TOKYO -- Nissan Motor Co. posted a 10.7 percent jump in quarterly operating profit thanks to booming domestic and U.S. sales but kept its forecast for basically flat full-year earnings.
The maker of the 350Z sports car has forecast a slowdown in profit growth citing risks from intense price competition in the United States, higher raw materials prices and volatile exchange rates.
The Big Three -- General Motors, Ford Motor Co. and the Chrysler group -- have raised the ante in the discount war, but other risks such as a strong yen have dissipated, and analysts expect another solid year for Japanese automakers.
Nissan, 44 percent owned by Renault SA, reported an operating profit of 206.26 billion yen ($1.85 billion) in the first quarter ended June, meeting the mean forecast of 207 billion yen in a survey of six brokerages by Reuters Estimates.
Net profit, meanwhile, fell 14.2 percent to 105.70 billion yen versus a consensus forecast of 123.56 billion yen due to one-off losses related to changes in accounting standards for fixed assets and a switch in its employee pension system.
The extraordinary losses totaled 29.7 billion yen, without which net profit would have risen 4.1 percent from the year before, Nissan said.
"I think the results were pretty good," said Shotaro Noguchi, auto analyst at Mitsubishi Securities. "The point to watch now is the performance in the second half, when there will be a dearth of new models."
Sales for the quarter grew 12.6 percent to 2.145 trillion yen, powered by 18.1 percent growth in the key U.S. market to 278,000 units on brisk sales of the Pathfinder and Murano sport-utility vehicles and the Altima and Sentra sedans.
Sales surged 18.6 percent in Japan to 194,000 units driven by the Note and Tiida compact cars, while in Europe they fell 3.9 percent to 133,000 units, in line with the overall industry.
Sales to other regions rose 18.2 percent to 274,000 units, led by China. Total global sales rose 14.3 percent in the quarter to 879,000 vehicles.
Domestic rivals Toyota Motor Corp. and Honda Motor Co. are expected to trail Nissan's performance, with analysts forecasting their quarterly operating profits around the same level as last year.
U.S. rivals, meanwhile, have closed a dismal second quarter due to steep losses in their discount-driven automotive operations.
Nissan said that while its U.S. sales incentives such as rebates and discounts grew from the year before, it was still spending just three-fifths of the industry average of about $3,000 per vehicle during the quarter according to some estimates.
Nissan's operating profit during the first quarter was also lifted by the inclusion of parts maker Calsonic Kansei Corp. in its consolidated earnings for the first time. That contributed 6 billion yen.
During the quarter, the dollar averaged 107.7 yen, down 2 yen from the year-earlier period, and the euro gained 3 yen to 137.
The dollar has since gained, trading around 112 yen on Tuesday. A stronger dollar boosts the bottom line of Japanese automakers, most of which have assumed an average rate of 105 yen for the year.
But Nissan stuck to its currency assumptions and kept its forecasts intact for the year to March 2006, during which it expects to top last year's record operating profit by 1 percent at 870 billion yen. It expects net profit to grow 0.9 percent to 517 billion yen.