Nissan takes $83m charge, warns of lowest profit in six years

Japanese carmaker was left reeling by arrest of chairman Carlos Ghosn

Photograph: Franck Robichon/EPA

Photograph: Franck Robichon/EPA

 

Nissan Motor took an $83 million (€73.5 million) charge related to the compensation of former chairman Carlos Ghosn as the Japanese carmaker reeling from the shock arrest of the iconic executive warned of its lowest profit in six years.

Operating profit will be 450 billion yen (€3.6 billion) this fiscal year, Nissan said Tuesday. That’s down from Nissan’s previous forecast of 540 billion yen and below the lowest of analysts’ estimates.

Sales in US and China are continuing to wane amid an industrywide slump, intensifying the pressures on chief executive Hiroto Saikawa who is trying to ease tensions with partner and shareholder Renault following Mr Ghosn’s arrest. The companies have spent the last two months coping with a major reputational hit from the scandal, indictments by Tokyo prosecutors over alleged financial improprieties and an unflattering spotlight on both companies’ corporate governance controls.

One-time charge

The one-time charge of 9.2 billion yen to reflect Mr Ghosn’s yet-to-be-paid remuneration shows Nissan and Renault are set to feel reverberations from the scandal for a long time. The so-called deferred pay has emerged as a point of focus for Tokyo prosecutors who have indicted Mr Ghosn for allegedly understating his income at Nissan by tens of millions of dollars.

Sales in China, Nissan’s largest market, fell 4 per cent in the October-December quarter. Nissan relies heavily on China, which is estimated to become its largest market. The company plans to invest $9 billion and introduce 20 electrified models there within three years.

Nissan’s US sales plunged 19 per cent in January, after slumping 6.2 per cent in 2018. The US market has been a major drag for Nissan in the past quarters. Sales in the Japanese carmaker’s domestic unit rose about 32 per cent in the December quarter, helped the previous year’s low base when shipments were hit by an inspection scandal.

Nissan kept its projected full-year dividend at 57 yen a share, a boon for shareholders including Renault, which owns 43 per cent of Nissan. – Bloomberg