Nissan Motor Co Ltd Earnings - Q2 2025 Analysis & Highlights
Key Takeaways
Nissan Motor Co., Ltd.'s Q1 2025 earnings call highlighted the Re:Nissan recovery plan, cost reduction strategies, product and market strategy realignment, and key financial results, including sales declines and operating losses, alongside future financial guidance.
Key Financial Results
Retail sales were down 10%.
Operating loss of ¥79 billion, better than guided in May due to a onetime gain and early fixed cost control.
Free cash flow was a negative ¥390 billion.
Automotive gross cash position remained solid with more than ¥2 trillion.
Total automotive liquidity stands at ¥3.1 trillion, including ¥2.1 trillion cash on hand and another ¥1 trillion auto cash lent to sales finance.
Access to ¥1.8 trillion in committed, unused credit lines.
Consolidated net revenues for the period were ¥2.7 trillion, with an operating loss of ¥79 billion and a net income loss of ¥116 billion.
Core automotive operations revenues were ¥2.4 trillion, reflecting lower wholesale volumes and a roughly ¥200 billion negative foreign exchange impact.
Operating loss deepened to ¥158 billion, including a tariff impact of nearly ¥70 billion.
Free cash flow in the automotive business was a negative ¥390 billion, expected due to seasonal factors.
Net cash stood at ¥1.1 trillion at the end of the quarter.
Business Segment Results
Unit sales in China dropped by 27.5%.
11% decline in Japan due to return in competition in the K-car segment and consumer hesitations toward Nissan.
2.4% decline in North America is partly due to adjustments to tariff impacts.
5% decline in Europe, primarily driven by reduced overall demand for electrification.
9% decline in other markets was mainly driven by the Kicks model change in Brazil.
Volume growth in the Middle East was fueled by strong demand for the Magnite and the introduction of the new Patrol.
Capital Allocation
Raised ¥860 billion in July through trade and convertible bonds, fully covering FY 2025 debt maturities.
Issued ¥660 billion in euro and dollars trade bonds with maturities ranging from 4 to 10 years and ¥200 billion in convertible bonds with a six-year maturity in early July.
Proceeds from the trade bonds would be used to refinance ¥700 billion of debt maturing this fiscal year.
Net proceeds from the convertible bonds are intended to be used over the next few years for investment in new products and technologies such as electrification and software-defined vehicles.
Industry Trends and Dynamics
Competition in China remains intense.
The non-premium JV segment continues to strengthen and the price war has escalated further.
Adjustments to the tariff impacts are reshaping the competitive landscapes.
Electrification continues to drive demand in Europe.
Competitive Landscape
Nissan being ranked the number one mass market brand in J.D. Power's Initial Quality Survey.
Macroeconomic Environment
Adversely impacted by nearly ¥40 billion of forex effects, mainly due to the weakening of the US and Canadian dollars.
There was a ¥69 billion negative impact from tariffs.
Growth Opportunities and Strategies
Implementing measures to reduce costs.
Redefining approach to products and markets by aligning offerings more precisely with the real market demand.
Reinforcing key partnerships to unlock economies of scale and deliver value at significantly lower cost.
Reshaping cost structure, aiming to save ¥500 billion through both fixed and variable cost reductions.
Eliminating inefficiencies and challenging legacy practices.
Consolidating manufacturing footprint from 17 plants to 10.
Product offensive is accelerating with further model announcements planned.
New models introduced in Q4 of last fiscal year are gaining strong traction.
Expanding SUV portfolio with the PHEV Rogue alongside the Armada, Pathfinder and Infiniti QX60 in the US.
Launching the Micra EV and the Qashqai with the next-generation e-POWER system in Europe.
Preparing to export China-made vehicles to other markets.
Financial Guidance and Outlook
Maintaining fiscal year 2025 retail sales forecast.
Introducing a Q2 operating loss expected at negative ¥100 billion.
Free cash flow in Q2 is forecast at approximately ¥350 billion negative with a return to positive territory anticipated in the second half of the year supported with our seasonal pattern.
Expect retail sales to reach 3.25 million vehicles this fiscal year, down by 2.9%, mainly due to a projected 18% decline in China.
Sales in Japan, North America and Europe are likely to be flat year-on-year, while other markets are forecasted to grow 6.6%.
Production volume is projected to be 3 million units as we continue to manage inventories.
Expect net revenue of ¥12.5 trillion for the current fiscal year.
Visibility for the second quarter: revenue of ¥2.8 trillion, operating loss of ¥100 billion and automotive free cash flow of negative ¥350 billion.
