DOWNLOAD
Detailed Information
Read this content. Log in or sign up.
If you are an investor with us, log in first to your Metrobank Wealth Manager account.
If you are not yet a client, we can help you by clicking the SIGN UP button.
Fundamental View
AS OF 15 Aug 2024- The company experienced model year changeover issues in North America and Japan. These issues were exacerbated in the U.S. by excess inventories of 2023 model year Rogue vehicles and the company has increased sales incentives to reduce inventories by the end of F2Q24 to make way for 2024 model year vehicles at higher prices. Management raised its FY24 revenue guidance on projected incremental currency benefits but lowered its production and sales volume targets along with its profit guidance. It now expects FY24 consolidated operating profit to decline YoY compared to its previous expectation for profit growth. The company’s lowered production volume and sales targets further delay its goal of improving fixed cost absorption, a key component to improving its automotive operating margins.
Business Description
AS OF 15 Aug 2024- Nissan, with headquarters in Yokohama, Japan, is a leading global automotive manufacturer with a market presence in many countries around the globe. The company’s growth investments are focused primarily on Japan, North America, and China, core markets with large profit pools in which Nissan has a meaningful market share. The company’s business in China is conducted through a joint venture with Dongfeng Motor Corporation.
- Nissan’s Sales Financing segment supports the sale of its vehicles by providing financing solutions to its customers and dealers. To enhance their creditworthiness, Nissan maintains keepwell (support) agreements with its wholly owned financial subsidiaries including Nissan Motor Acceptance Corporation (NMAC) in the United States and Nissan Financial Services (NFS) in Japan.
- The Renault-Nissan-Mitsubishi Alliance was established in 1999 to enhance member company scale in product development and raw material purchasing. The alliance includes equity participation, which led to Nissan holding ownership stakes in Renault (15% non-voting) and Mitsubishi (34%) and Renault holding an ownership stake in Nissan (43%). The Alliance’s automobile production volume is the third largest globally behind Toyota and Volkswagen.
Risk & Catalysts
AS OF 15 Aug 2024- Based on the challenges the company experienced in F1Q24, management lowered its targets for FY24 production volume and retail sales. It now expects FY24 production growth of 1%, down from 2% previously, while it lowered its target for FY24 retail sales growth to 6% from 7% previously. Sales excluding China are projected to increase 9% YoY, while sales in China are projected to decline 3%. The company continues to target North America as its highest retail sales growth market in FY24, with projected growth of 12%, down from its previous target of 13%.
- Nissan raised its FY24 guidance for revenue but lowered its outlook for consolidated operating profit and net income. Management now expects FY24 revenue growth of 10%, up from 7% previously, based on incremental currency tailwinds related primarily to a strong dollar. Consolidated operating profit is now forecast to decline 12% YoY, down from its previous expectation for 6% YoY growth, owing primarily to pricing and sales incentive actions taken in the first quarter to clear inventory along with 2024 model year changeover delays.
Key Metric
AS OF 15 Aug 2024| ? bn | FY20 | FY21 | FY22 | FY23 | LTM F1Q24 |
|---|---|---|---|---|---|
| Revenue | 6,843 | 7,393 | 9,573 | 11,524 | 11,570 |
| EBIT | (471) | (42) | 242 | 409 | 331 |
| EBIT Margin | (7%) | (1%) | 3% | 4% | (0%) |
| EBITDA | (201) | 247 | 559 | 760 | 692 |
| EBITDA Margin | (2.9%) | 3.3% | 5.8% | 6.6% | 3.4% |
| Total Liquidity | 4,096 | 3,601 | 3,658 | 4,196 | 3,696 |
| Net Debt | (636) | (728) | (1,213) | (1,546) | (1,404) |
| Total Debt | 1,260 | 973 | 687 | 468 | 191 |
| Gross Leverage | 8.3x | 3.9x | 1.2x | 0.6x | 0.3x |
| Net Leverage | -1.2x | -2.9x | -2.2x | -2.0x | -2.0x |
Scroll to view columns
CreditSight View Comment
AS OF 07 Oct 2024We maintain our Market perform recommendation on notes of Nissan (NSANY: Baa3/BB+/BBB-; S/S/S) and Nissan Motor Acceptance Corp. (NMAC) based on recent weak operating performance, a challenging second quarter outlook, and our view its credit rating will not likely be upgrade by S&P in the near term, partially offset by relative value.
Recommendation Reviewed: October 07, 2024
Recommendation Changed: May 10, 2024
Recommended Issuers
Who We Recommend
BMO Financial
Hyundai Motor
Bond:
HYNMTR 5.5 26
Toronto Dominion
