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Nissan stock has fallen to the lowest level in 10 years as the company has reported its earnings and is still under the pressure of the scandal surrounding former chairman Carlos Ghosn.
Japanese automaker Nissan Motor Co. reported its operating income for the three months ending on December 31, 2019, amounted to ¥22.735 billion (around $207 million), significantly lower than market estimates and falling 78% on an annual basis.
Net sales for the third fiscal quarter declined 17% to ¥2.5 trillion as gross profit fell 30% to ¥343.56 billion. From a net income of ¥75.85 billion in the third fiscal quarter of 2018, the company went through a net loss of ¥21.98 billion in the corresponding period last year.
Nissan also booked a loss per share of ¥6.67 for the quarter, which compared to earnings of ¥18 in the same period in the year prior.
Nissan Shaken by Ghosn’s Scandalous Embezzlement
The No.2 automaker in Japan has been pretty much shaken by the scandal surrounding former boss Carlos Ghosn. Last month Ghosn was accused of allegedly misusing $4.34 million of the company’s funds. The Japanese carmaker stated Ghosn spent the firm’s money on parties in Versailles, Cannes, and Rio, as well as gifts, dinners and entertaining purposes during his trips to France and Brasil.
“Ghosn had the budgets and financial statements approved by the board of directors without disclosing the details,” the filing Nissan submitted pointed out.
Furthermore, a few days ago the company revealed that it filed a civil lawsuit against Ghosn, requesting that he pays ¥10 billion ($90 million) to help offset the losses caused by his “years of misconduct and fraudulent activity.”
The automaker sued Ghosn at the Yokohama District Court in Japan. The amount Nissan seeks from its former chief executive will likely rise as it expects that he pays for all financial penalties “in criminal proceedings related to Ghosn’s misconduct,” the company said.
The latest legal document by Nissan lists accusations that were not included in its previous lawsuits against the Lebanese businessman. The carmaker also “reserves the right to pursue separate legal action over groundless and defamatory remarks made by Ghosn” after “his illegal flight from justice.”
Nissan Relations with Renault Back to Positive
One of the important things that came from this scandal was also a deranged relationship with the French carmaker Renault. Renault and Nissan’s relations haven’t been good since the Ghosn’s arrest. However, last month, Renault’s chairman Jean-Dominique Senard said that the relationship with Nissan is back to its best, calling it “extraordinarily positive.”
Senard stated that the two companies “are now shaping up the whole thing in a way that they can only have positive news in the near future,” adding that it is the most important “to make sure that things are working well on the industrial part” of the partnership.
Meanwhile, there has been reported worsening of sales and a brand image tarnished by years of heavy discounting in the United States and other markets.
Jeffries analyst Takaki Nakanishi said:
“It is too early for a halt in downward trend in Nissan’s share price in this environment.”
Factories Shut Down Because of Coronavirus, Nissan Stock Is Down
And, we shouldn’t forget the other problems the company had. At the beginning of this week, the company announced that it will suspend work at its Kyushu factory in Japan in order to prevent further spreading of the coronavirus.
The company also noted that its production has been hit by a number of plant closures in China as it needs parts arriving from Chinese factories for assembly.
The auto industry has been hit by the coronavirus outbreak as Tesla, Fiat Chrysler, Toyota and Honda all said they could suffer because of the disease. Meanwhile, Japan announced that 60 more people were diagnosed with the coronavirus on a cruise ship docked in Yokohama.
Shares fell to their lowest in more than 10 years after the company cut its annual profit forecast and said it would not pay a dividend in the second half. Nissan stock went down by 9.64% to ¥514 at 12:50 pm CET.