Crisis-hit Japanese automaker Nissan on Tuesday warned of a massive US$6.4 billion net loss for the current fiscal year as it reels from the impact of the coronavirus pandemic.
Nissan, which had delayed an annual forecast because of ongoing uncertainty, issued the warning as it reported a first-quarter net loss of 285.6 billion yen ($2.7 billion) on plunging sales.
“These results … reflect a full quarter of Covid-19 disruption that we knew would undermine our performance in key markets,” chief operating officer Ashwani Gupta said announcing the results.
“As you can see the pandemic has a severe impact on our operations,” he added.
Nissan said the value of global sales plunged 50.5%, with falls across markets including Japan, China and the United States.
And it warned the woes would continue, forecasting annual sales will plunge 21% to 7.8 trillion yen following a 15% drop the previous year.
“As a result of the impact of the coronavirus pandemic worldwide, the overall demand dropped to about half in this first quarter compared to last year,” chief operating officer Makoto Uchida told reporters.
“Plants in the world were forced to stop their production. At plants that continued running, the ratio of production largely declined as sales dropped. This caused a very severe business environment and impacted financial results,” he added.
The figures come after the firm reported a huge $6.2 billion annual net loss in May, announcing it would shut its Barcelona plant and slash production in an attempt to get back on track.
Nissan was already battling weak demand as well as the fallout from the arrest of former boss Carlos Ghosn, now an international fugitive after jumping bail and fleeing Japan, before the coronavirus pandemic hit.
But the unprecedented global health crisis has hit the auto industry as a whole hard, with lockdowns keeping people indoors and economic woes dampening demand.
“The auto industry’s business environment has totally changed due to the pandemic,” Satoru Takada, an auto analyst at Tokyo-based research and consulting firm TIW, said before the earnings were announced.
“The new coronavirus has hit both supply and demand hard. Production is recovering but consumer appetite remains stagnant. The outlook remains unclear amid concerns over a second wave or a third wave of the pandemic. The end of the tunnel is not yet in sight,” he warned.
The impact of the coronavirus pandemic compounds a series of existing problems for Nissan, including weak demand, the Ghosn scandal and tensions in its alliance with Renault and Mitsubishi Motors.
Earlier this year, Nissan and its alliance partners agreed a joint transformation plan, with each member agreeing to take the lead in a specific market.
But the partnership remains fragile, and Takada said Nissan still faced significant headwinds.
“Nissan’s performance remains in low gear, trailing its disastrous results for the previous fiscal year,” he said.
“We can’t see a clear sign of its full recovery … It remains at a crucial stage.”