Tokyo — Nissan announced it was considering changing its equity structure with Renault to ensure the existing alliance will survive beyond its current leadership.
The carmaker reported a "sizeable" profit gain for the year, as US tax cuts offset the negative factors, such as rising costs and a damaging inspection scandal.
Speculation about the alliance’s future, including a possible merger, has been brewing since reports earlier this year that the two companies were discussing plans for a closer tie-up in which Nissan could acquire the bulk of the French state’s 15% Renault holding.
The automaking partnership, which also includes Japan’s Mitsubishi Motors, was the world’s top-selling passenger vehicle maker in 2017, but amid growing consolidation in the global auto industry, the group must find a way to strengthen its framework before alliance chairman Carlos Ghosn retires in the coming years, after overseeing the partnership for nearly 20 years.
"This could take many different shapes," Nissan CEO Hiroto Saikawa told reporters on Monday at a results briefing, adding that a change in equity structure to create a more equal balance between the two companies was one of the options being studied.
"We need to ensure that the alliance can operate as it does now, preserving the autonomy of each company while maximising efficiencies, in its future generations."
Sagging US sales
Nissan is forecasting a third consecutive year of lower operating profits on expectations a stronger yen and higher raw material prices would outweigh a rise in global vehicle sales to a record high.
Japan’s second-biggest carmaker expects operating profit to ease 6% to ¥540bn ($4.93bn) in the year to end-March 2019, based on an assumption the yen will trade around ¥105 against the US dollar during the year, from around ¥111 in the year just ended.
Operating profit was squeezed by swelling costs, including growing incentives in the US market, and the negative impact of a damaging inspection scandal.
But US tax cuts offset the negative factors, resulting in a "sizeable" profit gain, said CEO Hiroto Saikawa.
Nissan, however, said its net profit for the current fiscal year to March 2019 was forecast to drop 33.1% to ¥500bn because of foreign exchange losses and growing costs of raw materials.
"The Japanese auto industry benefited from US tax cuts for the fiscal year," said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.
"Foreign exchange gains have contributed to their earnings but the impact is decreasing as the yen has gotten stronger recently," Takada told AFP.
Nissan was forced to recall more than a million vehicles after admitting in October that staff without proper authorisation had conducted final inspections on some vehicles intended for the domestic market before they were shipped to dealers.
The carmaker suspended all domestic production for a few weeks, sending its passenger car sales plummeting more than 55% in Japan in October.
Despite the inspection scandal, Nissan sold 5.77-million vehicles in the past fiscal year — a gain of 2.6% year-on-year.
Last week, Toyota also reported a record full-year net profit thanks to a weaker yen and US tax cuts, but warned about the outlook for the current fiscal year.
Honda Motor has said its annual net profit grew more than 70% but net profit is forecast to drop more than 46% chiefly due to a higher yen.
Reuters, AFP
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