NISSAN MOTOR CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In Q1 of fiscal 2027, the Company returned to profitability from the losses recorded in the previous year at both the operating and ordinary income levels. However, due to the heavy tax burden and fluctuations in extraordinary gains and losses, final profit remained extremely thin. Revenue was ¥29,642.0億 (+9.5% YoY), Operating Income was ¥778.9億 (compared with an Operating Loss of ¥791.2億 in the previous year), and Ordinary Income was ¥490.9億 (compared with an Ordinary Loss of ¥1,092.3億 in the previous year). Consolidated Net Income was ¥82.9億 (compared with a Net Loss of ¥1,140.1億 in the previous year), but Net Income attributable to owners of the parent was only ¥37.6億, resulting in a substantial difference from the ¥45.3億 attributable to non-controlling interests. The increase in revenue was primarily driven by higher sales in North America and growth in the sales financing business, while the improvement in Operating Income was attributable to a 707bp improvement in the gross margin.

Factors Affecting Performance

【Revenue】Revenue was ¥29,642.0億, up +9.5% YoY. By segment, the Automotive Business generated revenue of ¥26,622.9億 (89.8% composition ratio, +8.8%), while the Sales Financing Business generated ¥3,626.5億 (12.2% composition ratio, +14.8%); both segments posted revenue growth. By region, North America accounted for more than 60% of total revenue and grew substantially year on year, while Asia and other regions declined, indicating a North America-led revenue growth structure.

【Profit and Loss】Operating Income was ¥778.9億, representing a return to profitability from the Operating Loss of ¥791.2億 in the previous year, and the Operating Margin was 2.6% (previous year: -2.9%). The gross margin improved by +707bp year on year to 15.8%, but the SG&A ratio also rose to 13.2% (previous year: 11.7%), partially offsetting operating leverage. Although the Company recorded a foreign exchange gain of ¥142.6億 in non-operating income and expenses, net non-operating income and expenses were negative at ▲¥287.9億, mainly due to interest expenses of ¥320.0億 and other items, leaving Ordinary Income at ¥490.9億. Extraordinary losses were ¥186.8億 and extraordinary gains were ¥103.7億, resulting in net extraordinary losses of ▲¥83.2億 and amplifying fluctuations in final profit as a temporary factor. Against Profit Before Tax of ¥407.8億, income taxes and other taxes were ¥324.9億 (an effective tax rate of approximately 79.7%), substantially reducing Consolidated Net Income to ¥82.9億 and Net Income attributable to owners of the parent to ¥37.6億. Overall, the quarter was characterized by higher revenue and profit, with a clear improvement at the operating and ordinary income levels, while the tax burden and temporary gains and losses substantially eroded final profit.

Segment Analysis

The Automotive Business recorded revenue of ¥26,622.9億 (89.8% composition ratio, +8.8% YoY) and an Operating Loss of ¥177.9億 (the loss narrowed by +88.7% from ▲¥1,577.0億 in the previous year), with the margin remaining negative at ▲0.7%. The Sales Financing Business recorded revenue of ¥3,626.5億 (12.2% composition ratio, +14.8%) and Operating Income of ¥861.8億 (+9.7%), maintaining a high margin of 23.8%. Its Operating Income exceeded the Company-wide Operating Income of ¥778.9億 and offset the loss in the Automotive Business.

By regional revenue from external customers, North America grew substantially to ¥18,685.1億 (63.0% composition ratio, +24.5% YoY), leading overall revenue growth. Japan declined to ¥4,282.7億 (14.4% composition ratio, -5.7%), Asia to ¥919.8億 (3.1% composition ratio, -26.4%), and other regions to ¥2,732.2億 (9.2% composition ratio, -17.6%). Europe was broadly flat at ¥3,022.2億 (10.2% composition ratio, +2.1%). Revenue growth was concentrated in North America, and demand trends in other regions will affect the degree of geographic diversification going forward.

Key Financial Indicators

【Profitability】The Operating Margin was 2.6%, improving by 555bp from -2.9% in the previous year. The Net Margin remained low at 0.28% on a consolidated basis (0.13% based on Net Income attributable to owners of the parent), while ROE was 0.2%. The improvement in the gross margin to 15.8% supported the recovery at the operating level, but the increase in the SG&A ratio and heavy tax burden limited improvement in the final profit margin.【Cash Quality】Operating Cash Flow (OCF) was ¥371.6億, approximately 4.5 times Consolidated Net Income of ¥82.9億 and approximately 9.9 times Net Income attributable to owners of the parent of ¥37.6億, indicating relatively strong cash-generating capacity compared with accounting profit.【Investment Efficiency】The Automotive Business margin remained low at ▲0.7%, while the Sales Financing Business margin of 23.8% boosted overall earnings efficiency, indicating a significant disparity in capital efficiency by business.【Financial Soundness】The Equity Ratio was 26.5%, remaining broadly unchanged from 26.5% in the previous year. Interest-bearing debt, including short-term borrowings, current portions of long-term debt, and bonds, was approximately 1.7 times net assets of ¥53,286.5億. Interest coverage (Operating Income/interest expenses) was 2.43 times, and the current ratio was 154.2%.

