According to Nikkei News, on February 11, Nissan, which is deeply in a performance crisis, may usher in a net loss for the first fiscal year in nearly five years. The average market expectation of QUICK Consensus shows that Nissan’s net loss may reach 225.9 billion yen (about 1.5 billion US dollars) in fiscal 2024 (April 2024 to March 2025), which is Nissan’s fiscal 2020 The worst performance after a net loss of 448.7 billion yen due to the impact of the epidemic. Meanwhile, QUICK data shows that Nissan’s operating profit is expected to be 140.3 billion yen in fiscal 2024, down 75% from fiscal 2023.
Shinya Naruse, senior analyst at Okasan Securities, estimates that Nissan’s net loss in fiscal 2024 may reach 450 billion yen, mainly due to the company’s global cut of 9,000 jobs and 20% reduction in production capacity. Turning losses into profits” measures, which will result in a special loss of approximately 600 billion yen, a figure comparable to that of fiscal 2019. In fiscal 2019, Nissan announced large-scale cost-saving measures, including cutting 12,500 employees and cutting capacity by 10%, and reported a special loss of 669.4 billion yen and a net loss of 671.2 billion yen.
Analysts surveyed by QUICK expect Nissan to turn losses into profits in fiscal 2025, although net profit for fiscal 2025 is expected to be only 30% of the fiscal 2023 report. However, analysts warned that if the restructuring process lags, Nissan’s financial performance deteriorates into fiscal 2025. Shinya Naruse also admitted: “If Nissan and Honda advance the merger plan, Nissan may be expected to make a profit in fiscal 2025, but if Nissan reorganizes independently, the difficulty of turning losses into profits will increase dramatically.”
In December last year, Nissan and Honda announced plans to merge, trying to respond to high investment in electrification transformation through economies of scale, thereby temporarily boosting market confidence. However, reports said that the two sides suspended negotiations due to increased differences. The move was evaluated by Fitch Ratings Japan Senior Director Satoru Aoyama as “intensifying the uncertainty of Nissan’s future development” and expected that Nissan’s fiscal 2024 will not be able to do so due to business restructuring costs. It is unlikely to report net profit. It is reported that rating agencies Moody’s and Fitch have adjusted Nissan’s outlook from “stable” to “negative” in November last year, believing that the deteriorating trend of Nissan’s profitability is difficult to reverse.
In November last year, Nissan withdrew its 300 billion yen net profit forecast for fiscal 2024, replacing it with a “to be determined” statement. Nissan also lowered its operating profit forecast for fiscal 2024 to 150 billion yen.
At present, Nissan’s financing environment is becoming challenging. Nissan data shows that the company’s free cash flow has dropped, or the amount of cash remaining after paying for operating expenses and capital expenditures has dropped. Nissan’s auto business had a free cash flow of negative 448.3 billion yen in the first half of fiscal year 2024 (April to September 2024), while auto business was free in the same period in fiscal year 2023, as production declines lowered profits and working capital, while Cash flow is 193.9 billion yen. It is reported that 90% of the company’s sales come from car sales, and the remaining 10% come from car sales financing activities.
In addition, US President Donald Trump is planning to impose a 25% tariff on products imported from Mexico, which will also overshadow Nissan’s future. One-third of the cars sold in the U.S. are imported from factories in Mexico, and Nissan is expected to take the biggest hit among Japanese automakers if the tariff plan is officially implemented.
“Nissan can continue to operate its Mexican factory by increasing exports to outside the United States, but the company is unlikely to supplement the U.S. market cars by producing cars in the U.S. because of their U.S. The models currently produced by the factory are very different from those made in Mexico. If the tariffs are to last for a long time, Nissan will need to reconsider capacity. It is not feasible to pass on all the increased costs to consumers, so it is necessary for Nissan to make internal adjustments. .”