Adding to Ghosn woes, Nissan slashes profit outlook to near-decade low
By Naomi Tajitsu
TOKYO (Reuters) – Nissan Motor Co slashed its full-year profit forecast to its lowest in nearly a decade due to weakness in the United States, just as it adjusts to life without Carlos Ghosn and charts its future with alliance partner Renault SA.
The Japanese automaker expects operating profit for the year ended March to drop 45 percent versus a year earlier to 318 billion yen (£2.20 billion), from a previous forecast for 450 billion yen, on expenses related to extending vehicle warranties in the United States, its biggest market.
In a statement on Wednesday, Nissan said sales had taken a hit in the aftermath of the arrest of former Chairman Ghosn, contributing to a decline in profit to its lowest since the year ended March 2010.
This is the second cut to the automaker’s operating profit forecast in two months, 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.
Nissan is scheduled to announce its full-year earnings results on May 14.
Falling profit has been a headache since before 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.
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)
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