TOKYO - In a press briefing billed by the company as the most important since the Nissan revival plan was unveiled Oct. 18, 1999, Nissan President Carlos Ghosn was expected to show today, Oct. 30, that the turnaround effort is proceeding much faster than expected.
Ghosn has been signaling for weeks that the corporate restructuring is charging ahead. For example, in remarks at the unveiling of the X-trail small sport-utility concept at the Paris auto show, he said, 'The plan is (proceeding) much faster than planned.'
In today's briefing, details of which were obtained by Automotive News last week, Ghosn was expected to disclose that Nissan was profitable in the April-September first half. That puts the company on track to meet the first objective of the plan: a return to profitability on a consolidated net basis in the fiscal year ending next March 31.
In addition, Ghosn was expected to announce that Nissan is ahead of schedule on its two other key objectives: reducing debt by half, to less than $6.4 billion at current exchange rates, by 2002; and achieving an operating profit margin of at least 4.5 percent by 2002.
Analysts already have raised their expectations higher than Ghosn's targets.
While Nissan's own official target is for an operating profit of $1.0 billion in the current fiscal year, a survey of 16 auto analysts by QUICK financial service found that the average forecast was for $1.785 billion.
Although the company last week declined to provide specifics before the press conference, Nissan's global performance provides a general indication of the progress achieved:
Nissan's global production in the April-September first half rose 13.1 percent from a year earlier to 1,313,963.
Sales in Japan for the first nine months fell 7.8 percent from a year earlier to 568,292, but U.S. sales rose 15.8 percent to 587,492. Those U.S. sales include more light trucks, which bring higher profits.
Sales in Europe, Mexico and Canada also rose.
The company has continued to sell off assets, including stakes in suppliers and affiliates such as Yorozu Corp., Nissan Digital Process Ltd. and the company's aerospace division. Although the terms of those deals have not been announced, Nissan is understood to have used the proceeds to pay down its debt.
Ghosn's revival plan includes closing five factories and reducing head count by 14 percent or 21,000 over three years, and slashing Nissan's supplier count in half so that the remaining vendors' volumes would rise.
In exchange, suppliers were asked for a 20 percent price reduction over three years. Of that, 8 percent was expected in the first year. Ghosn told analysts in early October that suppliers had produced cost cuts of about 10 percent in the first year.
The supplier cost cuts were key to the plan's early success because those lower prices were effective from the April 1 start of the current fiscal year. With those cuts now in hand, Ghosn has appeared increasingly confident of the plan's success.
MORE COST CUTS
The cuts continue. For example, a Nissan staffer has found that Nissan and Renault use four or five suppliers of greaseproof paper for owners' manuals. The staffer now is studying whether those orders can be combined in one worldwide order.
Likewise, Nissan and Renault had more than 10 steel suppliers worldwide - Nissan Mexicana alone had three - and already have trimmed that list. Ghosn is expected to announce that Nissan has cut its 1,145 suppliers by about 20 percent.
The plan also called for growth. Nissan has said it will launch 22 new models over three years, with 10 of those going to the United States, 10 to Europe and 15 to Japan.