Nissan is back in the black but still only at 'starting line'

TOKYO – Nissan Motor Co. bounced back into the black in the latest quarter as the recovering automaker clawed through the pandemic and semiconductor crises to post its first full-year profit in three years, after tanking in the wake of the arrest of former Chairman Carlos Ghosn.

The rebound underscored Nissan’s progress in regaining financial health after a period of management upheaval when it slumped to the largest operating loss in the company’s history.

For the just-ended fiscal year, which finished March 31, Nissan erased that red ink as operating profit surged to 247.3 billion yen ($2.03 billion).

The advance brings Nissan closer to achieving CEO Makoto Uchida’s goal of delivering a sustainable 5 percent operating profit margin.

The automaker’s margin finished at 2.9 percent in the 12-month period to March 31, beating Uchida’s target of 2 percent for the fiscal year under his mid-term revival plan.

Uchida in 2020 staked his job on a successful turnaround, saying shareholders could remove him if he fails to deliver. Yet returning to profitability is only a job half-done, he said on Thursday.

“Finally, we are at the starting line,” Uchida said while announcing the company’s financial results. “Now is the time to deliver greater value and grow the company.”

Uchida unveiled his Nissan Next mid-term plan in 2020, focusing on cutting fixed cost, 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.

Nissan has cut global capacity 20 percent, trimmed the number of nameplates 15 percent and slashed 350 billion yen ($2.87 billion) in fixed costs. COO Ashwani Gupta said the rationalization phase of the comeback plan is complete, and Nissan is focused now on growth.

Uchida and Gupta took the reins at Nissan in late 2019 while the company still reeled from the arrest and ouster of longtime leader Ghosn and frayed relations with French partner Renault.

Nissan slumped to an operating loss that fiscal year, which ended March 31, 2020. And the red ink expanded into the company’s worst-ever operating loss in the year through March 31, 2021.

For the just-ended full-fiscal year, Nissan bounded back with net income of 215.5 billion yen ($1.77 billion), reversing a 448.7 billion yen ($3.68 billion) net loss the year earlier.

Surging sales and beneficial foreign exchange rates combined to more than offset soaring raw material costs and one-off costs related Russia’s invasion of Ukraine.

Revenue advanced 7.1 percent to 8.42 trillion yen ($69.07 billion) in 12-month period, even as global sales declined 4.3 percent to 3.88 million vehicles on the back of crimped production.

Sales slipped 2 percent to 1.18 million units in North America and declined 13 percent to 340,000 vehicles in Europe. Volume in China, Nissan’s top market, fell 5 percent to 1.38 million.

Looking ahead to the fiscal year ending March 31, 2023, Nissan forecast operating profit to advance a modest 1.1 percent 250.0 billion yen ($2.05 billion), while net income decreases.

Operating profit will be tempered by rising raw material prices, especially for metals such as steel and aluminum. And net income is seen falling because of a special gain from the sale of Nissan’s stake in Daimler, which inflated earnings in the just-finished fiscal year.

Nissan expects global revenue to grow 19 percent to 10.00 trillion yen ($82.03 billion) in the current fiscal year. And worldwide sales are seen advancing 3.2 percent to 4.0 million vehicles.