Nissan's profit drops amid former chair Ghosn's arrest

Hiroto Saikawa

Hiroto Saikawa

The partnership with Renault SA has been going through a challenging period due to the allegations against Ghosn, but Saikawa said he seeks to build a relationship of trust with new Renault Chairman Jean-Dominique Senard, who is scheduled to visit Japan this week.

In the wake of the Ghosn affair - in which the alleged improprieties occurred over almost a decade - Nissan has pledged to review its governance, including a possible overhaul of the board's composition.

Mr Ghosn, 64, the head of their alliance, was arrested in Japan on suspicion of underreporting his salary and of using corporate funds to underwrite personal losses in November.

Prosecutors have charged the former chairman with failing to report this amount in eight years of Nissan financial reports. Saikawa said Tuesday the alliance may need to revisit the targets it has set for 2022 - a set of goals given in 2017 that call for synergies and increased annual vehicle sales.

The disappointing nine-month performance and a change in accounting methods forced the manufacturer to downgrade its net profit forecast for the fiscal year to March to 410 billion yen, compared with 500 billion yen projected earlier.

Another investigation is underway into the Dutch holding company, Renault-Nissan BV, that oversees combined operations. Stocks of both companies are down sharply since Ghosn's arrest. Ghosn has said the compensation was never paid or decided upon.

The scandal at Nissan comes at a time when the automaker, together with its domestic rivals including Toyota Motor Corp, is struggling with sluggish sales and falling profit in North America, a key market.

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Nissan's operating margin is expected to fall to 3.9 percent from the prior projection of 4.5 percent.

"We are filled with regret about how we didn't see it and how we couldn't stop it", he said.

Last week, domestic rival Toyota slashed its full-year net profit forecast after saying its nine-month figure had tumbled almost 30 percent as it was hit by investment losses.

In the United States, it now sees sales tumbling 8.6 percent on the year to 1.46 million units, from 1.55 million last year. Their margins have been squeezed as they resorted to steep discounts to drive up demand in a competitive US market where sales have plateaued near record highs.

This was the first earnings report since Ghosn's arrest.

Nissan said it was accounting for this under-reported salary - technically owed to Ghosn - although Saikawa said that "I personally don't think that we will reach a conclusion to pay this money".

Ghosn has denied all charges against him.

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