Nissan Motor shares plunged by more than 8 percent yesterday after the Japanese automaker warned of the first drop in annual profits under its legendary chief executive and one-time savior Carlos Ghosn.
Nissan closed down ?126, or 8.35 percent, at ?1,383, off a low of ?Y1,363, after the group said net profit was now expected to slide by over 11 percent in the year to next month.
The warning came as Nissan, which is 44 percent owned by France's Renault, reported a 22.6 percent slump in net earnings in the quarter to December.
"Although the slowdown in Nissan's earnings and the possibility the company might miss its full-year targets were already expected, the scale of the downward revision surprised the market," said Credit Suisse analyst Koji Endo.
He described the profit-warning as "a Ghosn shock" and cut his investment recommendation on Nissan by two notches to "underperform" from "outperform."
Atsushi Kawai, analyst at Mizuho Investors Securities, said investors were concerned that Ghosn's ambitious growth targets "did not have much basis."
"Selling pressure on the stock looks unavoidable in the near term," he added.
Ghosn, who joined Nissan in 1999 and was credited with saving it from near bankruptcy, admitted on Friday that Nissan was "in a performance crisis."
"We have a weakness. We have to recognize it and we have to act on it. But fundamentally the company is healthy," he told reporters.
Ghosn, whose downsizing at Renault earned him the nickname of "Le Cost Killer," said he would unveil emergency measures in April to address the slump.
Nissan slashed its full-year to March net earnings target to ?460 billion (US$3.8 billion) from ?523 billion previously, which would mark an 11.2 percent drop from the preceding year's realized ?518.1 billion.
"We think the company's downward revision reflects not just changes in the external environment but also the collapse of its overly bullish targets," JP Morgan auto analyst Takaki Nakanishi said.
"If the company has indeed stretched itself to the breaking point, then we doubt that cost-cutting alone will be enough to fix the problem," Nakanishi added.
The company's net earnings fell to ?104.4 billion in the three months to December, the third quarter of the fiscal year, as revenue rose 1.8 percent from a year earlier to ?2.34 trillion.
The setback at Nissan came as rivals Toyota and Honda continued to make great strides in the US with their fuel efficient vehicles.
Ghosn has been credited with saving Nissan from near bankruptcy but has recently reduced the amount of time he spends running the Japanese company. In April 2005 he also took the helm of French partner Renault.
Analysts said Nissan's share price could rebound when Ghosn unveils his plans in April to reverse the profit slide.
"The company has an opportunity to improve its profitability to some degree if CEO Carlos Ghosn plays his trump cost-cutting card," JP Morgan's Nakanishi said.
"However, we think Nissan would have a hard time sustaining growth without initiatives that restore its products' competitive appeal," he said.
HONG KONG SECURITY: The president blasted regulations requiring Taiwanese agents or political organizations to provide information on their Hong Kong-related activities President Tsai Ing-wen (蔡英文) yesterday warned of countermeasures should controversial Chinese national security legislation imposed on Hong Kong undermine or harm Taiwanese interests. Article 43 of the legislation empowers the Hong Kong Special Administrative Region to serve written notices to Taiwanese political organizations or individual agents to furnish information on their Hong Kong-related activities, including their personal particulars, finances, assets, expenditure and capital in the territory. Failure to comply or providing false or incomplete information can result in a fine of HK$100,000 (US$12,903) or imprisonment of six months or two years respectively. Tsai said that Taiwan would keep a close watch on how
JUST QUESTIONS: Expelled reporter Ai Kezhu said that every member of Southeast Television had complied with the law and had not appeared on any talk shows Two Chinese reporters yesterday left Taiwan after the government revoked their accreditation and ordered them to leave amid a probe into allegations that several Chinese media outlets have set up studios and produced political talk shows in Taiwan. The two reporters — Ai Kezhu (艾珂竹) and Lu Qiang (盧薔) — worked for Fujian Province-based Southeast Television and arrived in Taiwan in December last year. The Mainland Affairs Council has launched an investigation after local media reported that Chinese broadcasters — including China Central Television, Southeast Television and FJTV — had set up studios in Taipei and produced political talk shows. Council Deputy Minister
PROBE LAUNCHED: An officer who served as a supervisor in the drill died in an apparent suicide after the accident, which was caused by unexpected waves Two marines who were on Friday injured in a military exercise in the waters off Kaohsiung passed away yesterday, Navy Command said. The marines — surnamed Tsai (蔡), 26, and a sergeant surnamed Chen (陳), 36 — were in a seven-member Marine Corps team that encountered rough seas during a simulated response to enemy forces landing on Taiwan. Their rubber craft overturned in waters off Taoziyuan (桃子園) beach in Zuoying District (左營), injuring four of the marines. They were rushed to hospital, where three of them — Tsai, Chen and a 34-year-old sergeant — were taken to an intensive care unit
‘SIGNAL TO ALLIES’: The US Navy’s exercises are not in response to those carried out by China, the commander of the strike group led by the USS ‘Ronald Reagan’ said Two US aircraft carriers were yesterday conducting exercises in the disputed South China Sea, the US Navy said as China also carried out military drills that have been criticized by the US Department of Defense and neighboring states. China and the US have accused each other of stoking tension in the waterway at a time of strained relations over everything from COVID-19 to trade to Hong Kong. The USS Nimitz and USS Ronald Reagan were carrying out operations and exercises in the South China Sea “to support a free and open Indo-Pacific,” the navy said in a statement. It did not say exactly