Nissan recovery plan will not include new measures

Nissan Motor Co. has prepared investors for a new plan aimed at jump-starting its stalled business, but it will instead repeat a string of existing measures in an announcement this month.

CEO Carlos Ghosn promised to map out "additional measures" by April to bring Japan's third-biggest automaker back on track after a profit warning two months ago.

Many investors expect such steps to be unveiled along with full-year financial results on April 26.

But Simon Sproule, corporate vice president for communications at Nissan, said the announcement would instead lay out five recently disclosed steps comprising a change in management structure, a reorganization of the Japanese sales network, a restructuring of some domestic manufacturing facilities, and job cuts in the United States and South Africa.

"Some people may be expecting a restructuring package," Sproule said. "But the company is in a very different situation than it was in 1999, and we also had no desire to group things together for the purpose of painting a better image."

The absence of new measures could cause some disappointment, especially among those who had expected more radical steps involving cost cuts from suppliers.

Atsushi Kawai, senior analyst at Mizuho Investors Securities, said it remained to be seen whether Nissan's action plan would deliver the desired results, but added that radical measures that would squeeze suppliers or dealers were not a solution either.

"The most important thing for Nissan right now is to make sure it can grow at a steady pace by building up a fan base for Nissan cars, through attractive products or whatever it takes, instead of going for headline-grabbing growth," he said.

"They're going to make more than 770 billion yen ($6.54 billion) in (operating) profits. One profit warning isn't cause for panic."

At the lowered estimates, Nissan's operating margin would be 7.4 percent for the 2006/07 business year, ranking it below the 9.5 percent expected by Toyota Motor Corp., even with Honda Motor Co. and above almost all other rivals worldwide.

Nevertheless, Ghosn, who also heads French partner Renault SA and is credited for rescuing Nissan from the brink of bankruptcy in 1999, in February called its recent performance an internal crisis.

"When he said 'crisis', it was meant as a wake-up call for the company," Nissan's Sproule said. "There are a lot of good things that we're doing that we don't want to disrupt."

Under its current three-year business plan, Nissan has promised an operating profit margin at the "top end" of the industry and a 20 percent return on invested capital. Its vehicle sales target of 4.2 million units is slated for completion a year later, in the 2008/09 business year.

Despite the launch of six new models and a weaker yen during the third quarter, Nissan's October-December net profit fell 23 percent to 104.5 billion yen ($887.5 million), prompting it to slash its full-year forecast by 12 percent to 460 billion yen ($3.91 billion).