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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Nissan Motor Co., Ltd.    7201   JP3672400003


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Nissan restructuring may assume cut of 1 million cars to annual sales target - sources

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04/10/2020 | 07:45am EDT
FILE PHOTO: A Nissan logo is pictured at Brussels Motor Show

Nissan Motor Co Ltd's management has become convinced the struggling automaker needs to be much smaller and a restructuring plan due out next month would likely assume a cut of 1 million cars to its annual sales target, senior company sources said.

Even before the spread of the coronavirus, Nissan's sales and profits had been slumping and it was burning through cash, forcing it to row back on an aggressive expansion plan pursued by ousted leader Carlos Ghosn. The pandemic has only piled on urgency and pressure to renewed efforts to downsize.

No new sales target has been finalised and it remains unclear whether one will be formally disclosed.

But Nissan's plans for restructuring through to March 2023 should be based on the assumption that it would only be able to return to annual sales of 5 million cars by then, two sources said, adding this would entail a large reduction to manufacturing capacity.

That compares with a goal of 6 million cars for the same period outlined in July by then-CEO Hiroto Saikawa, who had already stepped back from around 8 million targeted under Ghosn. Nissan likely sold about 5 million cars in the past financial year but this year's outlook is bleaker due to the pandemic.

"For years, Nissan was looking for annual sales volumes around 7-8 million vehicles. The company has never managed to sell much more than 5 million or so," one of the sources told Reuters. "The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020-2022."

A third senior company source said the figure could be even lower than 5 million given the impact of the virus, which has hammered car demand around the world.

The sources declined to be identified as details of the turnaround plan have yet to finalised.

In July, Nissan said it was aiming to cut annual global production capacity to around 6.5 million vehicles. Shrinking its sales target by 1 million vehicles would equate to closing three to four more assembly plants and shedding thousands more jobs on top of already announced plans to cut its workforce by 10%. The cutbacks would also ripple through to its suppliers and dealers.

Nissan declined to comment on its progress in devising a new mid-term plan. "The details will be shared in May," a spokeswoman said.

For interacti
ve charts on Nissan's global vehicle sales and operating margins, click onhttps://reut.rs/2USzcFy

The people said that a key metric of the recovery plan will be its operating profit margin and new CEO Makoto Uchida is likely to keep Saikawa's target for a margin of about 6%, one of the people said. In the third quarter, the margin was just 0.9%.

"At the very least, a downsizing is a given," the person said.

By comparison, operating margins at top-selling automakers Toyota Motor Corp and Volkswagen AG before the coronavirus pandemic hovered around 8%.

Another top priority will be the preservation of cash.

As of December, Nissan's automotive operations had negative free cash flow of 670.9 billion yen, a more than 6-fold increase from a year ago. "That's no longer at an acceptable level," said one of the people.

For an in
teractive chart on Nissan's overall cashflow and net cash levels, click onhttps://reut.rs/2VgkJSN

Nissan has requested a $4.6 billion commitment line from major lenders to cushion the impact of the pandemic while it seeks to engineer the desperately needed turnaround, people with knowledge of the matter have said.

By Naomi Tajitsu and Norihiko Shirouzu

Stocks mentioned in the article
ChangeLast1st jan.
NISSAN MOTOR CO., LTD. 7.48% 441 End-of-day quote.-30.67%
TOYOTA MOTOR CORPORATION 2.08% 6915 End-of-day quote.-10.36%
VOLKSWAGEN AG 2.16% 143.12 Delayed Quote.-18.79%
WORLD CO., LTD. 1.06% 1628 End-of-day quote.-39.50%
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Sales 2020 9 978 B 91 648 M 91 648 M
Net income 2020 -91 680 M -842 M -842 M
Net Debt 2020 6 730 B 61 811 M 61 811 M
P/E ratio 2020 -52,4x
Yield 2020 2,52%
Capitalization 1 725 B 15 833 M 15 846 M
EV / Sales 2019
EV / Sales 2020 0,85x
Nbr of Employees 138 893
Free-Float 45,6%
Duration : Period :
Nissan Motor Co., Ltd. Technical Analysis Chart | MarketScreener
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Technical analysis trends NISSAN MOTOR CO., LTD.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 20
Average target price 483,89 JPY
Last Close Price 441,00 JPY
Spread / Highest target 236%
Spread / Average Target 9,73%
Spread / Lowest Target -36,5%
EPS Revisions
Makoto Uchida Executive President & Chief Executive Officer
Yasushi Kimura Chairman
Ashwani Gupta COO & Representative Executive Officer
Stephen Ma Chief Financial Officer & Executive Officer
Anthony Thomas Chief Information Officer
Sector and Competitors
1st jan.Capitalization (M$)
NISSAN MOTOR CO., LTD.-30.67%15 833
VOLKSWAGEN AG-18.79%81 001
HONDA MOTOR CO., LTD.-6.50%44 923
DAIMLER AG-23.16%43 033
BMW AG-20.73%40 066