Nissan reports first half results for fiscal year 2016

Hiroto Saikawa, Co-Chief Executive Officer
Nissan Motor Co., Ltd.

For the six-month period to September 30th, consolidated net revenues decreased 10.3% to 5.32 trillion yen due to the negative impact from foreign exchange rates.

Operating profit totaled 339.7 billion yen, which equates to an operating margin of 6.4%.

Net income totaled 282.4 billion yen, which represents a 5.3% net margin.  Free cash flow for the automotive business was 364.1 billion yen and we ended the period with an automotive net cash position of 1.30 trillion yen.

This deterioration year-over-year came from unfavorable FX. And our operational efficiency improved year-over-year.

On constant currency basis, net revenues would have shown an increase of 3.2% to 6.12 trillion yen while operating profit would have improved 31.5% to 519.5 billion yen, reflecting an operating profit margin of 8.5%.

The year-over-year deterioration in Revenue, Operating Profit and Net Income comes from unfavorable FX impacts which were not completely offset by improvements in underlying the business performance - in particular, cost efficiency.


During the six months ending September 30th, global total industry volumes – or TIV – reached 44.7 million units, an increase of 3.5%.

Nissan’s total unit sales were 2.61 million units, a decrease of 3 thousand units. However, we remain sufficiently confident in our second-half performance that we are maintaining our sales outlook of 5.6 million units on a full year basis. We have a strong product line-up for the second half to help us reach this target.

In Japan, TIV fell by 1.0% to 2.31 million units. Nissan saw unit sales decline by 20.2% to 211,000 units, resulting in a market share of 9.2% mainly due to the fact that we had to stop sales of the Dayz and Dayz Roox minicars in the first quarter.

In early July, we resumed sales of the Dayz and Dayz Roox minicars. At the end of August, we launched the all-new Serena.

We have received almost 30,000 vehicle orders so far, which significantly exceeds the planned pace of 8,000 vehicles per month.

Encouragingly, over 60% of new Serena customers opted for Pro-pilot, signaling promising demand for autonomous-drive technologies.

In China, where our sales performance is measured on a calendar-year basis, first half TIV was up 7.9% to 12.31 million units.

Nissan’s sales increased 3.8% to 610 thousand units, representing a market share of 5.0% for the half.

For the nine-month period to the end of September, our China sales reached 929 thousand units which was up 8.2% versus the prior year period, but behind overall TIV growth.

It could be explained by two factors. 

One is low demand for light commercial vehicles, where we have a 5.3% share of a Chinese LCV market that declined 11.2% in the 9-month period to September 30.  

The second point is the rapid growth of the local brands in passenger car segment. The Venucia brand could not keep pace with the strong growth of other local brands.

In the U.S., TIV was down 0.8% at 9.03 million units. But Nissan’s sales rose by 3.7% to 783 thousand units, equivalent to a market share of 8.7%, amid strong demand for Rogue, Altima and Maxima.

In Canada, sales rose by 1.4% to 74 thousand units, resulting in a market share of 6.7%.

In Mexico, we remained number-one with unit sales increasing 14.8% to 191 thousand units, equivalent to a market share of 24.7%.

In Europe, including Russia, our sales totaled 362 thousand units, resulting in a market share of 3.8%. Excluding Russia, sales rose by 4.4% to 319,000 units, which resulted in a market share of 3.6%.

In Russia, the market continued to be impacted by the weak ruble and economic uncertainty. Our sales decreased 30.1% to 43,000 units and our market share was down 1.5 pp to 6.1%

Our market share in Europe declined due to underperformance in the B segment.  However we are expecting strong sales of the all new Micra later in this fiscal year which we unveiled last month at the Paris Motor Show.

In other markets, our sales decreased 4.9% to 382,000 units due to overall weak industry demand.

Unit sales in Asia and Oceania decreased 0.1% to 168,000 vehicles and sales in Africa and others totaled 41,000 units, down 18.4%.

Although sales in Latin America and the Middle East decreased to 83,000 units and 90,000 units respectively, we outperformed those markets.


Moving to the detail of our financial results, as with previous quarters, Nissan is presenting its financial performance under the equity accounting method for our joint venture in China.

On this basis:

  • Consolidated net revenues totaled 5.32 trillion yen.
  • Operating profit totaled 339.7 billion yen, which equates to an operating margin of 6.4%.
  • Net income was 282.4 billion yen, which represents a 5.3% net margin.

