Nissan hits 'rock bottom' as Renault pushes for a merger
Sherisse Pham byline
By Sherisse Pham, CNN Business
Updated 1403 GMT (2203 HKT) May 14, 2019
Hong Kong (CNN Business)Nissan posted a big drop in profits and revenues Tuesday, underlining the bumpy road ahead as it tries to move on from the Carlos Ghosn era and fend off a merger proposal from its French partner Renault.
Operating profit plunged 45% to 318 billion yen ($2.9 billion) in the fiscal year that ended in March, the Japanese automaker said in a statement. Revenue fell 3% to about 11.6 trillion yen ($105 billion), while vehicle sales were down 4.4% to 5.5 million.
This is "rock bottom," Nissan CEO Hiroto Saikawa said during the earnings presentation, warning that challenges will continue for the foreseeable future.
Nissan (NSANF) forecast operating profit for the fiscal year to March 2020 would fall to 230 billion ($2.1 billion), well short of analysts' expectations. Shares in Nissan (NSANF) closed down 3% in Tokyo.
The lackluster earnings show Nissan is struggling to move on from the arrest of Ghosn, its former chairman, late last year. The alliance Ghosn created between Renault (RNLSY), Nissan and Mitsubishi Motors was thrown into turmoil by his indictment for alleged financial misconduct.
Renault chairman Jean-Dominique Senard "has one idea in mind, which is integration or merger," Saikawa told reporters.
"What we've told Mr. Senard is this is not the right timing to discuss this matter," Saikawa added, noting that he and several other Nissan board members have consistently been opposed to merging.
Nissan sells more cars and pulls in more revenue than Renault but the French company owns a much bigger stake in its Japanese partner than the other way round.
Renault has declined to comment on reports that it wants to merge the two carmakers under a new holding company.
Ghosn is now under house arrest in Tokyo, where he faces charges of financial misconduct, and allegations that he understated his income for years and abused his position by transferring personal investment losses to Nissan.
Ghosn denies the charges against him, claiming that fears over a merger prompted a revolt at Nissan and led to his ouster.
Nissan's poor performance prompted questions on Tuesday about whether Saikawa would soon be booted from the company.
Asked by a reporter whether he should resign so Nissan can have a fresh start, Saikawa said the company's board and shareholders would have to weigh in on that decision.
"At the appropriate timing we'd like to handover to a successor. At this juncture, I can't say much more," he said.