Nissan slashes profit amid Ghosn scandal, lagging sales

TOKYO (AP) — Nissan cut its profit forecast for the fiscal year through March yesterday to reflect slowing sales, higher costs and the fallout from a criminal investigation of its former chairman, Carlos Ghosn.

Nissan Motor Co expects to post a 319 billion yen (USD2.9 billion) profit for the fiscal year, marking a 22 per cent drop from its earlier 410 billion yen (USD3.7 billion) forecast.

Nissan said the downgrade reflects higher costs in the United States (US) from a warranty extension campaign for some vehicles and falling sales due to “corporate issues,” alluding to the Ghosn scandal.

Ghosn was arrested in November last year and is facing charges of underreporting his income and breach of trust. He said he is innocent. He was released on bail in March and is awaiting another court decision on bail after his re-arrest on April 4.

Nissan, which is allied with Renault SA of France, has seen sales lag in France and Japan, where Ghosn is widely known. In the US and China, buyers aren’t as affected by the scandal, but the markets there overall have slowed.

A man walks past the logo at global headquarters of Nissan Motor Co, Ltd in Yokohama, near Tokyo. – AP

Other factors contributed to the revision, such as production not keeping up with demand for the Note, an extremely popular model in Japan. But the high-profile scandal has weakened the brand appeal of the maker of the Leaf electric car, Infiniti luxury model and X-trail sports utility vehicle.

Nissan said it expects to sell 5.5 million vehicles in this fiscal year. Earlier it predicted it would sell 5.6 million. The company sold nearly 5.8 million vehicles in the fiscal year that ended in March 2018.

The automaker reduced its sales outlook by 0.2 per cent for the fiscal year through March 2019 to 11.5 trillion yen (USD103 billion), compared to its previous forecast. It was Nissan’s second downgrade for its outlook following one in February that cited faltering sales in China and the US.

At that time, Nissan also logged costs about 9.2 billion yen (USD83 million) related to the alleged underreporting of Ghosn’s compensation.

Nissan has promised to strengthen its corporate governance to prevent a recurrence of what it said is serious wrongdoing by Ghosn.