Nissan Motor(NSANY) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Nissan reported a net income of JPY201.3 billion for the nine months ending December 31, 2021, an increase of JPY569 billion from the previous year [22][26] - Operating profit increased to JPY191.3 billion, representing an operating margin of 3.1%, up 5.6 points from the previous year [21][26] - Free cash flow for the automotive business was negative JPY350.2 billion due to working capital usage from lower production caused by semiconductor shortages [22][26] Business Line Data and Key Metrics Changes - In the third quarter, Nissan delivered 904,000 retail units, with unit sales in Japan at 94,000, China at 313,000, North America at 262,000, and Europe at 90,000 [10][11] - The all-new Note and Aura models in Japan achieved a segment share of 13.9%, up 6.6 points year-on-year [12] - The all-new Rogue in the U.S. secured a 7.3% segment share, up 1.7 percentage points from the previous year [13] Market Data and Key Metrics Changes - Total industry volume declined by 18% year-on-year, while Nissan's retail volume decreased by only 16%, outperforming the industry by 2 percentage points [8] - In the U.S., Nissan outperformed the industry by 1 percentage point in a market that declined by 21% [9] - In China, Nissan's Sylphy model captured a 19.2% market share, up 4.6 points year-on-year [14] Company Strategy and Development Direction - Nissan is focusing on electrification and vehicle intelligence under the Nissan Ambition 2030 plan, with a JPY2 trillion investment to launch 15 battery EVs and eight E-powered vehicles by 2030 [57] - The company aims to maintain a sales volume assumption of 3.8 million units for the fiscal year [30] - Nissan is committed to improving operational efficiencies and achieving a positive operating margin target of 2% for the fiscal year [31] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future performance, emphasizing the importance of innovation and customer safety amid ongoing semiconductor shortages and pandemic impacts [34] - The company anticipates a positive impact from foreign exchange and performance improvements, revising its operating profit outlook from JPY180 billion to JPY210 billion for the fiscal year [28] - Management acknowledged the challenges posed by the semiconductor supply chain but remains focused on production recovery and cash flow generation [45] Other Important Information - Nissan's global net revenue per unit increased by 13% compared to the third quarter of FY 2020, reflecting improved sales quality [20] - The company reported a significant improvement in liquidity, with net cash for the automotive business exceeding JPY1 trillion [24] Q&A Session Summary Question: When will free cash flow become positive for the full year? - Management indicated that while Q3 was positive, achieving positive free cash flow for the full year remains challenging due to semiconductor issues, but they expect improvements moving forward [45][46] Question: What is the strategy for R&D expenses and human resources in the shift to EV? - Management confirmed a JPY2 trillion investment in electrification and a gradual shift in resources to support this transition, ensuring alignment with market needs [57][58] Question: How does Nissan assess the impact of raw material price hikes? - Management stated that they are managing raw material costs through strategic purchasing and efficiency improvements, with passing costs to customers being a last resort [70][84] Question: What is the significance of North America as a profit driver? - Management highlighted that North America is crucial due to product renewal and a focus on quality of sales, resulting in improved profitability and market share [88][92] Question: How does Nissan view Tesla's performance? - Management acknowledged Tesla's role in raising awareness for EVs but emphasized Nissan's long-standing commitment to electrification and customer accessibility [105]