May 13, 2015 / 11:45 AM / 2 years ago

Nissan sees profit gains on vehicle sales growth, cost cuts

4 Min Read

A man walks past the logo of Nissan Motor Co. at the company's showroom in Yokohama, south of Tokyo May 13, 2015.Toru Hanai

YOKOHAMA, Japan (Reuters) - Nissan Motor Co (7201.T), Japan's second-biggest automaker, said it expects operating profit to climb 15 percent this financial year, forecasting vehicle sales growth in most regions and promising large cost cuts.

That follows robust earnings in the year just ended thanks to big currency gains and the popularity of its Rogue crossover SUV and other models in the United States.

It predicted currencies will work against it this year but plans to beat expected flat industry-wide vehicles sales with growth of around 5-6 percent in China, the United States and Europe. Cost cuts are set to add a hefty 110 billion yen ($920 million) to profit.

Nissan, 43.4 percent owned by France's Renault SA (RENA.PA), forecast operating profit of 675 billion yen - 2 percent less than a market consensus estimate, due in part to the automaker's conservative exchange rate assumptions.

Chief Executive Carlos Ghosn noted that sales were slumping in Brazil and Russia, while in China demand would be driven increasingly by price cuts.

Worries have grown about price competition in China as a slowing economy continues to weigh on demand for vehicles in the world's largest single auto market. In a sign of the pressure, General Motors Co (GM.N), No. 2 by market share in China, recently cut prices on 40 models there.

Ghosn noted Nissan had outperformed the industry with 20 percent sales growth in China through April, but said it would be watching pricing closely as rivals add incentives.

"The market is getting more competitive, but I don't think it's going to be brutally more competitive than anything else we have seen," he said in an interview with Reuters. "It's normalizing as an emerged market in which car makers are going to have to be smart, going to have to be quick and they're going to have to be competitive."

Ghosn would not be drawn into much further comment on the French government's move to raise its holding in Renault to gain a bigger say in its management, which he has said threatens the balance of the Nissan-Renault alliance.

Legislation introduced under France's socialist government doubles the voting rights of longer-term shareholders in companies that do not explicitly opt out by a two-thirds majority vote. An opt-out resolution proposed by Ghosn, who also leads Renault, failed to gain the necessary votes last month after France raised its stake to 19.7 percent from 15 percent.

Sources have said that Nissan representatives on the Renault board have warned the Japanese automaker could be forced to take steps to increase its influence.

"There is nothing more to add," Ghosn said. "In a certain way, this is, for the moment, much more a Renault issue and Nissan is supporting Renault in this situation."

Operating profit in the year just ended jumped 18 percent, but in the final quarter it fell 13 percent to 171.6 billion yen - short of analysts' estimates - as the company adjusted for accounting changes.

Reporting by Chang-Ran Kim and Thomas Wilson,; Editing by Edwina Gibbs and Elaine Hardcastle

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