Days after announcing a major acceleration in its plans to cut costs — including eliminating 9,000 jobs — Nissan Motor is getting a bit of a boost. Courtesy of a regulatory filing, it was revealed Effissimo Capital Management took a 2.5% stake in late September.
Nissan CEO Makoto Uchida announced sweeping changes to bring the company back into the black.
Realization of the move caused a flurry of excitement with Nissan’s shares rising more than 20% Tuesday before closing with a 13% rise. Nissan disclosed in a Securities & Exchange filing Monday Cayman Islands-registered ECM Master Fund, which is affiliated with Effissimo, a Singapore-based hedge fund known for investing in distressed companies.
Nissan certainly fits the bill. The Japanese automaker revealed last week it suffered massive losses in the first half of fiscal 2024, revamping its full-year guidance downward and announcing it plans to ramp up its turnaround plan, dubbed Arc, in response to the results.
The results forced the automaker to make dramatic moves to shore up losses, including slashing 9,000 jobs worldwide and cutting production by 20%. Nissan’s share price hit a four-year-low on Friday following the earnings results. It ended trade on Tuesday up 12.8% at 415.8 yen.
Nissan’s stock will probably rise further due to shareholder speculation about what efforts Effissimo may push to fix Nissan’s issues, Ikuo Mitsui, a fund manager at Aizawa Securities, told The Japan Times.
CEO Uchida laid out the company’s transitional plan, which it’s dubbed The Arc, to its long-term goal earlier this year.
Activist investor
While not an unfamiliar term in the U.S., activist investors are relatively new to the Japanese business world. Nissan acknowledged the ownership stake, saying in a statement that it “continuously engaging with institutional investors and analysts from securities companies,” without naming Effissimo specifically.
There has been no comment from anyone at Effissimo, but it’s clear investors are hoping it will become involved in Nissan’s revival. The hedge fund took an active role in holding Toshiba Corp. accountable for poor management decisions. It forced the company’s CEO to resign in 2021 and Toshiba accepted a buyout in 2023 after it couldn’t comeback from its failed nuclear power business.
It’s unclear if Nissan’s been talking with Effissimo since it took its ownership stake in late September. However, the company’s big moves announced last week could certainly been as a result of some pressure from its new shareholder.
More Nissan News
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- Nissan Reveals Product Planning Arc Between Biz Plans
- Nissan Unveils Revamped 2025 Murano
Results business
The company plans to cut costs by $2.6 billion in the wake of massive losses through the first six months of the company’s fiscal year — losses driven by slow sales in China and the U.S.
Nissan’s global sales fell 3.8% to 1.59 million vehicles for the first half of the financial year. The decline came as a result of losses in the company’s two biggest markets. Sales dropped 14.3% in China while U.S. sales fell almost 3% to about 449,000 vehicles. The two markets combined make up nearly half of Nissan’s global sales by volume.
The sales slippage resulted in consolidated net revenue for the first half of the fiscal year decreasing by $516.5 million, or 79.1 billion yen, to $39 billion, or 5.98 trillion yen, with consolidated operating profit decreasing $1.9 billion (303.8 billion yen) to $214.8 million (32.9 billion yen), representing an operating profit margin of 0.5%.
Net income was $125.4 million, or 19.2 billion yen. Down more than $1.5 billion from the year-ago period. The massive declines called for the company to make massive changes — and it is.
Future predictions
Aside from the aforementioned actions, the company plans to accelerate portions of its recovery program, the Arc, that was already in place. The goal is the ensure healthy growth, sustainable profits and cash generation while selling 3.5 million vehicles by fiscal year 2026.
That entails changing the process currently in place for producing vehicles. The company wants to build vehicles faster and cheaper. Nissan aims to reduce vehicle development lead time to 30 months and deepen collaboration with Renault Group, Mitsubishi Motors Corporation (MMC), and Honda Motor Co. Ltd., while exploring more strategic partnerships in the areas of technology and software services.
To facilitate swift decision-making for the turnaround actions, Nissan will appoint a Chief Performance Officer responsible for sales and profit, effective Dec. 1.
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