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Nissan surprises with Q2 rise, Renault shares gain

Nissan, Japan's third-biggest automaker held 44 percent by Renault SA, had been expected to suffer a fall in core profits on weak domestic sales and as demand for the Titan pickup and other high-margin light trucks shrank in its biggest market, the United States, due to heated competition and expensive fuel.

But driven by solid sales of smaller cars in the United States and in emerging markets, such as the Middle East and Mexico, Nissan's global sales grew 6.6 percent to 941,000 vehicles for the July-September second quarter. Revenue rose 13 percent to 2.618 trillion yen ($22.9 billion) -- above market expectations.

"This is very good -- much better than expected," Credit Suisse auto analyst Koji Endo said.

"Provided that the U.S. subprime problem and currency rates aren't going to be bad, I believe we may be able to add expectations of a revision."

Second-quarter operating profit was 218.71 billion yen ($1.91 billion), beating an average estimate of 183.5 billion yen in a survey of four brokerages by Reuters Estimates. That lifted its profit margin back to the year-ago level of 8.4 percent, and above 6.1 percent in the first quarter.

Net profit slid 27 percent to 120.11 billion yen from the year before, when it booked extraordinary gains from the sale of shares in its truck affiliate and had a lower tax rate.

The results, which came after market hours in Tokyo, pushed Renault's shares up 3.4 percent in Paris.

"You can expect more in the second half," Carlos Ghosn, chief executive of both Nissan and Renault, told a news conference.

Having anticipated soft industry-wide demand in the United States from the beginning of the year, Ghosn said the current downturn in the market would not derail Nissan's sales plans.

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