TOKYO - Nissan Motor on Tuesday became the latest Japanese automaker to slash its earnings forecast for this year, cutting expectations for operating profit by 11% to 450 billion yen ($4 billion) on the back of sharp declines in the U.S. and China, its two biggest markets.
The automaker's warning followed reductions in forecasts last week from Toyota Motor and Subaru, each for different reasons. However they add to the growing gloom over the auto sector after China last year saw car sales fall for the first time in 28 years.
In its first quarterly results since the arrest of former Chairman Carlos Ghosn on charges of financial misconduct, Nissan also took a 9 billion yen charge to cover the pay it alleges was not reported by its former boss. Ghosn, who has been held in a Tokyo jail for almost three months since his arrest in November, denies the allegations.
Nissan's decision to cut its earnings forecast was made despite a 25% rise in third quarter operating profit to 103.3 billion yen while revenue increased 5.9% to 3.5 trillion yen. For the three months to December, net profit fell 77% to 70.4 billion yen.
The company's outlook has been tainted by a sharp slowdown in the U.S. where sales during the October to December quarter fell 7% on the previous year to 370,000 units. Sales in January also fell by 19% year on year.
Nissan said it needed to rethink its global strategy to rebuild its brand. "In the U.S. market, our value as car and brand is not enough in the wake of excessive promotion," Nissan CEO Hiroto Saikawa said during the financial briefing on Tuesday.
Nissan's U.S. sales accounted for about 26% of the company's total sales last year, while sales in China made up 27%. But operating profit in North America in April-September hit only 85 billion yen, down by about 60% from three years before.
The company's U.S. sales have depended in large part on dealer incentives, with per-car incentives in April-December hitting $4,102 -- much more than Honda's $1,937 and Toyota's $2,460.
Under Ghosn, the company had focused on quantity rather than profit, executives suggested. "We can't blame everything on Ghosn, but we weren't allowed to lower the targets," a senior Nissan official said.
In the earnings announcement, the company's full-year forecast was down by 22% from the 574.7 billion yen recorded the previous year.