Nissan Motor Co Ltd has reported a 70-percent tumble in profits and slashed its full-year outlook to an 11-year low as the Japanese carmaker suffered from falling sales following the removal of former head Carlos Ghosn.
The latest weak showing from Nissan, which has already had nearly two years of weak financial performance, illustrates the scale of the work ahead for its new executive team, which is due to take over on December 1.
Following the removal of Ghosn almost a year ago, Nissan has been hit by sliding profit, uncertainty over its future leadership and tensions with top shareholder Renault SA – whose shares fell two percent to their lowest level since April 2013 after Nissan’s disappointing guidance.
Operating profit at Japan‘s second-biggest carmaker by sales came in at 30 billion yen ($275m) during the July-September period versus 101.2 billion yen ($927m) a year earlier.
That compared with a mean forecast of 47.48 billion yen ($435m) from nine analyst estimates, compiled by data provider Refinitiv, and marked its worst second-quarter performance in 15 years.
“Operating profit for the first half is off our target” for full-year profit, Stephen Ma, a corporate vice president and the incoming chief financial officer, told reporters.
“We have reassessed our sales outlook for China and other markets,” he said, adding that a stronger yen was also weighing on its forecast.
Nissan also withdrew its 40 yen ($5.71) per share dividend outlook for the year, saying it is now undecided on a payout. The company is conserving cash as it embarks on 12,500 job cuts globally, and cost reductions are not happening fast enough to blunt the effects of weaker demand, higher raw material costs and unfavourable currency trends.
Although other automobile manufacturers such as Honda Motor Co and Mazda Motor Corp have also slashed sales and profit outlooks for the year, Nissan is struggling with the added burden of financial mismanagement under Ghosn.
The carmaker in the past few weeks has announced a revamp of its top ranks with younger executives. The current head of its China business, 53-year-old Makoto Uchida, is due to become its next chief executive, as it seeks to draw a line under Ghosn’s legacy. He takes over from Hiroto Saikawa who stepped down in September over a pay scandal, who in turn succeeded Ghosn.
Years of heavy discounting and fleet sales, particularly in the United States, have left Nissan with a cheapened brand image, low vehicle resale values and dented profits.
The carmaker is implementing a global recovery plan under which it will axe nearly one-tenth of its workforce and cut global vehicle production by 10 percent through 2023 to rein in costs which it has said ballooned while Ghosn was CEO.
Ghosn is awaiting trial in Japan on charges of financial misconduct, which he denies.