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Nissan cuts profit forecast, launches executive overhaul

November 2, 2013 at 1:32 am | News Desk

Nissan cuts profit forecast, launches executive overhaulTokyo: Nissan on Friday launched a sweeping management overhaul to “rejuvenate” its top ranks while slashing its full-year profit forecast, as the Japanese automaker cited a sluggish European market and vehicle recall costs.

The firm now expects to earn 355 billion yen ($3.62 billion) in the fiscal year to March, down from an earlier 420 billion yen forecast.

Despite the slimmed-down forecast, Japan’s number-two automaker said its half-year net profit rose 6.5 percent from a year ago as sales jumped 14.7 percent.

“Nissan’s results reflect improved demand for our new products in Japan and the Americas,” chief executive Carlos Ghosn said.

“This was offset by difficult conditions in Europe, volatile demand in several emerging markets and higher expenses related to recalls.”

Japanese automakers, once lauded for their quality and safety, have been stung in recent years as they recalled millions of defective vehicles.

The management shakeup Friday at Nissan, maker of the Altima sedan and luxury Infiniti brand, included replacing its number-two position with a trio of executives.

Ghosn, 59, widely credited with rescuing a near-bankrupt Nissan when he took over more than a decade ago, said the firm needed fresh blood in its top ranks.

“Everyone understands the company needs to rejuvenate itself,” he said from Nissan’s headquarters near Tokyo.

Nissan cuts profit forecast, launches executive overhaul The announcement came about two months after Ghosn announced a broad management restructuring at Renault — he is also chief executive of the French carmaker, which owns more than 40 percent of Nissan.

Ghosn brushed off questions about his own retirement, saying it was up to shareholders and Nissan’s board.

“I can assure you there will be a time when I’ll be replaced, but it’s more a decision which will be up to the owners of the company,” he said.

China sales weak

Earlier Friday, Nissan said it sold 2.43 million cars over the half-year period, down 1.5 percent on-year, as sales in China, the world’s biggest vehicle market, fell 8.3 percent.

Europe slid 6.1 percent but North America jumped 13.8 percent, the company said.

China has been a key question mark for Japanese automakers, particularly Nissan which counts on the country for about one-quarter of its sales, far higher than its domestic rivals.

The automaker struggled to recover from the impact of a consumer boycott of Japan-brand goods in China last year, as a long-running diplomatic dispute over a chain of East China Sea islands flared anew.

Japanese firms saw sales plunge and many closed factories for a time as urban riots swept parts of China.

The automaker has been working to recover lost market share as Volkswagen and General Motors tried to capitalise on the consumer boycott.

On Friday, Ghosn said he expected Nissan to claw back its China market share to pre-boycott levels by early next year.

Like rivals Toyota and Honda, Nissan has benefited from a sharply weaker yen over the past year, which makes them more competitive overseas and inflates the value of repatriated foreign income.

Honda said Wednesday its net profit soared almost 47 percent in the three months to September as Japan’s third-largest carmaker benefited from a slide in the yen and a pickup in the key US market.

Toyota is to report its half-year earnings next week.

“Japanese automakers have been seeing improved results thanks to the weak yen and stable demand in North America,” said Shigeru Matsumura, auto analyst with SMBC Friend Securities in Tokyo.

But a sales tax hike in Japan next year and concerns about China demand could weigh on the sector’s results, he added.

Nissan has launched an aggressive new product rollout plan, including resurrecting its budget Datsun brand to woo a new generation of cost-conscious buyers in emerging markets.

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