Local carmaker Nissan Motor Co. has been hard hit by the COVID-19 pandemic. Production has been halted for a couple of months now at the Smyrna vehicle assembly plant and no one anywhere has bought a car since March. (Maybe that's an overstatement, but it's close to the truth.)
These weird times are reflected in Nissan's financial results for the 12-month period ended March 31, 2020, which were released Thursday, May 28.
In fiscal year 2019, consolidated net revenue declined to $91.8 billion, resulting in an operating loss of $376 million and a net loss of $6.2 billion. This includes costs associated with restructuring and impairments by 603.0 billion yen as Nissan focused on operational and efficiency improvements to transform the business. Free cash flow for the automotive business was a negative $5.6 billion.
To put that in perspective, the losses because of the global pandemic resulted in a 14.6 percent loss in revenue, a 40.5 percent drop in operating profit and 91.2 percent reduction in ordinary profit.
According to Nissan, the company maintains sufficient liquidity to steer through this challenging business environment. In addition, the company continues to have access to approximately $12 billion in unused committed credit facilities. In response to the COVID-19 pandemic, Nissan raised an additional $6.6 billion in funding between April and May.
Full-year financial results
Overall market demand decreased amid the current global environment, which has resulted in a global slowdown in vehicle sales.
In fiscal year 2019, the global market fell by 6.9 percent to 85.73 million units. Nissan's sales dropped 10.6 percent to 4.93 million units, and market share maintained 5.8 percent as per previous forecast.
For fiscal year 2020, Nissan anticipates the globally car market to decline by approximately 15 to 20 percent compared with the previous year due to the COVID-19 pandemic. Nissan's management continues to evaluate the impact of the pandemic on our operations and will issue the fiscal year 2020 forecast when a reasonably calculated outlook is available.
Nissan will carry out a phased restart of its U.S. manufacturing operations beginning in early June. The company’s vehicle assembly plant in Canton, Miss. and powertrain plant in Decherd, Tenn. plan to resume production on June 1, followed by its Smyrna, Tenn. vehicle assembly plant on June 8. The INFINITI Decherd Powertrain Plant resumed limited production on May 1.
“We have planned our manufacturing restart with care, mindful that the impact of COVID-19 continues," said Steve Marsh, senior vice president, Manufacturing, Supply Chain Management and Purchasing, Nissan North America, Inc. “The process will be gradual. Our first priority is to implement thorough protocols so employees are confident the necessary precautions have been taken to ensure their safety in the workplace."
Nissan has created a comprehensive playbook — Safe Start-Up — to guide employees on the new health and safety protocols. Safe Start-Up includes best practices and recommendations from the Centers for Disease Control and Prevention (CDC), the Occupational Safety and Health Administration (OSHA) and other government agencies. Some of the safety protocols include:
Daily health self-certifications for all employees and visitors. Employees or visitors who indicate they may have symptoms or may have been exposed to COVID-19 will not be allowed to enter any Nissan worksite.
Modifications to workstations, staggered shift and break times, and minimal job rotations, to adhere to social distancing guidelines.
Disbursement of additional personal protective equipment, including face shields and masks.
Enhanced disinfection protocols for workstations, common areas and shared tools.
Production shift patterns also will be adjusted as necessary to support the phased restart plan and match production with current market demand.
"As production increases, we will continue to assess and implement the necessary controls in line with any updated guidelines from government agencies and feedback from employees," Marsh said.