The Nissan Motor Co. Chief Executive Officer Carlos Ghosn, who rescued the automaker from near bankruptcy seven years ago, said that his credibility is on the line after missing last year's earnings goals.
According to the average of 16 analyst estimates compiled by Bloomberg, Nissan's profit probably plunged 33 percent in the three months ended March 31. Earnings in the year-ago period were bolstered by a 17 billion yen one-time gain from selling the Nissan Diesel Motor Co. shares to Volvo AB. Sales probably increased 31 percent to a record 3.46 trillion yen, the survey said.
In February, the Japanese automaker slashed its net income estimate for the year ended last March to 460 billion yen ($3.9 billion) from 523 billion yen. It was the first time the automaker missed its target. Additionally, the automaker may miss a 3.73 million-vehicle global sales forecast for the year.
"It's important to maintain credibility,'' said Ghosn in an interview on Feb. 2. "We have made forecasts and we have met them in the past. We missed it this time and we don't like it.'' Ghosn, 53, intends to regain investors' confidence when he unveils the carmaker's earnings tomorrow. In the said announcement, he also will tackle what he called a "crisis'' at Tokyo-based Nissan. The company in February scaled back its full-year profit forecast by 12 percent and said it may not meet its target of selling 4.2 million vehicles in the year ending March 2009.
"He took his eyes off the ball,'' said Edwin Merner, who oversees $1 billion as the president of Atlantis Investment Research Corp. in Tokyo. "Sales in the U.S. have been disappointing until recently and in Japan sales are in a shambles.''
The shares of the Japanese automaker declined by 2.7 percent to 1,195 yen as of 12:32 p.m. in Tokyo, extending the fall for 2007 to 17 percent. Shares of the Toyota Motor Corp. dropped by two percent to 7,220 yen and the Honda Motor Co. shares dived by 1.7 percent to 4,000 yen. The shares fell after the confidence of purchasers plunged in the United States. Japanese automakers derive as much as 70 percent of their operating profit in the country.
From April, Ghosn gave up daily oversight of North American operations. The change is giving Ghosn, who is managing both Nissan and Renault SA, more time to concentrate on improving the performance of the two automakers. Renault owns 44.3 percent of Nissan. Ghosn is set to announce a plan today to boost the Nissan's earnings. Nissan said it will offer incentives to workers in Japan to save costs, the first time in eight years it has offered early retirements. Meanwhile, Nissan spokeswoman Pauline Kee declined to comment on the analysts' estimates or on Ghosn's plan.
Nissan is betting on 11 new or redesigned vehicles. The said product lines, equipped with sophisticated auto parts like Nissan air mass meter, engines, brakes, and rotors, will be introduced worldwide in the year starting April 1, including the Rogue crossover vehicle as Ghosn said last month.
It can be recalled that the automaker unveiled only one new model globally in the first half ended on Sept. 30. Ghosn has said the automaker must improve its planning to bring out new models on a more regular basis. "If we don't learn from the mistakes we've made, we will make more mistakes,'' Ghosn said. "We have to learn.''
Nissan will probably focus on cutting costs in purchasing, making better use of production capacity and strengthening sales and marketing efforts, especially in Japan and the U.S., said analysts including Koji Endo at Credit Suisse Group in Tokyo.
In the year ended March 31, "Nissan gained from the weaker yen'', said Koichi Takatsuka, who oversees $1 billion at UAM Japan Inc. in Tokyo. In February, the automaker based its earnings forecasts on an exchange rate of 120 yen to the dollar and 150 yen to the euro for the three months ended in March.
Nissan will report earnings at 3:20 p.m. today. Honda reported at 3 p.m. yesterday, followed by Toyota at 3 p.m. on May 9.