NISSAN Motor Company’s operational and financial resurgence has been recognised by a significant upward re-rating of long-term corporate credit by Standard & Poor’s, the benchmark analysis for the world's financial markets.
S&P raised Nissan’s credit and debt ratings from ‘BBB’ to ‘BBB+’, reflecting impressive 2003 results, a string of successful new product launches, and extensive cost cutting.
The company’s operating margin for fiscal 2003 remained the highest in the industry at 11.1 per cent, up from 10.8 per cent in 2002 and 7.9 per cent the previous year.
“Nissan’s competitive position has improved significantly since the late 1990s, owing to a more profit-orientated product development strategy, rigorous cost cutting in purchasing, and its improved brand image, with more conservative sales incentives and sales-financing products,” said Chizuko Satsukawa, a credit analyst at Standard & Poor’s.
Nissan has since announced financial results for the first quarter of its current financial year (April-June, 2004) which show a 15.4 per cent increase in net consolidated revenue to US $17.4 billion, compared to the same period a year ago.
Operating profit totalled US $1.70 billion, up 5.8 per cent on the same period, with an operating profit margin of 9.8 per cent.
Middle East markets have contributed to Nissan’s upward re-rating and its firs-quarter performance, coinciding with the launch of 10 new models until the end of 2005, the biggest product offensive in the company’s regional history.
The launches form part of Nissan’s strategic ‘180’ plan aimed at achieving aggressive growth based on attractive new product. The three numbers stand for 1 million additional units sold by October 2005, minimum 8 per cent operating margin, and zero debt by the end of 2005.
At the same time, Nissan is targeting global sales of 4.2 million, the top operating profit for a global automaker, and return on capital invested of up to 20 per cent.
Standard & Poor’s comments that the outlook on Nissan’s long-term position is ‘stable’ while affirming its ‘A-2’ short-term rating.
The analyst also announced that it has affirmed its ‘BBB/A-2’ ratings on Renault SA, which has a 44.4 per cent stake in Nissan, and revised its outlook on the long-term corporate rating from ‘stable’ to ‘positive’.
As of March 2003, Nissan had already achieved a net cash position in its automotive business (excluding debt at captive finance operations), using constant accounting standards.
© 2004 Mena Report (www.menareport.com)
