TOKYO -- Nissan Motor has posted a net loss of 671 billion yen ($6.2 billion) for the year ended in March as the new coronavirus outbreak devastated sales and the carmaker started a big restructuring to cut costs.
The annual financial result exceeds the company's net loss of 233 billion yen for the 12 months ending in March 2009, a year marked by the global financial crisis. It lost 684 billion yen in fiscal 1999 amid a restructuring plan initiated by former boss Carlos Ghosn.
The annual loss announced on Thursday, for the 2019 fiscal year, was driven by 603 billion yen of costs associated with restructuring and impairments.
"We have been modifying the expansion strategy for nearly two years, but it is absolutely difficult to make a profit in these circumstances," said CEO Makoto Uchida at an online press conference Thursday. "We acknowledge the failure to get out of this situation and deal with the excess assets."
Nissan also said in a statement that the coronavirus pandemic substantially impacted production and sales worldwide.
Uchida said the company was starting a four-year program to cut production capacity by 20% to 5.4 million units a year.
It willl cut its product line-up from 69 to fewer than 55 models and cut fixed costs by about 300 billion yen.
Nissan is reducing capacity around the globe as part of a plan drawn up with Renault and Mitsubishi Motors, its partners in a Franco-Japanese carmaking alliance. The three companies said on Wednesday that they would deepen cooperation to make global operations more efficient, turning away from a focus on sales growth. Each company will lead operations in a given region.
Nissan confirmed on Thursday that it wanted to close a plant in Spain and another in Indonesia. It said it wanted to push its plant utilization rate above 80%, making operations more profitable.
It will also focus on its core markets and products, withdrawing from South Korea and ending its Datsun business in Russia.
Nissan also set out a goal to sell more than 1 million electrified vehicles by the end of its 2023 fiscal year. Uchida described the product as "a key driver."
Uchida declined to comment on further job cuts on top of the 12,500 headcount reduction announced in July 2019, and said the company will negotiate with related labor unions and local authorities.
As for its struggling North American business, Uchida said: "We feel it has been challenging to restore the damaged brand. We move on with a step further on rationalization."
The company will consolidate its North American production around core models, he said.
"We will surely bring Nissan back to a growth model. Nissan's potential is not at this level," Uchida stressed.
The automaker had recorded a 319 billion yen net profit the previous year. It did not give any earnings guidance for the current year as it is still unclear how demand will rebound in the wake of the pandemic.
It said it had "sufficient liquidity to steer through this challenging business environment."
Nissan had warned in April that it would fall into an annual net loss of up to 95 billion yen because of the effects of the coronavirus pandemic. It also said this could be revised, with additional provisions, after the company assessed its midterm plan.
Analysts estimate a net loss for Nissan of 180 billion yen for the current fiscal year, according to FactSet, as the company deals with its restructuring and ongoing turmoil from the coronavirus outbreak.
These are Nissan's first results encompassing a full 12-month period since the departure of former chairman Ghosn in November 2018.
The automaker sold 4.79 million vehicles in its latest financial year, the second decline in a row and a drop of 13% from last year.
Nissan's annual revenues were 9.87 trillion yen, down 14.6% from the year ended in March 2019.
Nissan has been struggling since long before the coronavirus pandemic, hammered by the aftermath of Ghosn's expansion strategy. Ghosn, who was arrested by Japanese authorities in November 2018 and fled to Lebanon in December 2019, increased the company's capacity in India, Indonesia and emerging markets during the past decade, aiming for more sales.
Nissan's discounting in North America was blamed for cheapening the brand. Global sales have declined from a peak of 5.77 million vehicles for the fiscal year through March 2018.
Confusion over the alliance and the management reshuffle within Nissan added further turmoil. The alliance has shown strains after Ghosn's arrest, as Renault made a proposal to Nissan for a full merger. The French carmaker owns a 43.4% stake in Nissan, while the Japanese company has 15% in its French partner without voting rights.
However Renault's chairman Jean-Dominique Senard reiterated Wednesday that there was no need for a merger.
Uchida took over as Nissan CEO in December after former CEO Hiroto Saikawa, who followed Ghosn at the helm of the carmaker, was also forced out.
The subsequent departure of former vice-COO Jun Seki just weeks after being appointed, however, suggested that the automaker was still not unified.
"There is still a fight for power between Nissan and Renault, and there is also some discord within Nissan," said Takaki Nakanishi, CEO of Nakanishi Research Institute, a Tokyo-based auto industry research company.
"It is unclear if people in Nissan are united in pursuit of the same goal for the alliance and for Nissan's mid-term plan."