Cash Flow Analysis

Operating Cash Flow was ¥371.6億, a substantial improvement from the previous year's OCF of ▲¥842.1億. Within working capital, a decrease in trade receivables generated a cash inflow of +¥1,267.5億, while an increase in inventories of ▲¥766.5億 and a decrease in trade payables of ▲¥1,711.8億 were sources of cash outflow. These factors reduced the OCF subtotal of ¥1,003.2億 to actual OCF. Investing Cash Flow was ▲¥2,151.5億, primarily due to investments in property, plant and equipment and loans and investments associated with the Sales Financing Business. Free Cash Flow (OCF + Investing Cash Flow) was therefore significantly negative at ▲¥1,779.9億. Financing Cash Flow was +¥1,104.9億, with proceeds from long-term borrowings (+¥4,376.3億) and other sources covering the investment shortfall. The funding structure remains dependent on raising interest-bearing debt for the time being. Cash and cash equivalents at the end of the period were ¥22,212.4億, providing a certain level of short-term liquidity.

Earnings Quality

Recurring earning power was centered on Operating Income of ¥778.9億. Non-operating income and expenses included volatile items such as the foreign exchange gain of ¥142.6億, as well as structural costs such as interest expenses of ¥320.0億. Extraordinary losses of ¥186.8億 and extraordinary gains of ¥103.7億 resulted in net extraordinary losses of ▲¥83.2億, which acted as a relatively large temporary factor compared with Consolidated Net Income of ¥82.9億. Against Profit Before Tax of ¥407.8億, income taxes and other taxes were extremely heavy at ¥324.9億 (an effective tax rate of approximately 79.7%), substantially compressing final profit. The difference between Consolidated Net Income of ¥82.9億 and Net Income attributable to owners of the parent of ¥37.6億 reflects the ¥45.3億 attributable to non-controlling interests, and the two figures must be clearly distinguished. Comprehensive Income was ¥884.9億, substantially exceeding Net Income, primarily due to foreign currency translation adjustments of +¥680.5億, which have limited correlation with cash generation from business activities. OCF of ¥371.6億 was approximately 4.5 times Consolidated Net Income, indicating relatively strong cash generation compared with the fragility of reported earnings.

Earnings Forecast and Guidance

Progress in Q1 against the full-year forecasts (Revenue of ¥130,000億, Operating Income of ¥2,000億, and Net Income attributable to owners of the parent of ¥200億) was 22.8% for Revenue, 38.9% for Operating Income, and 18.8% for Net Income. Operating Income was well above the 25% benchmark for simple linear progress and was progressing ahead of schedule, while Net Income was lagging due to the heavy tax burden and fluctuations in extraordinary gains and losses. The full-year Operating Income forecast anticipates a substantial improvement of +244.8% YoY, premised on a recovery in the profitability of the Automotive Business. No revisions were made to the earnings or dividend forecasts during the quarter.

Shareholder Returns

The dividend forecast is ¥0, and the Company intends to remain without a dividend for a second consecutive fiscal period. As no dividend is being paid, the Payout Ratio is not calculated. Given that Free Cash Flow is negative at ▲¥1,779.9億, continuing the suspension of dividends while prioritizing capital preservation is considered to have a certain degree of rationale. No share repurchases have been confirmed, and the resumption of shareholder returns is considered to require improved profitability in the Automotive Business and a stable return to positive Free Cash Flow.

Risk Factors

1. Automotive Business profitability: The Automotive Business continues to post an Operating Loss of ¥177.9億 (the loss narrowed from ▲¥1,577.0億 in the previous year), with a margin of only ▲0.7%. The Company-wide Operating Margin of 2.6% is supported by the Sales Financing Business (margin: 23.8%), making the recovery of the standalone earning power of the Automotive Business a key issue.

2. Financial leverage and interest burden: Interest-bearing debt has reached approximately 1.7 times net assets, while interest coverage (Operating Income/interest expenses) is 2.43 times. Interest expenses of ¥320.0億 account for more than half of total non-operating expenses of ¥608.6億, meaning that changes in interest rates have a relatively significant impact on Ordinary Income.

3. Heavy tax burden and fluctuations in temporary gains and losses: The effective tax rate is high at approximately 79.7%, based on income taxes and other taxes of ¥324.9億 against Profit Before Tax of ¥407.8億. Extraordinary gains and losses also resulted in net extraordinary losses of ▲¥83.2億, a relatively large fluctuation compared with Consolidated Net Income of ¥82.9億, reducing the predictability of final profit.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Within the industry, both the Operating Margin and Net Margin are substantially below the median, indicating a relative disadvantage in profitability.

Growth and Capital Efficiency

Revenue growth exceeded the industry median, indicating a relative advantage in top-line growth.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The return to profitability at the operating and ordinary income levels is clear, but the high effective tax rate of approximately 79.7% and fluctuations in extraordinary gains and losses (net ▲¥83.2億) compressed final profit, leaving Consolidated Net Income at ¥82.9億 and Net Income attributable to owners of the parent at ¥37.6億.

2. The Sales Financing Business generated Operating Income of ¥861.8億 (margin: 23.8%) and continues to offset the Operating Loss of ¥177.9億 in the Automotive Business, highlighting the polarization of earning power between segments.

3. Due to the substantial Investing Cash Flow of ▲¥2,151.5億, Free Cash Flow was ▲¥1,779.9億, and the Company remains dependent on funding through Financing Cash Flow, including proceeds from long-term borrowings.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: 1,132円–1,199円 at Cost of Equity ±1%, and 1,153円–1,172円 at ω±0.1.

Notes:

• Net Income is substantially compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests (Net Income ÷ Operating Income 10%). This value reflects that compression at face value; if the factors are temporary, underlying earnings power may be higher.
• Because forecast ROE is below the Cost of Equity, the theoretical value is below Book Value Per Share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

（Calculation model: Residual Income Model / Interest rate reference month: 2026-06 / This value is not intended to predict or guarantee the future share price）

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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