TOKYO, Feb 3: Nissan Motor Co. on Friday predicted its first drop in annual profits since its breakthrough foreign manager Carlos Ghosn took the helm of the loss-making company in 1999.

The unexpectedly severe profit warning came as the Japanese automaker reported a 22.6 per cent slump in net earnings in the quarter to December.

Faced with poor sales, particularly in its home market, net profits are now expected to slide by over 11 per cent in the year to March 2007, announced Nissan, which is 44 per cent owned by France's Renault.

Net earnings fell to 104.4 billion yen ($864.4 million) in the three months to December, the third quarter of the fiscal year, as revenue rose 1.8 per cent from a year earlier to 2.34 trillion yen.

I consider we are today in a performance crisis and we need to fix it as soon as possible, Ghosn told reporters via a video link from Paris.

We have a weakness. We have to recognize it and we have to act on it. But fundamentally the company is healthy,” he told reporters via a video link from Paris.

Operating profit fell 16.6 per cent to 183.1 billion yen in the third quarter as Nissan's global vehicle sales dropped 3.0 per cent from a year earlier to 795,000 vehicles.

The setback at Nissan comes as rivals Toyota and Honda continue to make great strides in the United States with their fuel efficient vehicles. Nissan has been slower to embrace gas-electric hybrid vehicles.

Ghosn is credited with saving it from near bankruptcy but has recently reduced the amount of time he spends running the Japanese company. In April 2005 he also took the helm of French partner Renault.

Carlos Ghosn is now chief executive of both companies, and his time to spend at Nissan is maybe more limited than before, said Tatsuya Mizuno, an auto analyst at Fitch Ratings.

Nissan's management has to propose new strategies, which should be different from the past. The recovery phase has ended. Nissan needs now another strategy, said Mizuno.

Ghosn crisscrosses the world in his Gulfstream corporate jet, moving between Paris, the US where he heads Nissan's North American operations, and Tokyo.

Just months ago he was touted as the possible saviour of ailing US auto giant General Motors until talks on a possible alliance broke down.

Ghosn said Friday Nissan would take additional actions” to try to boost its performance during the coming months. Full details would be unveiled alongside the company's full-year results in April, he said.

The Japanese automaker slashed its full-year net earnings target to 460 billion yen from 523 billion yen previously, which would mark an 11.2 per cent drop from the preceding year's realised 518.1 billion yen.

It cut its operating profit forecast to 775bn yen from 870bn.

Nissan has blamed its recent troubled spell on a lack of new model launches that has left it locked in a fierce battle with Honda Motor for the rank as number two Japanese automaker.

In an effort to reverse that, it introduced six new models including the Altima, Livina Geniss and Infiniti G35 in the third quarter and plans to launch 11 new models during 2007.—AFP