Nissan Reviews First Half FY2001 Financial Performance
Tokyo (October 25) - In an international analyst conference organized during the 35th International Tokyo Motor Show, Carlos Ghosn, president and CEO of Nissan reviewed details behind the record half-year consolidated operating profit of 187 billion yen (US$1.56 billion, Euro 1.73 billion) announced on October 18. In his presentation, Ghosn gave further breakdowns and a detailed analysis on the preliminary financial results.
Net sales
Consolidated net sales came to 3 trillion yen (US$25.00 billion, Euro 27.78 billion), stable with last years first half. The drop in wholesale volumes, especially in the U.S., had a negative impact of 6.3% or 191 billion yen (US$1.59 billion, Euro 1.77 billion), which was offset by a 6.4% or 192 billion yen (US$ 1.60 billion, Euro 1.78 billion) impact from translation of foreign currency sales into yen. Additionally, the spin-off of consolidated affiliates lowered consolidated net sales, as they were no longer included in the scope of consolidation.
Operating income
Nissan's half year consolidated operating profit improved from 134.4 billion yen to 187 billion yen (US$1.56 billion, Euro 1.73 billion), up 39% from last year and delivering an operating margin of 6.2%.
Foreign exchange rates created a positive impact of 68 billion yen (US$ 0.57 billion, Euro 0.63 billion) to consolidated operating profit. Other notable factors include the negative impacts of volume and mix for 61 billion yen (US$0.51 billion, Euro 0.56 billion), increased sales expenses, particularly in the U.S., of 12 billion yen (US$0.10 billion, Euro 0.11 billion), and 39 billion yen (US$0.33 billion, Euro0.36 billion) for product enrichment and the cost of evolving regulations worldwide.
The most significant positive factor on consolidated operating profit was 101 billion yen (US$0.84 billion, Euro 0.94 billion) from reduced purchasing costs. Nissan is on target for cumulative NRP purchasing cost reductions of 18% by the end of this fiscal year.
Ordinary income
Consolidated ordinary profit came to 158 billion yen (US$1.32 billion, Euro 1.46 billion) compared to 130.7 billion yen for the same period last year. Net financial costs came to 15 billion yen (US$0.13 billion, Euro 0.14 billion) down from 18.5 billion yen in the first half last year, as Nissan continues to swiftly reduce net automotive indebtedness. Pension expenses relating to the amortization for past pension liabilities over a 15-year period declined from 12.5 billion to 11 billion yen (US$0.09 billion, Euro 0.10 million) due to the impact of spin-offs of previously consolidated affiliates. In the first half of fiscal year 2000, the sale of marketable securities generated 17.6 billion yen in non-operating profits, however this item has been moved to extraordinary profits beginning in the first half of this fiscal year according to new accounting rules.
Income before taxes
Net income before taxes come to 165 billion yen (US$1.38 billion, Euro 1.53 billion) down 5.0% from 173.6 billion yen in the first half last year.
Nissan posted net extraordinary profits of 7 billion yen (US$0.06 billion, Euro 0.06 billion) down significantly from the 42.9 billion yen in the first half of fiscal year 2000, due to the reduction in profits from real estate and securities compared to the first half last year.
Due to the sharp fall in the value of the remaining securities to be sold, Nissan will recognize a devaluation loss of 9 billion yen (US$0.08 billion, Euro 0.08 billion).
Income taxes
Current taxes come to 39 billion yen (US$0.33 million, Euro 0.36 million). However, the company recognized 106 billion yen (US$0.88 billion, Euro 0.98 billion) in deferred tax assets.
Net income
Consolidated net income after tax is expected to total 230 billion yen (US$1.92 billion, Euro 2.13 billion), a 58 billion yen (US$0.48 billion, Euro 0.54 billion) improvement compared to 172 billion yen for the first half of fiscal year 2000.
Indebtedness
As of September 30, 2001, consolidated net automotive debt stood at 804.0 billion yen (US$6.70 billion, Euro 7.44 billion), down 149 billion yen (US$1.24 billion, Euro 1.38 billion) from 953 billion yen on March 31, 2001.
Outlook
Ghosn indicated that market conditions worldwide, especially in the U.S., were particularly unclear, so as not to call for any changes to the full year consolidated forecast. He cited risks of a continued global slowdown and heightened competitive pressure. He also spoke of opportunities within NRP from additional efficiencies and new products. Ghosn also commented that Renault and Nissan confirmed that advanced discussions are under way to strengthen the Alliance, in keeping with the principles of their 1999 agreement.
Nissan filed its official half year forecast with the Tokyo Stock Exchange and the company reiterated its forecast for the full fiscal year ending March 31, 2002, with consolidated net sales of 6,300 billion yen (US$52.50 billion, Euro 58.33 billion) operating profit of 350 billion yen (US$2.92 billion, Euro 3.24 billion) ordinary profit of 290 billion yen (US$2.42 billion, Euro 2.69 billion) and a net profit of 330 billion yen (US$2.75 billion, Euro 3.06 billion).
End
Note: Amounts expressed in US$ and Euro in this press release have been translated for convenience only at 120 yen = 1 US$ and 108 yen = 1 euro