A one-time charge to cover a four-cylinder engine "warranty issue" in North America contributed to a 25.7% year on year decline in Nissan Motor's operating profit to 153.3bn yen ($US1.34bn, EUR1.09bn) in the first quarter of fiscal year 2006.

Consolidated net income after tax rose 4.2% to 110.2bn yen ($US962m, EUR783m).

Nissan said the rise reflects the exceptional charges taken in the same period in 2005 relating to accounting standards changes and the introduction of Nissan's defined contribution pension plan.

Vehicle sales worldwide fell 6% to 826,000 in the April-to-June period. But net revenue rose 3.1% to 2.210 trillion yen ($19.30bn, EUR15.71bn).

Operating profit margin came to 6.9%. Ordinary profit was down 25.6% to 156.7bn yen (US$1.37bn, euro 1.11bn).

"As we predicted, the first half is proving to be challenging as we face significant headwinds and only one new model introduction," said Nissan president and CEO Carlos Ghosn.

"We are maintaining our forecast for the full fiscal year [ending 31 March, 2007] and remain confident that our new product introductions will provide a significant contribution to our business in the second half of this fiscal year, and to the achievement of Nissan Value-Up."

In the second half, Nissan will release eight new models around the world, including the Sentra, Altima and Infiniti G35 sedans for the US.

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