Nissan reported a drop in quarterly net profit on Thursday, hit by higher costs and weak sales in key markets, although it left its annual forecasts unchanged.

The Yokohama-based company said for the April-June quarter net profit edged down 1.1 percent on-year to 134.9 billion yen ($1.2 billion) while operating profit fell 12.8 percent to 153.3 billion yen.

The maker of the Altima sedan said in a statement that it was hit by "rising raw material costs, adverse foreign exchange impacts, and slower than anticipated growth in key markets".

It did not elaborate on the foreign exchange situation, though with factories around the world and in Japan it is exposed to risks in a number of currencies.

Sales rose 4.0 percent to 2.76 trillion yen.

"Overall, results were in line with the company's expectations... and the company expects improved profitability for the remainder of the year," the group said.

Company vice president Joji Tagawa said Nissan was reporting "satisfactory results despite rising raw materials costs, lower industry volumes in the United States and slower than expected growth in China and the Middle East."

"Our performance in Europe was also impacted by the timing of model change-overs," he told a press briefing.

"These negative issues are offset by healthy demand in Japan and continued cost efficiencies in our business," he said.

Sales growth in China came in at 5.3 percent in April-June while North America sales rose 0.6 percent.

Profits in the US market were dented due to heavy costs related to sales incentives.

Nissan maintained its earnings forecasts for the current fiscal year to March 2018.

It predicted net profit to fall 19.4 percent to 535 billion yen, largely due to year-before gains from the sale of its non-controlling stake in auto parts supplier Calsonic Kansei.

Operating profit is projected to slip 7.7 percent to 685 billion yen while sales are seen edging up 0.7 percent to 11.8 trillion yen.

Longtime Nissan boss Carlos Ghosn this year stepped down from the chief executive post to focus on overhauling scandal-hit Mitsubishi Motors.

Ghosn took charge at troubled Mitsubishi after Nissan threw it a lifeline last year, buying a one-third stake as it wrestled with a mileage-cheating scandal that hammered sales.

He also heads France's Renault and remains as chairman of Nissan.

Mitsubishi Motors said Tuesday that it swung back to net profit for the three months to June, while operating profit soared more than fourfold from a year earlier.

"Nissan can expect a positive synergy in its alliance with Mitsubishi from now on," Satoru Takada, an analyst at Tokyo-based research and consulting institute TIW, told AFP before Nissan's results.