Nissan’s net income dropped during the first half of the Japanese automaker’s fiscal year, but the company posted a double-digit increase in revenue and revised upward its revenue and profit outlook for the full year despite some stiff headwinds.
Consolidated net revenue increased by 15.3%, with consolidated operating profit, rising 12.3% an operating profit margin of 3.4%, slightly less than the 3.5% margin posted in the first six months of the previous fiscal year.
Net income dropped by 62% to 64.5 billion yen or $454 million dollars.
Headed in right direction
Nissan CEO Makoto Uchida said: “Our strong first half performance reflects our steadily improving profit structure and strong business foundations, as well as the exchange-rate impact of the historically weak yen. We achieved this encouraging result even though the business environment became more challenging due to the ongoing shortage of semiconductors and soaring raw material prices.
“In this environment, all Nissan employees worked together to maintain financial discipline and improve quality of sales. In addition, our newly introduced models have been very well received by customers in their respective regions.”
He noted Nissan expects the business environment to remain challenging in the second half, we aim to achieve our upwardly revised forecast by continuing to implement the Nissan NEXT business transformation plan.”
Challenges ahead
The increased revenue and operating profit were achieved despite a severe business environment in the first half of the fiscal year, with raw material prices rising sharply and sales volume falling below the previous year’s level due to semiconductor supply shortages and the impact of COVID-related lockdowns in Shanghai, China, Nissan said in the half-year financial report.
Through steady implementation of the Nissan NEXT transformation plan, the company improved net revenue per unit by continuing to improve the quality of sales in each market and reducing selling expenses. The improved performance over the previous fiscal year also reflected recent exchange rates and a weaker than expected yen, the report said.
For the 12-month period to March 31, 2023, Nissan also expects sales to decrease by 7.5% over the previous forecast to 3.7 million units, and the company expects to face continued shortages of semiconductor supply and increasing raw material prices.
Despite these challenges, Nissan officials said the company will continue to introduce new models and improve the quality of sales. In addition, due to recent fluctuations in foreign exchange rates and the significant weakening of the yen, Nissan has revised its exchange rate assumptions accordingly.
Despite the challenges, Nissan revised its full year forecast for fiscal 2022 upward.
The revised forecast reflects a 900 billion yen, or $6.33 billion, increase in net revenue and a 110 billion yen, or $773 million, increase in operating profit compared with the previous forecast.
This revision factors in an extraordinary loss of approximately 100 billion yen equals $705 million expected to be incurred in connection with the withdrawal of Renault-Nissan Alliance from the Russian market. The loss represents Nissan’s share of the write down.
