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Nissan Projects Net Losses, Slashes View Amid Coronavirus Crisis
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Nissan Motor Co. (NSANY - Free Report) recently announced that it is slashing the 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis. The company has delayed the announcement of its annual financial results and restructuring plan to May 28, which was earlier scheduled for a mid-May release.
Amid the uncertainty surrounding the coronavirus pandemic, Nissan expects to post its first annual operating loss in 11 years of around 45 billion yen ($419.7 million), as against the previous forecast announced in February of an operating profit of 85 billion yen. Further, it projects to report a net loss of about 95 billion yen ($900 million) compared with the prior estimate of profit of 65 billion yen. The company expects that its future financial performance will be impacted but the extent is unclear at this point.
This loss is likely to put pressure on Nissan’s global alliance with Renault and Mitsubishi Motors, who are leaving no stones unturned to fight against the coronavirus crisis that has shut most of their plants and hurt sales across the world. Notably, Nissan plans to operate its Kyushu plant on a single shift through May due to lack of demand for the Rogue Sport SUV crossover model. The company also suspended production at its Tochigi plant early this month, and plans to continue it through the end of May to contain the spread of the deadly virus.
Moreover, the Japanese automaker’s global car sales plunged 43% year over year in March, resulting in annual sales of 4.8 million units, marking its worst sales performance since 2011. Per Reuters, sinking sales have prompted Nissan to reduce the number of cars it will manufacture in Japan in May by 78% to 13,400 vehicles compared with the year-ago period’s nearly 61,000 units. Further in June, Nissan expects to cut its domestic production to 33,700 vehicles, down from the year-ago figure of 63,700 units. The figure also indicates a plunge of 43% from the previous production plan of around 59,300 units.
Apart from Nissan, the rapidly-spreading coronavirus pandemic has become a concern for other global auto biggies as well. Companies including Ford (F - Free Report) , Cummins (CMI - Free Report) , Superior Industries (SUP - Free Report) , Oshkosh and PACCAR have withdrawn their 2020 guidance. In addition, several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
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Nissan Projects Net Losses, Slashes View Amid Coronavirus Crisis
Nissan Motor Co. (NSANY - Free Report) recently announced that it is slashing the 2020 guidance in response to disruptions to the company’s supply chain due to the coronavirus crisis. The company has delayed the announcement of its annual financial results and restructuring plan to May 28, which was earlier scheduled for a mid-May release.
Amid the uncertainty surrounding the coronavirus pandemic, Nissan expects to post its first annual operating loss in 11 years of around 45 billion yen ($419.7 million), as against the previous forecast announced in February of an operating profit of 85 billion yen. Further, it projects to report a net loss of about 95 billion yen ($900 million) compared with the prior estimate of profit of 65 billion yen. The company expects that its future financial performance will be impacted but the extent is unclear at this point.
This loss is likely to put pressure on Nissan’s global alliance with Renault and Mitsubishi Motors, who are leaving no stones unturned to fight against the coronavirus crisis that has shut most of their plants and hurt sales across the world. Notably, Nissan plans to operate its Kyushu plant on a single shift through May due to lack of demand for the Rogue Sport SUV crossover model. The company also suspended production at its Tochigi plant early this month, and plans to continue it through the end of May to contain the spread of the deadly virus.
Moreover, the Japanese automaker’s global car sales plunged 43% year over year in March, resulting in annual sales of 4.8 million units, marking its worst sales performance since 2011. Per Reuters, sinking sales have prompted Nissan to reduce the number of cars it will manufacture in Japan in May by 78% to 13,400 vehicles compared with the year-ago period’s nearly 61,000 units. Further in June, Nissan expects to cut its domestic production to 33,700 vehicles, down from the year-ago figure of 63,700 units. The figure also indicates a plunge of 43% from the previous production plan of around 59,300 units.
Nissan currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Apart from Nissan, the rapidly-spreading coronavirus pandemic has become a concern for other global auto biggies as well. Companies including Ford (F - Free Report) , Cummins (CMI - Free Report) , Superior Industries (SUP - Free Report) , Oshkosh and PACCAR have withdrawn their 2020 guidance. In addition, several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>