Nissan: FY14 initial half financial formula debate from Hiroto Saikawa, Chief Competitive Officer

Posted on 05. Nov, 2014 by in Nissan Canada

Nissan reports net income of $2.30 billion for initial half of FY2014

 

Introduction

Today, we will go by some of a business highlights, sales opening and financial formula of a 6 month duration to Sep 30. My colleagues and we will afterwards take any questions we might have.

Overall, Nissan delivered plain business formula for a period. We are stability to govern a Nissan Power 88 mid-term devise and profitably grow a business. The formula we are stating currently simulate certain sales transformation in North America, as good as a prejudiced liberation from vexed prior-year sales in China and improving marketplace conditions in Western Europe. This helped to homogeneous a softening in a Japan marketplace following a output taxation boost during a commencement of a year and sensitivity in Emerging markets. Today’s reported earnings, distributed underneath a equity accounting process for a corner try in China, uncover a association is on lane with a financial performance.

For a initial half of mercantile year 2014, Nissan is stating sum net revenues of 5.14 trillion yen. This represents an boost of 8.2% over a same duration in 2013. Operating distinction totaled 261.9 billion yen, that equates to an handling domain of 5.1%. Net income increasing to 237 billion yen, that represents a 4.6% net margin. Free money upsurge for a automotive business was 164 billion yen for a initial half, and we finished a duration with an automotive net money position of 1.13 trillion yen.

Before going by a financial formula in some-more detail, we will initial quickly outline some of a business highlights as good as a sales opening for a period.

FY 14 H1 business update

Product

Nissan has confirmed a product offensive. In Europe, we launched a all-new Pulsar, that was a twelfth new entrance in as many months. As we pronounced previously, we aim to contest in scarcely each automobile segment, and Pulsar is a re-entry into a critical European core C-segment.

In a European crossover segment, a Qashqai continues to be good received. This week, a Sunderland plant in a UK constructed a dual millionth Qashqai. Along with a other initial Common Module Family vehicles, a Rogue and X-Trail, these crossovers continue to be among a many renouned models.

And only final month, a US EPA gave another reason for consumers to name Nissan vehicles. In their “Trends” Report, a EPA reported that a Nissan Group ranks as a many fuel fit full-line automaker with a fleet-wide fuel economy rating of 26.2 sum miles per gallon.

Infiniti

In a reward arena, Infiniti continues to globalize. This week, we will start prolongation of a Infiniti Q50 L in China.

Our aspirations for Infiniti go over a stream portfolio. Last month in Paris, we denounced a Inspiration pattern concept. This judgment hints during Infiniti’s pattern and record instruction and how Infiniti will heed itself among a several reward competitors.

Brand Enhancement

The Nissan code continues to be some-more manifest and attractive. Interbrand recently reported that a brand’s ranking softened by 9 places to 56th during a past year, that was one of a biggest movers in their annual investigate of a Best Global Brands. This outcome follows an glorious performance, progressing in a year, in Interbrand’s Best Global Green Brands report.

A pivotal to larger code prominence is a participation around vital sporting events such as a English Premier League, UEFA Champions League and a Africa Cup of Nations in soccer. Association with such absolute sports-franchises is an critical offered tool, pushing assembly engagement. No matter how diluted media becomes, vast moments during live games still have a vast impact on assembly traffic. So joining Nissan to those events will boost recognition of a brand.

Zero emissions

We sojourn committed to a zero-emissions strategy. Total sales of a Nissan LEAF have now surpassed 142 thousand units, including 19 uninterrupted months of sales increases in a US. In China, we are expanding a EV participation with a Sep introduction of a Venucia e30. And we launched a e-NV200 in Europe and Japan.

Alliance

The Alliance devise stays on lane to broach poignant synergies. In September, a Renault Samsung plant in South Korea began exporting a Nissan Rogue to a US to accommodate flourishing patron demand. And as we mentioned earlier, we continue to see certain transformation from a initial set of CMF vehicles.

During a Paris Motor Show, we highlighted a increasing co-operation between a Renault-Nissan Alliance and Daimler. Since a launch of a partnership in 2010, a sum devise portfolio common between Renault-Nissan and Daimler has quadrupled to 12 projects in Europe, Asia and North America. This will embody skeleton to jointly rise and make reward compress vehicles in Mexico and continued engine partnerships.

I will now spin to a sales opening for a financial period.

FY14 H1 sales performance

While altogether tellurian attention volumes increasing 3.1% to 42.69 million units, Nissan’s sum sell volume was adult 5.8% during 2.58 million units in a initial half with clever sales in North America and recuperating sales in China from a vexed before year level. Europe showed signs of stabilizing, that homogeneous some imbecility in Japan and continued sensitivity in rising markets.

Looking opposite a regions…

In Japan, a volume was 291 thousand units. The 7.6% decrease from final year was approaching due to a sale taxation boost progressing this year, that pulled brazen some new automobile orders. Although a sum attention volume was down 3% from final year, a decrease was reduce than approaching due to a carryover of orders from final year by some makers and extreme foe in a mini automobile segment. While a altogether marketplace share declined, in a mini automobile segment, we achieved record sales and marketplace share in a 1st half, where a Dayz array was ranked series 2 in a segment.

