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Nissan Motor said Friday net profit rose by about eight percent in the three months to September as sales grew despite what chief executive Carlos Ghosn described as a "severe business environment".

Rising material and fuel costs as well as increased interest rates and sales incentives were posing challenges to international automakers, said Ghosn, who is credited with saving Nissan from bankruptcy.

The Brazilian-born executive said Japan's second-largest automaker was preparing for more tough times.

"Globally, we remain bearish (negative) on the prospects for growth in the North American, Western European and Japanese markets," he said.

"For the new and emerging markets, such as China, the picture is mixed, with the days of almost automatic profit deriving from significant market growth largely behind us.

"Only Russia and India appear to provide good visibility and prospects in the near future," he said.

Nissan said its net profit increased 8.1 percent to 125 billion yen (1.14 billion dollars) in its second quarter compared with a year earlier.

Revenue rose 11.5 percent to 2.35 trillion yen, helped by a stronger dollar, but operating profit slipped 5.5 percent to 205.2 billion yen.

In the second quarter Nissan sold 955,000 vehicles world-wide, 15.6 percent more than a year earlier, helped by the release of two new models in Japan - the Serena minivan and Otti minicar.

Nissan has done particularly well in the US market thanks to the popularity of small cars and demand for more fuel-efficient vehicles, Ghosn said.

"Rising incentive levels continue to be a challenge in all markets. This year has seen especially deep discounting in the United States, Europe and China," said Ghosn.

"Despite the severe business environment, Nissan's fundamentals continue to strengthen thanks to appealing products and a competitive cost structure," he said.

Japanese automakers are in better shape than their US rivals.

Last week GM posted a loss of 1.6 billion dollars for the third quarter while Ford reported a net loss of 284 million dollars.

At Nissan, net profit slipped 3.4 percent to 230.70 billion yen for the six months to September as a whole owing to one-off charges.

However, sales jumped by 12.1 percent to 4.49 trillion yen and operating profit rose by 2.0 percent to 411.54 billion yen in the six months period.

In April, Ghosn also took over as chief executive of France's Renault, which owns a 44.4 percent stake in Nissan, although he remains the Japanese automaker's president and chief executive officer.

Last month Ghosn declared the recovery at Nissan as "complete", with its ambitious sales targets achieved. Nissan recently achieved the very last target under the "Plan 180" recovery programme - a one million increase in annual sales to 3.6 million vehicles. Nissan left its full-year forecasts unchanged at a net profit of 517 billion yen on revenue of 9.0 trillion yen.

Copyright Agence France-Presse, 2005


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