YOKOHAMA, Japan – Nissan Motor Co., Japan’s second-biggest automaker, cut its earnings forecast Friday and reshuffled its leadership lineup to cope with quality issues and tougher-than-expected conditions in many markets.
The company posted a 107.8 billion yen ($1.1 billion) net profit for the July-September quarter, a meagre 2 per cent increase from 105.7 billion yen a year earlier. Quarterly sales rose 16 per cent to 2.5 trillion yen ($25.4 billion).
Nissan President and Chief Executive Carlos Ghosn attributed the weaker-than-expected performance to a variety of troubles, chief among them weakness in many emerging markets and painfully expensive recalls.
He announced a management reshuffle that will make the company’s chief operating officer, Toshiyuki Shiga, a vice chairman and appoint three other executives as COOs.
“Our slow performance required immediate action to be taken,” said Ghosn, speaking at Nissan’s headquarters in Yokohama, near Tokyo. Ghosn emphasized that Shiga’s move was not meant as “revenge,” but was part of what he said is an overdue start to bring fresh talent into Nissan’s top management.
“I can tell you nobody is taking this as a kind of punishment,” Ghosn said. “Everybody recognizes there is a need to rejuvenate. This is a good chance to start.”
Ghosn sought to pre-empt any speculation about his own departure, saying he had no news to offer. Instead, he underscored his desire to take responsibility for ensuring that Nissan’s performance improves.
The company cut its profit forecast for the full fiscal year ending March by 15.5 per cent to 355 billion yen ($3.6 billion).
Nissan said last week that it was recalling more than 188,000 Nissan and Infiniti SUVs worldwide to fix faulty brake control software that could increase the risk of a crash. In September, it recalled 908,900 vehicles around the world for defective accelerator sensors that could cause engines to stall.
Ghosn said Nissan was very determined to address quality issues aggressively.
“We are really tightening. We take this very seriously,” he said.
Weaker-than-expected sales in Russia, Australia, Indonesia, Thailand and Brazil took a toll on sales, but Ghosn said Nissan has done relatively well in China, despite slowing growth in that market, regaining market share lost due to disruptions from a territorial dispute between Tokyo and Beijing.
Ghosn said Nissan has been stretched, with nine plants in construction or expansion at the same time. He noted that with $831 billion ($8.5 billion) in cash on hand, the company was engaging in its highest investment level ever.
“A little bit of the bad news, we could overcome. Too much of the bad news, impossible,” he said.
Still, Ghosn was confident about the automaker’s capacity to respond to its recent hardships in the longer term.
The company, allied with Renault of France, will begin making cars in Brazil in 2014, helping to reduce costs from tariffs imposed on its vehicles imported from Mexico.
Nissan’s half-year profit rose 6.8 per cent to 189.8 billion yen ($1.9 billion) from 177.7 billion yen a year earlier.
In unit terms, Nissan’s global sales fell 1.5 per cent due to declines in Europe and emerging markets. But sales in the U.S. jumped 14.5 per cent and in Japan rose 3.6 per cent.
Ghosn said the new management lineup would seek stronger discipline in reining in costs.