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As profits plunge, Nissan slashes full-year forecast
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Crisis-hit Japanese automaker Nissan slashed its full-year forecast yesterday as nine-month net profit dropped 45 percent in the first earnings report since the arrest of former chairman Carlos Ghosn.
The firm blamed growing costs of raw materials and emerging economy foreign exchange declines for its bottom-line profit dropping by 45.2 percent to 316.7 billion yen (US$2.9 billion).
The disappointing nine-month performance and a change in accounting methods forced the manufacturer to downgrade its net profit forecast for the fiscal year to March to 410 billion yen, compared with 500 billion yen projected earlier.
Annual sales are now seen at 11.6 trillion yen, down from an earlier estimate of 12 trillion yen.
The results came as Nissan and its partners Renault and Mitsubishi Motors are seeking to turn the page on Ghosn’s arrest for financial misconduct, which has exposed a rift in the three-way tie-up.
CEO Hiroto Saikawa vowed to “refine” the firm’s ties with Renault, whose new boss Jean-Dominique Senard is expected to take Ghosn’s position on the Nissan board.
“This alliance is our very big strength and asset,” Saikawa told reporters after the earnings were announced.
He said that the firms “respect each other’s independence” but strive for “win-win” results by maximizing synergies.
But Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm, warned the alliance still has a bumpy road ahead.
“Confusion surrounding Nissan’s management is expected to last a long time, as it’s not easy for the two companies to strike a deal on tough issues, including capital relations,” Takada said.
“It’s hard to find a manager like Ghosn who can take balanced actions. We need to watch if the confusion will have a direct impact on its performance from now on.”
Ghosn stands accused of — among other things — under-declaring some 9 billion yen in salary between 2010 and 2018 and continues to languish in a Tokyo detention center after being refused bail.
Nissan said it was accounting for this under-reported salary, technically owed to Ghosn. But Saikawa said: “I personally don’t think that we will reach a conclusion to pay this money.”
The Nissan results came at a tough time for Japanese carmakers.
Last week, domestic rival Toyota slashed its full-year net profit forecast.
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