Cost reduction measures work!Nissan raised its full-year profit forecast

2022-04-28 0 By

Nissan Motor Co., Ltd. has announced its financial results for the first three quarters of fiscal year 2021 (April 1, 2021 — December 31, 2021).Data show that in the first three quarters of fiscal year 2021, Nissan Motor Company’s consolidated net income is 6.15 trillion yen (about 339.4 billion yuan), operating profit rate is 3.1%, and net income is 2013.0 billion yen (about 11.1 billion yuan).With the figures rising, Nissan expects full-year operating profit of 210 billion yen (11.59 billion yuan) in fiscal 2021.Meanwhile, net profit is expected to be 205 billion yen (11.31 billion yuan), up 25 billion yen from the previous forecast.But what is more noteworthy in the earnings report is that Nissan’s operating profit margin for the first three quarters of fiscal 2021 increased by 5.6% compared to the same period of the previous fiscal year, which enabled it to swing to a profit of 2013.0 billion yen (about 11.1 billion yuan) from a loss of 367.7 billion yen (about 20.2 billion yuan) in the same period of last year.Nissan also reported higher profits in the first three quarters thanks to improving sales quality in all markets and tight control of financial management and fixed costs.The results also show that Nissan is completing its transformation step by step in accordance with the “Nissan NEXT” plan, and the cost reduction measures mentioned in the plan have already worked.On December 17, Nissan’s European division announced that it had stopped production at its only plant in Europe, Barcelona, Spain.Although it has operated the plant for more than 40 years, Nissan, which is in the midst of a transformation programme, has regarded it as a “toxic asset” in the face of a slump in production in recent years.Nissan’s strategic retrenchment in the North American market began when Hiroto Nishikawa took charge of the company.Mr. Uchida took the helm, saying publicly early in his tenure that Nissan would slash costs in North America “without tabulation.”Under Nissan NEXT, the focus of rebuilding the U.S. business is on three things: moving from quantity to quality, revamping the product line, and working closely with retailers.Now they are having an effect.In its latest earnings report, Nissan said: “The key model and new model vehicle profit increased significantly, benefiting from favorable conditions in the US market and improving sales quality in each market.”In addition to adjusting the market layout, improve the quality of sales, layoffs are also one of nissan’s strategic contraction measures.In fact, back in mid-2019, Nissan announced plans to cut 12,500 jobs.However, due to the impact of the epidemic, the scale of layoffs is much higher than originally planned.To mitigate the impact of global parts shortages and the pandemic on the company, Nissan is considering cutting 20,000 jobs worldwide, expected to be completed by 2023.The measures are part of nissan’s transformation plan to streamline operations and optimise costs.In Nissan’s transformation plan, the rationalization of supply chain costs has also been highlighted.Take Nissan’s layout in China as an example. In January 2021, sources revealed that In terms of supply chain, Nissan will increase localization of parts and technologies in China to reduce costs and help it compete better with Local Chinese automakers and major global competitors.One of the people said bluntly: “Nissan has emphasised a global strategy until now, but as regionalisation is replacing globalisation, Nissan has to become more cost competitive with all parts and technology in its cars by fully localising them.”That strategy has led the company to design and source components in China well beyond bumpers, seats and lamps to include more sophisticated components such as sensors and power inverters.Batteries for Nissan’s E-Power models, for example, have been developed in China and are supplied by Chinese battery maker Shinwanda Electric Vehicle Battery Co.Nissan Motor Co. ‘s main financial information for the third quarter of fiscal 2021 shows that although the revenue of the Joint venture in China in the third quarter of fiscal 2021 is almost the same as the same period last year, the net income increased by 70 billion yen (about 3.9 billion yuan).In this, it plays an important role in the optimization of local supply chain.In the face of the new four modernizations, and coalition partners share the development cost in May 2020, Renault and nissan, mitsubishi alliance to rescue troubled alliance, help members to recover from the impact of the epidemic, released the new business cooperation mode and accompanist “leading”, core technology, hoping to let members sharing and share the cost.Half a year later, the Renault-Nissan-Mitsubishi alliance officially released its development roadmap for 2030.In this new roadmap, union specifically for pure electric vehicles and intelligent made travel set around the “leader and accompanied by a” strategic cooperation pattern, plan in the next five years to the electric field to invest 23 billion euros (163 billion yuan) sharing electric platform, launched in 2030 years ago and 35 new electric models.At the same time, in the field of power battery, Renault, Nissan and Mitsubishi still adopt the alliance strategy, especially in the core market, Renault and Nissan chose a common power battery supplier.The Renault-Nissan-Mitsubishi alliance is working with a common partner to achieve economies of scale, which it hopes will reduce battery costs by 50% by 2026 and 65% by 2028.That way, the alliance will have a total of 220 MEGAwatt-hours of ev battery capacity at major production sites around the world by 2030.