Nissan likely to report first quarterly loss in more than a decade
Deteriorating profits underscore the challenges facing Nissan, which is slashing jobs, production sites and product offerings to ensure its survival
Tokyo — Nissan Motor may report its first quarterly loss in more than a decade on Thursday because of slumping sales, sources familiar with the company said, adding more pressure on efforts to rebuild the company after Carlos Ghosn’s ouster.
Deteriorating profits underscore the challenges facing Nissan, which is unwinding many of the expansionist strategies championed by former CEO and chair Ghosn by slashing jobs, production sites and product offerings to save cash and ensure its survival.
In addition to slumping sales, production disruptions caused by China’s coronavirus outbreak could also drag profits lower.
Three senior officials at Japan’s number two carmaker told Reuters that they anticipate a poor results announcement on Thursday, with one of them calling the figures “dismal”. Two of the officials cautioned that there is the possibility of an operating loss, which would be the first quarterly loss since the period ending March 2009.
Nissan said it could not comment on its financial results ahead of its official announcement.
The company is likely to report operating profit of ¥48.6bn ($442.5m) for the quarter ending in December, less than half the ¥103bn profit a year ago, according to SmartEstimate’s survey of three analysts, who revised their forecasts in January.
However, those forecasts were issued before the release of the December vehicle sales figures on January 30, which show third-quarter sales dropped by 11% from the same period a year earlier, according to Reuters calculations. That is the biggest quarterly slump of its current sales downturn that began two years ago.
That sales decline led one automotive equities analyst based in Japan to scrap his forecast and also warn that Nissan could post a loss. “It will be a question of whether there will be a profit or a loss. For the quarter, a loss is a possibility,” he said, declining to be named as his forecast had not been updated to reflect his latest view.
One of the three Nissan officials said there is a risk that the company may cut its full-year profit forecast of ¥150bn, which would be an 11-year low. The company announced that forecast in November after an initial ¥230bn outlook.
Since the start of the fiscal year in April, Nissan’s global sales have slumped 8.3% compared the same period year ago as it struggles to sell its Rogue SUV crossover and its Sentra sedan, two of its three top-selling models in the US, after years of heavy discounting in that key market has tarnished its image.
For the first nine months of the fiscal year, the company has sold 3.81-million vehicles. It risks missing its full-year target of 5.24-million, a decline of 5% from the prior year’s sales, amid prolonged production halts in China.