Nissan’s Profit Slips as Some Costs Climb

Nissan Motor Co., Japan’s second-largest automaker, reported a 3.5% drop in its fiscal second-quarter earnings Friday, as a weak dollar, the spiraling cost of incentives in the U.S. and worldwide increases in raw-material costs trumped rising sales.

Nissan, which makes most of its profit in the U.S. market, reported profit of 115.6 billion yen ($1.09 billion) for the three months ended Sept. 30, down from 119.8 billion yen a year earlier.

Sales for the period rose 10% to 2.1 trillion yen ($19.8 billion).

Despite the lower quarterly profit, Nissan Chief Executive Carlos Ghosn said in a news conference in Tokyo that he still expected record profit for the full year. Ghosn based his prediction on plans by Nissan, 44% owned by French carmaker Renault, to release more than a dozen new models in Japan, Europe and the United States over the next year.

New vehicles for the U.S. market include revamped models of the Nissan Frontier pickup and Pathfinder and Xterra sport utility vehicles and the Infiniti M luxury sedan.

“We’re pretty excited,” said Jed Connelly, senior vice president of sales and marketing at Gardena-based Nissan North America.

Sales in the U.S. for the first nine months of this year were up 22%, he said.

Incentives cost Nissan 59 billion yen in the most recent quarter. The company raised incentive spending in the competitive U.S. market by an average of $300 per vehicle to $1,853, Connelly said.

That’s less than half the national average -- rival General Motors Corp. spent an average of $4,300 per vehicle trying to move its large trucks and SUVs in the face of soaring gasoline prices. But it was still more than Nissan expected to spend, Connelly said.

The strong yen also pushed down profit, costing Nissan about 56 billion yen, the company said.

The rising yen has lowered the value of U.S. earnings for all Japanese carmakers by about 7%. The dollar cost an average of 110 yen in the first half of this year, compared with an average of 118 yen in the first half of 2003.

Nissan’s U.S.-traded shares rose 57 cents to $22.51 on Friday.

Times wire services were used in compiling this report.