As automakers scramble to try to find ways to stem expected losses due to the impact of the coronavirus pandemic, Nissan officials revealed the company is likely to post its first full-year operating loss in more than a decade.
The automaker, which is in the midst of a major reorganization in the wake of the Carlos Ghosn scandal, said it is struggling to deal with the dramatic drop in sales created by the deadly outbreak. The result is that the Japanese automaker had to shift from predicting a profit of about $795.3 million, or 85 billion yen, to a loss of $419.7 million for its 2019 fiscal year.
Additionally, the company expects to post a net loss of as much as 95 billion yen, or $888.9 billion, compared with a previous forecast for 65 billion yen, or 608.2 million profit. However, these are just estimates, and since the company pushed off its financial results announcement until May 28.
Nissan’s worst financial performance happened during the 2008 global financial crisis, when it posted an operating loss of 137.9 billion yen, or $1.3 billion.
“The company’s performance has continued to decline, primarily impacted by the COVID-19 pandemic,” Nissan said in the statement, adding that it would delay announcing its annual financial results and restructuring plan to May 28, which was initially set for mid-May.
“Nissan anticipates additional time to finalize the results and is currently reviewing the precise financial impact,” the statement said.
The deterioration in operating profit includes impacts from the decline in sales of vehicles and parts of approximately 90 billion yen and the booking of additional provisions for the sales finance business of approximately 30 billion yen, the company noted.
Furthermore, the deterioration in net income attributable to owners of the parent includes an approximately 30-billion yen impact from companies accounted for under equity method.
This does not include the impact of a revision of the company’s midterm plan, which the company is currently assessing. There is a possibility that Nissan may book an additional provision associated with this revision.
Additionally, Nissan revealed its global car sales have plummeted 43% in March compared with the same period last year. The company’s annual sales for fiscal year 2019 finished at 4.8 million units — the worst since 2011.