Last month, Nissan predicted its third-quarter earnings report would be bad, and the official filing reveals they were correct, and that future results are unlikely to improve much without making some dramatic moves.
For the first nine months of the fiscal year, Nissan’s operating profit fell 82.7% while net revenues fell 12.5%. Net income for the period decreased by 87.6% as the company continued to reel from steep sales declines in the U.S. and China amid an ugly fight with its former CEO, Carlos Ghosn.
Nissan also predicted that revenue will continue to decline for the balance of fiscal and operating profit will decline by 43.3 % and net income by 40%.
(Amid flurry of lawsuits, Nissan wants $91M from former boss Carlos Ghosn.)
Despite having made steady progress in its business transformation and profit recovery measures, due to weak performance and a slowdown in total industry volume the company has revised its full-year guidance, the company noted.
“For the full fiscal year, the company now expects to sell 5.05 million vehicles, a decrease of 3.6% from the previous forecast in November,” the company said in its earnings release.
The downward revision of its profit and free cash flow forecasts combined with the need for investment in future technologies to strengthen the company’s competitiveness, the company cut its year-end dividend for fiscal year 2019.
Nissan is progressing with its business transformation based on three pillars: rebuilding the strength of its U.S. operations, improving efficiencies of operations and investments, and fostering steady growth through new products, new technologies, and Nissan Intelligent Mobility, the company said in a statement.
“We are making progress, but sales volumes have been weak, so we need to do more restructuring than initially planned,” said Makoto Uchida, Nissan’s new CEO, reported Reuters. Uchida replaced Hiroto Saikawa, who was tangled up in the financial mismanagement investigation that got former CEO Carlos Ghosn arrested nearly 18 months ago.
(Nissan prepares to offer U.S. employees buyouts.)
Nissan is working to maintain average prices, reduce incentives and dealer inventories, and bring fleet sales to a more appropriate level as part of comprehensive initiatives that are resulting in improvements in the U.S. The initiatives are aimed at improving profits, and initiatives to improve quality of sales are starting to contribute to Nissan’s performance, it added.
In the area of improving efficiencies of operations and investments, Nissan is progressing with production capacity streamlining and production line efficiency improvements. Rationalization of the product line-up is also proceeding to schedule, and with steps such as deciding to end sales of the Datsun brand in Indonesia, the company is taking its strength in technology and strategically focusing on certain models and regions and righting the efficiencies of its investments.
Nissan has completed the short-term steps, and, including enhanced Alliance activities, is selecting and focusing on models scheduled to be launched after fiscal year 2022.
Regarding steady growth through new products, new technologies, and Nissan Intelligent Mobility, this is a pillar essential to the direction of Nissan’s business transformation. Nissan plans to launch a new SUV in the North America market, a compact sedan and a compact crossover in emerging markets, and, in the company’s home market, a crossover equipped with an evolved e-POWER powertrain and new highly attractive EV model positioned to symbolize the Nissan brand.
These new vehicle launches are expected to make a large improvement to average vehicle ages starting in the second half of next fiscal year, the company said.
(Nissan’s turnaround chief latest to leave, dealing automaker another blow.)
In consideration of current performance, Nissan plans to revisit the milestones in place through until the end of fiscal year 2022, and with the inclusion of enhanced Alliance activities, announce a revised midterm plan in May.