Nissan warns of 45% drop in profit

Nissan said Wednesday it expected its annual profit to be dramatically lower than expected, a fresh blow to the company still reeling from the arrest of its former top executive, Carlos Ghosn.

The automaker told investors that its operating profit for fiscal year 2018, which ended in March, was expected to be 45% lower than the previous year, at $2.8 billion.

It was Nissan’s second downward revision in two months, highlighting the difficulties it faces as it moves past the fall of Ghosn, a corporate titan who was called in to right the company when it hovered on the brink of bankruptcy in the late 1990s.

Nissan said weak sales in the United States, its largest market, and other regions caused half the slide in earnings, and expenses related to extended warranties on vehicles sold in America accounted for the other half.

In 2018, the company sold just fewer than 1.5 million vehicles in the United States, a 6.2% drop from 2017.

But it also blamed “the impact of recent corporate issues on sales,” suggesting the high-stakes drama involving Ghosn, who is being held in a Tokyo jail on four charges of financial wrongdoing, was weighing on the sales of its cars.

Nissan will announce its annual earnings May 14.

Ghosn’s problems have been a fount of negative publicity for the company, but its troubles began well before his arrest in November, when he was Nissan’s chairman.

The resulting shake-up in leadership has undoubtedly caused turmoil at Nissan, whose top executives have been preoccupied with managing the case’s reputational and legal fallout. It also has inflamed a long-standing disagreement with its partner, the French company Renault, over the direction of a partnership that has become one of the world’s largest automaking alliances.

Renault, which also was headed by Ghosn, owns 43% of Nissan and has exerted outsize control over the Japanese company. While the alliance has been critical to both companies’ success in an industry that increasingly rewards scale, some executives have seen the sometimes cumbersome relationship as an impediment to more efficient management.

Ghosn, who has denied all wrongdoing, has linked Nissan’s poor performance to his arrest, but has taken a very different tack.

In a video statement released in early April, he said his downfall was engineered by Nissan executives trying to divert attention from their own weak performance.