Nissan to Trim Financial Guidance by $2.8 Billion in Restructuring Plans

Japan based automaker Nissan Motor Co (7201) is looking forward on holding meeting to restructure financial guidance of the company for the year citing unavoidable disruptions caused by coronavirus pandemic which has resulted to reduced demand due to restricted movement of individuals.

This information was first published on Bloomberg News indicating Nissan is planning to trim its annual fixed costs by $2.8 billion as part of restructuring the automaker’s financial outlook of the year.

Nissan anticipates demand of cars to even slump further post the pandemic, a scenario which will probably prolong the time the automaker will take to bounce back to profitability.

Profit of the automaker has been on a constant decline for the past three years, earlier the company had devised a strategy of selling to chase a larger market share in the market, the strategy didn’t go as the company was expecting, plunging the automakers stock even further.

After holding meeting and reaching a consensus the company will be announcing its restructuring plans at the end of this month.

Bloomberg News claims to have sourced the news from involved sources who said areas in which the fixed cost will be slashed from include research and marketing. These plans have not yet been approved by the company’s board.

Word also has it the automaker is considering shutting down some production lines as part of restricting plans.

As much as automaker industry has been affected by the pandemic, long before outbreak of the deadly virus Nissan’s sales and profit were on a declining spree following ouster of former company’s Chief Executive Officer Carlos Ghosn.

Ghosn was ousted and arrested following financial wrongdoing accusations dating back up to 2018 and since his exit Nissan is yet to return to its winning ways.

Another factor linked to the automakers recent declining performance, is the move by Nissan to phase out its lower cost brand Datsun. Nissan said main reason behind cutting out Datsun is reduced sales of the model in Asia and Russian markets.

Leave a comment

Your email address will not be published. Required fields are marked *