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Nissan Motor Co Ltd Earnings - Analysis & Highlights for Q3 2024
Overview
PositivesNegativesOutlook
- The company is changing its structure to enable profitability in the auto business, which is its core business, to ensure sustainable growth.
- The company is identifying opportunities for asset optimization that contribute to cost reduction and better efficiency.
- The third generation e-POWER enjoys significant better performance, fuel economy, and cost through the evolution of dedicated engines and the integration of electric batteries than the first generation, particularly in overseas markets, where long distance travel is common, the company expects to achieve a 15% improvement in high speed fuel efficiency compared to the second generation reaching class leading levels.
- The company is focusing on the development of intelligent technologies that are unique to Nissan. In 2026, the company will concentrate on the evolution of intelligent cockpit and driving assistant technology, along with many other differentiated innovations.
- The company launched many new models in the markets to increase its competitiveness in fiscal year 2024. In Japan, the updated Note and Aura became leaders in the compact car segment and are driving the company's electrification efforts. In the United States, sales of all new Kicks remain strong, thanks to its practicality and styling.
- Net revenue was flat at ¥9 trillion on a consolidated basis.
- Operating profit decreased to ¥64 billion and net income decreased to ¥5 billion on a consolidated basis.
- The company expects ¥20 billion higher sales expenses, ¥5 billion higher Monozukuri cost, and a negative ¥15 billion from other factors.
- The company is exporting a large volume to the US, and a high tariff will have a huge impact on its business.
- The company's global production capacity will be reduced by 20% from 1 million units today to 4 million units by fiscal year 2026.
- The company expects to reduce cost by ¥20 billion through the adoption of the family development scheme.
- The company plans to sell 3 million units globally, excluding China in fiscal year 2026.
- The company expects forex and raw materials to each contribute ¥5 billion positive.
- The company expects to reduce inventory by more than 20% between the end of December and the end of March.
- The company expects to reduce approximately ¥100 billion in manufacturing.
Q&A Highlights from Nissan Motor Co Ltd Earnings Call Q3 2024
- Analyst asked about the reason for canceling the MOU with Honda.
- Makoto Uchida, CEO of Nissan Motor Co., Ltd., explained that the initial plan was to create a holding company with Nissan and Honda as subsidiaries, with each company maintaining its autonomy and competitiveness. However, the new proposal from Honda to make Nissan a wholly-owned subsidiary would have limited Nissan's autonomy and competitiveness, making it difficult to maximize its strength. Therefore, Nissan decided to cancel the MOU.
- Makoto Uchida, CEO of Nissan Motor Co., Ltd., explained that the initial plan was to create a holding company with Nissan and Honda as subsidiaries, with each company maintaining its autonomy and competitiveness. However, the new proposal from Honda to make Nissan a wholly-owned subsidiary would have limited Nissan's autonomy and competitiveness, making it difficult to maximize its strength. Therefore, Nissan decided to cancel the MOU.
- Analyst asked about the specific part of Nissan's autonomy that would have been damaged if it became a wholly-owned subsidiary of Honda.
- Makoto Uchida, CEO of Nissan Motor Co., Ltd., explained that the company's autonomy would have been damaged if it had become a wholly-owned subsidiary of Honda, as it would have limited Nissan's ability to demonstrate its strength and competitiveness in the global market.
- Makoto Uchida, CEO of Nissan Motor Co., Ltd., explained that the company's autonomy would have been damaged if it had become a wholly-owned subsidiary of Honda, as it would have limited Nissan's ability to demonstrate its strength and competitiveness in the global market.
- Analyst asked about the company's plan to reach the 9,000 figure mentioned in the previous presentation and the rationale behind choosing which plants to close and which to streamline through shift changes and other scaled-downs.
- Makoto Uchida, CEO, explained that the company will be reducing its workforce by 6,500 in manufacturing and 2,500 in SG&A, resulting in a total of 9,000 employees. He also mentioned that the decision to close or streamline plants will depend on market requirements and the capacity of production.
- Makoto Uchida, CEO, explained that the company will be reducing its workforce by 6,500 in manufacturing and 2,500 in SG&A, resulting in a total of 9,000 employees. He also mentioned that the decision to close or streamline plants will depend on market requirements and the capacity of production.
