TOKYO -- Nissan Motor will reverse the bullish expansion strategy led by former chairman Carlos Ghosn in pursuit of more moderate growth after its worst earnings performance in more than a decade.
Nissan said net profit in the fiscal year ending in March 2020 would fall 47% to 170 billion yen ($1.5 billion), based on an assumption that the yen will trade around 110.0 against the U.S. dollar during the year, from around 110.9 yen in the year just ended.
The company expects annual revenue to fall to 11.3 trillion yen, down 2.4%, with operating profit to slide 27% to 230 billion yen.
"We made a start after getting out of an unexpected event, but we still have accumulated issues," said Nissan CEO Hiroto Saikawa. "A majority of the problems is an outcome of the negative legacy from our previous structure. Our current focus is to get out of the sluggish earnings result."
"We will restructure our earnings as soon as possible to return to shareholders," said Saikawa, apologizing for cutting the company's expected dividend to 40 yen per share for the year to March 2020, down from 57 yen for the year ended in March.
Japan's second-biggest automaker said it will sell 5.54 million vehicles globally this fiscal year, and produce 5.40 million units, a slight increase from the 5.36 million units in the year ended in March.
Weak sales in its core U.S. market, as well as additional expenses arising from incentives to car dealers -- a costly discount strategy strategy employed by Ghosn to boost market share -- are still weighing heavily on the beleaguered company.
The strategy has not only hurt the Nissan brand, said Saikawa, but has also undermined trust with car dealers.
Increased development costs for autonomous driving and other new technologies had also eaten into profits as the company prepares for the onset of next-generation vehicles.
"We have attempted excessive expansion in the past years, but we will from now focus on steady and sustainable growth," insisted Saikawa.
Halfway through the six-year plan set in April 2017, Nissan also downgraded its original revenue target for the year to March 2023 from 16.5 trillion yen to 14.5 trillion yen. The company also cut its ratio of operating profits to sales from an initial 8%, to 6% over the same period.
Saikawa insisted that Tuesday's revision was just a skeleton plan, adding that the company would announce a more complete plan in July.
It has been a tumultuous period for Nissan following Ghosn's arrest in November over allegations of financial misconduct, with numerous departures from the struggling carmaker including Jose Munoz, one of Nissan's most senior executives.
Nissan slashed its net profit forecast in February from 500 billion yen to 410 billion yen, down 45% from the previous year's result, cutting it to 319 billion yen in April on the back of a worsening first-quarter sales.
With no end in sight to the disarray symbolized by Tuesday's lackluster earnings forecast, Saikawa is sure to come under increasing pressure as shareholders hold him accountable for Nissan's performance.
"Current management faces deep confusion as an outcome of the sudden departure of the head," said Takaki Nakanishi, CEO of Nakanishi Research Institute, an auto industry intelligence firm in Tokyo.
"Saikawa bears responsibility for the company's poor operation as he was the one announcing the current mid-term plan with Ghosn," added Nakanishi. "Whether Saikawa would stay as the CEO may be the upcoming subject."
Meanwhile, Nissan's French alliance partner Renault, is expected to seek to consolidate a new management framework for the alliance which was shaken by Ghosn's arrest.
The Japanese carmaker is expected to approve Renault Chairman Jean-Dominique Senard as vice chairman of the board at its annual shareholders meeting next month. Renault holds a 43% stake in Nissan, while Nissan has a 15% share Renault without voting rights.
Renault is reportedly still pushing for a formal merger with Nissan, despite being rebuffed on a recent proposal to integrate with its Japanese partner.
Ongoing deterioration of Nissan's earnings would weaken its power to negotiate with Renault.
Nikkei staff writer Rurika Imahashi contributed to this report.