Nissan slashes profit amid Ghosn scandal, lagging sales

Yuri Kageyama, The Associated Press
Published Wednesday, April 24, 2019 3:55AM EDT

TOKYO -- Nissan lowered its profit forecast for the fiscal year through March on Wednesday, as the Japanese automaker struggles with slowing sales and the fallout from the criminal investigation of its former chairman, Carlos Ghosn.

Nissan Motor Co. is expecting to post a 319 billion yen profit ($2.9 billion) for the fiscal year, marking a 22 per cent drop from its earlier 410 billion yen ($3.7 billion) profit forecast earlier.

Nissan said the drop resulted from costs in the U.S., arising from a warranty extension campaign for some vehicles, and falling sales due to "corporate issues," referring to the Ghosn scandal.

Ghosn was arrested in November and is facing charges of underreporting his income and breach of trust. He says he is innocent.

Nissan, which is allied with Renault SA of France, has seen vehicle sales drop in recent months in France and Japan, although they are unaffected in the U.S.

Other factors contributed to the results, such as production not keeping up with demand of an extremely popular model in Japan. But the high-profile scandal has weakened brand appeal for the maker of the Leaf electric car, Infiniti luxury model and X-trail sports utility vehicle.

Nissan said it expects to sell 5.5 million vehicles for the fiscal year, when earlier it had expected to sell 5.6 million vehicles. For the fiscal year ended March 2018, Nissan sold nearly 5.8 million vehicles.

It also lowered its sales outlook by 0.2 per cent for the fiscal year through March 2019 to 11.5 trillion yen ($103 billion).

The latest forecast revision follows a similar one made February, when Nissan cited faltering sales in China and the U.S.

At that time, Nissan also logged costs about 9.2 billion yen ($83 million) related to the alleged underreporting of Ghosn's compensation.

Nissan has promised to strengthen corporate governance to prevent a recurrence of what it has called serious wrongdoing by Ghosn. An internal investigation has shown he abused power for personal gain, according to the company, based in Yokohama.

Another question hanging over Nissan's future is its alliance with Renault. Ghosn had not only been the major figure identified with Nissan's turnaround success, he was also the main connector and facilitator of the international alliance.

There has been speculation Renault wants a complete merger with Nissan. Renault owns 43 per cent of Nissan, while Nissan owns 15 per cent of Renault.

Ghosn has said in a video message released after his arrest that he has always watched out for Nissan's interests, implying he would never have let it be swallowed by Renault.

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