Nissan quarterly profit soars on better pricing power, model mix

TOKYO – Operating profit at Nissan Motor Co. rose 45 percent in the latest quarter, as a more profitable mix of product and foreign exchange gains offset high costs and supply chain chaos.

Even amid sliding unit sales, Nissan said higher revenue per unit and better pricing power has helped bolster profitability as the company continues on its recovery track.

In announcing the results Wednesday, COO Ashwani Gupta said Nissan has captured a higher tier of customer in North America, partly through renewed product and lower incentives. Spiffs have moved down to around industry average, and Nissan's cars are packed with pricier technology.

"The customer is paying for it," Gupta said. "Our brand power is increasing."

Operating profit climbed to 91.7 billion yen ($634.6 million) in the July-September period, delivering a 3.6 percent profit margin.

That's up from 3.3 percent a year earlier and a step toward Nissan's midterm goal of delivering a sustainable 5 percent operating profit margin.

Net income, however, fell 68 percent to 17.4 billion yen ($120.4 million) in the quarter. That was in large part due to a big one-time charge for the cost of quitting its Russia business.

Revenue advanced 30 percent to 2.52 trillion yen ($17.4 billion) in three-month period, even as global sales shrank 21 percent to 750,000 vehicles on the back of hobbled output.

Lower deliveries

In North America, sales declined 25 percent to 204,000 units, while European deliveries fell 21 percent to 64,000. Volume in China, Nissan's top market, dropped 30 percent to 247,000.

The profit bump helps Nissan toward the company's Nissan Next mid-term plan. Unveiled in 2020 by CEO Makoto Uchida, the revival blueprint focuses on cutting fixed costs, trimming production capacity, launching new product and improving revenue per vehicle.

The campaign wraps up in the fiscal year ending March 31, 2024, but Nissan is ahead of plan by many measures.

Thanks to improving model mix and the foreign exchange tailwind, Nissan lifted its profit outlook for the current fiscal year ending March 31, 2023.

Foreign exchange gains added about half a billion dollars to quarterly operating profit.

New products such as the Ariya full-electric crossover, Z sports car and Rogue crossover have helped lift the brand's reputation and command better customers and pricing.

"The mix has improved a lot," CFO Stephen Ma said. "Customers have reacted very well to all our new products."
Nissan now sees operating profit increasing 46 percent to 360.0 billion yen ($2.49 billion), compared with the previous fiscal year.

The revised net income outlook is also better than previously outlined, but it still represents a 28 percent decline from the previous fiscal year.

Beneficial exchange rates are expected to help power a 29 percent surge in global revenue, even as Nissan cuts back on its volume forecast due to ongoing supply chain issues.

Nissan had earlier predicted global sales would increase to 4.0 million vehicles in the current fiscal year. But it now warns of a 4.5 percent decline to 3.7 million units.