Nissan Reports an Operating Profit of 58.5 Billion Yen
22 November 1999
Nissan Reports an Operating Profit of 58.5 Billion Yen and a Net Loss of 323.5 Billion Yen for the 1st Half of Fiscal Year 1999 ended September 30, 1999
TOKYO, Nov. 22 -- Nissan Motor Co., Ltd.
announced today a consolidated operating profit of 58.5 billion Yen
($ 551.8 million, Euro 517.7 million) and a consolidated net loss of
323.5 billion Yen ($ 3.05 billion, Euro 2.86 billion) for the 1st half of
fiscal year 1999 ended September 30, 1999. Sales reached 3,045.3 billion Yen
($ 28.73 billion, Euro 26.95 billion), a decrease of 9.9% compared to the same
period in 1998. Consolidated operating income increased to 1.9% of net sales
on a consistent basis compared to 0.7% in 1998. The average exchange rate for
the Dollar came to 117.35 Yen compared to 137.83 Yen for the same period in
1998.
To date, in accordance with the provisions of Japan's Securities and
Exchange Law, Nissan has only reported non-consolidated first half financial
results. Nissan has decided to disclose its consolidated first half results
as of the current fiscal year on a voluntary basis one year ahead of the
regulatory requirement.
Note: Amounts expressed in US$ and Euro in this press release have been
translated for convenience only at 106 Yen = 1 US$ and 113 Yen = 1 Euro, the
approximate rate of exchange on September 30, 1999.
Consolidated Financial Results:
1. Unit Sales:
Nissan's global vehicle sales for the first half of fiscal year 1999
reached 1,166,000 units compared to 1,275,000 units for the same period in
1998. Domestic sales totaled 369,000 units, a drop of 15.8% from last year
(438,000 units), sales in North America rose 2.7% to 344,000 units from
335,000 units in 1998. Sales in Europe decreased 3.3% to 266,000 units from
275,000 units the prior year while Mexican unit sales fell 21.1% to 71,000
units from 90,000 units. Other foreign markets totaled 116,000 units, down
15.3% from last year (137,000 units).
2. Net Sales
Consolidated net sales for the first half came to 3,045.3 billion Yen
($ 28.73 billion, Euro 26.95 billion), a drop of 9.9% on a consistent basis
from the first half of 1998. This fall is due to the decline in unit sales
and to the negative impact of the appreciation of the Yen.
3. Operating Income
Consolidated operating income increased 125% to 58.5 billion Yen
($ 551.8 million, Euro 517.7 million) and represented 1.9% of sales as
compared to 0.7% on a consistent basis in the first half of 1998. The
improvement in operating income is attributable to a reduction in costs and
S G & A expenses, which offset the negative impact of the appreciation of the
Yen and lower sales.
4. Ordinary Income
Consolidated ordinary income totaled 42.6 billion Yen ($ 401.8 million,
Euro 377.0 million) compared to a loss of 8.3 billion Yen ($ 78.3 million,
Euro 73.5 million) in the first half of 1998. This improvement is
attributable a reduction in non-operating expenses, such as interest on
outstanding debt and to the reversal of evaluation losses on securities.
5. Income before income taxes
Consolidated loss before income taxes reached 347.1 billion Yen
($ 3.27 billion, Euro 3.07 billion) for the first half of fiscal year 1999
compared to a loss of 100.2 billion Yen ($ 945.3 million, Euro 886.7 million)
for the same period in 1998. This loss is the result of extraordinary
non-recurring charges of 368.9 billion Yen ($ 3.48 billion, Euro 3.26 billion)
relating to changes in the accounting of pensions and retirement benefits (a
lump-sum 274.2 billion Yen ($ 2.59 billion, Euro 2.43 billion) reserve, which
covers service of all past retirement liabilities), a change in the
calculation method of provisions relating to product warranties to bring the
accounts in line with internationally accepted practices (48.1 billion Yen,
$ 453.8 million, Euro 425.7 million) and provisions for plant closures and
restructuring (46.6 billion Yen, $ 439.6 million, 412.4 million).
6. Income taxes
The company adopted tax effect accounting starting in the current
reporting period. This change resulted in the allocation of 29.1 billion Yen
($274.5 million, Euro 257.5 million), leaving most of the tax benefits for
future years. Current income taxes amounted to 18.7 billion Yen
(176.4 million, Euro 165.5 million).
7. Net Income
Consolidated net loss after tax reached 323.5 billion Yen ($3.05 billion,
Euro 2.86 billion) compared to a loss of 105.4 billion Yen ($ 994.3 million,
Euro 932.7 million) for the first half of fiscal year 1998.
8. Indebtedness and Financial Condition
Consolidated total net financial indebtedness came to 2,526.3 billion Yen
($ 23.8 billion, Euro 22.36 billion) for the first half of fiscal year 1999.
Consolidated net financial indebtedness of the automotive business totaled
1,382.3 billion Yen ($ 13.04 billion, Euro 12.23 billion), down from
2,035.8 billion Yen ($ 19.2 billion, Euro 18.02 billion) on a consistent basis
from the end of fiscal year 1998. The net financial indebtedness of the sales
finance companies reached 1,144.0 billion Yen ($ 10.79 billion,
Euro 10.12 billion). The decrease in consolidated total net financial
indebtedness is due to the capital injection of Renault.
Consolidated shareholder's equity at the end of September 1999 totaled
1,283.7 billion Yen ($ 12.11 billion, Euro 11.36 billion), an increase of
127.9 billion Yen ($ 1.21 billion, Euro 1.13 billion) compared to
1,155.8 billion Yen ($ 10.90 billion, Euro 10.23 billion) in 1998 on a
consistent basis.
9. Outlook
The outlook for the second half of fiscal year 1999 is contrasted. While
the market in Europe is expected to continue to show signs of growth, the
total market in the United States could slow from its historically high
levels. In Japan, the signs of a recovery in the passenger car market are
still in the early stages where demand is still weak.
Furthermore, the recent appreciation in the value of the Yen against the
Dollar and the Euro will continue to exert downward pressure on operating
margins.
In this environment, Nissan will be vigorously pursuing the rapid
implementation of its Revival Plan worldwide. Particular emphasis will be
given to the globalization of purchasing and tight control over selling,
general and administrative expenses. The impact of cost reduction efforts
should be the driving factor contributing to the achievement of an operating
profit for the full fiscal year 1999 which should not be very distant from the
figure announced in the May forecast of 100 billion Yen ($ 943.4 million,
Euro 884.96 million). The balance of the provisions relating to Nissan's
revival plan announced on October 18, 1999 will be charged to second half of
fiscal year 1999 ending March 31st 2000.
Mr. Anraku, EVP and CFO made the following comments:
"Nissan has disclosed consolidated half yearly financial results for the
first time. These interim results are published a month after the
announcement of a comprehensive revival plan aimed at growing Nissan's global
business and market presence while significantly reducing overall costs. The
company is now fully committed to the swift implementation of the Nissan
Revival Plan with the view of meeting its first target of a positive net
income result for fiscal year 2000."
Non-consolidated results: Nissan Motor Co., Ltd.
1. Net Income
Non-consolidated net loss for the first half of fiscal year 1999 reached
524.2 billion Yen ($ 4.95 billion, Euro 4.64 billion). This amount was
200.7 billion Yen ($ 1.89 billion, Euro 1.78 billion) greater than the
consolidated net loss for the same period mainly due to the write-down of the
company's investment in certain domestic subsidiaries as a result of a
revaluation of land prices.