Blog of RENAULT NISSAN Alliance

You don’t need me to tell you what a difficult year 2009 was for the global car industry.

But one thing I can tell you is that Nissan’s 2009 results and the outlook for the 2010 financial year demonstrate the company’s ability to react to and operate in a crisis. These were lessons Nissan learnt in the late 1990s when it had its own internal crisis and put in place the Nissan Revival Plan (NRP).

Since then, that ability to manage a crisis by having a simple plan with great execution has been embedded in Nissan’s DNA.

To a large extent Nissan’s results speak for themselves. An operating profit margin at 4.2% puts Nissan at the top end of Japanese OEMs’ performance. The company is now nearly debt free, which allows management to confidently announce that dividends will be reinstated as early as November 2010.

These results and the favourable outlook explain why Nissan's share price has doubled since April 2009.

Nissan’s performance is clearly enhanced by its Alliance with Renault. Synergies of EUR1.9bn were recorded for both companies over the past 12 months against a target at EUR1.5bn. Furthermore the Alliance allows Nissan to stay focused on its long-term strategy initially set out in the GT2012 business plan.

Here are a few highlights of some key strategic milestones:

1. EVs: Nissan Leaf is on time for launch in the second half of 2010 with more than 13,000 ordered in just a few weeks. This is more than Nissan can deliver over the next 12 months.
    
2. The new V-Platform – developed by Nissan as an Alliance platform has been launched and Nissan has renewed its focus on affordable cars that account for one-in-four of every car sold worldwide. Plants in Thailand, India and China will produce a total of 3 different body types and 1m units per annum are targeted from FY12.
    
3. Russia – where Nissan has partnered with Avtovaz to launch an entry car produced in Avtovaz’s Togliati plant with a very high level of local costs.

Looking ahead, 2010 will be a challenging year for the auto industry with global uncertainty and rising costs of raw materials.

But Nissan has a good base to grow from: The company expects volume to increase by 8 per cent to a record 3.8 million units with 10 new models which will help it gain market share across most regions; Nissan is also targeting an operating profit of Y350bn which should allow net debt to be eliminated and the company to firmly exit the crisis.

A new mid-term business plan – due to be presented in 2011 - is currently being prepared with value creation and financial strength as cornerstones of its financial strategy.

And while Nissan is doing that, the Alliance with Renault will help it and Renault accelerate their successes as unit sales and revenues are set to grow faster than costs over the next few years.