Nissan warns of sharp drop in profit as sales fall in major markets

Nissan warns of sharp drop in profit as sales fall in major markets

May 14th, 2019 by Ben Dooley / New York Times News Service in Business Around the Region

YOKOHAMA, Japan — Nissan warned on Tuesday that sales would continue to drop in major markets and forecast a sharp fall in operating profit, another blow for the automaker as it tries to shore up its management approach after the arrest of its former chairman, Carlos Ghosn.

The company expects its operating profit to shrink nearly 28%, to 230 billion yen ($2 billion) for the fiscal year ending in March 2020. It blamed diminishing sales in the United States and Europe.

"We hope to hit the rock bottom in 2018 and 2019 and reverse the trend in the coming years," the company's chief executive, Hiroto Saikawa, told reporters.

Nissan said it expected to sell more cars globally as a result of expansion in the Chinese market.

Nissan and Renault continue to debate how best to manage their alliance, which accounted for 10.7 million car sales in 2018. The alliance, which includes Mitsubishi, has been struggling since Ghosn was charged with financial wrongdoing last year in Japan and later stripped of his positions.

"We are openly discussing different options," Saikawa said, referring to possible changes to the ownership structure. But "this is not the right time to discuss this subject. Nissan first needs to concentrate on stabilizing its operations and performance."

Nissan also reported that its operating profit had dropped by nearly 45% to 318 billion yen ($2.9 billion) in 2018. Costs related to extended warranties on vehicles sold in America dealt another blow, the company said.

Saikawa said Nissan would move to overhaul its corporate governance and dial down an aggressive sales strategy that he said had "damaged the brand and its product competitiveness."

Saikawa had been critical of some Nissan efforts to expand in the United States and, specifically, of long-range targets pushed by Ghosn. Beginning in 2011, Ghosn had wanted Nissan to reach 8% profit margins and 8% market share in the countries where it operated.

Saikawa, who has been Nissan's top executive for two years, batted off reporters' questions about whether he planned to resign in light of the company's poor performance, laying the blame at Ghosn's feet.