Reuters reports that Nissan Motor Co has raised JPY832.6 billion in financing from its creditors since April as it tries to shore up its cash position in the face of falling sales due to the coronavirus pandemic, its latest annual securities report showed.
In a filing to Japanese financial authorities on July 6, the automaker said it had raised a total of JPY832.6 billion ($7.8 billion), including JPY712.6 billion announced in late May to respond to the novel virus, Reuters relates.
According to Reuters, Japan’s No. 2 automaker is struggling to recover profitability after posting its first annual loss in 11 years, suffering from falling sales, a tarnished image and a deteriorating cash position even before the virus outbreak sapped global demand for cars.
Under new Chief Executive Makoto Uchida, Nissan has pledged to cut JPY300 billion from its fixed costs over the next four years, by slashing its production capacity and vehicle model range by around one fifth.
Unveiling its recovery plan in late May, Mr. Uchida said improving cash flow would be Nissan’s biggest challenge, though the company expected to have positive free cash flow in the second half of the current financial year, compared with a negative JPY641 billion in the year to March, Reuters relates.
In addition to the secured funding, Nissan has said it has JPY1.1 trillion in net cash in its automotive business, and credit lines of up to JPY1.3 trillion.
But the company has acknowledged that more funding might be needed to cushion the blow of the coronavirus if it continues to weigh on sales in the coming months, Reuters says.
Nissan posted a 40% year-on-year fall in global vehicle sales during the March-May period, when global automakers shuttered most of their vehicle plants and car dealerships were closed to stem the spread of the virus, the report notes.
About Nissan Motor
Nissan Motor Company Ltd, usually shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan.
As reported in the Troubled Company Reporter-Asia Pacific on April 21, 2020, Egan-Jones Ratings Company, on April 6, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Nissan Motor Co., Ltd. to BB from BBB.