Nissan, Reeling From Profit Slump, Predicts Rebound in 2007

Nissan Motor Co., reeling from its first profit decline in seven years, said earnings will rise this  fiscal year on increased sales in Europe and the U.S.

Net income will gain 4.2 percent to 480 billion yen ($4 billion) in the 12 months ending March 31, from 460.8 billion yen a  year earlier, the Tokyo-based company said today. Sales will probably fall 1.6 percent to 10.3 trillion yen, it said.

A profit rebound may help Chief Executive Officer Carlos Ghosn rebuild confidence after missing earnings and sales forecasts  for the first time since taking over in 2000. Nissan expects vehicle sales in the U.S., its biggest market, to increase 6.3  percent this year, reversing a decline.

``Ghosn will probably be able to improve his credibility this year because sales and profit are expected to rise,'' said  Yoshihiro Okumura, who helps manage $365 million at Chiba-gin Asset Management Co. in Tokyo.

Nissan, Japan's third-largest automaker, reported a 46 percent decline in fourth-quarter profit because of weaker-than-  expected sales. The maker of Altima sedans earns as much as 65 percent of its operating profit in the U.S.

A drop in the yen against the dollar last year helped cushion earnings at Nissan by increasing the value of overseas sales.  The weaker yen boosted operating profit by 70.8 billion yen for the full-year period, the company said. Nissan based its  forecasts for the current year on exchange rates of 117 yen against the dollar and 148 yen versus the euro.

Rival Honda Motor Co. yesterday forecast profit will fall 2.9 percent to 575 billion yen in the year ending March because it  expects the yen to strengthen to 115 against the dollar.

``Nissan's performance will depend on how the yen performs,'' said Takashi Aoki, who oversees 130 billion yen in assets at  Fuji Investment Management Co. ``This year, exposure to foreign exchange rates will be crucial, as sales and profit won't be  so strong.''