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Nissan forecasts sharp sales, profit drop
NISSAN Motor Co is forecasting a wider-than-projected operating loss for the current fiscal year, as the impact from the coronavirus pandemic forces the carmaker to accelerate cost-cutting measures.
The operating loss for the year to March will be 470 billion yen (S$6.2 billion), compared with analysts' average prediction for a 216 billion-yen loss and a 40.5 billion-yen loss in the prior year. The Yokohama-based company also plans to skip its dividend, it said in a statement on Tuesday.
The Japanese carmaker is struggling to restore profitability and sales after reporting its biggest loss in two decades. Nissan has been mired in turmoil since the 2018 arrest of former chairman Carlos Ghosn, who had pushed for volume growth. The company is seeking to revive an ageing lineup and cut costs in an effort to improve margins and bring more cash into operations.
"It's going to be a very challenging year," Makoto Uchida, Nissan's chief executive officer, said at a news conference.
Nissan shares are down 35 per cent this year, compared with a 14 per cent decline in Toyota Motor Corp's stock and Honda Motor Co's 13 per cent decline.
Nissan reported a 154 billion-yen operating loss for the April-June quarter, compared with analysts' prediction for a loss of 253 billion yen, as the automaker stepped up cost cuts to make it through a pandemic-induced drop in sales.
Revenue fell 51 per cent to 1.17 trillion yen in the April-June quarter, when most major economies went into lockdown to slow the spread of the Covid-19 virus.
The halt in dividend payouts is a blow to Renault SA, the Japanese carmaker's biggest shareholder with a 43 per cent stake and its partner in a global automaking alliance. Nissan's performance during the latest quarter will reduce Renault's net income by 1.2 billion euros (S$1.9 billion), the automaker said in a statement. Renault is set to announced results on Wednesday.
Nissan will shut three production lines and cut about 14,000 jobs globally, up from 12,500 announced a year ago. It will also close two rented offices near Nissan's headquarters in Yokohama due to the pandemic, a person with knowledge of the matter has said. Nissan expects to sell 4.13 million vehicles during the current fiscal year, compared with 4.93 million units in the prior period.
"It would be meaningless if the cuts are only effective in the short term," said Bloomberg Intelligence analyst Tatsuo Yoshida. "I'm interested in how sustainable and meaningful the cost cuts are." BLOOMBERG