After posting only its first third quarterly loss in 11 years, Nissan Motor Co. on Thursday again cut its annual profit forecast due to weak demand and economic uncertainties.
To make matters worse, the ongoing COVID-19 epidemic will likely weigh on the automaker, which is still reeling from a sales downturn and management upheaval.
The Yokohama-based company reported a net loss of ¥26 billion for the October-December quarter. The last time Nissan posted a net loss in the same period was in 2008, during the global financial crisis.
The automaker expects to post an operating profit of ¥85 billion for the full business year ending March 31, plunging from the previous projection of ¥150 billion. Its net profit projection has also been slashed by 40.9 percent to ¥65 billion. Sales, too, are expected to sink 3.8 percent to ¥10.2 trillion, it said. Nissan initially cut its forecast when it announced earnings for the July-September period.
During a news conference held at its global headquarters in Yokohama, CEO Makoto Uchida said the latest outlook for the current business year does not yet include the expected impact from the COVID-19 outbreak.
“There must be a certain impact on unit sales and earnings, given that production in China will be suspended until mid-February,” he said.
The company is planning to extend the suspension of work at plants in China. Manufacturing facilities in Guangzhou, Guangdong province, and Dalian, Liaoning province, previously set to reopen last Monday will remain shut until at least Sunday. Plants in Xiangyang, Hubei province, and Zhengzhou, Henan province, which are closer to the city of Wuhan, the epicenter of the coronavirus outbreak, are likely to resume operations on Feb. 20 at the earliest, Uchida said.
The outbreak, which is thought to have originated in Wuhan, has added a fresh headache for an automaker that has been pummeled by a series of damaging events beginning more than a year ago with the arrest of the company’s charismatic then-CEO Carlos Ghosn on suspicion of financial misconduct.
On Monday, Nissan became the first Japanese automaker to announce a planned temporary domestic production halt, citing disruptions to the supply of parts from China due to the virus. Uchida on Thursday said that Nissan will carry out production adjustments at the plant in Fukuoka Prefecture on Friday and Monday. Production will be suspended on Feb. 24, he added.
It now expects to sell 5.05 million cars globally in the business year through March, down from the previous forecast of 5.24 million, it said. But this could take a hit from the virus, as the outbreak will likely affect consumption in China, whose market accounts for about one-third of Nissan’s global unit sales. The automaker said its unit sales for the nine months through December stood at 3.7 million, down 8.1 percent, due mainly to weak sales in North America and Europe, which dropped 10.2 percent and 16.2 percent on the year, respectively.