Altima, a popular model in the United States, its new model was released on June 26," he said. "So that means the April-June quarter was a difficult quarter for them to earn profits as they had to sell older model cars while pouring money into plants to bring out new models," he told AFP. "I'd say the decline in profit is not very worrisome" longer term, he added In May, Nissan posted a 341.43 billion yen full-year net profit and record sales for the year to March, as it shrugged off the devastating impact of last year's quake-tsunami disaster on production and flooding in Thailand. Rivals Toyota and Honda saw profits plunge during the same period. Nissan's full-year sales rose to their highest-ever 9.41 trillion yen with 4.85 million vehicles sold globally.