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Nissan operating profit dives 29% in first quarter

Automaker beset by slumping sales in US and Europe, higher costs, stronger yen

Nissan Motor corporate vice president Joji Tagawa announces the company's quarterly results Thursday. Sales were sluggish in the U.S. and Europe in the April-June quarter, he noted. (Photo by Takuya Imai)

TOKYO -- Nissan Motor announced on Thursday that its operating profit decreased by 28.8% on the year in the quarter ended in June, due to anemic sales in the U.S. and Europe.

The automaker said its operating profit recorded 109.1 billion yen ($985 million) in the first quarter of fiscal 2018, down from 153.3 billion yen the previous year. Although sales were up in China, they slowed in North America and Europe, which hit the company hard, as did the higher yen and rising costs for materials. Higher research and development expenses also added to the burden.

Nissan sold 1.31 million vehicles worldwide, down 3%. Unit sales in the U.S. declined 9.5%. The company launched a plan to cut back on buying incentives in that country, which are higher than the industry average. The U.S. accounts for a quarter of the company's global sales.

The Altima sedan also suffered a slump in sales, which have been sluggish amid higher demand for larger SUVs and pickup trucks.

In Europe, sales decreased by 13%, and global net income dropped 14.1% to 115.8 billion yen. 

As for U.S. threats of tariffs on automobiles, Joji Tagawa, corporate vice president, said the company expects little impact, as it "has long made efforts to localize production around the world. This has proven to be an effective way to avoid trade problems."

However, the company is braced for a further rise in costs associated with the U.S. steel and aluminum tariffs. "We see the risk that the rise in material costs will exceed our original estimates," he said.

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