Nissan estimates £4BN net loss as it embraces major cost-cutting measures
The Yokohama car firm had originally predicted a net loss of ¥80billion (£426million) for the year ending 31 March 2025. Towards the end of last year, alarm bells were sounded at the company, which was described as being 'on the brink of collapse' with 'just 12 months to survive' amid a company-shaking sales slump in China and the US, its two biggest markets.
On Thursday, it revised down its full-year sales volume reported in February by another 3.35million units. The Japanese auto firm, which employs 7,000 people in the UK and 17,000 in the US, has this month drafted in new chief executive Ivan Espinosa, who will spearhead a dramatic cost-cutting programme in an effort to rapidly turnaround its fortunes.
Nissan said in November it would axe 9,000 jobs and 20 per cent of its global manufacturing capacity, as it scrambles to reduce costs by £2billion in the current fiscal year. It attributed the enormous rise in losses to the cost of the revival plan set out by Espinosa, including a ¥500billon (£2.6billion) reduction in the value of its production facilities and ¥60billion (£316million) in restructuring costs.
It looks certain to be the company's largest ever loss and comes as its new CEO is expected to lower the axe on thousands of global jobs, reduce production capacity and shutter some of its vehicle plants. It has yet to rule out closing its Sunderland factory - Britain's biggest car producer - as part of its restructure. Thursday's report comes days after Alan Johnson, Nissan's senior vice-president for manufacturing, supply chain and purchasing, told MPs that the UK is 'not a competitive place to be building cars', citing energy and labour cost, as well as the lack of a local supply chain.
Speaking to the House of Commons' Business and Trade Committee on Tuesday, he said: 'It is energy costs - it is the cost of everything involved in the cost of labour, [and] training. It is the supplier base, or lack of - all sorts of different issues.' Approximately 6,000 people are employed at the Sunderland plant. Last year, 282,124 vehicles - including Jukes, Leaf EVs and Qashqais - were built there. This output represented more than one in three (36.2 per cent) passenger cars made in UK factories in 2024. However, production was down some 13.2 per cent on the year previous.
It was confirmed in February that a late shift on one of the factory's assembly lines would be closed, but no jobs were lost after some 400 affected workers were moved other production lines to 'maximise efficiency'. Ivan Espinosa took over as CEO on 1 April. A mechanical engineer who has been with Nissan since 2003 in a variety of strategy and planning jobs, he now has the monumental task of bringing the car maker back from the brink.
In the company statement delivered on Thursday, he said: 'We are taking the prudent step to revise our full-year outlook, reflecting a thorough review of our performance and the carrying value of production assets. 'We now anticipate a significant net loss for the year, due primarily to a major asset impairment and restructuring costs as we continue to stabilise the company. 'Despite these challenges, we have significant financial resources, a strong product pipeline and the determination to turnaround Nissan in the coming period.'
The Japanese car company estimates to end the fiscal year with almost ¥1.50trillion (£7.9billion) in its coffers. This is down on the near-¥1.55trillion (£8.2billion) it had at the end of 2023-24. The firm added that it expects to end the year with ¥1.9trillion (£10billion) of debt. Nissan and Honda ended merger talks to forge a £45billion car company in February.
The deal broke apart due to Honda's proposal to make Nissan a subsidiary, sources have said. Nissan said it now expects full year operating profit of ¥85billion (£448million), around 30 per cent lower than it previously forecast. The automaker, which said it will forego a dividend for the full year, will report its earnings on 13 May.
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