Five things to watch for in Nissan's results

TOKYO – Nissan Motor will announce Tuesday its results for the quarter ended December 31st. It was his first announcement of results since the arrest of the then president, Carlos Ghosn, accused of bad financial conduct.

In addition to this persistent problem and the tensions it has caused with the French manufacturer Renault, Nissan, like other Japanese manufacturers, faces the fallout of the conflict between the United States and China, the two largest automotive markets of the world. How do all these factors affect the profits and management of Nissan?

Here are five things to look for:

How does Nissan deal with the deferred salary of Ghosn?

Nissan is expected to account for Ghosn's under-reported expense of about 9 billion yen ($ 82 million) as an expense for the fiscal year ending in March. Such a decision could be reflected in revisions to the company's expected annual net profit of 500 billion yen.

Ghosn reportedly under-reported its revenues in Nissan's annual reports for the eight years ended until March 2018. Nissan has also been indicted for false disclosure of company information.

Although Ghosn's compensation is low relative to Nissan's overall earnings, the treatment of deferred payments by the Company after retirement could have an impact on its case. Ghosn said that he was not obliged to disclose the under-reported amounts as he had never signed a binding contract with Nissan setting the amount of deferred payments. However, if Nissan records the costs this year, it might suggest that the company considers the paying portion of its contract. This would not support Ghosn's claim.

How does the slowdown in China affect financial results?

When it announced its global car sales for 2018 at the end of January, Nissan said sales in China rose 2.9 percent to 1,563,986 vehicles. Although it is a record total for the company, sales declined from September to December each month, year-over-year.

Falling demand for cars in China would inevitably affect Nissan, the country's leading Japanese brand. New car sales in China fell in 2018 for the first time in 28 years, slipping 2.8% over the previous year to establish 28.08 million vehicles. An economic downturn and the end of tax incentives for small car purchases were attributed to lower sales.

China accounted for 27% of Nissan's global sales last year, surpbading the 26% generated in the United States. Tang Jin, senior research officer at Mizuho Bank, said Nissan's Sylphy is the second-best-selling sedan in China. "Japanese manufacturers have managed to reduce costs by standardizing their platforms and their share of sales in China has increased," he said.

Nissan's position in China appears to be relatively stable, but the slowdown in the Japanese automaker's largest market remains a concern over its financial results.

What are the financial prospects of the company?

Analysts will follow closely to see if Nissan is maintaining its profit forecasts for the whole year. Toyota Motor has revised downward its forecasts last week due to reduced cross ownership in its shares, while maintaining its operating profit outlook for the year.

Nissan's operating profit in the first half of the year was 210 billion yen, down 25% from the previous year and only 38% of its full-year 540 forecast. billion yen. It was far from the expected pace.

Takaki Nakanishi, director of the Nakanishi Research Institute, specializing in automotive, said: "There is a possibility of downward revision." Ghosn did not want to admit failure Ghosn being now absent, the attitude of the company can change.

In addition to the slowdown in China, delays in the planned rebuilding of its brand in the United States remain a problem. Nakanishi said Nissan needed to get out of the "bargain brand" reputation it has in the country. "The reconstruction on the American market takes a lot of time, at least five years," he said.

Nissan chief financial officer Hiroshi Karube will attend the earnings briefing on Tuesday, rather than managing director Hiroto Saikawa. The markets will monitor the evolution of Ghosn's high dividend policy.

Is the Nissan brand affected?

The Ghosn crisis has highlighted the weaknesses of Nissan's corporate government. In December, Nissan also revealed a fourth fraud incident during the vehicle inspection. How these problems affect the Nissan brand and ultimately its sales are key points of interest.

The Nissan Note model was the leading domestic sales leader in 2018 and indicated that domestic sales during the year were satisfactory. Nissan sold 615,966 vehicles in the domestic market in 2018, up 4.2% from 2017. But in December, sales were down 2.8% from the previous year, to establish 36,884 vehicles. This may indicate that the company has confidence issues to overcome with consumers.

What happens to the tripartite alliance with Renault and Mitsubishi Motors?

Ghosn was the president of Renault and Mitsubishi as well as Nissan and was essentially the glue that unites the alliance of the three companies. Renault holds a 43% stake in Nissan and Nissan holds 15% of Renault's capital. Nissan holds a 34% stake in Mitsubishi.

The alliance has placed the group among the top three global players in the automobile, alongside the Volkswagen Group and Toyota Motor. Alliance companies work closely together in areas such as research and development and purchasing.

The leaders of the three companies have agreed on a decision-making system in committee and continue to strengthen the alliance. But the prospects of the alliance seem uncertain, no strong leader playing the role of Ghosn in the face of tensions between Nissan and Renault.

Tensions between the two builders surfaced after Ghosn's arrest. Renault has sought to appoint its replacement to the position of Nissan chairman, but Nissan has rejected it. Ghosn was considering a merger between Renault and Nissan and he and others speculated that his arrest constituted a coup within Nissan aimed at blocking the unification of both companies.