YOKOHAMA – Nissan Motor Co., trying to rebuild its tarnished reputation over failed corporate governance following the criminal investigation of two former executives, cut its operating profit outlook by a sharp 28 percent for fiscal 2019 to its lowest in a decade.
At a news conference Tuesday at Nissan’s headquarters in Yokohama, CEO Hiroto Saikawa said operating profit is projected to sink to ¥230 billion from ¥318 billion in fiscal year 2018. Net income is estimated to dip to ¥170 billion from ¥319 billion.
“The most urgent priority is shaking off the weak performance,” Saikawa said.
The earnings announcement was confirmation that management is under heavy pressure to turn the company around. Following the fiscal year 2018 trend, Nissan projected sales would continue to increase in Japan and China but decline in North America and Europe.
Saikawa also weighed in on Nissan’s status in its alliance with Renault SA. The Nikkei newspaper reported last month that the French automaker had proposed an integration of the two firms to Nissan in mid-April. Nissan rejected the proposal, the newspaper reported.
Saikawa acknowledged that differences of opinion exist between him and Jean-Dominique Senard, Renault’s chairman, but he said they agree on the prioritization of restructuring Nissan’s profitability.
As for his course of action, Saikawa reiterated that he would not be stepping down.
“As I have said, I want to forge ahead with overhauling the company. … There are no changes to that,” he said.
Saikawa unveiled a series of reform plans dubbed “New Nissan Transformation.” He vowed to improve the carmaker’s market share in the United States, where vehicle sales fell to 1.4 million units in fiscal 2018. The plans include expanding electric vehicle sales both domestically and abroad, reshuffle all core models and introduce more than 20 new models.
Saikawa touched on the Carlos Ghosn saga, but largely distanced himself from the scandal and promised a fresh start.
Nissan has cut ties with the former executive after it said an internal probe found he and a former executive, Greg Kelly, engaged in financial misconduct. Ghosn was arrested and indicted on charges of underreporting his compensation and aggravated breach of trust. Both men deny any wrongdoing.
Ghosn has been credited with transforming the company from the verge of bankruptcy to a global titan under his leadership.
“Many issues explained here today have to deal with a negative legacy inherited from the previous structure,” Saikawa said. “I would like to apologize for making customers, shareholders and relevant parties worried.”