NISSAN MOTOR CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.58T
• Operating Income: ¥-27.65B
• Net Income: ¥29.36B
• EPS: ¥-63.55

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Nissan Motor Co., Ltd. (7201) reported FY2026 Q2 consolidated results under JGAAP with a notable deterioration in profitability despite relatively stable balance sheet liquidity. Revenue was ¥5,578.7bn, down 6.8% YoY, indicating soft top-line performance likely driven by volume/mix headwinds and/or pricing pressure amid a competitive global auto market. Gross profit was ¥834.4bn, translating to a gross margin of roughly 15.0%, which suggests the company maintained some pricing and cost discipline at the product level. However, operating income fell to a loss of ¥27.7bn (down 90.2% YoY), indicating significant operating deleveraging and/or elevated SG&A, warranty, or recall-related costs. Ordinary income was a loss of ¥77.9bn, reflecting negative operating results and interest burden. Net income was a loss of ¥221.9bn (net margin -3.98%), a deterioration of 93.5% YoY, implying additional non-operating or extraordinary pressures. Interest expense totaled ¥37.8bn and interest coverage was -0.7x, underscoring stressed earnings capacity to service financial costs within the quarter-to-date period. On the balance sheet, total assets were ¥19,133.8bn and total equity ¥5,165.7bn, implying an equity ratio of approximately 27.0% (despite the reported 0.0% being an unreported placeholder). Liquidity appears sound with a current ratio of 152.7% and a quick ratio of 140.3%, supported by sizable working capital of ¥4,253.3bn. Operating cash flow was negative at ¥209.4bn, broadly tracking net losses (OCF/NI ≈ 0.94), signaling earnings quality that is directionally aligned with cash, albeit negative. Financing cash flow was a net inflow of ¥31.2bn, suggesting reliance on external funding as OCF turned negative. Investing cash flow and cash & equivalents were not disclosed (reported as zero), limiting full free cash flow and liquidity runway analysis. DuPont decomposition yields an ROE of -4.30% driven by a negative net margin (-3.98%), modest asset turnover (0.292x), and high financial leverage (3.70x). The capital structure remains leveraged with a debt-to-equity ratio of 2.63x, which magnifies the impact of earnings swings on equity returns. Dividend per share was not paid during the period (DPS ¥0.00), which is consistent with the lack of distributable earnings and cautious cash posture. Overall, the quarter reflects weaker demand/price-cost dynamics and operating leverage headwinds, but with adequate near-term liquidity; data gaps (notably depreciation, investing CF, cash balances, and share count) constrain depth of analysis.

Profitability Analysis

ROE_decomposition: ROE -4.30% = Net Margin (-3.98%) × Asset Turnover (0.292x) × Financial Leverage (3.70x). The negative net margin is the primary driver of ROE weakness; asset turnover is modest for an auto OEM; leverage amplifies the negative margin impact. margin_quality: Gross margin ~15.0% suggests product-level margin remains intact, but operating margin fell to roughly -0.5% (operating loss of ¥27.7bn), implying higher SG&A, R&D, warranty/recall, or adverse FX/commodity effects. The drop in ordinary profit and net profit indicates additional non-operating and possibly one-off charges. operating_leverage: Revenue declined 6.8% YoY while operating income dropped 90.2% YoY, evidencing unfavorable operating leverage. Fixed-cost absorption likely weakened with lower volumes, and/or expense items did not flex down with revenue.

Growth Assessment

revenue_sustainability: Top line of ¥5,578.7bn declined 6.8% YoY; this suggests volume softness and/or pricing pressure across key markets. Without regional/mix disclosure, sustainability is uncertain, but the decline signals competitive and macro headwinds. profit_quality: Net margin of -3.98% and operating loss indicate low-quality earnings this period. Interest expense (¥37.8bn) and negative ordinary income emphasize earnings fragility. OCF tracked NI (ratio ≈ 0.94), suggesting limited accrual distortion but cash burn. outlook: Absent guidance, near-term profit recovery hinges on stabilizing volumes, improved mix/pricing, cost control, and FX/commodity relief. Leverage (3.70x assets/equity) means earnings swings will disproportionately affect ROE; restoring positive operating margin is critical.

