TOKYO -- Higher incentive spending and rising raw-material costs nicked operating profits at Nissan Motor Co. and Honda Motor Co. in the quarter ended Sept. 30.
Unit sales, revenues, and net profits rose at both companies.
Honda raised its forecast for earnings for the full fiscal year ending March 31, 2006. It says higher sales volume and an exchange rate that will be more favorable than previously expected will more than offset higher incentive costs. It also hopes to lower its U.S. incentive spending with the launch of a redesigned Civic.
Nissan left its forecast unchanged. It says the more favorable exchange rate will balance out against higher incentives and higher commodity and other costs. It won't launch a new model in the United States until after next spring.
Honda's worldwide operating profits in the quarter fell 5.9 percent to 162.69 billion yen, or $1.44 billion at current exchange rates. Revenues rose 11.7 percent to $20.65 billion, while net income rose 5.2 percent to $1.18 billion.
Nissan's operating profits fell 5.5 percent to $1.81 billion from a year earlier. Revenues rose 11.5 percent to $20.73 billion. Net income rose 8.1 percent to $1.10 billion, due to accounting changes and tax adjustments.
Honda's North American operating profits dropped 19.5 percent to $605.4 million. In addition to higher incentives, Honda cited higher interest rates that raised funding costs for its financial-services business and higher raw-materials costs. Unit sales in North America rose 7.7 percent to 394,000 cars and trucks.
Nissan did not provide North American profits for the quarter, but said its operating profits there in the fiscal first half ended Sept. 31 fell 10.3 percent to $1.34 billion, despite a 16.7-percent jump in unit sales to 571,000 cars and trucks.
Much of the earnings drop was due to higher incentives, but CEO Carlos Ghosn also said the carmaker has altered its accounting so that more of Nissan's profits will accrue to Japan and less to other markets. He said the change better reflects Japan's share of Nissan's engineering, r&d and manufacturing.
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