Nissan 2009 Annual Report Download - page 8

Letter from the President and CEO >
Fiscal 2008 was a very challenging year.
Nissan, along with the entire automotive
industry, operated in an environment that
faced a triple threat from a global financial
crisis, a severe economic recession and
volatility in foreign exchange rates.
Governments acted quickly to help stabilize
the environment, and stimulus programs
are being implemented around the world.
Even so, recovery is expected to take time.
Fiscal 2009 may be just as difficult as the
year it follows.
As soon as we saw the first signs of decline in fiscal
2008, Nissan responded quickly and took actions to
adapt to evolving circumstances.
In order to keep the companyfocused on the necessary
recovery of results, we suspended the NISSAN GT 2012
business plan, retained only key business objectives
and implemented a corporate recovery plan. A new,
three-region organizational structure was put in place
in order to maximize synergies within each region. A
new position, Chief Recovery Officer, was established
to lead the creation and implementation of the recovery
plan that is guiding our company through this time of
crisis. The recovery plan has two specific objectives,
which are to return to positive free cash flow and to
positive operating profit as soon as possible.
Part of the recovery plan focuses on actions to
preserve cash. In fiscal 2008, we took swift actions
to
tighten our control of global inventory, and we continue
to
monitor carefully the balance of sales, production and
inventory. We have postponed, reduced or canceled
specific capital investments until there is better visibility
regarding the duration of the economic crisis.
We are also taking actions to improve our profitability.
Monozukuri cost reduction is the biggest and most
important contributor to recovery. Forecasted reductions
in production volumes will lower our ability to decrease
costs per vehicle. Our monozukuri functions—
Engineering, Purchasing, Manufacturing and Supply
Chain Management—are working with our suppliers to
develop concrete action plans to improve profitability.
Major opportunities are linked to parts diversity and
complexity reduction and to exchange rates.
Monozukuri cost reduction activity was the key to the
success of the Nissan Revival Plan, and it will be the
key to this recovery plan as well.
Nissan ended fiscal 2008 with results that were
better than what we had forecast at the end of the
third quarter of fiscal 2008. Net revenues of ¥8,437.0
billion were higher than our third-quarter forecast, and
the operating loss of ¥137.9 billion was smaller than
expected. Despite these better-than-expected results,
the absolute numbers show that we still have significant
challenges before us. The crisis is ongoing, and market
conditions are still volatile.
Two clear indicators will point to the end of the crisis.
One is when we no longer see further declines in total
industry volumes for the global automotive market. The
other indicator will be when Nissan’s net income
returns to positive and is forecast to remain positive.
As long as there is a credit issue in the global
economy, positive free cash flow will be our leading
objective, but concern for the present will not overshadow
our vision for the future. We are rebalancing short and
long-term objectives in order to remain viable and
prepare for major evolutions that are occurring in our
industry. Though the crisis forces us to act defensively
on some counts, we continue to look for opportunities.
Managing Through the
Global Crisis
06 Nissan Annual Report 2009