Nissan (NSANY) third-quarter profit rises on higher sales abroad

03 02 2008

Nissan (NSANY) third-quarter profit rises on higher sales abroad

Posted by: in Companies Competitive Strategy

Filed under: Earnings reports, Forecasts, Good news, Launches, Competitive strategy, Japan

Despite a troubled U.S. economy, a stronger yen and increased credit costs in the US., it looks like Japanese automakers are still benefiting from a booming automobile demand. After Honda Motor Ltd. (NYSE: HMC) announced early this week its profit rose 38.1% in the third-quarter, now it is Nissan Motor Co. (NASDAQ: NSANY)’s turn to prove its efficiency.

Japan’s second-biggest automaker reported this morning its third-quarter profit rose 26.6% to 132.22 billion yen ($1.24 billion), helped by higher sales in Asia. The company had posted a profit of 104.46 billion yen during the same period of last year. The company’s results also show a respectable 18.2% jump in revenue to 2.770 trillion yen ($26.03 billion), following strong sales of the Rogue crossover automobile in the U.S.

Even though Nissan’s earnings numbers matched analysts’ predictions, the company is still showing some concerns over its further gains. The automaker said that its bottom line could be affected by lower American consumer spending. A weaker dollar also could dampen Nissan’s earnings by reducing the value of its foreign revenue.

Nissan saw a rise in its revenue after the company launched several new cars, including the Rogue SUV in the U.S. and the Qashqai crossover in Europe. Along with the U.S.; the Middle East, China and Russia brought the company strong sales that more than offset the impact of weaker domestic sales. Thus, the automaker counted 898,000 cars soled worldwide during the third-quarter, which is a 13% growth from the same period a year earlier. The U.S only saw a 28% growth in revenue, which totals 255,000 cars.

Joji Tagawa, Nissan’s corporate vice president, said in a news conference that, despite facing “with difficult market conditions,” the company is “firmly on track to accomplish our full-year targets.”

Japan’s third-largest automaker, in which Renault SA of France holds a 44% stake, kept unchanged its full-year earnings outlook, which targets a profit of 480 billion yen ($4.5 billion).

Nissan’s alliance with Renault was quite positive for the company as it brought record global sales of 6.62 million during the last year, which is a 4.2% increase from 2006. The company’s efforts to stimulate the domestic market also showed good results. Its new GT-R high-performance sports automobile, which costs about $70,000, brought 4,000 orders for the automobile since its launch late last year.

Eliza Popescu is a financial writer for the on the internet investment advisory service Investor’s Observer.