Canadian Manufacturing

Nissan pays US$2.2B for 34 per cent stake in Mitsubishi Motors

The news comes as Nissan reports a 40 per cent drop in profit, blaming a sales slump and currency fluctations

May 12, 2016  by Yuri Kageyama, The Associated Press

Nissan Motor Co. president Carlos Ghosn. PHOTO Nissan

Nissan Motor Co. president Carlos Ghosn. PHOTO Nissan

TOKYO—Nissan, which is taking a 34 per cent stake in scandal-ridden Japanese rival Mitsubishi Motors, suffered a 40 per cent plunge in January-March profit as sales dipped and currency perks faded.

These were similar to the reasons Japanese rival Toyota gave when it estimated a 35 per cent profit hit for the first quarter.

Nissan Motor Co. reported a 71 billion yen (US$651 million) profit for the first quarter. It had a 119 billion yen profit the same period of 2015.

Quarterly sales edged down 1.2 per cent to 3.25 trillion yen ($29.8 billion).

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A weak yen had worked as a plus for exporters like Yokohama-based Nissan, but the currency has been strengthening in recent months.

For the fiscal year, Nissan’s profit rose 15 per cent to 523.8 billion yen ($4.8 billion). The automaker forecast a 525 billion yen ($4.8 billion) profit for the fiscal year through March 2017.

Chief Executive Carlos Ghosn announced Thursday that Nissan will spend 237 billion yen ($2.2 billion) to become the top investor in Mitsubishi Motors by purchasing newly issues shares.

Nissan shares dropped 1.4 per cent in Tokyo trading as Japanese media reported that a deal with Mitsubishi was imminent. Mitsubishi Motors issues, on the other hand, surged 16 per cent.

Mitsubishi Motors has been rocked by a scandal over cheating on mileage tests to inflate fuel economy figures for its minicar models. It had another scandal, over a systematic coverup of auto defects, which surfaced in the early 2000s, but the wrongdoing had dated back decades.


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