It was a tough year for recent Motley Fool Global Gains selection Nissan (NASDAQ:NSANY). After six years of meeting its goals, the company and its high-profile CEO, Carlos Ghosn, acknowledged at the end of the third quarter that Nissan would miss its FY 2006 targets.

Nissan released its full-year 2006 results overnight, and while they weren't pretty, they could have been worse. For the year, unit sales fell 2.4% to 3.48 million, largely because of the absence of new models for most of the year. Despite the decline in units, Nissan did post higher revenue year over year. But even with some gains from foreign currency movements, operating income and net income fell 12% and 13%, respectively, because of increased raw material costs, higher incentives to sell aging models, and a loss of operating leverage on fewer units sold.

Japan was by far the worst-performing market for Nissan, with industry sales falling 4.1% and Nissan's sales declining 12.1%. In the U.S., the company fared a bit better, with sales declining 4% as the industry fell 3.4%. New models toward the end of the year reversed some of the earlier steep declines. In Europe, both the industry and Nissan were flat. Nissan's bright spot this year was the rest of the world -- its "general overseas market" -- where sales increased 5.1%. The company enjoyed a 22.2% increase in China, where it launched an all-new model.

Next year, Nissan expects Japanese sales to decline another 5.4%. The total market in Japan continues to shrink, and competitors Honda (NYSE:HMC), Toyota (NYSE:TM), Suzuki (OTC BB: SZKMF.PK), and others are fighting with Nissan for pieces of that smaller pie. But Japan's the only low point the company expects next year.

Overall unit sales are expected to increase 6.2%, with an 11.2% increase in Europe, a 6.3% increase in the U.S., and an 11.3% increase in its general overseas market. This still puts the company behind its original strategic goals from more than a year ago, but it should be an improvement from this year. From a financial perspective, Nissan expects slightly higher revenue, after adjusting for a one-time accounting change this year, and a roughly 4% rise in net income.

Nissan's year wasn't entirely free of good news. The company continued to expand its Infiniti brand outside of the U.S. and South Korea, moving into Russia this year. Next year, Infiniti will begin selling in the Ukraine and China as well. The other bright spot is Nissan's light commercial vehicle business, which exceeded targets originally set for next year in operating margin and units sold. That segment has been strong and profitable in Japan, and the company is gradually expanding it to other markets.

Nissan will also continue its aggressive cost-cutting. It plans to source more materials from countries with less expensive inputs, and to continue outsourcing non-core IT and other services. This should allow Nissan to maintain its margins while continuing to increase its investment in research & development.

The auto industry as a whole faces several headwinds, including the softening U.S. housing market. Honda announced this week that it expects profits to decline in FY 2007 on weaker U.S. sales. That said, Nissan's goals aren't outrageous, and Ghosn is up-front about Nissan's strengths and weaknesses. In the video presentation accompanying the automaker's results, he speaks very plainly about areas in which Nissan can still improve, including strengthening its brand image among consumers to gain pricing power. If Nissan can execute its plans and achieve even the low level of growth it's targeted, its shares will likely follow that same upward path.

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Nathan Parmelee has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.