Nissan posted quarterly operating profit barely in the black at just 1 billion yen for the quarter ended June 30, 2024. That compares with 128.6 billion yen posted for the same quarter last year.
Revenues in the quarter were up 80.7 billion yen to 2,998.5 billion yen, the drop in profitability down to soft prices, model mix and heavy use of incentives in the US market.
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Nissan lowered its operating profit forecast for this fiscal year to 500 billion yen (previous forecast 600 billion yen).
Nissan president and CEO Makoto Uchida said: “Our first quarter results were very challenging. The reasons are clear, and we have implemented measures to recover our performance. First, we are optimizing the inventory buildup in the US market and bring VME efficiency with a focus on quality of sales. Then, from the second half we aim to maximise sales of new and refreshed models to achieve the revised forecast of sales volume and profit.”
Nissan said sales in North America for the FYQ1 were down 1.7% at 323,000 (US sales down 3.7% at 237,000 units), but that inventory was higher than planned and ‘enhanced incentives’ will be needed to reduce incentives to a more reasonable level in the second half of the year.
CFO Stephen Ma said the decline in US sales was primarily influenced by the impacts of delayed model year change over for Rogue and Sentra, aging products in some high margin segments, as well as the market’s movement towards hybrid vehicles.
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By GlobalData“After the strong tactics to promote the MY23 Rogue sell down, we aimed to restore transaction prices and reduce incentives,” he said. “However, softer than expected industry demand coupled with industry wide inventory and incentive increase, led to the elevated spending to keep competitiveness and manage our inventories.
“This situation will continue into Q2 as we are focused on improving inventory levels as well as a good transition to the refreshed models in second half.”
Nissan said it expects some profit recovery from the second half of the year, supported by accelerating product offensive and strengthened fixed cost discipline.
“A combination of corrective measures and new model launches will help drive our recovery,” said Ma. “In the US, we are introducing the INFINITI QX80, Nissan Kicks, Armada and Murano.
“In Europe, we anticipate momentum with e-POWER variants of Qashqai, X-Trail, and Juke; Patrol in the Middle East. In Japan, good demand is expected for the Note, Sakura, Serena, and DAYZ.”
