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Nissan not relying on asset sales for profits

TOKYO: Nissan Motor Co, in the midst of drastic reforms, will not rely on asset sales to attain a group net profit in the year from April and thus end its money-losing streak, said a senior company finance official.

A key goal was to achieve a group ordinary profit -- where operating income exceeds non-operating expenses, Thierry Moulonguet, Nissan's deputy chief financial officer and set to become chief financial officer in April, said in an interview late on Friday.

Just a year ago on Monday, Nissan ceded control to France's Renault SA, which launched a drastic restructuring programme of job cuts, plant closures and huge cost reductions.

Asset sales would naturally contribute to net profit. "But we do not depend on it," said Moulonguet, who was seconded from France's Renault SA after it took a controlling 36.8 percent stake in Japan's third-largest automaker last year.

Cuts in procurement costs and administrative expenses and the planned launch of new models -- all goals outlined in Nissan's three-year reform programme last October -- would contribute to profits, as would the disposal of non-core assets.

Asset sales are also aimed at reducing Nissan's debt of more than 2.0 trillion yen ($18.64 billion).

Moulonguet said he was confident that the ordinary profit goal could be reached. "We are very confident but we are also very pragmatic and very aware that this needs a big motivation in the company," he said.

For this business year, however, Nissan is projecting a significant group net loss of 590 billion yen ($5.50 billion) due to its restructuring plans -- the seventh loss in eight years.

OLD BANK TIES TO FADE

Moulonguet also said Nissan intended to do business with eight to 10 banks globally. As a result, Japan's Fuji Bank and the Industrial Bank of Japan (IBJ) would not necessarily remain Nissan's main banks, although they would remain important business partners.

It is another sign that Nissan is not paying heed to traditional Japanese business ties, which value long-standing personal relationships, but is determined to do business on a business-only basis. The automaker is already pursuing this policy as it halves the number of its suppliers.

Nissan's shares ended on Friday down five yen at 408 yen.

Nissan's latest asset sale announcement also came on Friday -- when the company said it would sell its group's more than four percent stake or 25.4 million shares in Fuji Heavy Industries Ltd, the maker of Subaru cars to General Motors Corp.

A long expected sale, it would generate a "significant profit", Moulonguet said, although he declined to reveal the price until the sale had been finalised.

The Nihon Keizai Shimbun newspaper reported this month that Nissan would gain 20 billion yen from the deal.

Moulonguet said Nissan was close to agreement on two real estate sales that would generate significant profits and hoped to achieve a third in the next business year.

But he said Nissan was not in a hurry to sell its assets. "If we do not see a good opportunity, we will not sell," he said.

Moulonguet said Nissan had marketable shares with a book value of 200 billion yen, mostly holdings in financial institutions and "industrial" holdings in companies such as auto parts maker Calsonic Corp.

He said Delphi Automotive Systems Corp, the world's largest auto parts maker, was the main contender to buy Nissan's Calsonic shares but there were a couple of other bidders.-Reuters