Nissan cuts full-year profit estimates amid inspection scandal

YOKOHAMA – Nissan Motor Co. revised downward on Wednesday its full-year profit forecast for the fiscal year through next March, as it reels from an inspection scandal in which uncertified workers conducted final tests on cars.

Nissan now expects its group operating profit to stand at ¥645 billion ($5.6 billion) for fiscal 2017 — compared with an earlier estimate of ¥685 billion — due to costs related to the scandal.

The carmaker kept its group net profit and sales outlooks unchanged. Net profit is estimated at ¥535 billion, down 19.4 percent from the previous year, on sales of ¥11.8 trillion, up 0.7 percent.

“I deeply apologize for undermining public confidence,” Nissan Chief Executive Officer Hiroto Saikawa told a news conference at the automaker’s headquarters in Yokohama. “We will make all-out efforts to win back trust.”

Nissan also said its group operating profit in the fiscal first half through September fell 17 percent from a year earlier to ¥281.83 billion, as recall costs related to the inspection scandal and litigation settlement expenses related to faulty air bag inflators made by Takata Corp. reduced the profit by ¥40.8 billion.

Group net profit was down 2.1 percent to ¥276.51 billion on sales of ¥5.65 trillion, up 6.2 percent.

Saikawa said the firm resumed production and shipment at all of its six domestic plants after halting operations for roughly half a month. The inspection scandal has forced Nissan to recall around 1.2 million vehicles.

Nissan has found that improper car tests continued even after it announced a recall. The scandal first surfaced in September.

Saikawa said that the company initially planned to report to the transport ministry Wednesday the findings of a probe by a third party panel into the unauthorized inspections but postponed the plan to next week due to additional recalls and resumption of operations.

In the first half, the automaker boosted global sales 4.6 percent from the same period last year to 2.73 million vehicles, as its domestic sales jumped 34.1 percent to 283,000 vehicles on solid demand for the Serena minivan and Note compact models.

But as the scandal deepened, sales in the home market tumbled in October, with Nissan models falling out of the top 10 in monthly sales according to data from auto industry bodies.

The company said the impact of the debacle on domestic orders will likely last at least until November.

Sales in China rose 6.7 percent to 651,000 vehicles, backed by robust demand for the Sylphy sedan and X-Trail sport utility models.

In North America, sales dropped 1.3 percent to 1.04 million vehicles, as U.S. sales fell 0.4 percent to 779,000.

“The U.S. market is tough,” Saikawa said, referring to severe price competition in the biggest market for the company.

Strong sales of the Qashqai small SUV and the Micra compact helped Nissan mark a 3.6 percent increase to 375,000 vehicles in Europe.

The Japanese carmaker also outlined its medium-term business plan “Nissan M.O.V.E to 2022” covering the six years from fiscal 2017, the first plan since Mitsubishi Motors Corp. joined the Nissan-Renault S.A. alliance after Nissan took a 34 percent stake in the company last year.

The company will once again aim for an operating profit margin goal of 8 percent in fiscal 2022 after failing to meet the target during the previous business plan. The margin stood at 5.0 percent in the first half.

Nissan also said it aims to boost sales to ¥16.5 trillion from ¥12.8 trillion in fiscal 2016.

The carmaker said in September the alliance will roll out 12 new electric vehicles by 2022 to maintain its lead in the growing market for zero-emission cars. It also plans to raise their combined vehicle sales by 40 percent to 14 million units by 2022, as the Franco-Japanese group is in close competition with the Toyota Motor Corp. and Volkswagen AG groups in global sales.