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Rough Ride: Nissan cuts off prospects, revealing Ghosn charges



YOKOHAMA, Japan (Reuters) – Nissan Motor warned that its annual profit will reach a low of six years on a decline in world sales and underscores the challenges it faces, as it has also come with the consequences of the shocking arrest and detention Abuse of office of his former chairman Carlos employs Ghosn.

In its first results since Ghosn was arrested in November, the Japanese automaker filed a $ 84 million charge for executive compensation, which was charged with defecting its Nissan salary in 2010 -2018 had underestimated.

The scandal has moved global car markets and created tensions between Nissan and its French automaker Renault, which raises concerns about the future of the companies Ghosn wanted to integrate.

The bleak outlook suggests that Nissan and Renault urgently need to strengthen their partnership. However, relations have been tense since Japanese automaker Ghosn first dropped out after being arrested in Tokyo on 1

9 November.

Nissan wants to stabilize its alliance business, said CEO Hiroto Saikawa, who will meet newly appointed Renault Chairman Jean-Dominique Senard in Japan this week to look for ways to cement his partnership.

Prior to this meeting, the CEO of Nissan said he wanted both companies better use their scale to be more competitive and efficient in areas such as manufacturing and procurement, while respecting others' autonomy.

"There has been much talk in recent years of 'convergence' between the two companies, said Saikawa, pointing to one of Ghosn's main goals for Allianz." In stabilizing our business, we need to re-examine investments (towards convergence This could be a revaluation of the Alliance's growth targets by 2022, Saikawa said at a briefing on Tuesday.

Nissan, which is nearly 60 percent larger than Renault after sales, remains younger in its ownership structure.

Renault holds 43.4 percent of Nissan, while Nissan only owns a 15 percent stake in Renault.

Japan's second-largest automaker forecasted operating income of 450 billion yen ($ 4 billion) in March, down from 22 percent over the previous year and 17 percent below a previous forecast, which may be due to a slowdown in global sales was impaired.

This would be the lowest operating profit of Nissan since 2013.

(Click on tmsnrt.rs/2POSji4 for an interactive chart on Nissan's operating income and vehicle sales.)

SALES TO SKID

Nissan lowered its annual uptime Worldwide sales of retail vehicles rose 5.5 percent, forecasting weaker sales in China, its largest market, and the United States.

The logo of the Nissan Motor Co. can be seen on February 12, 2019 in Tokyo, Japan, behind a traffic sign. REUTERS / Kim Kyung-hoon

Saikawa said Nissan will avoid meeting sales targets with rebates, a strategy that has impacted its profitability in North America, the world's No. 2 automotive market.

"We only achieved 60 to 70 percent of our (global) annual target in the third quarter," said Saikawa. "If we are not careful how we can balance this gap in the fourth quarter, we might be in similar situations that we have seen in the past."

"So we want to increase our performance by improving the quality of sales," he added.

Nissan expects to sell 5.6 million vehicles worldwide from March to March, compared to a previous target of 5, 93 million.

While sales continue to grow in China, the world's leading car market, the country's forecast has been reduced from 1.70 million units to 1.56 million units.

In the US, it declined revenue increased 8.6 percent year-over-year to 1.46 million units (1.55 million a year ago).

(See tmsnrt.rs/2RjnBuA for an interactive chart of vehicle sales for Japanese automakers in the US and China) .)

Nissan and its domestic competitors, including Toyota Motor Corp., were struggling with weak sales and declining profits in North America, their margins being depressed as they resorted to hefty discounts in order to boost demand in a competitive US market where sales have reached record levels.

While North America managed to repair some of its profits, as stock reductions on older models reduced strong US haircuts, falling demand will prove Nissan's ability to be disciplined with its incentives ,

(See tmsnrt.rs/2RnFOr2 for an interactive chart of the annual worldwide vehicle sales of Japanese automakers.)

GHOSN SALARY PROVISION

The prospects are bleak as Nissan also grapples with the Ghosn scandal and the resulting clarification employs its corporate governance.

Nissan claimed to have posted additional expenses related to payments to Ghosn of approximately 9 billion yen ($ 84 million). This announcement came after she was charged with non-disclosure of compensation along with Ghosn.

While it is possible for a Japanese court to order Nissan to pay Ghosn that amount, Saikawa said it was "unlikely" that the cost would be realized.

Slideshow (3 images)

This provision approximates the amount Ghosn was charged in his 2010-2018 salary at Nissan for under-reporting.

Ghosn has denied all allegations against him.

Reporting by Naomi Tajitsu; Cut by Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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