Nissan suffers a record-breaking EUR 4.1 billion loss
Making Waves Once More: The Tumultuous Return of Nissan's Financial Woes
Back in 1999, when Renault invested a hefty $5 billion in Nissan, a Chrysler exec couldn't help but call it a "bottom-of-the-ocean safe" situation. Well, history showed him up. French entrepreneur Louis Schweitzer, then leading Renault, masterminded the savior alliance for Nissan and dispatched Carlos Ghosn to Japan, flanked by a crack team. Factories shut down, supplier relationships restructured, and the break-even point plummeted. International expansion, especially in China, sent sales soaring to 5.8 million vehicles in 2017, the last full year before Carlos Ghosn's 2018 Tokyo arrest. During these profitable days, Nissan showered Renault with fat dividends, tallying a whopping 8 billion euros between 1999 and 2024, refuting the American's pessimistic forecast.
But on Tuesday, May 13, the American prophecy returned to haunt us, more threatening than ever. With Renault owning 36% of Nissan, the latter announced a major loss and declared no dividends in 2024 and 2025. Nissan's stock now trades at 357 yen (2.20 euros), in comparison to the 400 yen it was when Renault signed on in 1999, the year Nissan welcomed the jewelry brand to its capital.
Current Financial Status of Nissan:
Nissan has faced significant financial hurdles, such as a staggering net loss of ¥670.9 billion (around $4.5 billion) in the fiscal year ending March 2025[1][2]. This follows a slew of past financial troubles, with the worst-ever full-year net loss of ¥684 billion in 1999-2000[2]. Nissan's financial health is further clouded by the turbulent global market and potential U.S. tariffs[2].
Prospects and Recovery Plans:
Nissan has unveiled an ambitious restructuring plan named Re:Nissan, aimed at slashing costs by ¥500 billion through reducing vehicle platforms from 13 to 7 by fiscal year 2035, and shedding 20,000 jobs between 2024 and 2027[1]. The plan targets Nissan's return to profitability and positive cash flow by fiscal year 2026[1]. Although the company avoided disclosing a 2026 profit forecast, citing market volatility[2], it remains hopeful.
Dividends and Stock Prices:
With Nissan's current financial dilemmas and restructuring underway, dividend payments may take a hit. Failing companies often resort to reserving cash by trimming or eliminating dividends. Specific details about dividend plans moving forward have yet to be mentioned in recent updates[2]. As for stock prices, Nissan's shares will likely react to its performance and restructuring initiatives. Announcing record losses and job cuts may dampen investor confidence initially, potentially leading to a negative stock performance[2]. However, if Nissan successfully implements its recovery plan and starts to show signs of recovering, investor confidence may stabilize or even rebound.
Influence of Partnerships:
Nissan's partnership with Renault, owning almost 36% of Nissan's shares, also looms large in its financial fate. Renault anticipates feeling the repercussions of Nissan's restructuring, further affecting Nissan's stock price and financial stability[2].
The financial predicament of Nissan has once again escalated, with the company announcing a major loss and discontinuing dividends in 2024 and 2025, a striking contrast to the lucrative payouts it offered Renault in the past. This rough patch in the automotive industry could potentially impact the finance sector, considering Nissan's share value trade is intertwined with the global transportation market.
