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Nissan operating losses shrink as restructuring takes hold
The operating loss for the year to March will be 340 billion yen (USD 3.2 billion), compared with the prior forecast for a 470 billion yen loss, the Yokohama-based company said in a statement.
Nissan Motor Co. forecast a 28% smaller operating loss for the current fiscal year, fueling optimism that the automaker is regaining its footing after the coronavirus pandemic dented global sales.
The operating loss for the year to March will be 340 billion yen ($3.2 billion), compared with the prior forecast for a 470 billion yen loss, the Yokohama-based company said in a statement Thursday. For the July-September quarter, Nissan reported an operating loss of 4.8 billion yen, compared with analysts’ average estimate for a 148 billion yen loss.The shrinking deficits are an early sign that Nissan’s efforts to cut more than 300 billion yen in fixed costs, reduce capacity and restructure the business are paying off. That’s fueling optimism that the automaker will join Toyota Motor Corp. and Honda Motor Co., which recently doubled their full-year profit forecasts, in recovering from outbreak-related disruptions. Facing an aging lineup and suffering from a volume-focused strategy, Nissan embarked on an aggressive turnaround plan six months ago while moving past the turmoil caused by the November 2018 arrest of former Chairman Carlos Ghosn.
“Other automakers are recovering, but Nissan’s recovery is weaker,” said Tatsuo Yoshida, a Bloomberg Intelligence analyst.
Shares of Nissan fell 2.9% at the close. The stock is down 36% this year, while the Nasdaq OMX Global Auto Index is up about 33% over the same period.
Sales for the latest quarter fell 27% to 1.9 trillion yen, matching analysts’ prediction. Nissan raised its outlook for full-year revenue to 7.9 trillion, compared with analysts’ average projection for 7.8 trillion yen.
Chief Executive Officer Makoto Uchida said in September that he expects Nissan to return to profitability in 2021 if the current momentum continues, thanks to demand in China bouncing back from the pandemic.
To further refresh its aging lineup, Yokohama-based Nissan promised in May to launch 12 new cars in the next 18 months. It plans to cut both capacity and the number of models by 20%, and will no longer pursue volume growth to shed the old legacy from the Ghosn era.
Nissan’s restructuring plan calls for the shuttering of three production lines and elimination of about 14,000 jobs globally, up from 12,500 announced a year ago.
The automaker has raised a total of 895 billion yen in funding, issued 70 billion yen in bonds and had 1.9 trillion yen in unused credit lines, it disclosed in its latest earnings presentation on July 28.
