Nissan has reported a squeeze on its operating profit in the second quarter (fiscal 1st quarter) due to the adverse impact of divestments, rising raw material costs and slower sales in major markets for its products, particularly China.

The company said its April-June net profit was 134.9 billion yen, down 1% from the same quarter last year. However, operating profit was down 12.8% at 153.3 billion yen.

Nissan said its financial results were in line with company expectations despite rising raw material costs, adverse foreign exchange impacts, and slower than anticipated growth in key markets.

The company expects improved profitability for the remainder of the year driven by new products.

Operating profits declined 12.8% compared to the prior year primarily due to the conditional change resulting from the divestiture of Calsonic Kansei, rising raw material costs, and adverse foreign exchange impacts. Net income was down 1.1%.

Sales performance

For the first quarter, Nissan total unit sales were 1.351 million units, an increase of 5%.

Sales in Japan continued to improve following the resumption of Kei car sales (following the Mitsubishi testing scandal) and strong demand for registe6red vehicles, including models such as the Note e-POWER and the Serena with ProPILOT autonomous drive technology. Nissan saw unit sales rise by 45.6% to 131,000 units, resulting in a market share improvement of 2.6 points to 10.9%.

In the US, Nissan’s sales increased 1.2% to 403,000, equivalent to a market share increase of 0.4 points to 9.1%, amid continued demand for SUVs including the Rogue and recently launched Rogue Sport, the company said.

Nissan unit sales in China, which reports figures on a calendar year basis, increased 5.3% to 314,000 units. The market share in China was flat at 4.7% for the quarter.

In Europe, including Russia, Nissan’s sales totalled 185,000 units, an increase of 1.1%. Excluding Russia, Nissan’s sales decreased 0.2% to 162,000 units due primarily to planned model changeovers, the company says. Nissan’s market share in Europe was flat at 3.6%.

In other markets, including Asia and Oceania, Latin America, the Middle East and Africa, Nissan’s sales increased 1.2% to 188,000 units despite volatile demand in some markets.

The company expects to sell 5.83m units in fiscal 2017 as models such as the Rogue Sport, refreshed Qashqai and X-Trail, Kicks, Navara, and the new Nissan LEAF boost  sales in the second half of the year.