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Nissan announces record half-year operating profit as revival continues

Carlos Ghosn, president and chief operating officer of Nissan Motor Company, has this morning announced that the company's 'revival plan' (NRP) is well ahead of schedule and delivering significant profits. Nissan is due next month to report its third consecutive half-year of record profits, with an operating income expected to be 187 billion yen (£1.1 billion), 39% more than last year and an operating margin of 6.2%.

Mr Ghosn also reported that Nissan had reduced debts by 149 billion yen (£859m) in the past six months to 804 billion yen (£4.6 billion) and expected net income after tax to come to 230 billion yen (£1.3 billion), for a return on net sales of more than 7.5%.

Mr Ghosn said: “NRP is a book with many chapters ranging from product plan, brand power, investments for the future, cost reduction and asset sales. From the beginning, we have been implementing each one of them intensively and simultaneously, while recognising that expected benefits will come at very different points in time.

“Nissan has continued reducing its cost base vigorously. Cumulative purchasing cost reductions are on track to reach 18% this year. The company is also beginning to benefit in the first half from restructuring in the domestic distribution network and in manufacturing, with the 31 March, 2001 closure of three assembly plants in Japan.

Ghosn added: “Just two years after having a near death experience, Nissan is finding itself, at the midpoint of NRP, not very far from the highest level of profitability among the global volume players in the industry.”

Nissan reported record operating profits despite stable net revenues. Globally, retail sales volumes for the first-half fiscal year 2001 decreased by 3.8%, from 1.337m units to 1.286m units. In Japan, volume rose 2.1% to 342,000 units from 335,000. In the US, volume fell 14% to 349,000 units from 406,000, while volume in Canada grew 7.4% to 29,000 units from 27,000. In Europe, Nissan volume declined 5.5% in the first half to 273,000 from 289,000 in the first-half last year.

“If market conditions, as seen today, were more predictable and less volatile, we would have revised our profit forecast upward,” said Mr Ghosn. “However, we have chosen a more cautious outlook, which still represents a more than 20% improvement in operating profits over last year, despite a significantly tougher economic and competitive environment.”

Ghosn reiterated the company's full-year financial forecast for fiscal year 2001 of a consolidated operating profit of 350 billion yen (£2 billion) and net income after tax of 330 billion yen (£1.9 billion). He also announced a new fiscal year-end consolidated net automotive debt target of 750 billion yen (£4.3 billion), 100 billion yen (£573m) below the company's previous forecast.

On November 19, 2001, the company will file its official audited accounts for the first half of fiscal year ending March 31, 2002.

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