Nissan Reports Half-Year Operating Profit And Net Income
30 October 2000
Nissan Reports Best Consolidated Half-Year Operating Profit And Net Income in 10 Years
TOKYO, Oct. 30 Nissan Motor Co., Ltd.
today released preliminary financial figures showing a consolidated operating
profit of 136.6 billion yen (US$ 1.26 billion), an operating margin of 4.5%,
for the first six months of fiscal year 2000 -- the best performance in a
decade. The figures are evidence that the comprehensive Nissan Revival Plan
is fully engaged, yielding higher-than-expected results, and that its strong
commitments will be overachieved.
The consolidated figures were reported in filings with the Tokyo Stock
Exchange as the company issued an official forecast for its half-year and
revised the forecast for the full year. Official financial figures for the
April-September 2000 period will be reported Nov. 20.
"The preliminary figures illustrate Nissan's highest achievement in the
last 10 years and are more than twice as high as last year's first half,"
Carlos Ghosn, Nissan's president, said at a news conference. "And it is fair
to say that this is only a beginning."
Revenues were hampered by the appreciation of the yen and were virtually
the same as the first half of the previous fiscal year at 3.05 trillion yen
(US$ 28.24 billion) despite higher retail sales. Nissan's improved world-wide
operations led to a first-half ordinary profit of 133.5 billion yen
(US$ 1.24 billion). Net income came to 170.2 billion yen (US$ 1.58 billion)
as Nissan posted 39.6 billion yen (US$ 0.37 billion) in exceptional profits
for the period.
In the filings, Nissan revised its full fiscal year 2000 forecast,
doubling operating profit to 220 billion yen (US$ 2.04 billion) and raising
substantially its forecast for net income after taxes to 250 billion yen
(US$ 2.31 billion).
The better-than-expected results for the half-year were fueled by
significant cost reductions, particularly in purchasing, and increased
worldwide sales of profitable vehicles.
While the impact of the revival plan unveiled by the company on Oct. 18,
1999 did not factor any benefit from growth, world-wide retail sales came to
1.337 million units, up 5.7 percent compared with the same period in the
previous fiscal year.
The figures included negative impacts of 90 billion yen (US$ 0.83 billion)
from foreign currency exchange and 32 billion yen (US$ 0.30 billion) mainly
from competitive market and regulatory pressures.
These negative elements were more than offset by a 192 billion yen
(US$ 1.78 billion) positive impact from cost reductions in purchasing as well
as sales, general and administrative expenses.
Growth in vehicle sales volume world-wide contributed 4 billion yen
(US$ 0.04 billion). Combined volume and product mix gains in North America,
Europe and other markets world-wide offset a mediocre sales performance in
Japan which had been expected by the company.
In addition Nissan reduced its net automotive debt by 200 billion yen
(US$ 1.85 billion) during the first six months of the fiscal year, bringing
the company's estimated net automotive debt to 1.15 trillion yen
(US$ 10.65 billion), 100 billion yen (US$ 9.3 billion) lower than the fiscal
year-end forecast.
During his press conference, Mr. Ghosn also up-dated the progress made in
the implementation of the NRP.
At the center of the NRP is an aggressive, world-wide product launch plan,
with 22 all-new vehicles being introduced over three years. Two of the
vehicles have been already introduced in Japan -- the Bluebird Sylphy sedan
and the Nissan X-Trail sport-utility vehicle.
He reiterated the company's guideline of 5 percent of sales devoted to
capital expenditures with 60 percent focused on new-product and technology
development.
Manufacturing plans for Japan are proceeding as outlined in the NRP.
Nissan is in the process of optimizing manufacturing capacity utilization in
North America and Europe to meet increased demand and to reduce exposure to
foreign exchange fluctuations.
In addition, Nissan will make an announcement in the coming weeks about
North American manufacturing strategy regarding the already announced full-
size pickup truck and sport-utility vehicle as well as a new generation of
Nissan minivan.
Despite the better-than-expected financial results for the half-year,
Mr. Ghosn said many of the risks the company had forecast still remain.
Primary risks for the second half include continued weakness of the euro
and increases in prices of energy and precious metals. Mr. Ghosn also
cautioned that the slowdown in the U.S. market could be swifter and more
severe than the company's revised forecast of a 1.1 percent decline for the
full fiscal year.
Mr. Ghosn also recognized that opportunities remain, including development
of synergies with its Alliance partner Renault and continued strong
implementation of the NRP.
"In the first half of 2000, we made significant strides. But it is only a
step towards what we want to achieve," Mr. Ghosn said. "Nevertheless, this
first step is very motivating for all of us in Nissan. It stimulates us."
Under the NRP, the company has committed to attaining a consolidated net
profit in fiscal year 2000, cutting consolidated net automotive debt in half
to 700 billion yen (US$ 6.48 billion) or less and reaching a minimum operating
margin of 4.5 percent by fiscal year 2002.
"Significant profitability in fiscal year 2000 will be achieved, and we
are confident today that we will also achieve both the debt and the operating
margin commitment by fiscal year 2002," Mr. Ghosn said. "We are building a
global company of Japanese essence, that we would like you, as we do, to be
proud of and to respect."
note: yen dollar conversion is for the convenience of the reader only.
It has been calculated at 108 yen to a dollar, the approximate exchange rate
as of September 30th 2000.