Nissan takes Ghosn charge as profits go into reverse

February 12, 2019

Nissan says it has recognised 9.2bn yen (£64.7m) in costs related to scandal-hit Carlos Ghosn while downgrading its annual profit forecasts.

The Japanese carmaker, which sacked Ghosn as its chairman in November after uncovering alleged financial misconduct, said the charge covered compensation and expenses over several years.

He remains in a Tokyo prison cell awaiting trial and denies all the accusations he faces in the country.

:: Carlos Ghosn scandal takes Renault twist

Nissan made the announcement while revealing financial results covering the third quarter of its financial year to 31 December which showed a 77% drop in profits to 70bn yen (£740m).

That was despite revenues rising by 6% in the period compared to the same quarter in 2017.

The company pointed to challenging conditions continuing globally but said falling sales in North America - where it had been discounting heavily - and in Europe were propped up by gains in Japan, China, Thailand, the Philippines and Latin America.

Nissan, like rivals, is facing challenges on several fronts from the slowdown in the world economy to the demonisation of diesel - particularly in Europe.

Sky News revealed last month how Nissan had decided to maintain production of its X-Trail model in Japan - despite a previous pledge to create over 700 more jobs in Britain through an expansion of its Sunderland operation.

The company later admitted that Brexit uncertainty had also clouded the investment.

Nissan's financial results showed profits were 45% down on a rolling nine month basis.

It said that as a result of its performance it was revising lower its forecasts for full-year revenues and profits.

The company predicted earnings of 410bn yen (£2.9bn) - a fall on 90bn yen on its earlier expectations.

Christian Stadler, professor of strategic management at Warwick Business School, said: "The departure of Carlos Ghosn, who was such a talismanic figure for Nissan, is likely to have a bigger effect during the year ahead, as the company attempts to address the distribution of power in its relationship with Renault.

"At the moment Nissan is by far the bigger player in terms of sales. It could also be a factor in Nissan's decision to lower its forecasts for the year ahead.

"Mr Ghosn was very much sales driven. In his absence the company may focus more on profits, but that will be difficult.

"The economic downturn will put pressure on car manufacturers to be more competitive with their prices, which makes it harder to maximise profits while sales are falling.

"That could be bad news for British car manufacturing if vehicles are subject to new tariffs after Brexit, as Japan's new deal with the EU could make it cheaper to build cars elsewhere," he concluded.

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