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Automobiles

Nissan falls hard in Japan Inc.'s earnings nosedive

Profit forecasts shrink by nearly half from most recent projections

A man wearing a mask walks by a Nissan dealership in Tokyo.   © Reuters

TOKYO -- Corporate Japan is on track to erase 46% of the projected net earnings for the year ended March, a Nikkei estimate shows, with Nissan Motor warning Tuesday of a first net loss in 11 years.

The fallout from the global pandemic has slammed both export-heavy industries and domestic-focused businesses. This marks a departure from the global financial crisis when internal consumption was granted a level of immunity.

For the 2019 fiscal year, 337 listed companies have either projected or turned in a total net profit of about 2.9 trillion yen ($27 billion). That is down from forecasts from the third quarter announcements approximating 5.3 trillion yen combined.

The results are based on figures from businesses that posted annual earnings or forecast revision between Feb. 15 and Tuesday. The 337 companies account for nearly 20% of all Japanese firms that close their books in March.

The financial attrition is anticipated to be widespread. Nissan has downgraded its net income by between 150 billion yen and 160 billion yen, expecting a net loss of up to 95 billion yen. The previous full-year guidance of 65 billion yen was already down by 70.6% from a year earlier.

The operating earnings could be 120 billion to 130 billion yen lower than the previous forecast of an 85 billion yen profit, which was 73% less than the previous year.

The global sales volume for the automaker declined 13% during the previous fiscal year, the company said Tuesday. Sales plunged by 42.6% in March alone. The poor demand for new vehicles and components squeezed profit by about 90 billion yen.

Nissan's loss reflects the effect of the novel coronavirus on factory output and the subsequent decline in sales. Reserves for restructuring efforts are not reflected, and "there is a possibility that Nissan may book an additional provision," the company said.

Toyota Motor also announced its unit sales the same day. The figure for global sales fell for three consecutive months and by 23.8% in March from the previous year. It is the first fall by more than 20% the company has seen since 2011, when an earthquake affected production.

Among auto suppliers, Denso downgraded the bottom line by 157 billion yen. Keihin issued a 19 billion-yen downward revision to net earnings, possibly bringing the results into the red.

The energy industry is hurting from the historically low price of petroleum. Oil conglomerate JXTG Holdings reported a net earnings downgrade of 455 billion yen -- a new record -- under the weight of inventory write downs. Trading house Marubeni took off 390 billion yen from its previous forecast, largely due to losses at petroleum and gas developments.

Social distancing norms have caught Oriental Land flatfooted. The operator of Tokyo Disneyland announced Tuesday that the full-year net profit through March undershot October's projection by 14 billion yen. Oriental Land shut down its resorts at the end of February, leading to an 8.7 billion-yen net loss for the January-March quarter.

Department store operator Isetan Mitsukoshi Holdings issued an 18 billion yen downgrade, reversing a profit into a net loss.

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