Nissan Denies Nikkei Report on Global Car Output Cut of 15%

(Bloomberg) -- Nissan Motor Co. denied a report by the Nikkei that it’s planning to cut global output by around 15 percent for the fiscal year to March 2020, even as the carmaker struggles to reignite earnings and sales while dealing with the fallout from the arrest of ex-chairman Carlos Ghosn.

Nissan issued a rare response calling the details in the report “completely incorrect,” saying that it lodged a protest with the newspaper over its coverage. The Japanese automaker is seeking to produce around 4.6 million units, the lowest in nine years, according to the newspaper.

Following the statement, Nissan shares recovered some of their earlier losses to close 2.2 percent lower in Tokyo. The stock declined 22 percent in 2018.

Ghosn, who was arrested for the first time in November, is being detained in a Tokyo jail on allegations of misusing Nissan’s money for personal gain. He has denied the allegations as well as formal charges accusing him of falsifying financial information and breach of trust.

Toshihide Kinoshita, an analyst at SMBC Nikko Securities Inc., wrote in a report that the figures, though unverified, suggest production levels well below his projections, and that the negative impact on annual operating profit could be 150 billion to 200 billion yen ($1.3 billion-$1.8 billion), although that doesn’t take into account any efforts by Nissan to cut costs or reduce inventory.

IHS Markit is predicting a decline, but not as steep; the researcher projects sales will drop 6.3 percent to 5.3 million units in 2019.

In February, Nissan slashed its operating profit forecast to 450 billion yen, to well below analysts’ estimates as sales in China and the U.S. sputter. Nissan is expected to report earnings results on May 14, giving investors a look into its performance as the entire industry faces complex issues such as the U.K.’s potentially jarring exit from the European Union and huge investments in electric and autonomous vehicles.

Nissan is cutting a future target for China car sales by about 8 percent, people familiar with the matter said in March. Output in Japan will remain basically unchanged at more than 900,000 units, while overseas production will fall by 20 percent to around 3.7 million vehicles, the Nikkei reported.

The move may impact earnings and throw a shadow over Nissan’s alliance with Renault SA, the newspaper said.

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