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Last Updated: Tuesday, 26 July 2005, 09:24 GMT 10:24 UK
Europe denting Nissan and Peugeot
Nissan Murano
Nissan's been putting the pressure on domestic and foreign rivals
Carmakers Nissan and Peugeot have complained that lacklustre European demand is hitting earnings growth.

Japan's Nissan saw European sales drop 3.9% during the last quarter, while France's PSA Peugeot Citroen reported a 0.3% slide in west European turnover.

Nissan offset the drop by selling more cars to the US and China, pushing quarterly operating profit up 11%.

Peugeot found it harder to counter the slide as high raw material costs and accounting changes also hurt earnings.

Carmakers are not alone in feeling the pinch as many European consumers have put off large purchases because of concerns about the economic environment and the outlook for jobs.

Retailers across the region have complained that market conditions are worsening and calls for an interest rate cut have become louder.

Tighter times

Despite the European dip, Nissan's earnings for the three months through June were in-line with market estimates.

Operating profit in the fiscal first quarter totalled 206.26bn yen (1.3bn; $1.9bn), Nissan said.

Net profit, however, dropped 14% to 105.7bn yen in the three-month period mainly due to a change in accounting rules.

While Europe is proving to be a weak spot, Nissan - 44%-owned by France's Renault and Japan's second-biggest carmaker - has seen sales improve elsewhere.

During the first three months of its financial year, total sales rose by 13% to 2.145 trillion yen.

In the US and China, growth topped 18%, while within Japan sales climbed by almost 19%.

US consumers have been buying Nissan's Pathfinder and Murano sport-utility vehicles, while in Japan the focus is more on compact cars such as the Note and Tiida.

Significant upturn?

Peugeot, Europe's second-biggest car maker, has remained optimistic about its outlook for this year, despite a slide in profits during the first six months.

The company said that it still expects to hit sales and earnings targets.

Group net income in the six months to the end of June dropped to 697m euros (482m) from 880m in the same period a year earlier.

Peugeot said earlier this month that sales had climbed 0.6%, helped by demand in areas countries such as Turkey and China, and regions including Latin America.

The company has been cutting costs and launching new models, which are expected to lift sales in the latter stages of this year.

"However, lacklustre growth in European economies means that the region's automobile markets are not likely to see a significant upturn," PSA said in a statement.


SEE ALSO:
Peugeot staff reject shift change
22 Jun 05 |  Coventry/Warwickshire
US car firms lose out to rivals
03 May 05 |  Business
Record profit for carmaker Nissan
25 Apr 05 |  Business


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