Getty Images

Nissan Books $83 Million Charge on Ghosn as Profit Forecast Cut

Feb. 12, 2019
Earnings overshadowed by tensions with French partner Renault.

Nissan Motor Co. took an $83 million charge related to the compensation of former Chairman Carlos Ghosn as the Japanese automaker reeling from the shock arrest of the iconic executive warned of its lowest profit in six years.

Operating profit will be 450 billion yen (US$4.1 billion) this fiscal year, Nissan said Tuesday. That’s down from Nissan’s previous forecast of 540 billion yen and below the lowest of analysts’ estimates.

Sales in U.S. and China are continuing to wane amid an industrywide slump, intensifying the pressures on Chief Executive Officer Hiroto Saikawa who is trying to ease tensions with partner and shareholder Renault SA following Ghosn’s arrest. The companies have spent the last two months coping with a major reputational hit from the scandal, indictments by Tokyo prosecutors over alleged financial improprieties and an unflattering spotlight on both companies’ corporate governance controls.

The one-time charge of 9.2 billion yen to reflect Ghosn’s yet-to-be-paid remuneration shows Nissan and Renault are set to feel reverberations from the scandal for a long time. The so-called deferred pay has emerged as a point of focus for Tokyo prosecutors who have indicted Ghosn for allegedly understating his income at Nissan by tens of millions of dollars.

Sales in China, Nissan’s largest market, fell 4% in the October-December quarter. Nissan relies heavily on China, which is estimated to become its largest market. The company plans to invest $9 billion and introduce 20 electrified models there within three years.

Nissan’s U.S. sales plunged 19% in January, after slumping 6.2% in 2018. The U.S. market has been a major drag for Nissan in the past quarters. Sales in the Japanese carmaker’s domestic unit rose about 32% in the December quarter, helped the previous year’s low base when shipments were hit by an inspection scandal.

Nissan kept its projected full-year dividend at 57 yen a share, a boon for shareholders including Renault, which owns 43% of Nissan.

By Ma Jie

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!