Crisis-hit Japanese automaker Nissan said Thursday its net profit plunged more than 87% for the nine months to December as it struggles with weak demand and fallout from the arrest of former boss Carlos Ghosn.
Nissan revised downwards its full-year sales and profit forecasts, but warned that the impact from the spreading coronavirus crisis was not yet included in their figures.
“Let me express my sincere regrets to shareholders. The company results are weaker than expected,” said CEO Makoto Uchida, who announced there would be no dividend paid.
Net profit for April-December dropped 87.6% o 39.3 billion yen ($358 million), on sales down 12.5% at 7.5 trillion yen for the period.
On a quarterly basis, Nissan suffered a net loss of 26.1 billion yen for the three months to December, the first third-quarter loss in more than a decade.
The profit decline was mainly due to weak sales in the United States as well as Japan, where the impact of the nation’s sales tax hike hit auto demand, the company said in a statement.
“Nissan is in a very severe situation at a time when competition in the global auto market is further intensifying,” said Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm.
Nissan, which downgraded its annual forecasts three months ago, said its bottom-line profit was now forecast to be 65 billion yen for the fiscal year to March 2020, compared with an earlier estimate of 110 billion yen.
Full-year sales are estimated at 10.2 trillion yen, down from a previous forecast of 10.6 trillion yen but Uchida said the latest forecast did not include the potential impact of the novel coronavirus.
“The market remains tough due in part to the novel coronavirus outbreak,” Uchida told reporters.
Analysts are weighing the possible impact of the virus on production in China.
Nissan has already suspended operations at four assembly plants in the country.
It aims to resume operations at two plants next week, but has not decided whether to extend the closure at the remaining two.
It was Nissan’s first earnings announcement since Ghosn dramatically jumped bail and fled Japan, where he was awaiting trial on financial misconduct charges.
Ghosn, who was arrested in November 2018 and spent 130 days in detention, denied all the charges and claimed he was a victim of a plot by Nissan and Japanese officials.
‘Good and bad aspects’
On Wednesday, Nissan filed a civil lawsuit to reclaim some 10 billion yen from Ghosn for what it called “years of his misconduct and fraudulent activity.”
Uchida took the Nissan helm in December as the firm overhauled its leadership after the Ghosn scandal.
“Nissan replaced its leaders but has yet to show a roadmap for revival, and is still making an extra effort to settle the Ghosn case,” Takada said.
Adding to Nissan’s woes is continued tension within the three-way alliance with Mitsubishi Motors and Renault.
Ghosn, who created the alliance, wanted greater integration with France’s Renault, and says his push for that prompted angry Nissan executives to plot against him.
The two firms have made a show of holding the marriage together in the wake of Ghosn’s arrest, but tensions have bubbled to the surface.
“Ghosn had both good and bad aspects, but Ghosn’s leadership was a cornerstone of the alliance and they have yet to find a matching leadership,” Takada said.
Last week, rival Toyota reported a surge in net profit on record sales for the nine months to December, and upgraded its full-year profit.
Honda revised up its full-year profit forecasts but warned that the impact from the spreading coronavirus crisis was not yet included in their figures.
Nissan shares plunged 1.54% to 568.5 yen ahead of the third-quarter earnings report.