(MENAFN- AFP) Shares in Nissan Motor plunged more than 11 percent on Tuesday after the auto giant slashed its full-year earnings forecast, citing a sluggish European market and expensive product recalls.
The Tokyo-listed stock was down 11.55 percent to 850 yen in early trade but recovered to 867 yen as investors gave their first reaction to the disappointing figures after a three-day weekend.
Japan's number-two automaker announced on Friday a sweeping management overhaul to "rejuvenate" its top ranks and a cut in its full-year profit forecast after markets had closed, with Tokyo shuttered Monday for a national holiday.
Nissan said it expects to earn 355 billion yen ($3.62 billion) in the fiscal year to March, down from an earlier 420 billion yen net profit forecast.
But despite the slimmed-down forecast it said its half-year net profit rose 6.5 percent from a year ago as sales jumped 14.7 percent.
Among the pressures on Nissan's bottom line, the company cited higher-than-expected costs tied to vehicle recalls.
The management shake-up at Nissan, maker of the Altima sedan and luxury Infiniti brand, included replacing its number-two position with a trio of executives.
Chief executive Carlos Ghosn, widely credited with rescuing a near-bankrupt Nissan when he took over more than a decade ago, said the firm needed fresh blood in its top ranks.
"Everyone understands the company needs to rejuvenate itself," he said from Nissan's headquarters near Tokyo.
The rejig comes about two months after Ghosn announced a broad management restructuring at Renault. He is also chief executive of the French carmaker, which owns more than 40 percent of Nissan.
The Japanese firm sold 2.43 million cars over the half-year period, down 1.5 percent on-year, as sales in China, the world's biggest vehicle market, fell 8.3 percent.
China is an important market for Japanese automakers, particularly Nissan, which counts on the country for about one-quarter of its sales, far higher than its domestic rivals.
The company struggled to recover from a consumer boycott of Japanese-brand goods in China last year as a long-running diplomatic dispute over a chain of East China Sea islands flared.
Credit Suisse downgraded Nissan shares to "neutral" from "outperform".
"The shortfall in the (July-September) second-quarter results and the large downward revision to full-year guidance reflect deterioration in Nissan's competitive position," said Issei Takahashi, analyst at Credit Suisse.
Nissan has launched an aggressive new product rollout plan, including resurrecting its budget Datsun brand to woo a new generation of cost-conscious buyers in emerging markets.
Like rivals Toyota and Honda, the automaker has benefited from a sharply weaker yen over the past year, which makes the sector more competitive overseas and inflates the value of repatriated foreign income.
But a looming sales tax hike in Japan and concerns about Chinese demand could weigh on results, Nissan warned.
-- Dow Jones Newswires contributed to this article --
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