Feb. 9, 2011
Fiscal Year 2010 Third-quarter Financial Results
Joji Tagawa, Corporate Vice President, Investor Relations
Nissan Motor Co., Ltd.
For the first nine months of fiscal year 2010, Nissan's performance has been solid. We continue to execute our business plan with discipline, reacting quickly to both positive and negative conditions in the business environment. We are managing our operations with efficiency and maintaining a firm control on all expenses.
Today we are reporting consolidated net revenues of 6 trillion 421.8 billion yen, 19.4% higher than the year-ago level. Operating profit increased 96.1% to 448.9 billion yen.
Net income amounts to 288.4 billion yen, more than five times the nine-month result in fiscal 2009.
Free cash flow for the auto business totaled a positive 212.5 billion yen, and we have an automotive net cash position in the amount of 42.9 billion yen.
Our results show that we are consistently moving forward in the right direction.
The big news from the third quarter relates to the launch of Nissan LEAF, the first car in our zero-emission lineup.
October marked the start of production at our Oppama Plant. By March, we will be producing about 4,000 units a month in Oppama, and we will be on track to produce 10,000 units by the end of this fiscal year.
Nissan LEAF deliveries began in December to customers in Japan and the United States. The launch has gone very smoothly, and Nissan LEAF has garnered some impressive accolades along the way, including: the 2010 Good Design Gold Award in Japan; inclusion on the Ward's "10 Best Engines" list in the United States; and recognition as the 2011 European Car of the Year. The positive response from consumer and media to Nissan LEAF has further added to our confidence.
In addition to Nissan LEAF, other new model launches in this quarter included the Serena minivan and Fuga Hybrid in Japan and the Juke small crossover in Noth America.
Third-quarter sales performance
Globally, the total industry volume in the first nine months was up 12.9% from the same period a year ago. The greatest increase was in China, up 34.8%.
Year to date, Nissan's global sales are up 20.5% from the prior year, to 3.018 million units.
In the third quarter alone, global sales totaled 1.008 million units, up 14.3% from the same period in fiscal 2009. The increase was not only from emerging markets such as China, but also from developed markets including the U.S. and Europe.
Looking at our sales performance by region, the total industry volume in Japan rose 2.2%, to 3.5 million units, in the first nine months. Our sales increased 3.6% over the prior-year level, to 438,000 units, boosted by sales of our NECO [Nissan Eco] Series and new Juke, March and Elgrand models. Our domestic market share is up slightly, to 12.7%.
In the third quarter specifically, the total industry volume in Japan declined by 24%, as expected, due in part to the expiration of government incentives in September. In this period, our sales totaled 109,800 units, and our market share improved by half a percentage point.
In the United States, the total industry volume rose 9.9%, to 9 million units, and our sales increased 14.3%, to 680,000 units. In the third quarter, our sales were up 23.7% to 234,900 units. Our truck sales increased sharply, up 40.3%, to 82,100 units, and Infiniti sales increased 35%, to 28,600 units. Year to date, our U.S. market share increased to 7.5%.
In Canada, our sales were up 4.1%, to 65,000 units, and our market share remained stable at 5.3%.
In Mexico, our sales reached 144,300 units, a 23.4% increase, and our market share rose 2 points, to 22.9%.
In Europe, the total industry volume decreased 2.5%, to 13.2 million units, but Nissan's sales increased 12.1%, to 425,000 units. Our European market share grew four-tenths of a percent, to 3.2%. Our sales in Western Europe were up 4.4%, to 326,700 units, and our sales in Russia rose sharply, up 65.5%, to 72,900 units. Last month we announced that we are adding a third shift at our St. Petersburg Plant in response to our strong sales and the start of Murano production at the plant.
In China, the auto industry is continuing to expand. In the nine months from January to September, the total industry volume in passenger cars and light commercial vehicles increased 34.8%, to 12 million units. Our presence is expanding as well, as sales of vehicles rose 39.4%, to 755,000 units.
In the third quarter alone, our sales in China increased 20.4%, to 251,900 units, due to strong sales of QASHQAI, Sylphy and Teana. From January to September, our Chinese market share increased two-tenths of a percent, to 6.3%.
In the fourth quarter of calendar 2010, our sale momentum continued to outpace the TIV growth rate. The fourth-quarter total industry volume was up 24%, and our sales increased 25.5%, to 268,600 units.
