Nissan cuts profit forecast after 70% quarterly plunge

© Reuters. FILE PHOTO: Nissan logo is seen in Tokyo Motor Show in Tokyo

By Naomi Tajitsu

YOKOHAMA (Reuters) - Nissan Motor Co (T:7201) reported a 70% drop in quarterly profit on Tuesday and cut its full-year forecast to an 11-year low, hit by a strong yen and falling sales, and highlighting the turmoil at the Japanese automaker after the ouster of Carlos Ghosn.

The latest weak showing from Nissan, which also slashed its interim dividend by 65% after its worst second-quarter performance in 15 years, illustrates the scale of the work ahead for its new executive team, which is due to take over on Dec. 1.

Following the ouster of former chairman Ghosn almost a year ago, Nissan has been battered by falling profit, uncertainty over its future leadership and tensions with top shareholder Renault SA (PA:RENA) - whose shares fell 2% to their lowest since April 2013 after Nissan's downbeat guidance.

Nissan shares, down 19% this year, closed up 1% at 714.5 yen before the results announcement.

Operating profit at Japan's second-biggest automaker by sales came in at 30 billion yen ($275 million) in July-September versus 101.2 billion yen a year earlier.

That compared with a mean forecast of 47.48 billion yen from nine analyst estimates compiled by Refinitiv. Nissan announced an interim dividend of 10 yen per share, down from 28.50 yen a year ago.

The company's global vehicle sales fell 7.5% to 1.27 million in the quarter. Sales in China, its biggest market, fell 2.5%, while those in the United States fell 4.5%.

"Our sales in China outpaced the market, but sales in other key regions, including the U.S., Europe, and Japan underperformed," Stephen Ma, a corporate vice president who will become chief financial officer next month, told reporters.

Slowing demand for cars in the United States and China, the world's biggest auto markets, has led to cut-throat competition, and Nissan's slump in first-half sales has knocked operating profit off course from the automaker's full-year target.

"We are revisiting all our assumptions, and as you can see that is why we revised down our forecast for sales volume for the full year," Ma said.

Nissan slashed its full-year operating profit forecast by 35% to 150 billion yen, which would be its worst full-year performance in 11 years.

It now sees global retail sales at 5.2 million vehicles, down from a previous forecast for 5.5 million, bracing for its worst annual sales in six years.

For a graphic on Nissan operating profit, margin, click: https://fingfx.thomsonreuters.com/gfx/editorcharts/NISSAN-RESULTS/0H001QEL97HT/eikon.png

Nissan in the past few weeks has announced a revamp of its top ranks with younger executives including Ma, while naming the head of its China business, 53-year-old Makoto Uchida, as its next chief executive. The company is seeking to draw a line under the legacy of Ghosn, who is awaiting trial in Japan on charges of financial misconduct, which he denies.

The automaker said it would hold an extraordinary shareholders meeting on Feb. 18, 2020, to vote on a proposal for Uchida and other members of the new executive team to become company directors, while former Nissan CEO Hiroto Saikawa, outgoing interim CEO Yasuhiro Yamauchi and former Renault CEO Thierry Bollore were scheduled to vacate their director posts.

Years of heavy discounting and fleet sales, particularly in the United States, has cheapened the automaker's brand image while lowering vehicle resale value and denting profit.

Nissan is implementing a global recovery plan under which it will axe nearly one-tenth of its workforce and cut global vehicle production by 10% through 2023 to rein in costs which it has said ballooned when Ghosn was CEO.