Bad Timing: Nissan Warns of Full-year Loss After Pandemic Slams Finances

Nissan can’t catch a break. Instead of the new decade heralding sunnier skies and calmer seas for a financially compromised Nissan, the first quarter of the year (and counting) brought nothing but grief.

Declining sales and shuttered plants spurred by the coronavirus pandemic further destabilized the automaker’s balance sheet. It was the kind of out-of-the-blue event both beancounters and executives feared, occurring just as the automaker was preparing (hoping?) to exit its present crisis with the help of a new CEO and a new plan.

Clearly, that recovery will have to wait, as analysts are now mentioning 2008 in the same sentence as “Nissan.”

In a notice filed with the Tokyo Stock Exchange on Tuesday, Nissan said it expects to post an annual operating loss for the fiscal year ending March 31st — its first full-year tumble into the red since the Great Recession.

As recently as mid-February, Nissan projected a $796 million operating profit for the 2019 financial year, with a net profit of $609 million. Today, it slashed its predictions, telling the stock exchange it expects to end the fiscal year with a roughly $420 million operating loss.

In a release, Nissan said “the company’s performance has continued to decline, primarily impacted by the COVID-19 pandemic.” (Note the use of the word “primarily.”)

“As a result,” the automaker stated, “Nissan may report a consolidated operating profit that is 120 billion to 130 billion yen lower and net income that is 150 billion yen to 160 billion yen lower than the February 13 forecast.”

The company added that the plunge in net income “does not include the impact of a revision of the company’s midterm plan, which the company is currently assessing.”

As sales plunged around the globe last year, Nissan hurriedly cobbled together a plan to right the ship, outlining five-figure job cuts and culling the number of build configurations of its new models. Its CEO, Hiroto Saikawa, hit the bricks in the fall, replaced by a new leader, Makoto Uchida, who quickly got an earful from U.S. dealers. Uchida made it known that if his plan, expected to be revealed in full next month, doesn’t result in a quick turnaround, he’ll gladly fall on his sword.

Shortly after that pronouncement, the automaker’s earnings report for the fiscal third quarter of 2019 revealed a net loss, and the pandemic took hold outside the confines of China’s borders. Few could have predicted this trial by fire.

“Due to delays in the company’s financial close and audit process caused by the COVID-19 pandemic and lockdowns in several locations, Nissan will delay its announcement on FY19 financial results and revised midterm plan from middle of May to May 28, 2020,” the company said Tuesday.

In the near future, Nissan is expected to retreat from several low-performing markets while maintaining an annual production volume well below that seen in previous years — certainly when compared to the heady Ghosn era. For an altogether different reason, Nissan is said to cut production at its Japanese assembly plants by as much as 70 percent in May, reflecting the reduced demand borne of the coronavirus pandemic.

[Image: Nissan]