CEO: NISSAN HAS HIT ROCK BOTTOM
Carmaker sees 28pc plunge in profit for fiscal year ending in March 2020
NISSAN Motor Co forecast a 28 per cent plunge in its annual operating profit, setting it up for the weakest earnings in 11 years and underscoring its struggle to turn the page after the ouster of former chairman Carlos Ghosn.
The lacklustre outlook from Japan’s No.2 carmaker is likely to add to the pressure on chief executive officer (CEO) Hiroto Saikawa as he tries to overhaul corporate governance and put Nissan on a more equal footing with alliance partner Renault.
Nissan’s weakening profit has raised concerns at Renault, which holds a 43 per cent stake in the Japanese firm and has
pushed for closer ties.
But some Nissan executives have opposed a full merger and what they see as an unequal partnership that gives smaller Renault more sway over Nissan.
“Today we have hit rock bottom,” said Saikawa yesterday.
“We would like to recover to our original performance level in two to three years,” he added.
Nissan expects operating profit of 230 billion yen (RM8.76 billion) for the fiscal year to March 2020, missing the 457.7 billion yen average of 23 analyst estimates compiled by Refinitiv.
The carmaker reported an operating profit of 318 billion yen in the year just ended, down 45 per cent from a year earlier.
It also booked 4.4 billion yen in expenses to reflect previous misstatements involving Ghosn’s compensation.
Sluggish profitability would likely result in a 30 per cent cut to full-year dividend to 40 yen per share, Nissan said.
The biggest blow to Nissan’s bottom line has come from the costly sales incentives in the United States, where its sales fell 9.3 per cent to 1.44 million units in the year ended March 31.
For years it has relied on heavy discounting in its biggest market to sell its Rogue compact sports utility vehicle and Altima sedans, under aggressive targets Ghosn set during his time as CEO.
Saikawa, who took over as Nissan’s CEO in 2017, has pledged to focus on improving US profit margins, but it has been a slow process as Nissan continues to resort to discounting
The carmaker also cut its midterm revenue target to 14.5 trillion yen by 2022, from 16.5 trillion yen. It sees its annual operating margin at six per cent by then, versus an earlier target for eight per cent.
Nissan shares are down around two per cent this year, after losing a fifth of their value last year.
Meanwhile, sources say the company is looking to invest in a Chinese electric-car startup to provide it with a greater footprint in the world’s biggest market for new-energy vehicles (NEV).
Nissan wanted to buy a stake of as much as 25 per cent in a Chinese electric-vehicle maker and it had narrowed the potential targets to startups including WM Motor Technology Co, Zhejiang Hozon New Energy Automobile Co and CHJ Automotive Co, said the sources.
The plans signal the carmaker was looking to push ahead with ambitions in the NEV space started when Ghosn was still chairman of its board.