Nissan Announces 84% Increase in Operating Profit; NISSAN 180 Achieves 10.6% Operating Margin

    TOKYO--Oct. 23, 2002--Nissan Motor Company announced today that it expects to report an 84% increase in operating profits for the first half of fiscal year 2002, to 348 billion yen (US $2.8 billion, euro 3.0 billion). Record profits are attributed to a combination of higher volumes from new products, more efficient operations and lower purchasing costs. With a confident outlook for the second half, President and CEO Carlos Ghosn revised the full-year operating profit upward by 30% from 553 billion yen to 720 billion yen (US $5.8 billion, euro 6.2 billion). The company will file its official audited report on November 19, 2002.
    "NISSAN 180 was built with the conviction that Nissan could move to its second and final phase of revival -- that of lasting, profitable growth based on attractive products and competitive performance," said Ghosn. "We have been tenaciously laying the groundwork for growth, and today we see that growth is here in a very challenging global market."
    Ghosn also announced a three-year dividend policy that aims to triple Nissan's annual dividend of 8 yen per share for fiscal year 2001 to 24 yen per share for fiscal year 2004 by the end of NISSAN 180. He noted: "With five consecutive half-years of increased profits, we have established Nissan's global return to significant profitability. We want to make our dividend policy transparent and consistent with our aim to be at the top level of profitability in the global auto industry."
    On expected revenue of 3.28 trillion yen (US $26.6 billion, euro 28.2 billion) for the first half of the 2002 fiscal year, Nissan's operating income is expected to be 348 billion yen (US $2.8 billion, euro 3.0 billion), an 84% increase over the first half of FY 2001. The operating margin is expected to be 10.6% of net sales, led by increased volumes in the entry-level segment in Japan as well as strong sales of the Altima and a rejuvenated Infiniti line in the United States. The impact of foreign currency exchange was minimal, and lower costs were tightly managed amid growth.
    Nissan also reported that net automotive debt was reduced to 274 billion yen (US $2.2 billion, euro 2.4 billion) in the first half, from 432 billion yen (US $3.5 billion, euro 3.7 billion) at the end of fiscal year 2001. The debt reduction was realized by improved cash from operations as well as continued asset sales.
    Globally, Nissan retail sales totaled 1,386,000 units in the first half of the fiscal year, an increase of 7.5% from the same half-year period of FY 2001. This solid performance is being sustained by Nissan's product plan, which will introduce 28 all-new products in the three years of NISSAN 180. Twelve of those products are being launched in the current fiscal year; six have been launched to date.
    In Japan, volume rose 12.1% to 383,000 units (including mini-cars). Entry-level cars such as the new March and Moco have driven the increase. In the United States, volume was up 8.3% to 378,000 units, with the Nissan Altima, Nissan 350Z and Infiniti G35 selling at a strong pace. In Europe, sales declined 9.4% to 251,000 units from January to June as the company focused on profitability, preparing for the launch of the new Micra in fiscal year 2003. General overseas markets saw a 16.2% increase to 374,000 unit sales. In Mexico, volume is up 18.4%, led by the successful launch of the Platina. In China, volume is up 80% to 36,000 unit sales.
    Lower purchasing costs generated a positive contribution of 102 billion yen (US $830 million, euro 880 million) to operating profits. Ghosn pointed out that the increased volumes and the higher level of efficiency brought on by Nissan's purchasing policy since 1999 are delivering significant benefits.
    Ghosn also highlighted the company's recent investment in China, emphasizing Nissan's commitment to plan for future profitable growth beyond NISSAN 180. On September 19 Nissan announced that it would invest 8.55 billion RMB (JPY 120.4 billion, US $1.03 billion) into a new partnership with Dongfeng Motor Corporation. Dongfeng Motor Co., Ltd., is targeting 550,000 unit sales by 2006 -- 220,000 of which will be Nissan-branded passenger cars -- and 900,000 within 10 years.

    Revised Financial Forecast:

    Based on expected stronger volumes in the second half, the company revised its volume forecast upward by 1.7% to 2,838,000 and filed a revised financial forecast with the Tokyo Stock Exchange.
    Full-year revenues are expected to reach 6.8 trillion yen (US $55.2 billion, euro 58.5 billion), an increase of 9.7% from FY 2001, and operating profits to be 720 billion yen (US $5.8 billion, euro 6.2 billion), a 47% increase. The operating margin is expected to be 10.6%, a margin improvement of 2.7 points over FY 2001. Ordinary profit is forecasted to be 660 billion yen (US $5.4 billion, euro 5.7 billion), a 59% increase, as financial costs are minimized due to lower debt, and the net profit after tax is expected to be 490 billion yen (US $4.0 billion, euro 4.2 billion), an improvement of 32%. Net automotive debt is forecasted to fall to 80 billion yen (US $650 million, euro 690 million) by the end of the fiscal year, down from 432 billion yen at the end of the prior fiscal year. The forecast for the second half maintains the current assumption that the dollar would remain at 125 yen and the rate of the euro would reach 120 yen.

    Note: Amounts in dollar and euro are translated for the convenience of the reader only at the rate of 123.1 yen/dollar and 116.3 yen/euro, the average rate for the first half of fiscal year 2002.