Nissan reports dropping 2nd-quarter profit

[October 31, 2008]  TOKYO (AP) -- Nissan reported a 39 percent drop in fiscal second quarter profit Friday, as a strong yen and a contraction in the U.S. market combined to batter earnings at Japan's No. 3 automaker.

Japanese automakers have been more resilient in avoiding the serious sales plunges and monetary losses of their American rivals. But they have been hurt by the global slowdown.

The surge in the yen set off by the recent stock market gyrations is an extra burden on Japanese exporters.

Nissan Motor Co.'s net profit for the July-September period fell to 73.5 billion yen ($746 million) from 120 billion yen the same period a year ago.

Tokyo-based Nissan also drastically lowered its net profit forecast for the fiscal year through March 2009 to 160 billion yen ($1.6 billion), down 67 percent from the previous year. Earlier, Nissan had expected a 340 billion yen ($3.5 billion) profit for the fiscal year.

The move follows a similar -- but smaller -- downward revision from Japanese rival Honda Motor Co. earlier this week, after it reported 41 percent drop in quarterly profit.

"The global financial and economic crisis has had a profound effect on every area of our industry, with the grip on credit and declining consumer confidence being the most damaging factors," said Nissan Chief Executive Carlos Ghosn.

Nissan acknowledged that troubled times are likely to continue for some time, although the automaker allied with Renault SA of France said it was working on new technology and product developments to be ready when the recovery comes.

Nissan's quarterly sales declined 3.7 percent on year to 2.522 trillion yen ($25.6 billion).

But it reported better vehicles sales, selling 966,000 vehicles worldwide July-September, up 2.7 percent from the same period the previous year.

Nissan is hoping to keep such solid results going, planning five new models in the fiscal second half, including the Z sports car and Cube compact in Japan, and the luxury model Infiniti G37 convertible in the U.S.

The yen's recent jump to a 13-year high against the dollar last week was set off by investors seeking to unwind yen "carry" trades, which had taken advantage of Japan's low interest rates to borrow yen to invest elsewhere. Reversing those trades means buying back the yen, lifting its value.

Nissan said the yen was appreciating not only against the dollar but also against the ruble and other currencies, hurting its books. In trading Friday, the dollar was just under 97 yen. Last week, it briefly fell below 91 yen.

"The effects of the global financial and economic crisis have created conditions of extreme volatility and uncertainty that are expected to continue," it said in a statement.

Toyota Motor Corp., Japan's top automaker, is scheduled to report earnings next week.

Honda, whose sales have relatively held up because of its fuel-efficient offerings, reduced its net profit forecast to 485 billion yen ($5.2 billion) for the fiscal year ending March 31, 2009, down 19 percent from the previous year. It had earlier projected a 490 billion yen ($$5.3) annual profit.

Nissan shares slid 8.4 percent to 493 yen ($5) in Tokyo. The results were released after trading ended for the day.

[Associated Press; By YURI KAGEYAMA]

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