- Analyst asked about the benefits of the third-generation e-POWER system in terms of performance and other aspects, and which models will adopt it.
- Makoto Uchida, CEO, explained that the third-generation e-POWER system will improve fuel economy, especially in highway mode, and that it will come to Europe first. Kunio Nakaguro, CTO, added that the third-generation e-POWER system will provide additional benefits such as quietness and control, and that it will be applied to Xtrail Rogue, Ariya, and other models.
- Makoto Uchida, CEO, explained that the third-generation e-POWER system will improve fuel economy, especially in highway mode, and that it will come to Europe first. Kunio Nakaguro, CTO, added that the third-generation e-POWER system will provide additional benefits such as quietness and control, and that it will be applied to Xtrail Rogue, Ariya, and other models.
- Analyst asked about Nissan Motor Co Ltd's plan for their key markets, specifically North America, Europe, Japan, China, and India.
- Makoto Uchida, CEO of Nissan, stated that the company is exporting a significant number of cars from Mexico to the US, including Nissan and INFINITI brand models. He mentioned that if high tariffs are imposed, the company may need to transfer production of these models elsewhere. He also noted that the company is exporting a large volume to the US and that a high tariff would have a huge impact on their business.
- Makoto Uchida, CEO of Nissan, stated that the company is exporting a significant number of cars from Mexico to the US, including Nissan and INFINITI brand models. He mentioned that if high tariffs are imposed, the company may need to transfer production of these models elsewhere. He also noted that the company is exporting a large volume to the US and that a high tariff would have a huge impact on their business.
- Analyst asked about the resolution at the BOD and if there were any members who were for the continuation of talks towards business integration.
- Makoto Uchida stated that there were diverse debates at the BOD, including discussions on the company's current position and future prospects. He mentioned that the resolution was adopted after several rounds of discussions had taken place. He also noted that he personally believed that business integration through a holding company would be the pathway towards becoming strong and competitive, but the most recent proposal by Honda was not towards that direction.
- Makoto Uchida stated that there were diverse debates at the BOD, including discussions on the company's current position and future prospects. He mentioned that the resolution was adopted after several rounds of discussions had taken place. He also noted that he personally believed that business integration through a holding company would be the pathway towards becoming strong and competitive, but the most recent proposal by Honda was not towards that direction.
- Analyst asked about the management changes at Nissan Motor Co Ltd.
- The company plans to announce new top management in March, and corporate officers will be reassigned to corporate executives. They may also reduce 20% of executive positions. The company is also looking to optimize its business and make decisions faster.
- The company plans to announce new top management in March, and corporate officers will be reassigned to corporate executives. They may also reduce 20% of executive positions. The company is also looking to optimize its business and make decisions faster.
- Analyst asked about the company's reaction to the recent proposal from Honda.
- The company was unsure about the success of the proposal and had doubts about whether the newly integrated company would be strong under the new scheme. They had discussions with the executive committee and board members and reached a conclusion. They believe there are big potential synergies in the strategic partnership talks and will continue discussions to implement actions that will benefit both companies.
- The company was unsure about the success of the proposal and had doubts about whether the newly integrated company would be strong under the new scheme. They had discussions with the executive committee and board members and reached a conclusion. They believe there are big potential synergies in the strategic partnership talks and will continue discussions to implement actions that will benefit both companies.
- Analyst asked about the timeline and milestones for Nissan's strategic partnership with Honda.
- Makoto Uchida stated that Nissan will seek to create new synergies with Honda and that they will continue to discuss business collaboration. He mentioned that Nissan's goal is to reach 3.5 million vehicles by 2026, including China, and that the company needs to think about the economy of scale and the need for collaboration with other companies. He also mentioned that they cannot make announcements at their discretion and that they will continue to discuss these matters with Honda and hopefully make some announcements in the future.
- Makoto Uchida stated that Nissan will seek to create new synergies with Honda and that they will continue to discuss business collaboration. He mentioned that Nissan's goal is to reach 3.5 million vehicles by 2026, including China, and that the company needs to think about the economy of scale and the need for collaboration with other companies. He also mentioned that they cannot make announcements at their discretion and that they will continue to discuss these matters with Honda and hopefully make some announcements in the future.