Financial Health

liquidity: Current ratio 152.7% and quick ratio 140.3% indicate healthy short-term liquidity. Working capital stands at ¥4,253.3bn, providing a buffer for operations despite negative OCF. solvency: Total liabilities of ¥13,578.7bn vs. equity of ¥5,165.7bn yield a debt-to-equity ratio of 2.63x. Implied equity ratio is ~27.0% (computed from reported assets/equity), indicating moderate capitalization for an auto OEM but with sensitivity to earnings downturns. capital_structure: Financial leverage at 3.70x assets/equity highlights reliance on liabilities. Interest coverage is negative (-0.7x), pointing to pressure on debt service capacity until operating profitability recovers.

Cash Flow Quality

earnings_quality: OCF/Net Income ≈ 0.94 indicates that reported losses are largely mirrored in cash flow, suggesting limited accrual-driven distortions this period. FCF_analysis: Investing cash flow was undisclosed (reported as zero), so FCF cannot be reliably computed. With OCF at -¥209.4bn, achieving positive FCF would require sizable net investment inflows or asset sales, neither of which is disclosed. working_capital: Inventories of ¥1,004.2bn within current assets of ¥12,323.5bn imply significant working capital tied in operations. The negative OCF may reflect weaker earnings and/or working capital outflows; detailed drivers are not disclosed.

Dividend Sustainability

payout_ratio_assessment: DPS was ¥0.00 and payout ratio 0.0%, consistent with net losses and a prudent stance to preserve liquidity. FCF_coverage: FCF coverage cannot be assessed due to missing investing cash flow; given negative OCF, organic dividend coverage would be weak absent asset monetization or external financing. policy_outlook: Resumption or increases in dividends likely depend on restoring sustained positive operating income and OCF. Management will need visibility on profitability and cash generation before committing to distributions.

Risk Assessment

Business Risks:

• Demand cyclicality across key markets leading to volume and mix volatility
• Intense competition and pricing pressure in global auto markets
• FX fluctuation impacts on exports and imported components
• Commodity/raw material cost volatility affecting gross margins
• Product quality, warranty, or recall risks elevating SG&A and provisions
• Supply chain disruptions (semiconductors, logistics) impacting production

Financial Risks:

• Negative operating and ordinary income reducing interest service capacity
• Leverage (D/E 2.63x; financial leverage 3.70x) amplifying earnings swings
• Potential covenant or rating pressure if losses persist
• Working capital intensity and negative OCF leading to incremental funding needs

Key Concerns:

• Sustained operating losses and negative interest coverage (-0.7x)
• Top-line decline (-6.8% YoY) with adverse operating leverage
• Data gaps (investing CF, cash balances, depreciation) limit full FCF and asset turnover quality assessment

Investment Implications

Key Takeaways:

• Revenue declined 6.8% YoY to ¥5.58tn; operating margin turned negative (~-0.5%)
• Net loss of ¥221.9bn (net margin -3.98%); ROE -4.30% driven by negative margins
• Interest coverage -0.7x indicates near-term earnings stress
• Liquidity remains adequate (current ratio 153%; quick ratio 140%) with ¥4.25tn working capital
• Leverage is meaningful (D/E 2.63x; leverage 3.70x), magnifying earnings volatility
• OCF negative at ¥209.4bn; FCF not assessable due to missing investing CF

Metrics to Watch:

• Sequential operating margin and ordinary income trajectory
• OCF recovery and working capital turns (inventory levels and receivables)
• Net debt and interest coverage trends
• Pricing/mix and regional volume recovery
• Capex and investing cash flows (to complete FCF view)
• FX and commodity cost sensitivity

Relative Positioning: Within Japan-listed auto OEMs, the period’s negative operating and net margins place the company below typical peer profitability, while liquidity appears adequate and leverage is at the higher end, increasing sensitivity to earnings recovery.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis