Nissan 2014 Annual Report Download - page 15

Joseph G. Peter
Chief Financial Officer
Marking his fifth year as Chief Financial Officer (CFO), Joseph Peter says:
“We know what we need to do in terms of product, quality, revenue
management, and in the cost side of the business. Our margin-objective is
within our line of sight, and we are moving forward.”
That forward momentum was reflected in the last fiscal year. On a pro-
forma basis, Nissan reported consolidated net sales up 18.7% to 11.43 trillion
yen for the 12 months to March 31, 2014. Operating profit increased by
15.7% to 605.7 billion yen, and net income rose 13.6% to 389 billion yen*.
Auto business free cash flow was a positive 208.1 billion yen for the
fiscal period, contributing to a year-end net cash position of 1.13 trillion yen in
Nissan’s automotive business. The CFO regards the generation of free cash
flow and the creation of a strong balance sheet as some of the highlights of
his tenure. Since Peter assumed the role, Nissan’s credit rating has been
upgraded and the company has moved from a net debt to a strong net cash
position.
“As we began the Power 88 plan, we were focused on solid free cash
flow,” Peter recalls. “We had an objective to generate 1.5 trillion yen over the
period of the plan. Over the first three years we are more than 50% there.”
It is a creditable performance given some of the headwinds that Nissan
has faced since the start of the plan. “We started our Power 88 mid-term plan
with the stress of natural disasters, first in Japan and then in Thailand,” says
Peter. “We were able to recover faster than others because of the teamwork
by Nissan’s members across multiple disciplines.”
Since then, the company has benefited from a correction in the value of
the yen, although Peter maintains it remains overvalued compared to the
average historic exchange rate against the US dollar. Nissan, moreover, has
not enjoyed the same “bounce” from the yen correction as some other
Japanese carmakers.
Peter argues that there are better indicators of business strength than
favorable currency movements. “When you look at the measure of out-
performance attributed to other companies, you need to be clear what is
driving that performance.
“At Nissan our sales performance has exceeded that of our key
competitors in key markets around the world, particularly the US and China.
“From a financial perspective, the impact of the yen-correction has been
less favorable for Nissan than others. That is because we previously took
steps to realign our cost and revenue footprint. We have been shifting
production to important markets − it’s better in the long term to have more
products manufactured where they are sold.”
As Nissan embarks on the second half of its Power 88
business plan, Joseph Peter remains focused on the key
financial metrics, cost discipline and free cash flow that is
central to the company’s mid-term strategy.
* Since the beginning of fiscal 2013, Nissan has reported figures calculated under the equity method
accounting for its joint venture with Dongfeng in China. Although net income reporting remains
unchanged under this accounting method, the equity-accounting income statements no longer include
Dongfeng-Nissan's results in revenues and operating profit. Under the equity accounting method,
Nissan reported revenues up 20% to 10.48 trillion yen for the 12 months to March 31 2014, and
operating profit increased by a healthy 13.6% at 498.4 billion yen.
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NISSAN MOTOR CORPORATION ANNUAL REPORT 2014
EXECUTIVE PROFILE
CONTENTS
CORPORATE FACE TIME
PERFORMANCE
NISSAN POWER 88
CORPORATE GOVERNANCE
CEO MESSAGE