Nissan Announces 187 Billion Yen Record Half-Year Operating Profit
as NRP Runs Well Ahead of Schedule
Tokyo (October 18) - In an address marking the second anniversary of unveiling the Nissan Revival Plan (NRP), Carlos Ghosn, President and Chief Executive Officer of Nissan Motor Company, announced that the plan is well ahead of schedule and delivering significant profits as promised. This half, Nissan will report its third consecutive half-year of record profits, with an operating income expected to be 187 billion yen ($1.56 billion, Euro 1.73 billion), 39% more than last year and an operating margin of 6.2%. Ghosn also reported that Nissan had reduced consolidated net automotive debt by 149 billion yen ($1.24 billion, Euro 1.38 billion) in the past six months to 804 billion yen ($6.70 billion, Euro 7.44 billion) and expected net income after tax to come to 230 billion yen ($1.92 billion, Euro 2.13 billion), for a return on net sales of more than 7.5%. Since announcing the NRP on October 18, 1999, the company continues to lay a solid foundation on which it will launch 13 new models in fiscal year 2002
"NRP is a book with many chapters ranging from product plan, brand power, investments for the future, cost reduction and asset sales. From the beginning, we have been implementing each one of them intensively and simultaneously, while recognizing that expected benefits will come at very different points in time," said Ghosn. Nissan has continued reducing its cost base vigorously. Cumulative purchasing cost reductions are on track to reach 18% this year. The company is also beginning to benefit in the first half from restructuring in the domestic distribution network and in manufacturing, with the March 31, 2001 closure of three assembly plants in Japan. Ghosn added, "Just two years after having a near death experience, Nissan is finding itself, at the midpoint of NRP, not very far from the highest level of profitability among the global volume players in the industry."
Nissan reported record operating profits despite stable net revenues. Globally, retail sales volumes for the first-half fiscal year 2001 decreased by 3.8%, from 1.337 million units to 1.286 million units. In Japan, volume rose 2.1% to 342,000 units from 335,000. In the U.S., volume fell 14.0% to 349,000 units from 406,000, while volume in Canada grew 7.4% to 29,000 units from 27,000. In Europe, Nissan volume declined 5.5% in the first half to 273,000 from 289,000 in the first-half last year. General overseas markets saw a 4.6% increase to 293,000 from 280,000, with Mexico posting a 14.1% increase.
"If market conditions, as seen today, were more predictable and less volatile, we would have revised our profit forecast upward," said Ghosn. "However, we have chosen a more cautious outlook, which still represents a more than 20% improvement in operating profits over last year, despite a significantly tougher economic and competitive environment."
Ghosn reiterated the company's full-year financial forecast for fiscal year 2001 of a consolidated operating profit of 350 billion yen and net income after tax of 330 billion yen. He also announced a new fiscal year-end consolidated net automotive debt target of 750 billion yen, 100 billion yen below the company's previous forecast
In his presentation, Mr. Ghosn stated, "At the heart of the revival process are two fundamental missions. First is to change the mindset, second is to establish a high level of trust." He acknowledged, "The jury is still out on the ultimate success of the revival process, but we have no apprehensions on the verdict, as long as everyone looks at us with objective eyes."
Nissan will unveil eight new concept and production vehicles on October 24, at the Tokyo Motor Show, many of which will be launched in the coming year. On November 19, 2001, the company will file its official audited accounts for the first half of fiscal year ending March 31, 2002 results with the Tokyo Stock Exchange.
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Editors note: Amounts in dollar and euro are translated for the convenience of the reader only at the rate of 120 yen/dollar and 108 yen/euro.