Nissan Motor forecast a 28% drop in its annual operating profit, setting it up for the weakest earnings in 11 years and underscoring its struggle to turn the page after the ouster of former Chairman Carlos Ghosn.

The lacklustre performance at Japan’s No.2 automaker, which has been hit hard by Ghosn’s arrest last year, adds to pressure on CEO Hiroto Saikawa as he tries to put aside the scandal and focus on overhauling corporate governance and giving Nissan a more equal footing with alliance partner Renault.

Nissan forecast operating profit of 230 billion yen ($2.10 billion) for the year to March 2020, versus 318 billion yen in the year just ended. The forecast compared to a 457.7 billion yen average of 23 analyst estimates compiled by Refinitiv.

Earlier in the day, Kyodo news reported that Tokyo prosecutors had filed a request to revise their indictment against Ghosn, providing more details on alleged cash transfers involving the former executive and a Saudi friend.

Ghosn, currently out on bail and awaiting trial in Japan, has been charged on several counts of financial misconduct and of allegedly enriching himself at Nissan’s expense.

He has denied all the charges against him and said he is the victim of a boardroom coup.

The scandal rocked the global auto industry and has raised concerns about Nissan’s ability to regain its footing following the departure of the charismatic leader and architect of its alliance with Renault.

The automaker also cut its mid-term revenue target to 14.5 trillion yen by 2022, from 16.5 trillion yen. It sees its annual operating margin at 6% by then, versus an earlier target for 8%.

Shares of Nissan are down around 2% this year, after losing a fifth of their value last year.

Meanwhile, Japan’s Nikkei stooped to a three-month low on Tuesday, as investor sentiment took a further hit after China defied Washington by announcing retaliatory tariffs, dragging most sectors into negative territory.

China said it would impose higher tariffs on $60 billion in U.S. goods despite President Donald Trump’s warnings not to retaliate against additional tariffs on Chinese imports announced by the White House on Friday.

The Nikkei share average ended the day down 0.59% at 21,067.23 after falling to as low as 20,751.45, the lowest since mid-February.

“Investors are concerned how much damage the trade war will cause on Japan’s real economy and financial market,” said Shusuke Yamada, vice president and chief Japan FX strategist at Bank of America Merrill Lynch.

Automakers came under pressure. Mazda Motor slid 2% and Subaru Corp fell 2.3%.

Nissan Motor Co fell 2.95% after the Nikkei business daily reported that the automaker will likely experience its fourth straight year of decreasing profits in the financial year through March 2020.

But traders added that with signs of the market being oversold, some short-term investors were covering earlier shorts.

Komatsu, with a large exposure to China, ended up 0.55% after slumping 4% earlier. Fanuc Corp was up 0.1% after dropping 2.9% and Yaskawa Electric rose nearly 1% after sliding 4.5%.

Large telecommunication companies, considered defensive shares, gained amid the drop in the broader market. Nippon Telegraph and Telephone Corp rose 1.9% and KDDI Corp climbed 2.4%.

The broader Topix shed 0.4% to 1,534.98, after falling to a more than four-month low of 1,508.85.

Small cap markets also lost ground, with the Mothers index sliding 1.96% and the Jasdaq market shedding 0.59%.



Reuters