Nissan worth less than Subaru after shares plummet

[Mark-x]

Nissan shares fell 9.6 percent to a decade low after the company cut its full-year profit outlook and scrapped its year-end dividend payout, slipping to fifth place by market value among Japan's automakers.

Nissan shares fell to their lowest since 2009 in Tokyo on Friday, leaving the company with a market capitalization of 2.17 trillion yen ($19.8 billion), behind Subaru, Suzuki, Honda and Toyota.

Nissan's stock is down 19 percent since the start of the year, after declining 28 percent in 2019 and 22 percent in 2018.

 

Dogged by falling sales in the U.S., Japan and Europe, as well as instability in its most senior management ranks following the arrest of former Chairman Carlos Ghosn, Nissan reduced its full-year operating profit forecast to 85 billion yen, down from an earlier estimate of 150 billion yen.

The shares of Renault, which owns 43 percent of Nissan and relies on dividends from the Japanese company, were mostly unchanged in Paris after the Renault posted a loss for 2019.

 

By slashing its dividend payment to the lowest level since 2011 and pursuing a previously announced plan to cut 12,500 jobs globally, Nissan is trying to free up cash for investment in next-generation technology needed to stay competitive in areas such as electric vehicles and self-driving cars.

"Unfortunately, our business performance has worsened more than we anticipated, and there's no letting up on investing in the future," CEO Makoto Uchida said at a press conference at the company's Yokohama headquarters. "In order to invest in growth, we ended up with this dividend."

 

The results and outlook underscore the challenges facing Uchida, who took over as CEO in December and promised to unveil a revised midterm plan in May for Nissan and its two-decade alliance with France's Renault, which has itself recently appointed a new CEO.

 

Worldwide sales volumes at Nissan slid 8.4 percent to 5.18 million vehicles last year, pulling down its combined performance with Renault to third place globally after top-ranked Volkswagen Group and -- for the first time since 2016 -- Japanese rival Toyota. For the year through March, Nissan cut its automobile sales outlook by 3.6 percent to 5.05 million units.

The results are beginning to overshadow Nissan's other big headache, the charges against Ghosn on alleged financial crimes. Sluggish profits, stuck near a decade low, also weaken the Japanese company's position in its three-way automaking alliance.

Ghosn, who has denied all charges, fled trial in Japan late last year, making his way to Lebanon in a private jet. The former executive and Nissan are now suing each other.

After years of sales incentives that eroded margins and pushing businesses to buy cars, CEO Uchida said Nissan needs to rebuild its brand image and focus on appealing to retail customers.

 

Uchida, Nissan's third CEO since 2017, joined Nissan in 2003 from metals and machinery company Nissho Iwai. He was most recently in charge of the automaker's operations in China.

The CEO said that Nissan plans to reopen three of its Chinese factories shuttered by the coronavirus outbreak from Feb. 17 and two others from Feb. 20. Those plants have been closed since late January as a planned break for the Lunar New Year was extended amid concerns about the spread of the contagion.

"Considering that we won't resume production until mid-February, that will have some impact" on income and revenue in the current quarter, Uchida said.