Nissan Motor Co.s forecast for its first net loss in almost a decade and its shrinking cash supply prompted Standard & Poors to warn that the automakers credit rating may be lowered.
Nissan's financial profile may deteriorate beyond initial expectations amid the ongoing turbulence in global auto markets, the ratings service said in a statement released today in Tokyo.
S&Ps credit rating affects Nissans ability to borrow money and make consumer loans and leases through Nissan Motor Acceptance Corp.
Nissan has a BBB+ long-term credit rating, the third-lowest of S&Ps 10 investment-grade categories. The new status -- credit watch with negative implications -- makes it more likely the rating will be lowered. The watch also pertains to Nissans A-2 short-term credit rating.
Nissan CEO Carlos Ghosn revealed yesterday that the automaker expects a $2.9 billion loss for the fiscal year ending March 31. It would be Nissans first net loss since 2000.
For the nine months through Dec. 31, Nissan had negative cash flow of 615 billion yen, or about $6.73 billion, S&P said.
The ratings on Nissan may be lowered by one notch if we determine that Nissan's financial profile will not be able to absorb the negative impact of cash burn, S&P said.
Ghosn also unveiled a worldwide restructuring plan yesterday that includes 20,000 job cuts, pay cuts and other cost-cutting measures.
The companys stock price on the Tokyo stock exchange rose more than 7 percent today in reaction to Ghosns announcement.
Like most other global automakers, Nissan is reeling from the general collapse in U.S. vehicle sales. North American sales of Nissan and Infiniti-brand vehicles declined by 10.9 percent in 2008, a drop of 116,887 vehicles from the previous year.
That was less than half of the Detroit 3s 2008 23 percent sales tumble and not as severe as the industrys 18 percent decline. Nissan was aided in part late in the year by an offer of reduced interest rates and inexpensive leases on several models.
Said S&P: We aim to resolve the CreditWatch status within the next 90 days, after assessing Nissan's ability to improve its cash flow and financial profile in these demanding conditions.