Japan’s Nissan sees sharply lower profits after Ghosn scandal

The automaker says it expects operating profits to fall by 28 percent in the coming financial year.

FILE PHOTO: Passersby are silhouetted as a huge street monitor broadcasts news reporting ousted Nissan Motor chairman Carlos Ghosn''s indictment and re-arrest in Tokyo
Nissan expects profits to drop by 28 percent in the current financial year [File: Issei Kato/Reuters]

The troubles at Japan’s second-biggest carmaker, Nissan, appear to be worsening.

As its former chairman Carlos Ghosn defends himself against allegations of financial misconduct, the company said on Tuesday it expects operating profits to fall by 28 percent in the year ending March 31, 2020. That’s after a 45 percent plunge to 318bn yen ($2.9bn) last year.

Nissan shares fell nearly three percent in Tokyo on Tuesday ahead of the announcement. They are down more than 20 percent since September.

“The stock price might increase if Nissan’s current situation would be improved. However, we’d better have a conservative (perspective) based on the official guidance of Nissan until we see some changes. It will take time,” Tatsuo Yoshida, an analyst at Sawakami Asset Management, told Al Jazeera.

The lower profit forecast by Nissan marks a departure in style since Ghosn’s time.

The company has blamed the fall on a warranty extension for some vehicles – particularly in the US where it has been trying to gain a bigger slice of the car market – and the weaker global economy in the first quarter of this year.

Ghosn’s shadow

Since he was first arrested in November, Ghosn has been released, detained again and is currently out on bail pending trial. He has denied all charges against him.

The company is still reeling from Ghosn’s arrest and has pushed back on efforts by alliance partner Renault SA to more fully integrate the two companies. Ghosn was chairman of both companies before his arrest for financial misconduct. In April, Renault proposed the creation of a joint holding company.

In a business plan released in November 2017, Nissan said it intended to boost sales by 30 percent by 2023 to as much as 16.5 trillion yen ($150bn) with a focus on Latin America, India, China and North America. Nissan, Renault and Mitsubishi Motors Corp originally wanted to boost combined vehicle sales from nearly 11 million per year to 14 million by 2022.

Source: Al Jazeera, News Agencies

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