Chairman Misconduct Scandal Costs Nissan $84 Million amid Slashed Profit Forecast
Originally published on: CCN
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February 12, 2019
Japanese auto giant Nissan has revised its sales and profit forecast for the full year which ends next month downwards.
The carmaker now estimates that its operating profit will come in at 450 billion yen ($4.1 billion). Previously Nissan had been expecting an operating profit of 540 billion yen.
Despite the lowered full-year outlook, Nissan’s operating profit for the quarter that ended in December rose to 103.3 billion yen. In a similar period a year prior, the Japanese auto giant generated an operating profit of 82.4 billion yen.
Nissan Expects to Sell Fewer Cars Globally
Nissan’s operating margin is also projected to decline from a previous forecast of 4.5% to 3.9%. While the Japanese automaker had been expecting to sell 5.9 million units this has now lowered to 5.6 million units.
The Japanese carmaker attributed the lowered outlook to poor performance in the first nine months of 2018. Between January and September 2018, Nissan’s global sales declined by 2.1%. While there was growth recorded in some markets such as China and Japan, sales fell in Europe and North America.
Nissan also booked a 9.2 billion yen ($84 million) charge to cover deferred compensation costs for its ex-chairman, Carlos Ghosn. The Nissan ex-chairman is currently in custody over financial misconduct charges. The charges relate to Ghosn’s under-reporting of his salary while at the auto giant between 2010 and 2018.
Nissan’s Rival, Toyota, Has Also Lowered Profit Outlook
Nissan’s lowered profit outlook comes barely a week after fellow Japanese automaker Toyota also slashed forecasts. While Toyota had earlier estimated 2.3 trillion yen ($20.8 billion) in net profit, it now expects the group net profit to fall to approximately 1.87 trillion yen ($17 billion). Compared to the previous fiscal year, this is a 25% decline.
— Andy Vermaut (@AndyVermaut) February 6, 2019
However, with regards to the global sales outlook, Toyota expects to sell 10.55 million units, a record number. This will include vehicles sold by its subsidiaries such as Hino Motors and Daihatsu Motor. According to senior Toyota executive Masayoshi Shirayanagi, some of its major markets will experience a slowdown:
We expect U.S. sales to slow and those in the Middle East to struggle going forward but sales will increase in China and our hybrid vehicles will continue to be popular in Europe.
Honda, Another Nissan Rival, Bucks the Trend
Not all Japanese automakers are revising their net profit outlook downwards, however. Earlier this month, Honda Motor Co raised the net profit forecast for the fiscal year ending in March.
While Honda had been expecting a net profit of 675 billion yen ($6.1 billion), this has been revised upwards to 695 billion yen ($6.38 billion). This was attributed to improved sales in China, per Seiji Kuraishi, Honda’s executive vice president. Despite the slowdown in the world’s largest car market, Honda has experienced growth, per Japanese daily, The Mainichi:
Despite the current negative trend in the Chinese market, we have actually posted record sales in December and we are also seeing very strong numbers for January. For the current fiscal year, we think sales in China will grow from the previous year.