Nissan Motor Co.’s credit rating was cut a notch by Moody’s Investors Service, which cited the automaker’s weakening profitability and margins over the past two years.
The issuer rating was lowered to A3 from A2, the rating company said in a statement Friday. Moody’s had placed the Yokohama-based automaker on negative watch in February.
The latest downgrade comes days after S&P Global Ratings placed the automaker’s rating on negative watch, saying there is a more than a 1-in-3 chance of a further delay in Nissan’s profit recovery. Earlier this month, Nissan cut its full-year earnings forecast after third-quarter profit missed analysts’ estimates, adding to the fallout from the November arrest of former Chairman Carlos Ghosn.
“The downgrade reflects the continuing slide in Nissan’s profitability, driven by weak sales in the U.S., its largest market,” Motoki Yanase, Moody’s Japan vice president, said in the statement.
Nissan’s sales in the U.S. plunged 19 percent in January amid an industrywide slump, intensifying the pressure on Chief Executive Officer Hiroto Saikawa as he seeks to ease tensions with partner and shareholder Renault SA.
It will take several years to gauge the success of Nissan’s strategy of emphasizing margin-over-unit sales growth, refreshing old models and lowering discounted bulk sales, Moody’s said. The new post-Ghosn governance framework will also take time to prove its effectiveness, the ratings agency added.
Hurt by slumping U.S. sales, aging vehicle models and an out-of-sync product cycle, the carmaker issued a profit outlook of ¥230 billion ($2.1 billion) for the fiscal year ending March 2020, roughly half of the average ¥453 billion projection.
Nissan also reported its lowest annual profit in a decade at ¥318 billion.
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