For the full calendar year, Nissan sales in China rose 35.5% and topped the million-unit sales mark, at 1 million 24 thousand units.
In other markets, including Asia, Africa, South America and the Middle East, our sales volume increased 31.8%, to 508,000 units.
Markets showing strong increases included Latin America, where our sales were up 70.4% to 120,000 units; Thailand, with a 78.8% rise to nearly 50,000 units; and Indonesia, where sales jumped 69.6% to 28,800 units.
Compared to the prior year, our financial performance reflects the contribution coming from our increased sales volumes and our ongoing activities to improve operating efficiency. Nissan has demonstrated solid performance through the third quarter of fiscal 2010.
Consolidated net revenues increased 19.4% to 6 trillion 421.8 billion yen. The main contributor, increased volume, was partially offset by negative impacts from foreign exchange.
Consolidated operating profit totaled a positive 448.9 billion yen.
Net income was also positive, at 288.4 billion yen.
Explaining the operating profit variance analysis:
- The 110.3 billion yen negative impact from foreign exchange came mainly from the appreciation of the yen against the U.S. dollar.
- The net impact from purchasing cost reduction efforts was a positive 90.8 billion yen. This amount included a negative impact from a rise in raw material and energy costs amounting to 44.6 billion yen.
- Volume and mix produced a positive impact of 344.7 billion yen as a result of the increase in global sales volume.
- Marketing and Sales expense had a negative impact of 133.8 billion yen.
- Lower gains on the resale of returned lease vehicles in North America resulted in a negative variance of 19.3 billion yen.
- R&D costs increased 24.6 billion yen.
- Sales financing contributed a positive 19.9 billion yen.
- The remaining variance was a positive 52.6 billion yen, due mainly to improved profitability from affiliate companies, our after-sales business and other factors.
At the end of the third quarter, our net automotive debt remained in a net cash position in the amount of 42.9 billion yen, which was a significant improvement from the year-ago level. If the yen had remained at the exchange rates that existed at the start of this fiscal year, our cash position would have come to 159.9 billion yen. External agencies have recognized our stronger balance sheet: Our credit rating has been upgraded one notch from BBB to BBB+ by Standard & Poor's and from A- to A by R&I.
For the first nine months of fiscal 2010, our results show that Nissan continues to manage its business effectively. Going forward, our optimism is tempered by risks we see in rising commodity prices, the volatility in exchange rates and ongoing uncertainties in the world economy.
We expect our full-year global sales to reach 4.165 million units, a 1.6% increase from our previous forecast made in November 2010. The 65,000-unit increase is coming mainly from sales in China.
Considering our performance to date and activity we foresee for the remainder of this fiscal year, we are revising our full-year financial forecast for fiscal year 2010, using a foreign-exchange rate assumption of 80.9 yen to the dollar and 110.2 yen to the euro for the fourth quarter.
- Net revenues are expected to be 8.8 trillion yen.
- Operating profit is expected to be 535 billion yen.
- Net income is expected to be 315 billion yen.
- Capital expenditures will amount to 340 billion yen, as previously forecast.
- R&D expenses will also remain unchanged, at 425 billion yen.
To date in FY10, we have launched five all-new products globally. In the last quarter, we will launch five more.
Our fuel-efficient, competitively priced sedan will be sold in China under the model name Sunny.
Nissan's entry into the U.S. commercial vehicle market begins in the spring. Nissan has extensive experience in commercial vehicles for many years. With this experience and these high-quality Nissan NV models, we expect to be competitive in the American market as well.
Also in the United States, we will launch the totally redesigned Nissan Quest minivan and the new Murano CrossCabriolet crossover convertible.
In Japan, we will launch the new Moco minicar.
And in early 2011 we will start deliveries of Nissan LEAF to individual customers in Europe, beginning in Portugal, Ireland, England and the Netherlands. Sales in other European countries will begin in the summer.
This expanding range of products illustrates our commitment to bringing more and better choices in different categories to satisfy customers' needs and wants around the world.
As the global economy continues to recover, we will continue to deliver good results with a strong lineup of products, meaningful technologies and the effective execution of strategies for profitable growth in all regions.
Nissan is preparing for future growth, and we will provide more details when we announce our next midterm plan after the start of the new fiscal year.
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