Healthy profit gives Nissan shot in the arm

Nissan Motor Co, Japan's third-largest automaker, rose the most in six years on the Tokyo Stock Exchange after it reported higher fiscal second-quarter operating profit and analysts raised their ratings.

Nissan gained as much as 139 yen, or 12.4 percent, to 1,263 yen and traded at 1,259 yen as of the 11 am trading break. It was the biggest intraday gain since September 25, 2001, when the shares jumped 14.3 percent.

Chief Executive Officer Carlos Ghosn boosted operating profit by the most in at least three years by turning to emerging markets for growth as sales slipped in Japan. Tokyo-based Nissan raised its operating margin to more than 8 percent for the first time in a year, ending what Ghosn had termed a crisis.

"The results were surprisingly good and made investors realize that they had been overly pessimistic about the company's performance," said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co in Tokyo. "We're seeing a knee-jerk reaction to Nissan's earnings results."

Nissan boosted operating profit 12 percent to 218.7 billion yen ($1.9 billion), helped by demand in Russia, China and the Middle East. Net income fell 27 percent after gains from asset sales and tax breaks in the year-ago period.

Ratings raised

Mitsubishi UFJ Securities Co and Nomura Securities Co raised their ratings on Nissan. Mitsubishi UFJ raised its rating to "outperform" from "market outperform". Nomura Securities Co raised it to "strong buy" from "buy".

In the fiscal first half, Nissan's sales in Russia more than doubled, while sales in China grew 25 percent and sales in the Middle East rose 21 percent. The company has a six-month backlog for the Qashqai sport-utility vehicle in Russia, Ukraine and northeast Europe.

Nissan increased US sales of Versa compact cars more than fivefold and those of Altima sedans by 22 percent in the first nine months.

Sales of sport-utility vehicles fell, with demand for Xterra and Pathfinder SUVs declining 17 percent and 12 percent, respectively, in the same period, according to Autodata Corp.

The company plans to introduce 11 new or redesigned vehicles this fiscal year, including the GT-R, its most expensive sports car, which goes on sale in Japan in December.

Nissan's sales at home slumped 7.2 percent in the first nine months of this year.

Industrywide demand in the world's third-largest auto market has dropped for the past 18 months, forcing Toyota Motor Corp and Honda Motor Co, Japan's two biggest automakers, to trim their domestic sales forecasts for this fiscal year.

Ghosn, who also heads Renault SA of France, gave up daily oversight of Nissan's North American operations in April to focus on improving performance at the two companies. Renault owns 44.3 percent of Nissan.

Indian venture

Nissan and an Indian partner will spend $500 million to set up venture to make trucks as economic growth in India spurs commercial vehicle sales.

Nissan and Ashok Leyland Ltd, India's second-largest truckmaker, will begin producing vehicles lighter than 8 tons by 2010, the two companies said in a joint release in the southern Indian city of Chennai yesterday.

Ashok Leyland will own 51 percent of the venture that can make 100,000 trucks annually, with Nissan owning the remainder.

Bloomberg News

(China Daily 10/30/2007 page16)