Sunday, October 25, 2020
banner
Home /  Business  /  Nissan reports $6.2 bn loss, to shut Barcelona plant

Nissan reports $6.2 bn loss, to shut Barcelona plant

Nissan reports $6.2 bn loss, to shut Barcelona plant

AFP
Tokyo
Crisis-hit Japanese automaker Nissan on Thursday reported a huge $6.2-billion annual net loss, announcing it would shut its Barcelona plant and slash production, as it reels from the impact of the coronavirus pandemic.
Nissan was already battling weak demand as well as the fallout from the arrest of former boss Carlos Ghosn, currently an international fugitive after jumping bail and fleeing Japan.
But it said the global outbreak had hit all aspects of its business, with the auto industry as a whole facing an existential crisis as the virus forces people to stay indoors.
The firm said it logged a net loss of 671.2 billion yen ($6.2 billion) for the year to March, compared with the net profit of 319.1 billion yen a year earlier. Operating loss was 40.5 billion yen.
It unveiled a four-year plan that will involve cutting global production by 20 percent, shutting its operation in Barcelona that employs 3,000 people and reducing its vehicle line-up.
Nissan also plans to withdraw from South Korea, where the firm saw “limited opportunities”, chief executive Makoto Uchida said.
The company said the global pandemic had “substantially impacted” production, sales and other business activities in all regions, and declined to issue a forecast for the current fiscal year because of ongoing uncertainty.
The results were worse than had been projected, and CEO Makoto Uchida said the firm had to “admit failures”.
The impact of the coronavirus pandemic compounds a series of existing problems for Nissan, including weak demand, the Ghosn scandal and tensions in its alliance with Renault and Mitsubishi Motors.
“Nissan is facing an extremely tough business environment,” said Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm. “The coronavirus shock hit Nissan when it was already struggling to recover,” Takada told AFP before the announcement.
“Nissan has already cut jobs but extra restructuring may be needed,” he said.
“Nissan cannot expect a V-shaped recovery. It is at a crucial stage,” he added.
The automaker’s restructuring plan will see its factory in Barcelona shuttered, despite government efforts to keep it open.
Angry employees responded to news of the plant’s closure by setting fire to a mound of tyres at its entrance and blockading the road into the complex.
“It is truly shameful that a multinational like this has let us go in the middle of the COVID-19 pandemic,” said Jordi Carbonell, a 54-year-old employee.
Spain’s Foreign Minister Arancha Gonzalez Laya said the government would “not throw in the towel” and would “explore all solutions, because our concern is to safeguard employment”.
Uchida said the decision had been difficult, but that the firm needed to take action to transform its business. He said he would be taking a 50 percent cut in his base pay, with other executives also taking cuts.
“Our transformation plan aims to ensure steady growth instead of excessive sales expansion,” he said in a statement. “We will now concentrate on our core competencies and enhancing the quality of our business.”
On Wednesday, Nissan and its alliance partners announced a joint transformation plan, agreeing each member would take the lead in a specific market.
The plan will see Nissan take the lead in China, North America and Japan, with Renault in the front in Europe, Russia, South America and North Africa, and Mitsubishi Motors leading in ASEAN and Oceania countries.
But Uchida acknowledged that even in Nissan’s core markets, like the United States, the situation was tough.
“We’re realising that it takes time to restore a brand that’s damaged,” he told reporters.
Nissan’s leadership has struggled to right the firm since the 2018 arrest of former boss Carlos Ghosn on financial misconduct charges, which he denies.
His arrest set off a chain reaction that forced a major internal overhaul, prompted the resignation of the firm’s CEO and exposed deep tensions within the three-way auto alliance.

Pages