NEW YORK (TheStreet) -- Nissan (NSANY) posted a 13% drop in quarterly operating profit as it contended with slower sales in China and Japan, and higher costs in the U.S., but the Japanese automaker expects profits to rise and sales to grow in the current fiscal year as it looks to trim costs.
Carlos Ghosn, CEO of the Yokohama, Japan-based automaker, said he expects operating profit to rise 15% in the current fiscal year. The company benefited last year from a favorable currency exchange and robust sales in North America.
In terms of unit sales in North America, Nissan gained 12% for the year to 1.65 million cars, light trucks and crossovers, a record. Operating profit for the year was up 54%. Ghosn, speaking in Yokohama, highlighted the performance of "core models," notably the Altima, Rogue and Sentra. He also credited "better discipline" with incentives and discounts for the increase in operating profit.
Ghosn was cautious in responding to questions by reporters about France's proposal to buy more shares and double its voting rights for its stake in Renault (RNSDF), which holds a 43% stake in Nissan. Nissan owns a 15% non-voting stake in Renault. The alliance between the two automakers, which was formed in 1999 when Renault rescued a floundering Nissan, has flourished.
The CEO said the French government's proposal had caused a "very sensitive situation" affecting "the balance of the alliance, the health of the alliance, so I'm not going to make any comment." Analysts have pointed out that if the French government increases its influence over Renault it will, by extension, increase its influence over Nissan. That could upset the Japanese automaker.
Nissan's American depositary shares were rising 2.6% on Wednesday. Renault shares were off slightly in European trading.
The rise in value of the yen against the dollar is expected to depress Nissan's finances this year, the company has said. Sales growth will average 5% to 6% worldwide for the company, compared with a flat sales forecast for the industry. Cost-cutting should account for a 110 billion yen ($920 million) gain in operating profit.
Speaking of the Chinese automotive market, Ghosn acknowledged that automakers lately have been cutting prices, which hurts profit, on top of slowing growth in vehicle sales.
"The market is getting more competitive, but I don't think it's going to be brutally more competitive than anything else we have seen," he said in an interview with Reuters. "It's normalizing as an emerged market in which carmakers are going to have to be smart, going to have to be quick and they're going to have to be competitive."
The activist stance of France's Socialist government may present as much or more of a worry to Ghosn as currency matters or the state of the Chinese vehicle market. In connection with its increase in voting rights, French Economy Minister Emmanuel Macron said, "This operation shows the state's willingness and ability to use all arms available to investors to promote a progressive, long-term capitalism which will serve the development and the employees of companies."
The statement's vagueness -- perhaps deliberate -- leaves the door open to more interventionist positions by the government, such as influencing where Renault operates factories, how much it pays French workers, and even which car models to sell.