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Nissan Benefits From Chinese Growth as Earnings Beat Estimates

July 29 (Bloomberg) -- Nissan Motor Co. benefited from higher earnings in China, the world’s largest auto market, as the maker of the Altima sedan delivered profits that beat analyst estimates.

Net income at Japan’s second-largest carmaker rose 37 percent to 112.1 billion yen ($1.1 billion) in the April-to-June quarter, beating the 84.3 billion yen average of 14 analyst estimates compiled by Bloomberg. The Yokohama-based automaker pledged to meet its forecasts after cutting its profit projections in each of the last two years.

The gains may signal Chief Executive Officer Carlos Ghosn is gaining traction after making dozens of executive changes in November to improve execution and cut incentives in the U.S. Deliveries have outpaced Honda Motor Co. and Toyota Motor Corp. in the U.S. and China this year, though the company cautioned its growth in the Asia’s largest economy may slow.

“The full-year guidance isn’t conservative,” Joji Tagawa, a Nissan corporate vice president, said at the earnings briefing yesterday. “‘We gave warnings two years in a row and this year we intend to hit guidance. We have learned a lot of lessons since November and taken many measures, so we are seeing the results now.’’

Even so, the automaker has cut deliveries to dealers in China beginning this month, on signs inventory was building up since the end of June on intensifying competition, he said.

Nissan boosted deliveries in China by 21 percent in the quarter to 283,000 units, boosted by the X-trail SUV. The automaker will meet its full-year China target, Tagawa said.

Annual Targets

The automaker reaffirmed its forecast for global deliveries to climb 8.9 percent to 5.65 million vehicles this fiscal year, helped by new models including the Qashqai, Rogue, Datsun Go and Infiniti Q50. The company also maintained its full-year forecast for 405 billion yen in net income, 535 billion yen in operating profit and 10.79 trillion yen in revenue.

‘‘Nissan is well placed to deliver on its outlook given our continued product offensive along with measures to enhance competitiveness, build market share and the ongoing benefits of our Alliance strategy,’’ Ghosn said in a statement.

The automaker rose 0.8 percent to 1,001.50 yen at the close of Tokyo trading yesterday, before it announced earnings. The stock rose 13 percent this year, compared with a 4.7 percent decline for the benchmark Nikkei 225 Stock Average. The stock has 13 buys, 15 holds and 1 sell, according to data compiled by Bloomberg.

Operating Profit

Operating profit in the quarter rose 13 percent to 122.6 billion yen, beating analysts’ estimate of 114.2 billion. Sales rose 10 percent to 2.47 trillion yen, compared with the analysts’ estimate of 2.41 trillion.

In North America, Nissan reaped 51 billion yen in operating profit last quarter, increasing from 41.8 billion yen a year earlier.

In the U.S., Nissan overcame production delays for its key models including the Altima mid-size sedan in 2012, boosting January-June sales by 13 percent, compared with the 5 percent growth at Toyota and 1 percent decline at Honda.

The carmaker’s incentives in the country fell 17 percent to $2,254 per unit in June from a year earlier, after it cut sticker price for most of its models in 2013, according to market researcher Autodata. That’s still higher than most Asian car brands, including Toyota and Honda. Nissan is counting on the Murano SUV slated for later this year to further improve U.S. profitability.

U.S. Incentives

‘‘Manufacturing and sales operations -- which had been falling like dominoes into chaos since March 2012 -- have finally stabilized,” Takaki Nakanishi, a Tokyo-based analyst with Jefferies Group LLC, wrote in a report this month. “Nissan must recuperate the core of the North American competitiveness and profitability.”

Back home in Japan, operating profit fell to 56.9 billion yen from 74.8 billion yen last year. Nissan’s domestic deliveries fell in the April-June quarter after the first consumption tax increase in the country since 1997.

The growth in profit was also helped by Nissan’s premium Infiniti brand, where first-half sales rose 30 percent to a record. Deliveries in China more than doubled from a year earlier.

Infiniti Chief

Infiniti chief Johan De Nysschen is leaving the carmaker to head General Motors Co.’s Cadillac brand, just as sales are rising and the brand is preparing to start production of two long-wheelbase models in China. De Nysschen had set a target for Infiniti to win 10 percent of the world premium market by 2020 to challenge Volkswagen AG’s Audi, Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz.

“It’s a big loss,” said Kota Yuzawa, an auto analyst at Goldman Sachs Group Inc. in Tokyo. “You need a very good consistency to build a good brand image.”

Nissan started sales of the no-frills Datsun brand in India and Indonesia and plans to start deliveries in Russia and South Africa this year to target the lowest end of the market.

Initial customer reaction has been mixed. In India, the first market where the brand was introduced, Datsun helped Nissan sales rise 48 percent in June after doubling in May. The same boost didn’t happen in Indonesia, where Nissan sales fell 24 percent last month following a 32 percent drop the month before.

Nissan is expecting Datsun cars to account for one-third to half of the group’s total deliveries in markets where it will be introduced.

The automaker posted an operating loss 1.6 billion yen in Europe, compared with an operating loss of 6.7 billion a year earlier, amid mounting signs that the region is recovering from recession.

To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho

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