In China, Nissan’s sales increasing by 14.6% in a initial half. Our altogether marketplace share in China during this duration increasing 0.3 points to 5.6%. But for a Jul to Sep period, that is a third entertain underneath a China operations mercantile year, Nissan’s section sales decreased by 12% to 259 thousand units, that is homogeneous to a marketplace share of 5.1%. In a third quarter, a ubiquitous marketplace slowdown, quite in a LCV segment, as good as increasing rival vigour in a compress shred and a slow disastrous consumer view ensuing from domestic tensions weighed on a sales pace. As a result, section sales were reduce than creatively expected. To opposite this, we took actions to normalize inventories and extended a rendezvous with a play network.

Turning to North America: in a US, a sales grew 13.7% to 708 thousand units, that outperformed a altogether market. This helped lift a marketplace share to 8.2%. This opening enclosed clever direct for a Rogue and Altima. In Canada, sales increasing 30.6% to 66 thousand units. Sales also increasing in Mexico to 138 thousand units, where Nissan has continued to be a marketplace personality with a marketplace share of 25.6%.

In Europe, trade conditions showed signs of stabilizing. Nissan saw sales boost by 8.4% to 334 thousand units. Sales in Europe incompatible Russia increasing 9.5% to 261 thousand units, ensuing in a marketplace share of 3.5%. In Russia, sales increasing 4.4% to 73 thousand units for a marketplace share of 6.2%.

In other markets, sales volume was down 0.2% to 423 thousand units, that reflected a mercantile downturn in a rising markets. In Asia and Oceania, sales increasing to 180 thousand units, adult 1.2% and sales in a Middle East increasing to 110 thousand units, adult 14.4%. This was homogeneous by continued decrease in Latin America, where sales decreased by 11.6% to 88 thousand units.

FY14 H1 financial performance

I will now go by a altogether financial opening for a period.

Under a equity accounting basement for a corner try in China, sum net revenues increasing 388.4 billion yen, to 5.14 trillion yen, essentially driven by a boost in volumes and auspicious sell rate. Operating distinction totaled 261.9 billion yen. Net income was 237 billion yen.

Looking during Operating Profit transformation in detail:

  • The 17.3 billion yen auspicious impact from unfamiliar sell came especially from a improvement of a yen opposite a U.S. dollar.
  • Cost equipment including purchasing cost rebate efforts, aloft tender element costs and product improvement resulted in net assets of 52.5 billion yen.
  • Volume and brew constructed a certain impact of 27 billion yen.
  • The boost in offered and offered losses resulted in a 34.7 billion yen disastrous movement.
  • RD costs increasing by 4.4 billion yen.
  • Manufacturing losses increasing by 15.3 billion yen.
  • And other equipment had a disastrous impact of 2.4 billion yen.

At a finish of a period, Nissan continued to suffer a plain automotive net money position of 1.13 trillion yen.

As we have finished in before buliding we will benefaction financial opening on both a equity accounting basement as per a filing and a government pro forma basement that is how we are measuring a Power 88 targets. This slip shows a initial half income matter underneath a pro-forma basis. For a half, net revenues were 5.64 trillion yen, handling distinction was 332.6 billion yen and net income was 237 billion yen.

FY14 full year outlook

Based on a initial half sales opening and a opinion on marketplace conditions for a residue of a mercantile year, we have motionless to correct a sales forecasts for a 12 months finale Mar 31, 2015.

Specifically, a 2014 mercantile year sales opinion is being revised downward by 2 hundred thousand units to 5,450K vehicles. This essentially reflects a reduced sales opinion for rising markets, quite in China where we are saying ubiquitous debility in a LCV segment, increasing foe in a compress shred and a continued inauspicious impact of domestic tragedy on Japanese brands. These impacts are approaching to some-more than homogeneous a softened opinion in North America.

Relative to a opinion on financial performance, we are progressing a before superintendence for both Operating Profit and Net Income. We entirely design to homogeneous a disastrous impacts from volume rebate in rising markets by increasing sales in North America, along with serve improvements on a cost side of a business and a advantages of net auspicious unfamiliar sell movements compared to a before forecast.

Reflecting these changes, Nissan has filed a following revised full-year foresee with a Tokyo Stock Exchange, regulating a unfamiliar sell rate arrogance of 105 yen to a dollar and 137 yen to a euro for a second half. It is formed on of a equity process for a Chinese corner venture.

  • Net income is approaching to be 10.8 trillion yen;
  • Operating distinction is unvaried during 535 billion yen;
  • Net income is unvaried during 405 billion yen;
  • Capital output is approaching to sojourn during 525 billion yen;
  • And RD losses will sojourn during 500 billion yen.

Conclusion

Based on a revised FY outlook, we continue to design to beget plain full year automotive giveaway money upsurge and broach plain earnings to shareholders. Nissan stays committed to progressing a smallest 30% payout ratio to net income during a residue of a mid-term devise period, and we foresee a division remuneration of 33 yen per share for this mercantile year. Earlier today, a Board authorized remuneration of an halt division of 16.5 yen per share to be done on Nov 26, 2014.

In conclusion, we would like to reaffirm that Nissan stays committed to improving a business opening and we are on lane to grasp a full year guidance.

 

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