Nissan Motor Co, the Japanese automaker in the middle of a turnaround under an alliance with Renault SA of France, reported yesterday a 34 percent rise in profits for the first fiscal half as cost cuts and a weaker yen helped offset lagging sales.
Nissan's profit for the six months ended in September totaled ?230.3 billion (US$1.9 billion), up from ?172 billion for the same period a year ago. Sales totaled ?2.98 trillion (US$24.3 billion), down 1.4 percent from ?3.02 trillion last year.
The results were in line with a report given last month by Chief Executive Carlos Ghosn on the progress of his revival plan, which includes shuttering three assembly plants, cutting purchase costs by turning to global suppliers and selling off subsidiaries.
Sent by Renault to fix money-losing Nissan two years ago, Ghosn has become a bit of a star recently for corporate Japan during these hard times while many companies are fighting a serious downturn.
Nissan said the first-half results marked the third consecutive half-year of record profits as well as the company's best financial performance in more than a decade. Nissan lost money in seven out of eight years before Ghosn arrived.
"The results were made possible through the swift and strong implementation of the Nissan Revival Plan," the Tokyo automaker said in a statement.
Nissan is building a US$930 million facility near Canton, Mississippi in the US that is set to open in 2003 and eventually employ 4,000 people. The plant will produce pickup trucks, minivans and sport utility vehicles.
The challenge for Nissan is to build a stronger brand image and sell more cars especially in Japan, where rivals Toyota Motor Corp and Honda Motor Co dominate with a succession of hit models. Success will depend on whether Nissan has any hits among the new models planned for next year and ahead.
Nissan kept its profit outlook for the full fiscal year ending in March unchanged at ?330 billion (US$2.7 billion).
Its sales outlook was also the same at ?6.3 trillion (US$51 billion) as uncertainties remain about the global economy after the Sept. 11 terrorist attacks in the US.
For the fiscal year ending in March 2001, Nissan chalked up ?331 billion (US$2.7 billion) in profits on sales of ?6 trillion (US$49 billion).
For the first fiscal half that just ended, global sales totaled 1.29 million vehicles, down nearly 4 percent from 1.34 million a year ago.
But a weak yen, which boosts the value of Nissan's overseas earnings when converted into the Japanese currency, offset some of those losses, Nissan said. Nissan was calculating earnings at ?114 to the US dollar, but the greenback is recently trading at about ?120.
Nissan and Renault are trying to strengthen their alliance.
Last month, both sides said Nissan will acquire a 15 percent stake in Renault, while Renault raises to 44.4 percent the 36.8 percent stake in Nissan that it acquired in 1999.
In Tokyo trading, Nissan's shares closed up 6 percent yesterday at ?593 (US$4.80).
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