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Nissan's loss smaller than forecast after speedier cuts

 

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Makoto Uchida, Nissan CEO

Makoto Uchida, Nissan CEO

Bloomberg

Makoto Uchida, Nissan CEO

Nissan Motor Company is set to report a smaller than projected operating loss for the latest quarter, as the automaker reduces costs ahead of schedule, sources have revealed.

Although analysts predict a quarterly operating loss of 253bn yen (€2bn), the accelerated cost cuts helped to shrink that by about 100bn yen (€808m), said one person familiar with the matter, who asked not to be identified because the information is not yet public.

The manufacturer will report its results for the fiscal period ending June tomorrow.

The Japanese car maker is struggling to restore profitability and sales after the November 2018 arrest of its former chairman Carlos Ghosn.

A lack of new models also left it ill-prepared to face a downturn in global vehicle demand amid the coronavirus pandemic.

After announcing its biggest loss in 20 years for the business year that ended March, Nissan unveiled plans to cut 300bn yen (€2.4bn) in fixed costs, close some production lines and slash capacity by 20pc.

The annual fixed-cost reduction target will be raised to 350bn yen (€2.8bn) and three more global factory lines will be shut down, according to documents seen by Bloomberg News.

That will increase total worker cuts to about 14,000 over the next few years, compared with the 12,500 job cuts announced a year ago, the documents show.

Two rented offices near Nissan's main headquarters in Yokohama are being closed as well, as more people continue to work from home because of the Covid-19 outbreak, the source said.

A representative for Nissan did not immediately respond to a request for comment during the weekend. As part of its efforts to generate cash, Nissan is pushing forward with plans to sell assets, the documents showed.

The company has been struggling to find a buyer for subsidiary Nissan Trading, Bloomberg News reported in February.

Earlier this month, the automaker raised 70bn yen (€566m) in debt by issuing notes ranging from 18 months to five years.

It is paying interest that was the highest among all debt issued by Japanese firms this fiscal year, according to data compiled by Bloomberg.

The efforts to reduce spending and increase cash will put Nissan on track to return to positive cash flow for the automotive business during the January-March fiscal fourth quarter, the source said.

Like many other automakers, Nissan's revenue plummeted during the April-June period this year.

It fell by about a half, the documents show.

Although the manufacturer announced two new compact SUV models this year, the Rogue and the electric Ariya, they aren't on sale yet.

Nissan is considering moving more of its sales online, after learning that about 10pc of its vehicles were sold digitally during the pandemic lockdown, the source said.

Nissan is also selling off all of its corporate jets, with four out of five aircraft already sold, the source added.

One of them is the Gulfstream G650 with the tail number N155AN that was used by Mr Ghosn. (Bloomberg)

Irish Independent