Nissan returns to quarterly profit on China sales

Japanese automaker Nissan Motor Co. climbed into the black last quarter and forecast a smaller yearly loss as surging sales in China helped offset sluggish demand in the West.

The country's No. 3 car company posted net income of 25.5 billion yen ($270 million) in the July-September period after three straight quarters in the red. The result was 65 percent lower compared with last year but far better than Nissan's 16.5 billion yen loss in the April-June quarter.

Revenue, meanwhile, totaled 1.87 trillion yen ($19.57 billion).

The automaker sold 901,000 vehicles in the quarter, down 6.8 percent from the previous year.

"Our performance in the first half of fiscal 2009 is encouraging, demonstrating that Nissan's recovery plan is on track," President and CEO Carlos Ghosn said in a statement. "Our outlook will remain cautious until we see evidence that economic recovery can be sustained in world markets."

With its results better than originally expected, Nissan became the latest Japanese car company to boost its outlook for the year as automakers benefit from robust Chinese demand, aggressive cost cutting, and cash-for-clunkers programs around the world.

Nissan now expects a narrower net loss of 40 billion yen for the fiscal year through March 2010 compared with its previous estimate of a 170 billion yen loss. Revenues were pegged at 7 trillion yen.

The company also raised its global sales forecast to 3.3 million vehicles from 3.08 million. In the U.S., Nissan expected to sell 765,000 vehicles as opposed to its previous prediction of 750,000.

Rivals Honda Motor Co., Suzuki Motor Corp. and Subaru-maker Fuji Heavy Industries Ltd. have also upgraded their outlooks in recent days. Toyota Motor Corp, the world's top automaker, reports earnings Thursday.

The results underscored the growing importance of emerging markets like China, where massive government stimulus measures have buoyed demand at a time when more developed markets are slumping.

Nissan's sales in China surged 48 percent to 396,826 units in the six months through September compared to the year-ago period, whereas the company suffered declines in Japan, the U.S. and Europe.

"In term of units sold, China has become a major contribution to Nissan," said Philippe Barrier, an analyst at Societe Generale. "It's been a big success in China."

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