Thu, Apr 25, 2019 - Page 10 News List

Crisis-hit Nissan issues new profit warning

VOTE OF CONFIDENCE:French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe pledged their backing for the alliance, despite Ghosn’s arrest

AFP, TOKYO

Former Nissan Motor Co chairman Carlos Ghosn, second left, and his wife, Carole, second right, leave the office of Ghosn’s lawyer in Tokyo on April 3.

Photo: AFP

Nissan Motor Co yesterday issued a profit warning, deepening the woes of the Japanese automaker as it seeks to recover from the shock of former chairman Carlos Ghosn’s arrest.

The firm downgraded its projection for net profit in the fiscal year to last month from ¥410 billion (US$3.7 billion) to ¥319 billion, the second cut in its forecast in recent months.

Nissan appeared to acknowledge the difficulties surrounding the Ghosn affair, which has cast questions over the company’s own corporate governance.

It cited as a reason for the downgrade “the adverse operating environment facing the company during the fourth quarter and the impact of recent corporate issues on sales.”

Another reason was given as “additional expenses arising from the implementation of a warranty extension campaign covering certain vehicles sold in the US market.”

The profit warning came as Ghosn awaits his fate after prosecutors hit him with a fourth set of charges over alleged financial misconduct.

Authorities suspect he syphoned off about US$5 million for his personal use from money transferred from Nissan to a dealership in Oman.

Ghosn denies that charge and also insists he is innocent of all allegations against him.

His lawyers have filed for bail, which the Tokyo District Court is considering.

In February, Nissan already slashed its full-year forecast, as it revealed that nine-month net profit had dropped 45 percent — a decline the firm blamed on rising raw material costs and foreign exchange difficulties.

The results came as Nissan and its partners Renault SA and Mitsubishi Motors Corp are seeking to turn the page on Ghosn’s arrest for financial misconduct, which has exposed a rift in the three-way tie-up.

In a complicated management structure, Renault — 15 percent of which is held by the French state — owns a 43 percent stake in Nissan.

French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe on Tuesday pledged their backing for the alliance, despite the strains caused by Ghosn’s arrest.

The two leaders “reaffirmed their attachment to the Renault-Nissan alliance which is going to celebrate its 20th anniversary, and is a major symbol of industrial cooperation between France and Japan,” a statement said.

Ghosn was ousted as chairman of Nissan and Mitsubishi Motors almost immediately after his arrest, and later resigned as chairman and chief executive of Renault.

The tycoon says the allegations against him are part of a plot by some “backstabbing” Nissan executives concerned about a closer relationship between the two firms.

The other reason for this “plot” was the “deterioration in Nissan’s performance for two years,” he said in a video message recorded before he was dramatically rearrested earlier this month.

Before his sudden downfall, Ghosn was hailed as a titan of the auto sector who had saved Nissan from the brink of bankruptcy by forging an unlikely alliance with Renault, the French stalwart he also headed.

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