Nissan's Finances Still in the Toilet

Matt Posky
by Matt Posky

Fulfilling earlier promises that the company had hit a wall and might require several years to recover, Nissan reported a 70-percent decline in quarterly operating profit on Tuesday. It also pulled back its full-year operating profit forecast by 35 percent to 150 billion yen, representing the automaker’s worst annual performance in 11 years. The business now expects to see global retail volume somewhere around 5.2 million vehicles (down from estimates 5.5 million).

“We are revisiting all our assumptions, and as you can see that is why we revised down our forecast for sales volume for the full year,” incoming CFO Stephen Ma explained to Reuters after releasing its first-half results for 2019 (ending September 30th). That was swiftly followed by the announcement of an extraordinary shareholders meeting to decide on proposals for current directors leaving their positions ( Hiroto Saikawa, Yasuhiro Yamauchi, Thierry Bolloré) and the new director nominees.

From Reuters:

Nissan shares, down 19 [percent] this year, closed up 1 [percent] at 714.5 yen before the results announcement.

Operating profit at Japan’s second-biggest automaker by sales came in at 30 billion yen ($275 million) in July-September versus 101.2 billion yen a year earlier.

That compared with a mean forecast of 47.48 billion yen from nine analyst estimates compiled by Refinitiv. Nissan announced an interim dividend of 10 yen per share, down from 28.50 yen a year ago.

The company’s global vehicle sales fell 7.5 [percent] to 1.27 million in the quarter. Sales in China, its biggest market, fell 2.5 [percent], while those in the United States fell 4.5 [percent].

“Our sales in China outpaced the market, but sales in other key regions, including the U.S., Europe, and Japan underperformed,” Stephen Ma, a corporate vice president who will become chief financial officer next month, told reporters.

Years of heavy discounting, aimed at improving sales volume, is typically the answer given for why Nissan is performing so poorly. But the automaker also said the yen strengthened more than anticipated in earlier forecasts, coupled with worries about economic uncertainties surrounding the trade war, the cost of developing/manufacturing new-energy vehicles, and the probable downturn of several markets. It also had to cope with some, ahem, quality control issues and regulatory compliance expenses.

The shareholder meeting, scheduled to take place in February after Makoto Uchida replaces Hiroto Saikawa as CEO, to vote on a proposals for members of the new executive team to become company directors. The change is seen largely as a way to breathe new life into corporate management while distancing the company from executives with any ties to ousted Renault-Nissan Alliance Chairman Carlos Ghosn.

[Image: By Anton Watman/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Dividebytube Dividebytube on Nov 13, 2019

    Oh Nissan... I used to be such a fan boy in the 80s to early 90s, wanting to have a 300ZX TT, or a Hardbody 4WD truck, or a Maxima with a 6-speed manual. Now? A stripped down Frontier would be my only choice, or the I can't afford but only dream GT-R. Infiniti is hurting too - even though I do like the looks of the Q60 and would still pick up a Q70 even though its an "old" platform.

  • Jeff S Jeff S on Nov 13, 2019

    I might go for a stripped down Frontier--a lot of truck for a cheap price.

  • EBFlex At the summer property putting boats in the water, leveling boat lifts, cleaning the lots for summer, etc. Typical cabin stuff in the most beautiful place on the planet
  • Lou_BC I've I spent the past few days in what we refer to as "the lower mainland". I see Tesla's everywhere and virtually every other brand of EV. I was in downtown Vancouver along side a Rivian R1T. A Rivian R1S came off as side street and was following it. I saw one other R1S. 18% of new vehicles in BC are EV'S. It tends to match what I saw out my windshield. I only saw 2 fullsized pickups. One was a cool '91 3/4 ton regular cab. I ran across 2 Tacoma's. Not many Jeeps. There were plenty of Porches, Mercedes, and BMW's. I saw 2 Aston Martin DBX707's. It's been fun car watching other than the stress of driving in big city urban traffic. I'd rather dodge 146,000 pound 9 axle logging trucks on one lane roads.
  • IBx1 Never got the appeal of these; it looks like there was a Soviet mandate to create a car with two doors and a roof that could be configured in different ways.
  • CAMeyer Considering how many voters will be voting for Trump because they remember that gas prices were low in 2020–never mind the pandemic—this seems like a wise move.
  • The Oracle Been out on the boat on Lake James (NC) and cooking up some hella good food here with friends at the lake place.