Adding to Ghosn woes, Nissan set to further slash profit outlook: report
TOKYO (Reuters) – Nissan Motor Co Ltd could be heading for a bigger-than-expected earnings drop due to weakness in its top markets, just as it adjusts to a future without Carlos Ghosn and grapples with the outlook of its alliance with France’s Renault SA.
FILE PHOTO: A Nissan logo is pictured during the media day for the Shanghai auto show, China, April 16, 2019. REUTERS/Aly Song
The Japanese automaker, which already flagged its lowest profit in six years, is preparing to announce on Wednesday another cut to its earnings outlook for the fiscal year ended March due to falling sales in North America and China, broadcaster TV Tokyo reported, citing unidentified sources.
The report knocked Nissan shares 3 percent lower.
This would be the second cut to the automaker’s operating profit forecast this year and adds pressure on Chief Executive Hiroto Saikawa just as he works to draw a line under Ghosn’s legacy by overhauling corporate governance and seeking a more equal footing with Renault, Nissan’s biggest shareholder.
A Nissan spokesman declined to comment on the TV Tokyo report when contacted by Reuters. The automaker is scheduled to announce its full-year earnings results on May 14.
Falling profit has been a headache since before former Chairman Ghosn was first arrested in November on allegations of financial misconduct. Currently in jail following his fourth arrest, Ghosn – who denies wrongdoing – could learn as early as Wednesday whether he will be released on bail for a second time.
The automaker is already anticipating a 22 percent cut in operating profit to 450 billion yen ($4.02 billion) for the year ended March, its lowest since the year ended March 2013.
Nissan has struggled to reduce costly sales incentives in the United States. For years it has relied on heavy discounting in its biggest market to sell its Rogue compact sport utility vehicles and Altima sedans to expand market share, under aggressive targets Ghosn set during his time as chief executive.
Saikawa has since pledged to stop chasing share and instead focus on improving profit margins. The automaker has also turned it focus to China as its next major growth market, albeit just as vehicle sales in the world’s biggest auto market have slowed.
Since his ouster at Nissan in November, Ghosn has accused his former colleagues of a boardroom coup aimed at scotching his plan to merge Nissan and Renault.
In a video statement shown to reporters earlier this month, Ghosn said Nissan had “management problems” since he gave up the CEO role two years ago, which had resulted in profit warnings.
While Nissan’s troubles could raise the need for stronger co-operation with Renault, the Japanese automaker appears to be resisting closer ties with a partner it exceeds in both vehicle sales and profitability.
“Now is not the time to think of such things,” Saikawa told a group of reporters outside of his house in Tokyo on Monday, in response to a Nikkei report that Nissan would reject an integration proposal from Renault.
“At the moment we are focused on improving Nissan’s earnings performance. Please give us time to do that.”
Reporting by Naomi Tajitsu and Chris Gallagher; Additional reporting by Takashi Umekawa; Writing by Naomi Tajitsu; Editing by Richard Pullin and Christopher Cushing