Nissan Motor Co. recovered from the pandemic and semiconductor crises to post its first full-year profit in three years, after plummeting in the wake of the arrest of former Chairman Carlos Ghosn. TOKYO – Nissan Motor Co. jumped back into the black in the most recent quarter.
The turnaround demonstrated Nissan’s efforts toward regaining financial stability during a time of managerial turmoil during which the business sank to the greatest operational loss in its history.
Nissan eliminated that loss during the just ended fiscal year, which ended on March 31, as operational profit soared to 247.3 billion yen ($2.03 billion).
The development moves Nissan one step closer to establishing a sustainable operating profit margin of 5%, according to CEO Makoto Uchida.
The automaker’s margin for the year that ended on March 31 came in at 2.9 percent, exceeding Uchida’s fiscal year objective of 2 percent set forth in his mid-term recovery plan.
In 2020, Uchida gambled his job on a good turnaround and threatened to resign if he didn’t deliver. But, as he observed on Thursday, getting back to profitability is only half the battle won.
When reporting the company’s financial performance, Uchida commented, “Finally, we are at the starting line.” “The moment is now to increase value and expand the business.”
In 2020, Uchida introduced Nissan Next, his mid-term strategy that focuses on reducing fixed costs, increasing revenue per vehicle, reducing production capacity, and launching new products. The campaign ends in the fiscal year that ends on March 31, 2024, but Nissan is in many ways ahead of schedule.
Nissan has reduced fixed expenses by 350 billion yen ($2.87 billion), the number of nameplates by 15%, and global capacity by 20%. The comeback plan’s rationalization phase is over, according to COO Ashwani Gupta, and Nissan is now concentrating on growth.
Nissan was still reeling from the arrest and dismissal of longstanding leader Ghosn and the strained relations with French partner Renault when Uchida and Gupta assumed control of the corporation in late 2019.
In its subsequent fiscal year, which ended on March 31, 2020, Nissan sank to an operational deficit. The company’s worst-ever operating loss occurred in the fiscal year through March 31, 2021, as a result of the growing deficit.
Nissan rebounded with a net income of 215.5 billion yen ($1.77 billion) for the recently completed full fiscal year, turning around a 448.7 billion yen ($3.68 billion) net deficit from the prior year.
Rising costs for raw materials and one-time expenses associated with Russia’s invasion of Ukraine were more than compensated by booming sales and favorable currency exchange rates.
Even though global sales fell 4.3 percent to 3.88 million vehicles over the course of a year due to constrained supply, revenue increased 7.1 percent to 8.42 trillion yen ($69.07 billion).
In North America, sales fell 2% to 1.18 million units, while in Europe, sales fell 13% to 340,000 automobiles. Nissan’s largest market, China, saw a 5% decline in volume to 1.38 million units.
Nissan predicted operational profit would increase by a meager 1.1 percent to 250.0 billion yen ($2.05 billion) for the fiscal year that ends on March 31, 2023, but net income would fall.
Rising raw material costs, particularly for metals like steel and aluminum, will restrain operating profit. Additionally, net income is expected to decline due to a one-time profit from the sale of Nissan’s Daimler investment, which boosted results in the just ended fiscal year.
Nissan anticipates its total income for the current fiscal year to increase by 19% to 10 trillion yen ($82.03 billion). Furthermore, it is predicted that global sales will increase by 3.2% to 4.0 million automobiles.
For fiscal year 2022, Nissan announces progress from April through June.
First-quarter results showed an operating profit of 64.9 billion yen and a net profit of 47.1 billion yen.
Significant growth in revenue per unit for key models as sales quality keeps getting better
Tokyo, Japan – The financial results for the three months ending June 30, 2022, were released today by Nissan Motor Co., Ltd.
Operating profit margin was 3.0%, operating profit was 64.9 billion yen, and combined net revenue was 2.14 trillion yen in the first quarter of the fiscal year. The first quarter’s net income1 was 47.1 billion yen.
Earnings were under pressure during the first quarter due to the extremely difficult business environment, which was made worse by external factors like rising raw material prices and logistics costs as well as production being restricted by the Shanghai lockdown brought on by the new coronavirus’s spread and semiconductor supply shortages. However, Nissan was able to somewhat mitigate the effects by making ongoing efforts to raise the caliber of sales in every region, which increased the income per unit of important models. Nissan was able to maintain positive revenue and ordinary profit thanks to its commitment to fiscal restraint and vigilant control of fixed expenses as well as the benefit of the cheap yen.
The financial results for Nissan for the three months ended June 30, 2022, determined using the equity accounting method for the group’s joint venture in China, are shown in the accompanying table.
based on average foreign currency prices for the first quarter of FY22 of JPY 130/USD and JPY 138/EUR
Operating profit was 98.8 billion yen, or an operating margin of 4.0%, on a management pro forma basis, which incorporates the proportionate consolidation of earnings from Nissan’s joint venture operation in China. The amount of net income1 was 47.1 billion yen.
Makoto Uchida, president and chief executive officer of Nissan, commented on the outcomes “The business environment remained more difficult than anticipated in the first quarter. We think that Nissan’s success in this environment is evidence that the Nissan NEXT business transformation plan has continuously reinforced the company’s basis and that we are transitioning to a profit structure that is more resistant to outside influences. Although the business environment will continue to be unsure, we will introduce our global volume model, the X-Trail, with e-POWER and e-4ORCE in Europe after the recent introduction in Japan, in addition to the new Sakura EV, which continues to receive significant orders. We will maximize the benefits of these new vehicles while further enhancing our profit structure.”
2 Since the start of the 2013 fiscal year, Nissan has disclosed financial data for its Chinese joint venture with Dong Feng that was computed using the equity method of accounting. Under this accounting approach, net income reporting does not change, but Dong Feng-revenue Nissan’s and operating profit are no longer included in the equity-accounting income statements.