The last few years have certainly been interesting for Nissan. After clawing its way back from financial disaster in the early 2000s, the company endured one of the most high-profile and scandal-ridden management shakeups in automotive history by 2018. It also became desperately unprofitable while incurring negative growth, with the remaining leadership deploying an aggressive restructuring plan designed to help get the business back on track.
Those efforts appear to have been successful.
Nissan is back in the black and turning a profit for the first time in three years, according to CEO Makoto Uchida and a report from Automotive News.
Over the last fiscal year, ending on March 31st for Nissan, the company showed operating profit pitching up to 247.3 billion yen ($2.03 billion USD). However, Uchida’s targeted 5 percent operating profit margin will take a little longer to achieve. Nissan only managed a 2.9 percent margin for 2021. Though it’s still a major step in the correct direction and ultimately good news for the manufacturer, as the year’s mid-term revival plan only called for 2 percent.
Uchida staked his job on a successful turnaround in 2020, mimicking the actions of the now-defamed Carlos Ghosn from 1999. Though, while the former CEO is now living on the lam in Lebanon, Nissan’s current boss is still hoping to appease shareholders. During the announcement of the company’s financial results, Uchida confessed that his job was far from finished.
“Finally, we are at the starting line,” the CEO said on Thursday. “Now is the time to deliver greater value and grow the company.”
From Automotive News:
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.
The resulting fallout had seriously tarnished the brand’s image. But it had also become plagued with quality control issues and maintaining production schedules (like the rest of the industry) as global sales volumes pitched downward. These were all things Nissan had hoped to fix during its restructuring phase but not before it endured its worst-ever operating loss in 2020.
Fortunately, the automaker just rebounded with an annual net income of 215.5 billion yen ($1.77 billion), flipping last year’s financial forfeiture of 448.7 billion yen ($3.68 billion). Sales improved 2 percent (YOY) to 1.18 million units in North America. However European volumes declined 13 percent to just 340,000 vehicles. Nissan’s largest market, China, also declined by 5 percent — resulting in 1.38 million deliveries.
Despite reforming itself into a profitable business, headwinds will persist. The rising price of raw materials is going to make it harder for all automakers and Nissan acknowledged that last year’s earnings were helped immensely by selling its entire stake in Daimler. This has led the company to forecast relatively meager improvements for next year’s report. Nissan is estimating operating profit to advance by 1.1 percent to 250.0 billion yen ($2.05 billion), while its net income is likely to decline. Meanwhile, global revenue is assumed to grow by 19 percent to 10 trillion yen ($82.03 billion) for 2022. Total sales are also anticipated to climb by 3.2 percent, resulting in some 4 million deliveries by the end of March 2023.
[Image: Memory Stockphoto/Shutterstock]
Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.