Nissan Profit Increases on Growth in Sales and Cost Cutting

Nissan Motor Company the second largest automaker in Japan said it is expecting its operating profit to increase by 15% during the current financial year, It forecasted its sales growth for vehicles in most of its regions and promised large cuts in costs.

This follows strong earnings in its just ended year due to big gains in currency and the popularity it enjoyed for its crossover SUV Rogue and other models across the U.S.

Nissan predicted that currencies would work against it in the current financial year but plans to beat the expected flat vehicle sales predicted industry wide, with sales growth of 5 to 6 % in China, Europe and the U.S. Cost cutting is set to add another $920 million to its profit.

Nissan is 43.4 % owned by Renault SA the French carmaker, and forecasted its operating profit to be 675 billion yen which is 2% less than the estimates on Wall Street, due partly from the conservative exchange rate the automaker is assuming.

Carlos Ghosn the CEO at Nissan noted that the company’s sales were dropping in Russia and Brazil while demand in China would be helped by its price cuts.

Worries have increased over competition in prices across China, as an economy that is slowing continues to weigh on the demand for vehicles in the largest single market in the world for autos.

In another sign of pressure, General Motors the No. automaker by market share in China, cut prices recently on more than 40 models.

CEO Ghosn noted that Nissan outperformed the rest of the industry with a sales growth of 20% in China through the end of April, but said it would watch pricing closely as its rivals start adding incentives.

Ghosn would not discuss more about the move by the government of France to increase its holding in Renault to have a bigger say in the overall management, which he has said before threatens the balance of the alliance between Nissan and Renault.

Legislation introduced in the socialist government in France doubles its voting rights of longer term shareholders in businesses that do not opt out by a majority vote of two-thirds.