Nissan slashes full-year forecast as first-half profit falls

YOKOHAMA, Japan (AFP) – Crisis-hit Japanese automaker Nissan yesterday slashed its full-year forecast for both sales and profit as it struggles with weak demand in Japan, the United States (US) and Europe, as well as fallout from the arrest of former boss Carlos Ghosn.

Nissan downgraded its net profit forecast to JPY110 billion (USD1 billion) for the fiscal year to March 2020, compared with an earlier estimate of JPY170 billion.

Full-year sales are now estimated at JPY10.6 trillion, down from a previous forecast of JPY11.3 trillion.

Nissan blamed the poor outlook on weak first-half earnings, a strong yen, an uncertain global outlook and the stagnation of the car industry in general.

Incoming chief financial officer Stephen Ma said, “Sales in China outpaced the market but sales in other key regions including the US, Europe and Japan underperformed in those markets. This resulted in the overall decrease of our market share.”

Net profit for the six months to September plunged 73.5 per cent to JPY65.4 billion on sales down 9.6 per cent at JPY5.0 trillion.

A staff member stands by a window of a Nissan car gallery in Tokyo. Japanese automaker Nissan has seen July-September profit tumble to half of what it earned the previous year as sales and brand power crumbled since the arrest of former Chairman Carlos Ghosn a year ago. PHOTO: AP

It was its first earnings announcement since Nissan named Makoto Uchida as new chief executive last month, elevating the insider heading the firm’s China unit as it overhauls its leadership after the Ghosn scandal.

The appointment, to take effect on December 1, came after months of turmoil for the automaker in the wake of the arrest of former chief Ghosn on allegations of financial misconduct.

Former CEO Hiroto Saikawa resigned in September after an investigation prompted by the Ghosn scandal revealed he was among Nissan executives who received excess pay by altering the terms of a share price bonus.

“Nissan’s new management is setting sail in a storm,” said Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm.

“Uchida is expected to show new strategies for Nissan’s survival,” Takada told AFP.

The automaker has cited a global slowdown in the auto sector, but it is also suffering from a lack of innovation on its production line and reputational damage from the Ghosn scandal.

Uchida inherits the harsh cost-cutting measures Saikawa proposed as a way out of the crisis – including reducing dealer incentives and promotions but also cutting global production by 10 per cent to 2023 – a measure that means the loss of 12,500 jobs.

“Additional restructuring is possible in the wake of the layoff plan,” Takada said. Asked about possible fresh job losses, Nissan official Ma said no new announcement would be made until the full new management team is in place on December 1. Adding to Nissan’s woes is continued tension within the three-way alliance with Mitsubishi Motors and Renault. Ghosn, who created the alliance, wanted greater integration with France’s Renault, and said his push for that prompted angry Nissan executives to plot against him.

The two firms have made a show of holding the marriage together in the wake of Ghosn’s arrest, but tensions have bubbled to the surface.

Renault holds a 43-per cent stake in the Japanese automaker, which in turn controls 15 per cent of the French firm but has no voting rights.

“The negative impact of the furore around Ghosn is gradually becoming visible,” Takada said. “The alliance is facing a crucial stage,” he added.

Ghosn is out on bail in Tokyo, awaiting a trial that reports have suggested could start in April on charges of under-reporting millions of dollars in salary and using company funds for personal expenses.

He denies any wrongdoing.