Japan Stocks Slip a Second Day on Nissan Profit, U.S. Car Sales

By Patrick Rial

Aug. 4 (Bloomberg) -- Japan stocks fell a second day, led by carmakers, after Nissan Motor Co.'s profit fell by two fifths and U.S. auto sales fell to the lowest annual rate in 16 years.

Nissan, Japan's third-largest automaker, sank to a five-year low after net income sank due to a writedown on leased vehicles and a stronger yen, and as U.S. auto sales dropped to the lowest since 1992. Smaller rival Mazda Motor Corp. plunged the most in six years. Canon Inc., which gets more than a quarter of its revenue in the Americas, declined to the lowest since April after the U.S. jobless rate rose to the highest level in four years.

``The U.S. auto figures were extremely poor, and I expect the gradual deterioration of the U.S. economy to continue until the beginning of next year,'' said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which manages about $94 billion.

The Nikkei 225 Stock Average slumped 169.34, or 1.3 percent, to 12,925.25 as of 10:43 a.m. in Tokyo. The broader Topix index fell 19.91, or 1.6 percent, to 1,253.02. Four stocks fell for each that advanced on the Topix.

Nissan slumped 4.8 percent to 788 yen, the lowest level since March 2003. The company said on Aug. 1 net income dropped 43 percent to 52.8 billion yen ($492 million) in the first quarter. Three brokerages cut their price targets on the company.

Toyota Motor Corp., the world's largest automaker by value, slumped 3.3 percent to 4,460 yen, the lowest since August 2005. Honda Motor Co., which gets more than half its sales in North America, tumbled 4.3 percent to 3,330 yen, a seventh day of declines. Toyota reported a 12 percent slide in U.S. sales for July on Aug. 2, while Honda's dipped 1.6 percent.

`Shocking' Auto Sales

Mazda Motor Corp. a third owned by Ford Motor Co., plunged 8.9 percent to 551 yen, the steepest slide in more than six years, after July U.S. sales dropped 13 percent, the biggest decline among Japanese automakers.

The sales figures were ``shocking,'' even in comparison with the conservative forecasts Nomura Holdings Inc. had been making, Shinya Naruse, an analyst at the brokerage, wrote in a note today.

Olympus Corp., the world's biggest maker of endoscopes, slumped 6 percent to 3,280 yen after the company's profit declined amid slumping prices for digital cameras. JPMorgan Chase & Co. cut its rating on the stock to ``underweight'' from ``neutral.''

``With profit down by about a 10th across the board, it's not as bad as I had feared,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. ``But in this market when you show a drop in earnings, it brings the sellers out almost automatically.''

U.S. Unemployment

Canon lost 2 percent to 4,810 yen. Sony Corp., the maker of the PlayStation 3 game console, slipped 1.7 percent to 4,030 yen.

U.S. unemployment rose to 5.7 percent in July from 5.5 percent the prior month. As recently as April, it was 5 percent. A separate report showed that U.S. manufacturing stagnated in July as companies were hit by rising raw-materials costs and slower spending.

Nippon Telegraph & Telephone Corp., the nation's largest telephone company, jumped 2.5 percent to 573,000 yen, the highest since May 31, 2007, after the Nikkei newspaper said on Aug. 2 the company may report a first quarter operating profit of as much as 400 billion yen, boosted by a 45 percent jump in profit at its mobile phone subsidiary NTT DoCoMo Inc.

Nikkei futures expiring in September lost 0.8 percent to 12,920 in Osaka and fell 1.2 percent to 12,920 in Singapore.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.