Nissan sees record $6.9 billion loss as restructuring charges mount

TOKYO – Nissan Motor warned it will post a net loss of as much as 750 billion yen (S$6.9 billion) for the fiscal year that ended in March – a record annual deficit – as restructuring charges weigh on the struggling Japanese carmaker.

With an ageing line-up, Nissan has been discounting its cars in order to avoid building up inventory, eroding profits. Analysts on average were projecting a loss of 112 billion yen, which itself was worse than Nissan’s prior outlook for a deficit of 80 billion yen.

The even weaker-than-expected results will put increasing pressure on Nissan to find another lifeline after efforts to combine with Honda formally ended earlier this year. That led to the ouster of chief executive officer Makoto Uchida, who’s said it will be “difficult to survive” without a partnership of some sort.

While Nissan slightly raised its sales forecast late on April 24, the company warned that its net loss could be 700 billion to 750 billion yen. “This is primarily due to changes in the competitive environment and deterioration in sales performance,” the carmaker said.

The company’s shares rose as much as 3.1 per cent on April 25 as some analysts noted that there has at least been an improvement in the automaker’s cash position. The stock is still down 29 per cent since January.

“Nissan had been aiming at a cost structure that could generate profits even at production of 3.5 million units but it plans to further improve the break-even point,” Citigroup’s Arifumi Yoshida wrote in a note. At the end of March, Nissan’s net cash stood at 1.49 trillion yen, up from 1.24 trillion yen as of the end of December ,and “we view the improvement as somewhat positive”.

The carmaker’s sales are faltering in the United States and China while it faces US$5.6 billion (S$7.3 billion) in debt obligations next year.

Nissan also doesn’t have a strong line-up of hybrid vehicles to offer customers in key markets and has been embroiled in management turmoil and infighting since former chairman Carlos Ghosn was arrested and ousted in 2018.

Mr Uchida, 58, stepped down in March to take responsibility for Nissan’s deteriorating fortunes and was replaced by Mr Ivan Espinosa, who previously had held the title of chief planning officer for a year.

Mr Espinosa, 46, faces the unenviable task of reversing Nissan’s fortunes, refreshing its outdated line-up and finding new business partners. He’ll also have to navigate the upheaval caused by US President Donald Trump’s sweeping 25 per cent tariffs on car and parts imported into the US. BLOOMBERG