Nissan Motor reportedly has warned of a record US$4.5bn operating loss this year and its lowest sales in a decade as the COVID-19 pandemic hampered its turnaround efforts.
The company forecast an operating loss of JPY470bn ($4.5bn) for the fiscal year to 31 March 2021, much larger than analysts’ consensus estimate for a JPY262.8bn loss, Reuters said, citing Refinitiv data.
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That would be the second consecutive annual loss.
Nissan also warned revenue likely would plunge 20 % to JPY7.8 trillion this year with vehicle sales falling to an 11 year low of 4.13m from 4.93m the year before.
Adding to expected losses is a likely deterioration in the sales financing business as cash strapped customers struggle to make lease payments while underutilised factories are also burning through cash, Reuters said.
“The market outlook remains uncertain and we may see a further deterioration in demand due to a possible second wave of the pandemic,” chief executive Makoto Uchida told a livestreamed briefing.
“Fiscal year 2020 will be a challenging year in terms of profitability and free cash flow,” Uchida said, adding Nissan would not issue a dividend this year.
Nissan said it expected to cut more than JPY150bn this year from costs related to marketing, selling and depreciation – roughly half its target to cut JPY300bn from its fixed costs by March 2024, Reuters noted.
In the first quarter of this financial year, the automaker made an operating loss of JPY153.9bn, following a loss of JPY94.8bn the previous quarter.
Global sales tumbled 48% to 643,000 vehicle in April June as sales halved in North America and fell 40% in China.
While demand in the US remains weak due to the pandemic, Nissan said the proportion of retail sales was increasing as it shifts away from years of highly discounted fleet sales. As a result, each car sold in the US resulted in an increase in revenue of more than $700, Reuters reported.
Nissan said it had secured more loans and issued debt in the past two months to boost liquidity to cope with the virus crisis, resulting in an untapped credit line of around JPY1.9 trillion at the end of June.
But free cashflow at its automotive business has deteriorated to minus JPY815.7bn, as it burns through cash to keep its plants running with many of them yet to return to normal production levels.
As global output normalises, chief financial officer Stephen Ma said he saw a “pretty good chance” free cash would turn positive in the second half, Reuters reported.
