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Home / Business / Rough turn: Nissan slashes outlook, reveals Ghosn-related charge

Rough turn: Nissan slashes outlook, reveals Ghosn-related charge



YOKOHAMA, Japan (Reuters) – Nissan Motor warned its annual profits will plummet six years of declining global sales, emphasizing the challenges it faces, as it also interferes with the fallout from the shocking arrest and confusion of its former head Carlos ghosn .

The Japanese machine, in its first results since Ghosn was arrested in November, uncovered a $ 84 million charge related to deferred compensation for the executive accused of underreporting his salary at Nissan during 2010-2018.

The scandal has rolled global car markets and created tensions between Nissan and its automaker partner France's Renault, and claims concerns about the future of the companies that Ghosn wanted to integrate.

The Dour view indicates an urgent need for Nissan and Renault to strengthen their partnership, but the ties have been strained since the Japanese machine moved first to remove Ghosn, who is in the lead after the arrest on November 1

9 in Tokyo.

Nissan wants to stabilize the Alliance's operations, says CEO Hiroto Saikawa, who plans to meet newly-appointed Renault leader Jean-Dominique Senard this week in Japan, as they look at ways to cement their partnership.

Prior to that meeting, the Nissan CEO said he wanted both companies to leverage the scale to be more competitive and efficient in areas such as manufacturing and purchasing while respecting each other's autonomy.

"In recent years, there has been a lot of talk about" convergence "of the two companies' operations, Saikawa said, referring to one of Ghos's most important goals for the alliance." While stabilizing our business, we must investigate whether investments (against Convergence is most effective. "

This may mean a reassessment of the Alliance's growth target through 2022," said Saikawa at a briefing on Tuesday.

Nissan, which is nearly 60 percent larger than Renault on sale, remains junior in its stockholding structure Renault has 43.4 percent of Nissan, while Nissan has only a 15 percent non-voting share in Renault.

Japan's second-largest automaker projected an operating profit of $ 450 billion ($ 4 billion) for the year to March, a decline of 22 per cent from the previous year and 17 per cent below a previous forecast, damaged by a decline in global sales.

This will be Nissan's lowest operating profit since 2013. [Foretinteractiv diagram aboutNissan operating result run [2] POSji4)

SALE TO SKID

Nissan cut its worldwide worldwide sales of vehicles by 5.5 percent and expected weaker sales in China, the largest market and the US.

The logo of Nissan Motor Co. is seen at its showroom behind a traffic sign in Tokyo, Japan February 12, 2019. REUTERS / Kim Kyung-hoon

Saikawa said that Nissan will avoid trying to meet the sales targets after using discounts, a strategy that has harmed the profitability of North America, the world's No. 2 car market.

"We could only meet 60 percent to 70 percent of our (global) target for the year to the third quarter," said Saikawa. "If we are not careful about how we compensate for that fourth quarter shortfall, we can find ourselves in similar situations we have seen before. "

" So we will increase our performance by improving the quality of sales, "he added.

Nissan expects to sell 5.6 million vehicles worldwide in the year to March, Against a previous goal of 5.93 million

While still seeing sales growing in China, the world's best auto market, it trimmed its country forecast to 1.56 million units from 1.70 million units. [19659002] In the US, sales now total 8.6 percent year-on-year to 1.46 million units, from $ 1.55 million last year.

(For an interactive map of Japanese car manufacturers' car sales in the US, China, see below. rs / 2RjnBuA)

Nissan and its domestic rivals, including Toyota Motor Corp., have struggled ed a weak sales and falling profits in North America. Their margins have been squeezed as they turned to steep discounts to drive up demand in a competitive US market where sales have plateaued near record highs.

Although it has been able to repair some of the profits in North America, as stock reduction of older models made it possible to call back on heavy US discounts, falling demand will test Nissan's ability to be disciplined with its incentives .

(For an interactive map of Japanese car manufacturers annual global vehicle sales, see tmsnrt.rs/2RnFOr2)

GHOSN SALARY PROVISION

The gloomy outlook comes as Nissan also engages with the Ghosn scandal and the resulting corporate governance control.

Nissan said it had recognized around $ 9 billion ($ 84 million) in additional expenses related to payments to Ghosn. This announcement comes after it was accused next to Ghosn by not revealing the compensation.

Although it is possible that a Japanese court could order Nissan to pay Ghosn that amount, Saikawa said it was "unlikely" the expense would be realized.

Slideshow (3 Images)

This provision refers roughly to the amount of Ghosn has been charged by underreporting in his 2010-2018 salary on Nissan.

Ghosn has denied all charges against him.

Reporting by Naomi Tajitsu; Editing Himani Sarkar

Our Standards: Thomson Reuters Trust Principles.

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