TOKYO - Carlos Ghosn doesn't set easy targets.
Nissan Motor Co.'s president has pulled the Japanese carmaker back from the brink of bankruptcy and led it, a year ahead of his timetable under the Nissan Revival Plan, to perhaps the fattest gross profit margin any volume carmaker will post this year.
He wants the current year - and the next three - to be even better.
"We transformed a struggling company into a good company," Ghosn said here last week as he announced preliminary results for the fiscal year ended March 31. But under a new three-year plan called Nissan 180, he said, "we will transform a good company into a great company."
Nissan expects its final results for the latest fiscal year to show that consolidated, or worldwide, operating profit soared 68 percent from a year earlier to a record ¥490 billion, or about $3.92 billion at current exchange rates. That yielded an operating profit margin of 7.9 percent, the highest for a full year in Nissan's history.
Operating income is profit before interest, taxes, depreciation and amoritization, and is a key indication of a company's profitability on its core operations.
For the October-March second half, the margin was a stunning 9.3 percent. Nissan said net profit rose 12.4 percent to $2.97 billion, although revenue rose just 1.8 percent to $49.56 billion. The results will be formally reported on May 20.
For the current fiscal year ending next March 31, Ghosn said, Nissan will do even better: Operating profit will rise to $4.42 billion, net profit to $3.04 billion and revenue to $51.96 billion, based on current exchange rates.
Nissan slashed its debt by $4.14 billion to $3.48 billion during the year and expects that to drop to below $2 billion by the end of March 2003. But the funds to retire more debt will have to come from cash flow because Nissan already has sold all of the stocks and other marketable securities it intends to sell.
The Nissan 180 program calls for sales of an additional 1 million vehicles worldwide on an annualized basis, an 8 percent operating margin and zero net automotive debt, all by the end of March 2005.
Nissan aims to add 100,000 unit sales a year in Europe, and 300,000 more each in the United States, Japan and other overseas markets.
In typical Ghosn fashion, Nissan has set numerous specific goals as milestones toward its overall Nissan 180 targets.
For example, Nissan aims to cut the gap in transaction prices and resale values between Toyota and Nissan products, which Ghosn considers a reflection of the relative weakness of the Nissan brand, by 50 percent in the United States and Japan.
It also wants to cut the gap between Nissan and Volkswagen transaction prices in Europe by an average 30 percent. Already, he said, the new Altima has a transaction price equal to the Toyota Camry and higher than the current Honda Accord.
"The new goals are commitments. These are not targets that we'll be happy if we reach 80 percent of them," Ghosn said. "If we increase our sales by 900,000 instead of 1 million, I consider that a breach of commitment."