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Nissan lifts profit forecast, but Renault uncertainty remains

Man walks in front of the Nissan logo at Nissan Gallery in Yokohama

By Satoshi Sugiyama

TOKYO (Reuters) -Japan's Nissan Motor Co lifted its full-year profit forecast on Wednesday, buoyed by higher-margin sales and a weaker yen, and reiterated talks with top shareholder Renault about revamping their alliance were "open and constructive".

Upbeat results - the automaker reported a 45% jump in quarterly profit - came against industry-wide worries about higher costs and chip shortages and, for Nissan, uncertainties about the future of the partnership with France's Renault.

Renault on Tuesday unveiled a sweeping overhaul of its businesses, saying it would set up a joint venture with China's Geely for gasoline engines and hybrid technology and spin off its electric vehicles unit next year.

It wants Nissan to invest in the new electric unit. The talks are ongoing and "open and constructive," Nissan Chief Executive Makoto Uchida told a briefing.

But it remains to be seen how they play out. The companies are also renegotiating their equity ties, which currently see Renault owning a controlling 43% of Nissan and the Japanese company holding only a 15% non-voting stake in Renault.

People with knowledge of the talks have said Renault's stake in Nissan could be reduced to 15%.

While Renault said its new gasoline and hybrid unit could supply powertrains to Nissan, that ambition could also raise complications, according to Morningstar analyst Richard Hilgert.

"We like the potential for increased economies of scale," he said in a note to clients. "But this may present issues with alliance partner Nissan, which has also contributed (internal combustion engine) and hybrid technologies to Renault."

INTELLECTUAL PROPERTY

Discussions between the two companies have taken longer than initially expected due to Nissan's concerns about how its intellectual property rights can be protected as Renault forges new ties with Geely, sources have told Reuters.

However, Uchida said he didn't believe there were any differences in views with Renault over intellectual property.

Nissan reported 91.7 billion yen ($630 million) in operating profit for the three months to end-September. That beat a Refinitiv consensus estimate of 88.2 billion yen from 11 analysts.

The company raised its full-year operating profit forecast to 360 billion yen from 250 billion yen, exceeding the 335 billion yen average forecast by 21 analysts.

"Global issues such as semiconductor shortages and supply chain disruptions triggered by the pandemic, as well as soaring energy and raw material prices, have had a greater impact on our business than we initially anticipated," Uchida said.

"However, despite these challenges, our business performance is steadily recovering and exceeding our plans," he said.

Semiconductor supply disruptions meant Nissan had to temporarily stop taking new orders for two models in Japan last month. ($1 = 145.6700 yen)

(Reporting by Satoshi Sugiyama; Editing by David Dolan, Edwina Gibbs and Mark Potter)