The Strategist

Nissan worsened forecast for the year because of Carlos Ghosn case


02/12/2019 - 11:35



In 2018, the Japanese automaker Nissan Motor Co. turned out in the center of a major scandal in connection with the arrest of one of the most famous top managers of the global automotive industry, Carlos Ghosn, increased its operating profit and revenue in the third fiscal quarter, but reduced its net profit.



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The company has worsened forecasts for the entire financial year, ending in March. Nissan's figures for 2018 will include one-time expenses in the amount of 9.2 billion yen ($ 83 million), not recorded in previous years, the company said in a press release. These costs are associated with the revision of the amount of remuneration of Ghosn, the former chairman of the board of directors.

The 64-year-old Ghosn was reportedly arrested on November 19, 2018 by Japanese authorities on suspicion of underpaying money in reports sent to regulators and misleading investors and authorities. Three days later, Nissan dismissed Ghosn from the post of chairman of the board of directors.

The automaker's operating profit in October-December increased by 25.4%, to 103.3 billion yen, revenue increased by 6%, to 3.05 trillion yen.

Nissan's net profit in the third quarter fell by 77%, to 70.4 billion yen.

Despite the challenging business environment, the growth rate of sales in Japan, China, Thailand, the Philippines and the countries of Latin America in the past quarter was above the market, according to a press release from Nissan. Sales in the US have declined, but their quality has improved, the company noted.

Global sales of Nissan for the three quarters of the current financial year fell by 2.1%, to 4.02 million units. Growth in sales in Japan, China and several other countries was offset by falling sales in North America and Europe.

Negative factor for sales in Europe was the uncertainty associated with the effects of Brexit, said the chief financial director of Nissan Hiroshi Karube.

Nissan’s share in the world market for the first nine months of 2018 decreased by 0.1 percentage points, to 5.9%, the company notes.

Following the results of the entire current year, the automaker expects to sell 5.6 million cars (previously, 5.9 million were expected).

The automaker lowered its annual operating profit forecast by 90 billion yen, to 450 billion yen; net profit - also by 90 billion yen, to 410 billion yen; revenue - by 400 billion yen, to 11.6 trillion yen.

Nissan Chief Executive Officer Hiroto Saikawa said at a press conference on Tuesday that he feels responsible because he could not prevent violations committed by Ghosn. He noted that Nissan’s alliance with Renault is an "important asset" and has "great value."

Nissan shares rose 1.9% on the basis of trading in Tokyo on February 12. Renault securities lose in the price of 0.9%.

Renault released its own statement on Tuesday, stating that Ghosn, who had left office earlier this year as chairman of the board of directors and CEO, remains the director of Renault SA.

The new Renault CEO Thierry Bollore also became the head of Renault-Nissan BV (RNBV), but Ghosn remains a member of the governing board of the RNBV, according to a Renault press release.

In addition, Ghosn currently retains positions in the companies Alliance Rostec Auto BV and Renault do Brasil, Renault noted.

source: reuters.com, bbc.com




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