graphic
News > International
Nissan triples loss forecast
April 16, 1999: 7:53 a.m. ET

Ailing car giant sees $300M loss; to skip dividend payment, ax 5,000 jobs
graphic
graphic graphic
graphic
LONDON (CNNfn) - Citing a deeper-than-expected slump in domestic sales, Japan's second largest carmaker, Nissan Motor Co., said Friday it expected to post a fiscal year loss of 35 billion yen ($296 million) - more than triple the shortfall initially forecast by the company back in November.
     The downward revision comes less than a month after French auto giant Renault, which has weathered financial turmoil of its own in recent years, unveiled plans to pay $5.4 billion for a 36.8 percent stake in the Japanese auto group.
     The announcement prompted some analysts to question the merits of an alliance between a debt-saddled carmaker and another recently back from the financial brink.
     In return for its cash injection, Renault acquired 36.8 percent of Nissan Motor, 22.5 percent of its truck affiliate Nissan Diesel Motor Co. and the European finance subsidiaries. The company hopes to avoid over-exposure to Nissan's liabilities, in part by supplying three top executives, including turnaround expert Carlos Ghosn, in top posts at Nissan.
     In a terse statement Friday, Renault played down the importance of Nissan's revision, saying it "is in the range of the estimates" used by the company in determining the size of its equity stake.
     Renault (PRNO) shares, which have come under pressure recently, were up nearly 1 percent in Paris Friday, at 37.31 euros, well off their year high of 49.30 euros. Nissan shares notched up 0.44 percent in Tokyo Friday.
     Nissan also said it planned to skip year-end dividend payments for the fiscal year ended March 31, the first time it has done so in nearly half a century.
     Nissan said it had acted in view of worsening earnings estimates, and "continuing sluggish demand in the Japanese market during the current fiscal year."
     Rounding out a hard-hitting litany of statistics released Friday, Nissan President Yoshikazu Hanawa told reporters in Tokyo Friday the company will aim to trim annual domestic production capacity to 1.5 million units over the next two to three years.
     The company currently produces 1.9 million cars a year. The cutbacks will result in the elimination of 5,000 jobs in the carmaker's global workforce by the end of March 2001, Hanawa said.
     Nissan reported interest-bearing debt of 1.9 trillion yen on a consolidated basis for the fiscal year.
     The company clipped its sales estimates by 2.4 percent, to 3.32 billion yen.
     Renault's alliance with Nissan marks its first foray into corporate Japan. The companies estimate they will save $3.3 billion from 2000 to 2002 alone by sharing purchasing costs and auto platforms.
     But skeptics say it may be difficult for the French company, facing increasingly cutthroat competition at home in Europe, to help breathe new life into the Japanese juggernaut.Back to top

  RELATED STORIES

Nissan, Renault in $5.4B deal - March 27, 1999

Daimler scraps Nissan deal - March 10, 1999

  RELATED SITES

Nissan

Renault


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic