Welcome to the Daily 5 report for Wednesday, July 30.
Nissan Motor Co. early today encountered a brief distraction from its latest quarterly report showing a troubling operating loss of $547 million. In a nation that vividly remembers the devastating 2011 tsunami that killed about 20,000 people, the warnings for a possible tsunami were taken seriously and Japanese automakers including Nissan shut down production at plants near the ocean. Fortunately, no major damage was reported.
Back at Nissan headquarters, new CEO Ivan Espinosa still had the unenviable task of reporting the company's latest batch of red ink. In short, the numbers were bad, but not as bad as expected — suggesting the automaker's financial problems may be starting to bottom out.
Espinosa said the Re:Nissan revival plan he introduced in May is gaining traction and moving in the right direction.
"The momentum is real and the transformation is underway," he said in our story today by Hans Greimel.
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The company said it made better-than-expected progress in cutting costs, and it also reaped a one-time gain from lower-than-expected warranty outlays.
"We had a muted start to the fiscal year," said CFO Jeremie Papin. "These results reinforce the urgency of executing the Re:Nissan plan."
Still, as Greimel wrote, Nissan expects more red ink for the July-September quarter, saying its operating loss would widen to $691.5 million.
There's plenty of painful cuts to come. As we've reported, Nissan is closing the Civac plant in Mexico and is expected to exit a joint venture operation with Mercedes-Benz there as well.
The new U.S.-Japan trade agreement could blunt additional pain from tariffs. Nissan faced 25 percent duties, but the new agreement offers 15 percent. That's still more than the previous 2.5 percent tariff.
"We welcome the improvement," Espinosa said. "But 15 percent is still a challenging number."
Tariffs also are on the radar at Penske Automotive, which carries a formidable lineup of import-heavy luxury brand stores. Penske's second-quarter report looked strong, but unit sales fell. Net income gained 3.3 percent to $250.9 million.
Meanwhile, this afternoon we are covering second-quarter reports from Ford Motor Co. and used-car giant Carvana Co. Both stories should appear on our home page by the end of the afternoon.
That's it for now. Have a great rest of your day. Click here if you'd like to read this in your browser.
— Philip Nussel, online editor
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