Press Release: Nissan Motors Co., Ltd.

Press Release: Nissan Motors Co., Ltd.
Date of Release: Mar 28, 2002
Releases Benchmark Report

Kam Hon, David Schroeder /  416-593-5577 ext.2243, ext.2232 / e-mail:
khon@dbrs.com

 

Nissan Motors Co., Ltd. ("Nissan" or "the Company") is a global car
manufacturer with production facilities in all three major auto markets,
namely, North America, Western Europe, and Japan.  Nissan is the second
largest car manufacturer in Japan, and it also has a meaningful market
position in North America and Europe.  The Company's performance was in
decline throughout the 1990s.  A bloated cost structure and lack of new
models led to a string of losses.  Since 1991, the Company only reported
positive results once, in 1996.  In addition, Nissan was burdened by a
high debt load, a result of high cash usage and poor profitability.  In
May 1999, the Company formed an alliance with Renault, the second
largest car maker in France, with Renault taking a 36.8% stake in
Nissan.  In October 18, 1999, Nissan announced a far reaching
restructuring program, the Nissan Revival Plan ("NRP") aiming at turning
around the Company's moribund performance and return Nissan to
profitability by FY2002 (year ending March 31, 2003).  Nissan has made
good progress in reducing its material costs and closing excess capacity
and meeting targets in the NRP ahead of schedule.  The Company is now
solidly profitable in most regions with the exception of Europe.
Improving cash flow from operations and proceeds from selling non-core
assets allowed the Company to reduce net automobile debt to about ¥800
billion at the end of September 2001 from ¥2,041 billion at the March
31, 1999.  However, Nissan's financial profile, albeit much improved, is
still weaker than most of its major competitors.  To maintain its
improvement momentum, Nissan has announced another program, 'Plan 180,'
for the period 2003 - 2005.  'Plan 180' targets (1) an increase of 1
million units in sales, (2) matching industry leaders in operating
margins, and (3) zero net automobile debt.  Nissan is expected to
introduce 22 new models between 2002 and 2005 to support growth.  A lack
of new models was the prime reason for share loss in Japan in the recent
past.  Leveraging on its improved cost base, a higher sales volume
should give a meaningful boost to earnings.  However, deteriorating
conditions in all major auto markets will intensify competition, making
it more difficult for Nissan to increase sales and reverse its market
share loss.  As a minimum, the weakened market conditions will likely
slow down the Company's improvement.

Dominion Bond Rating Service Limited (DBRS) has published a full report
that provides additional analytical detail.  To see this report, please
click on http://www.dbrs.com/web/sentry?COMP=2900
<http://www.dbrs.com/web/sentry?COMP=2900&DocId=106540> &DocId=106540.
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