MOODY'S INVESTORS SERVICE SAYS NISSAN WILL MAINTAIN HIGH PROFITABILITY AND MARKET POSITION

Moody's Investors Service has changed to positive from stable the outlook on the Baa1 senior unsecured ratings of Nissan Motor Co., Ltd. (Nissan) and its supported subsidiaries. The outlook change reflects Moody's view that Nissan is likely to continue to maintain high profitability, strengthen its market position and improve financial flexibility over the intermediate term.
Nissan has improved its track record and presence in global markets without sacrificing margins – its domestic market share increased to 14.6% for fiscal 2004 from 12.2% for 2001, and its US share grew to 6.0% from 4.2% over the same period.
Nissan's successful model introduction program and cautious attitude toward incentives has contributed to the recovery of "Nissan" and "Infiniti" brands and supported the company's strong operating performance. The 9.6% operating profit margin that the automobile segment recorded in fiscal 2004, while lower than the previous year's 10.8%, was the highest among Moody's-rated automobile businesses.
Although Nissan's costs were high and acted as a drag on earnings until fiscal 2000, the company responded with two mid-term plans -- "Nissan Revival Plan" and "Nissan 180" -- that led to cost reductions of 130 billion - 280 billion yen every year from then to fiscal 2004. These reductions have also been a factor in the company's high profit margins.
“Nissan has been making an enormous effort during the recent years” said Takeshi Nakajima, Deputy Managing Director at Nissan Middle East. “The NRP and Nissan 180 plans have not only lead to cost reductions but also to increased market share and higher profit margins, both of which are important rating factors going forward.”
Nissan managed to reduce external automotive debt, excluding financial debt, to 74 billion yen at the end of fiscal 2004 from 704 billion yen three years earlier and 204 billion yen at the end of fiscal 2003. Despite the company's intensive capital expenditure plan and its increasing R&D expenditure to further strengthen competitiveness, Nissan is likely to maintain these expenditures within cash flow generation. As a result of its prudent financial policy, Moody's expects Nissan to boost its liquidity and improve its financial flexibility.