Looking at the operating profit movement:

Overall including volumes, M&S, and Monozkuri performance, we produced a positive impact of 124.5 billion yen.

Meaning without the negative impact by FX, our operating profit margin increased 1.8 percentage points to 8.5% by efficiency improvement of our operations.

FX however had a negative impact of 179.8 billion yen, resulting in a reported operating profit of 339.7 billion yen.

On a management pro forma basis, which includes the proportionate consolidation of our Chinese joint venture, our key indicators showed that:

  • Net revenues totaled 5.84 trillion yen for the half.
  • Operating profit was 412.0 billion yen.
  • Net income totaled 282.4 billion yen.
  • Automotive free cash flow was 408.1 billion yen; and
  • We ended the period with automotive net cash of 1.46 trillion yen.

On a pro forma basis, our actual operating profit margin was 7.1%. If we did not have significant headwinds by FX, this 7.1% of operating margin would have been 9.0%.


During the first half, we continued to launch exciting new products as planned in the Nissan Power 88 midterm plan.

Our new models have included the new Datsun redi-Go crossover in India, the all new Serena in Japan, the new Kicks in Brazil, the 2017 Pathfinder, the all new Armada, and the new Titan half-ton pick-up truck in North America.

For each of these models, initial demand is encouraging, giving us strong momentum as we enter the second half.

To sustain that momentum, we will launch more new products in the coming months. As a result, we expect strong growth in the second half.

In North America, the new Rogue will contribute to our sales forecast for the fiscal year.

At the recent Paris motor show, we unveiled the new Micra model for Europe which will be assembled at a Renault plant at Flins, France from December.

We began sales of the all new Serena in Japan on August 24th. And last week, we began sales of and the Note e-POWER in Japan. It marks a big milestone in our electrification strategy under Nissan Intelligent Mobility. 

We are confident in the potential of the Note e-POWER, which went on sale on November 2nd.

We also saw continued momentum at our premium Infiniti brand, where unit sales rose 5.8% to 106 thousand units in the first half of the fiscal year. This was driven primarily by encouraging demand for the Q30 in Europe as well as the QX30 and QX60 in North America.

Nissan has continued to build its brand profile.

In the first half, we sponsored major sporting events – notably the Summer Olympics and Paralympic Games in Brazil, the European Champions League and college sports in the USA.

These activities helped to lift brand visibility this year.  According to the Interbrand survey of top brands, Nissan rose 6 positions and is now ranked 43rd in global brands.

We also see the accelerating adoption of new technology as key to building our brand profile. That will continue in the future.

One of our biggest priority areas is to build on our Nissan Intelligent Mobility vision for building a zero-emission, zero-fatality future for driving. 

Nissan Intelligent Mobility is featuring in more new vehicles such as the latest Serena, where we are offering ProPILOT functions. This autonomous drive technology combines automated steering, accelerator and braking to ease driver workload in heavy traffic and on long journeys.

We have been actively building partnerships beyond the traditional automotive industry to jointly work on further enhancing Nissan Intelligent Mobility.

We as the Alliance recently announced a multiyear agreement with Microsoft to partner on next-generation technologies including the Microsoft Azure, which is one of their intelligent cloud offerings.

We as an Alliance acquired Sylpheo, the French software development company, to accelerate the expansion of our connected vehicle and mobility services program.

Last month, we announced the expansion of our Alliance strategy by completing the acquisition of a 34% stake in Mitsubishi Motors for 237 billion yen.

As part of the Alliance, we will target synergy benefits through collaboration on joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology sharing and an expansion of the companies' combined presence in both developed and emerging markets.

We are also accelerating our six-year partnership with Daimler through cooperation on a production facility at Aguascalientes in Mexico, as well as the forthcoming one-ton pick-up production in Argentina, and joint engine production in North America.


Relative to our outlook for the full fiscal year, we are maintaining our previously announced financial and volume guidance.

Nissan maintains a progressive dividend policy reflecting our profitability and solid free cash flow generation and remain committed to a minimum pay-out ratio of 30%. For the 2016 fiscal year, our previous projection of an increase in the full year dividend to 48 yen per share is maintained. Earlier today, our Board approved payment of an interim dividend of 24 yen per share to be made on November 25, 2016.


In summary, despite strong headwinds in the first half, particularly on the FX front, we have delivered solid business performance and financial results leveraging improved operational efficiency. Looking forward, we are committed to growing our business in a sustainable way delivering solid earnings, positive automotive free cash flow and attractive shareholder returns.


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