TOKYO -- Sliding sales in North America helped send operating profit at Nissan Motor Co. tumbling 86 percent, but the Japanese automaker avoided a loss through heavy cost cutting.
North American revenue fell 37.1 percent to 570.9 billion yen, or $5.97 billion at current exchange rates, in fiscal first quarter ended June 30, compared with a year earlier.
On a unit basis, North America posted the worst decline of any region. Nissan sold 225,000 vehicles in the period, or 31.6 percent fewer than the year before.
Despite the meltdown in demand, Nissan saw operating profit in North America climb to $368.6 million , from $105.7 million a year earlier.
But that increase was relative to a massive one-time charge.
Last years results were depressed by a $1 billion provision for residual losses on used car prices, about a quarter of which was logged in the first quarter. Nissan didnt need to book such a loss this year because prices stabilized, CFO Alain Dassas said.
Cost cutting also contributed to the North American profit, he said.
The global picture
Predicting no convincing recovery in global car demand, Japan's No. 3 automaker kept its forecasts for an annual loss unchanged as a lack of hybrid cars overshadowed solid sales in China.
CEO Carlos Ghosn has previously said Nissan will focus on returning to positive free cash flow through joint cost-cutting efforts with French partner Renault SA.
While some bright signs are emerging on the sales front -- Nissan has enjoyed stellar growth in China this year thanks to a lineup heavy in smaller cars that enjoy tax incentives -- its lack of hybrid models has left it trailing the market in Japan.
For the first time, Nissan sold more vehicles in China than at home in the first half of the year.
Nissan made an operating profit of 11.6 billion yen ($122.9 million) in April-June, down from a profit of 80 billion yen a year earlier but beating a consensus loss estimate of 117 billion yen in a poll of four analysts by Thomson Reuters.
Nissan, in which Renault has a 44 percent stake, lost a net 16.5 billion yen in the first quarter, against a profit of 52.8 billion yen a year ago.
Revenue fell 36 percent to 1.51 trillion yen.
For the financial year to March 31, 2010, Nissan kept its operating loss forecast at 100 billion yen and its net loss forecast at 170 billion yen.
"We believe it would be premature to lift forecasts at this juncture," Nissan COO Toshiyuki Shiga said, listing among the risks a further rise in the yen and drops to global car sales when government steps to stimulate demand come to an end.
Shiga said Nissan was on track to return to positive free cash flow by the end of the financial year.
As Japanese rivals Honda Motor Co. and Toyota Motor Corp. aim to spur car sales with new hybrid vehicles, Nissan is pouring its efforts into creating a market for pure electric vehicles with the first launches in Japan and the United States next year.
Partly on hopes for its lead in electric vehicles, shares in Nissan have almost doubled in price this year, making them the best performer among Japanese auto shares. Tokyo's transport sub-index gained 44 percent in the same period.
Reuters contributed to this report