Nissan Reports 57% Profit Plunge, Hits 'Rock Bottom'

Embattled Nissan Motor Co. Ltd., the world’s largest maker of electric vehicles (EVs), reported a massive 57 percent plunge in profits for its fiscal year ending March while warning of tougher times ahead.

The company continues to see a spate of bad publicity due to its ongoing court battle with former CEO Carlos Ghosn. Ghosn, who is under house arrest in Tokyo, faces charges of financial misconduct. He put together the Renault-Nissan-Mitsubishi Alliance whose existence is now under threat.

Nissan said its net profit for the fiscal year to March 2019 stood at $2.9 billion, a 57 percent year-on-year plunge and the lowest amount since 2009/10 when the company was fighting for its life due to the global financial crisis.

The forecast profit outlook for the current fiscal year to March 2020 is much worse -- $1.55 billion, or an 80 percent plunge year-on-year. Revenue dropped 3 percent to about $105 billion, while vehicle sales fell 4.4 percent to 5.5 million units.

This is "rock bottom," said CEO Hiroto Saikawa during the earnings presentation.

"The performance is a challenging one and we want to change this," said Saikawa, who also warned that challenges will continue in the foreseeable future.

Analysts said Nissan’s paltry earnings report confirms Nissan is struggling to move on from the arrest of Ghosn. The Renault-Nissan-Mitsubishi Alliance remains in turmoil and speculation abounds it might be dissolved in favor of an outright merger between Nissan and Renault under a new holding company.

Saikawa lent some credence to the report saying he had rebuffed overtures from Renault chairman Jean-Dominique Senard for integration.

"What we've told Mr. Senard is this is not the right timing to discuss this matter," said Saikawa.

He said he and several other Nissan board members are bent on opposing the merger. Saikawa, however, might not have a voice in Nissan’s future operations.

Reports are circulating Saikawa might soon be fired because of Nissan's poor performance. Asked about this, Saikawa replied the company's board and shareholders have to weigh in on that decision.

"At the appropriate timing we'd like to handover to a successor. At this juncture, I can't say much more," he said.

Renault is also pushing back at the perception Ghosn is entirely to blame for Nissan’s current ill fortune.

"A part of Nissan's management is settling scores," said a source close to Renault cited by media. "They are trying to pin the company's bad performance on Ghosn."

Christopher Richter, an analyst for the CLSA brokerage based in Tokyo, noted that Saikawa "has been in the top job for more than two years -- that's half of a model cycle -- so I don't think you can lay all the blame with Mr. Ghosn.”

Renault said the Nissan the March figures are "regrettable".

"What is bad for Nissan is bad for Renault and vice-versa,” said a Renault spokesman. “And these results are not good news for the Alliance. These results reinforce the idea that we need changes.”