Japanese car giant Nissan yesterday downgraded its annual operating profit forecast after a damaging inspection scandal in its domestic market, as its chief executive vowed to regain customers’ trust.
Nissan said it now expects to make an operating profit of ￥645 billion (US$5.7 billion) for the year to March, a cut from its previous forecast of ￥685 billion.
The manufacturer left its forecasts for net profit and sales unchanged at ￥535 billion and ￥11.8 trillion respectively.
Before presenting the figures to journalists, Nissan chief executive officer Hiroto Saikawa bowed long and deep in apology.
“I would like to express my apologies to customers, partners, dealers and all the people who have been supporting Nissan,” Saikawa said.
The scandal has “undermined the trust of all of you,” he said, adding: “We would like to do our best to regain the trust of all of you.”
Last month, Nissan said it was recalling about 1.2 million cars in Japan that had failed to meet domestic rules on final vehicle inspections.
The company confirmed that tests were performed by staff who were not certified to check the vehicles to Japanese government standards.
The automaker suspended all domestic production for a few weeks before resuming earlier this week, sending its passenger car sales plummeting more than 55 percent in Japan last month.
“Considering the impact from the inspection issue-related costs in Japan and the pace of progress in our cost-cutting efforts, we are revising down our operating profit forecast,” the maker of the Altima sedan said in a statement.
Excluding the impact from the inspection scandal in Japan and costs linked to litigation in the US, Nissan said its operating profit was “in line with our initial forecast.”
For April-September, Nissan’s net profit edged down 2.1 percent year-on-year to ￥276.51 billion while operating profit dropped 17 percent to ￥281.83 billion.
Sales rose 6.2 percent to ￥5.652 trillion as the number of cars sold globally edged up 4.6 percent to 2.73 million vehicles.
In Japan, it sold 283,000 vehicles over the period, up 34.1 percent, it said.
In addition to falls in domestic sales last month, the firm saw hundreds of orders scrapped in Japan due to the suspension of factory operations, a Nissan official in charge of the Japanese market told reporters.
She said the firm would continue to see the impact of the scandal this month, but “we are expecting to recover in December.”
Saikawa pledged that the company would announce details of an internal probe into the inspection issue in the coming days.
Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm, said the impact of the scandal is now “quite visible.”
“It’s not only a matter of its brand image. The scandal is now affecting Nissan’s real business,” he said before the announcement.
The number of cars sold in China rose 6.7 percent and the figure for the European market edged up 3.6 percent, but sales volume in North America slipped 1.3 percent, reflecting slowing demand.
Long-time Nissan boss Carlos Ghosn this year stepped down from the chief executive post at Nissan to focus on overhauling scandal-hit Mitsubishi Motors.
Ghosn took charge at troubled Mitsubishi after Nissan threw it a lifeline last year, buying a one-third stake as it wrestled with a mileage-cheating scandal.
He also heads France’s Renault and remains chairman of Nissan.
Following the results, the firm’s shares closed up 0.67 percent at ￥1,118.5, outperforming the overall market, which ended down 0.1 percent.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable