Tuesday , June 15 2021

Rough ride: Nissan collides with his views, reveals a charge associated with Ghosn



Nissan Motor warned that its annual profit would reach the six-year lows of declining global sales, highlighting the challenges it faces as it fights the consequences of the shocking arrest and expulsion of its former president, Carlos Gosn.

The Japanese automaker, in its first results of Gosn's detention in November, reports a $ 84m fee for a postponed compensation to the executive, which is accused of not taking enough of his salary in Nissan during the 2010-2018 period.

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

The crude outlook shows Nissan and Renault's urgent need to strengthen their partnership but the ties are strained after the Japanese automaker moved first to remove Ghosn as president after his arrest in Tokyo on November 19th.

Nissan wants to stabilize Alliance operations, said CEO Hitroto Saikva, who will meet Renault's new chairman Jean-Dominique Surard this week in Japan while looking for ways to strengthen his partnership.

Prior to this meeting, Nissan's Chief Executive Officer said he wanted the two companies to make better use of their scale to be more competitive and efficient in areas including manufacturing and public procurement, while respecting the autonomy of others.

"Over the past few years, much has been said about the" convergence "of the operations of the two companies," Saikava said, referring to one of Gos's key goals for the alliance. "As we stabilize our operations, we need to reconsider whether the investments (towards convergence) are most effective."

This could mean a reassessment of the Alliance's growth targets by 2022, Saikava said at a briefing Tuesday.

Nissan, who is almost 60% larger than Renault, remains young in his shareholding structure. Renault owns 43.4% of Nissan, while Nissan has only 15% non-voting voice in Renault.

Japan's second largest producer predicts operating profit of 450 billion yen ($ 4 billion) for the year to March, which is 22 percent less than the previous year and 17 percent less than the previous forecast affected by the slowdown in global sales.

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

(For Interactive Chart for Nissan's Operating Profit, Car Sales, click on tmsnrt.rs/2POSji4)

SELL SKID

Nissan cut its annual retail sales growth by 5.5 percent and forecast weaker sales in China, its largest market and the United States.

The logo of Nissan Motor Co. was seen in his showroom behind a road sign in Tokyo, Japan, February 12, 2019 REUTERS / Kim Kyung-hoon

Saikawa said Nissan will avoid attempts to achieve its sales goals using concessions, a strategy that has damaged its profitability in North America, the world's second car market.

"We have managed to meet 60% to 70% of our (global) target for the year to the third quarter," Saikva said. "If we are not careful to compensate for this shortfall in the fourth quarter, we may find ourselves in similar situations we have seen in the past."

"That's why we want to increase our productivity by improving the quality of sales," he added.

Nissan expects to sell 5.6 million vehicles worldwide in the year to March, compared with a previous target of 5.93 million.

Although sales are still rising in China, the world's largest car market, it cut its country's forecast to 1.56 million units of 1.70 million units.

In the United States, sales are now down 8.6% year-over-year to 1.46 million units, from 1.55 million last year.

(For an interactive chart for car sales of Japanese automakers in the US, China, see tmsnrt.rs/2RjnBuA)

Nissan and its local competitors, including Toyota Motor Corp, are struggling with slow sales and declining profits in North America. Their margins are squeezed as they resort to steep discounts to boost demand in a competitive US market where sales have reached record levels.

Although it has managed to redeem a portion of its profits in North America, as the decline in inventories of older models has allowed it to reverse the heavy downturn in the US, the decline in demand will test Nissan's ability to be disciplined with its incentives.

(For an interactive chart of the annual world car sales of Japanese automakers, see tmsnrt.rs/2RnFOr2)

PROVISION FOR THE WORK OF GOSS

The dark prospects come as Nissan also struggles with Ghosn's scandal and as a result of this careful corporate governance survey.

Nissan has announced that it has admitted about 9 billion yen ($ 84 million) for additional costs related to Ghosn's payments. This message comes after being charged with Goshen with the non-disclosure of compensation.

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

Slideshow (3 images)

This provision approximates the amount that Ghosn has been accused of underreporting in his 2010-2018 salary at Nissan.

Ghosn denied all charges against him.

Reporting by Naomi Tajtzu; Editing by Himani Sarkar

Our Standards:Trust Principles of Thomson Reuters.

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