Recall Costs Cut Nissan’s Profits

Nissan Motor Co.’s operating and net income fell 22% and 3%, respectively, in July-September because of greater selling costs and 41 billion yen ($359 million) in recalls.

Revenue for the fiscal second quarter climbed 9% to 2.9 trillion yen ($25.4 billion). Unit sales rose 4% to 1.38 million vehicles.

But operating profits plunged to 129 billion yen ($1.1 billion), and net income slipped to 142 billion yen ($1.2 billion). Much of the quarter’s special charges were for recalls to replace Takata Corp. airbag inflators that could explode when activated in a crash. Nissan also is recalling more than 1.2 million vehicles in Japan that had been improperly inspected.

The company says increased sales and marketing costs, especially in North America, trimmed operating results by another 45 billion yen ($398 million).

Retail sales in North America, Nissan’s largest market, declined 2% to 377,000 units in July-September. Operating profits plunged 50% to 32 billion yen ($282 million). Sales improved in Japan (+25% to 276,000 units), China (+8% to 336,000) and elsewhere (+8% to 120,000).

Nissan expects continued pressure on operating results. The company now predicts its operating profit for the full fiscal year ending March 31 will drop 13% to 645 billion yen ($5.7 billion) compared with the 8% decline it forecast earlier.