Nissan’s first-half net profit plunged 94% and it announced plans to lay off 9,000 workers and cut one-fifth of its production capacity. Nissan’s stock price fell 10% in early trading in Tokyo on Friday to its lowest level since October 2020. Nissan Motor Co will also sell part of its stake in Mitsubishi Motors Corp after burning through 448.3 billion yen ($2.9 billion) in cash over the past six months.
“Under this new situation, it is difficult to tell whether Nissan can reduce fixed costs as quickly as it did last time until we get more details on its restructuring plan,” Goldman Sachs Japan analyst Kota Yuzawa wrote in a note. “
The cost of insuring against non-payment of Nissan’s bonds appeared set to rise on Friday, with an expected rise of 180 basis points compared with 165 basis points earlier in the week, according to a credit default swap trader.
The disastrous results will prove costly for Chief Executive Makoto Uchida, who will lose half his pay starting this month. The CEO told investors that Nissan is “affected not only by external challenges but also by our specific issues,” alluding to the meteoric rise of Chinese automakers and overly ambitious sales targets set by Nissan. .
“Achieving our sales goals will be a challenge,” Uchida said.
Nissan now expects operating income to plummet to 150 billion yen for the fiscal year ending in March, down 70% from its previous forecast. Management also cut its revenue forecast by more than 9%, meaning they now expect almost no growth this year.
Uchida has been at the helm since 2019, when Nissan faced an existential crisis following the departure of former Chairman Carlos Ghosn. He has struggled to turn things around in the face of fierce competition from the likes of Tesla Inc and China’s BYD Co, leaving the company lagging among Japan’s major automakers.
“Nissan is the weakest. The only way for the company to increase sales is to cut prices,” said James Hong, an analyst at Macquarie Securities Korea.
Nissan’s (Baa3/BB /BBB-) rating appears to be in jeopardy after dismal results in the second quarter of 2025 and a self-assessment of its extremely difficult situation.
—Joel Levington, Director of Credit Research, BI
Nissan Motor Co. will sell nearly a third of its stake in partner Mitsubishi Motors Corp., reducing its current stake of just over 34%. As of Thursday’s close, the roughly 10% stake Nissan will offer through the Tokyo Stock Exchange is worth about 68.6 billion yen.
Uchida’s three-year turnaround plan to revive the business has been in the works for about eight months, although Nissan already had to make changes earlier this year. In July, the company lowered its annual operating profit forecast to 500 billion yen from 600 billion yen due to poor sales in China, Japan and North America.
Profit for the quarter ended in September was 32 billion yen, below consensus expectations of 65 billion yen, and further behind the 208 billion yen a year ago.
Bloomberg Intelligence analyst Tatsuo Yoshida said: “The second-quarter profit decline is not surprising, but the number itself was even lower than expected. The main problem is the gap between what the company wants to achieve and reality.” Possible. . “
Uchida’s plans include expanding Nissan’s electric vehicle lineup, forging new partnerships and selling an additional 1 million vehicles per year by 2027. This is a big problem that is waning as consumer demand for electric vehicles increases.
“Demand for hybrid vehicles has enabled Toyota and Honda to achieve strong profitability. This strategy also needs to be revisited,” Macquarie’s Hong said.
Like many international traditional automakers, Nissan is struggling in China, the world’s largest auto market. In June, the company said it would halt production at a factory in Changzhou due to falling sales.
Nissan currently expects to produce about 3.2 million vehicles in the fiscal year ending in March, a nearly 7% decrease from the previous fiscal year. The company also lowered its retail sales forecast to 3.4 million vehicles, lowering expectations for major markets such as North America, China, Japan and Europe.
In March, Nissan struck deals with Honda Motor Co. and Mitsubishi Motors Corp. to collaborate on software development, batteries and other electric vehicle parts. The alliance could pit the three companies against Toyota Motor Corp and its partnership with Subaru Corp, Suzuki Motor Corp and Mazda Motor Corp.
Uchida said on Thursday that strategic partnerships with Renault Motors, Mitsubishi Motors and Honda will improve Nissan’s investment efficiency and products. The size of the layoffs he announced is about 7% of Nissan’s total workforce.
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First published date: November 8, 2024 08:25 AM IST
