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Nissan Drops Most Since ’08 After Cutting Forecast: Tokyo Mover

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Nissan's Altima Vehicle
The Nissan Motor Co. logo is seen on an Altima vehicle unveiled during a news conference at the New York International Auto Show in New York. Photographer: Scott Eells/Bloomberg

Nov. 5 (Bloomberg) -- Nissan Motor Co., Japan’s second-biggest carmaker, tumbled the most in almost five years in Tokyo trading after the company lowered its profit forecast.

The stock fell 10 percent to close at 861 yen, the biggest decline since December 2008. Nissan had the largest drop in the Nikkei 225 Stock Average, which climbed 0.2 percent.

At a time when the weaker yen is supposed to be bolstering Japanese exporters’ earnings, Nissan last week cut its full-year net income forecast by 15 percent after demand in emerging markets slowed and recall costs mounted. Analysts at Deutsche Bank AG, Goldman Sachs Group Inc. and Credit Suisse Group AG cut their investment ratings on the stock.

“The impression was really bad as the downward revision was even bigger than we expected,” said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo. “They have to regain market confidence.”

Nissan cited unfavorable emerging-market exchange rates, such as the Indian rupee, in cutting its outlook. The company also said changes in government policies in countries such as Thailand and Brazil are part of the reasons that the company reduced its full-year global sales forecast to 5.2 million units, compared with an earlier forecast of 5.3 million.

Management Overhaul

Recall costs were another reason for the earnings revision. Nissan said on Sept. 26 it would recall 910,000 vehicles globally, including the Serena minivan and X-Trail SUV, over an accelerator glitch. The recall will cost the company about 15 billion yen ($152 million), weighing down the company’s quarterly profit, according to Kota Yuzawa, an analyst with Goldman Sachs Group Inc. in Tokyo.

Nissan reported earnings Nov. 1. Japanese markets were shut yesterday for a holiday.

Carlos Ghosn, chief executive officer at both Nissan and Renault SA, also announced he’ll get rid of Nissan’s chief operating officer position -- currently held by Toshiyuki Shiga -- two months after doing so at the French carmaker he also runs.

Ghosn said Shiga’s responsibilities will be split among three executives and denied the management overhaul was a “punishment for anyone” or a move toward picking a successor.

Nissan will stick to its mid-term targets -- 8 percent global market share and an operating margin of 8 percent by March, 2017 -- and the downturn in emerging markets won’t last long, Ghosn said.

To contact the reporter on this story: Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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