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Nissan profits plunge due to COVID-19 lockdown, chip failure

TOKYO – Japanese carmaker Nissan’s profits tumbled last quarter, to less than half from a year earlier due to the COVID-19 lockdown in China and global semiconductor shortages. production has been affected.

Nissan Motor Co. reported Thursday that its April-June net profit totaled 47.1 billion yen ($349 million), down from 114.5 billion yen in the same period in 2021. That change marks a 59% drop. Quarterly sales rose 6% to 2.14 trillion yen ($15.9 billion).

According to the manufacturer based in the port city of Yokohama, rising raw material costs are also hurting profits.

Nissan posted profit for the last fiscal year ending in March for the first time in three years.

The image of the Nissan brand, allied with France’s Renault SA, took a hit after its star chief executive Carlos Ghosn was arrested in Japan on multiple financial misconduct charges in 2018.

Ghosn, who led the union for two decades, said he was innocent, pointing to a coup in the automaker’s ranks as behind the charges. He was released on bail in December 2019 and is currently in Lebanon.

Nissan reiterated in Thursday’s earnings report that Ghosn used company money for “personal gain,” including housing purchases and payments to family members, gifts and contributions that the company deems incorrect.

Semiconductor shortages due to COVID-19 restrictions in different countries have hurt not only Nissan but the entire auto industry.

Chief Executive Officer Ashwani Gupta said Nissan will invest to “build resilience”, restructure supply chains and inventory levels so demand can be better met. But Gupta warns the chip shortage crisis won’t be fixed for some time.

He said rising raw material costs must also be addressed, noting that Nissan is “moving forward with cautious optimism.” The cheap yen will act as a “light breeze”, Gupta said. A falling yen increases the value of Japanese manufacturers’ overseas earnings.

Nissan, which makes the Leaf electric vehicle, Rogue sport utility vehicle and Infiniti luxury sedan, expects its production output to recover in the coming months.

It forecast net profit for the fiscal year ending March next year of 150 billion yen ($1.1 billion), down 30% from last year.

“During the first quarter, the business environment remained more challenging than expected. We believe our progress in this environment is proof that Nissan’s business foundation is firmly underpinned. “, said CEO Makoto Uchida.

Japan’s top automaker, Toyota Motor Corp., reports earnings next week.

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