Nissan seeks to delay supplier payments to free up cash, company emails show

By Daniel Leussink

TOKYO (Reuters) -Nissan Motor has asked some suppliers to allow it to delay payments to free up short-term funds, according to several emails and a company document reviewed by Reuters, as the troubled Japanese automaker scrambles to boost cash. 

New CEO Ivan Espinosa, who took over in April, has unveiled plans to shed around 15% of Nissan's global workforce and close seven plants as he targets 500 billion yen ($3.4 billion) in cost cuts over the next two years. 

Battered by slumping sales and weighed down by an ageing vehicle lineup, the car maker reported a $4.5 billion net annual loss in the financial year that ended in March and has declined to give a forecast this year.

Now, Nissan has asked some suppliers in Britain and the European Union to accept delays in payment, according to the correspondence reviewed by Reuters and a person with knowledge of the matter.

The move would allow it to have more cash on hand at the close of the April-June first quarter and follows similar requests before the end of the last financial year in March, the emails showed.

It is not uncommon for companies to request payment extensions from suppliers to help free up cash. In a statement to Reuters, Nissan said it had incentivised some of its suppliers to collaborate under more flexible payment terms, at no cost to them, to support its free cash flow.

"They could choose to be paid immediately or opt for a later payment with interest," Nissan said.

The correspondence, which has not been previously reported, gives a detailed look at Nissan's effort to conserve cash in the short term, even if that means paying suppliers more down the line.

The emails were exchanged among Nissan employees in Britain and the EU, including staff in its purchasing and treasury departments, according to their profiles on LinkedIn. 

One employee told co-workers in emails this month that suppliers were "again" being asked for an extension of payment terms. It was in line with the aim to bolster free cash flow "requested from CEO top down", the employee told colleagues. Nissan told Reuters its CEO did not mandate functional tasks in regions. 

June payments would be delayed to August 15, the employee wrote, later adding some would be pushed to September. 

Suppliers would not be forced to accept delayed payment, the employee wrote. The requests went out earlier this month, according to the person with knowledge of the matter.

"It shows the difficult situation Nissan is facing in terms of financing," said Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Laboratory.

"It appears they want to postpone their current expenses as much as possible." 

Nissan said in its statement that it was taking immediate actions to recover its performance and rebuild to a leaner, more resilient structure.

"While we are taking these actions we aim for sufficient liquidity to weather the costs of the turnaround actions and redeem bond maturities," it said.

It expects to record negative free cash flow of 550 billion yen, or about $3.8 billion, for its automotive business this quarter, worse than the 303 billion yen in the same period last year. 

Following typical seasonal patterns, the first quarter is expected to be Nissan's most challenging, Chief Financial Officer Jeremie Papin said in May.

It is targeting positive free cash flow by its 2026 financial year.

Reuters was not able to determine whether Nissan made similar requests to suppliers in other regions, how many suppliers it contacted, or the term of extensions sought. In Japan, it has already faced scrutiny over supplier payments, after regulators found it had unlawfully underpaid dozens of them.    

BIG TASK

In other internal emails, a director in the treasury department appeared to refer to a target of freeing up 150 million euros ($175 million), stating in an email last month the need to deliver on a "purchasing task of 150M EUR". Delaying supplier payments until July - the start of Nissan's second quarter - was an option to help achieve the "purchasing task" of 150 million euros, the director wrote in another email. 

Nissan said in its statement it would not comment on internal discussions or specific targets.

The emails showed Nissan discussed giving suppliers two options: one was to accept delayed payment in consideration for a higher payment. The other was to be paid on time as usual, in which case HSBC would make the payment and Nissan would later repay the bank with interest.

HSBC, listed as one of Nissan's banks in a March filing, declined to comment on client matters.

The automaker estimated it could boost free cash flow by up to 59 million euros by extending payment terms with more than a dozen companies in Britain and the EU, including UK-based units of temp-staffing firm ManpowerGroup and shipper Mitsui O.S.K. Lines, a company document from October 2024 showed. 

Both ManpowerGroup and Mitsui O.S.K. declined to comment.

In February, the treasury department director wrote about delivering free cash flow for the close of the financial year in March, raising concern about meeting targets and saying more suppliers, including in India, needed to be contacted.

"Only a few weeks remaining," the director wrote. "Urgent support needed."

Nissan had 2.2 trillion yen ($15.1 billion) in cash and cash equivalents on hand at the end of March. It faces some 700 billion yen in debt coming due this financial year.

Its debt has been cut to "junk" by all three major ratings agencies. Any further ratings downgrades could complicate future fundraising plans, Nissan said in a filing this month. 

($1 = 144.4500 yen)

(Reporting by Daniel Leussink; Additional reporting by Maki Shiraki; Editing by David Dolan and Jamie Freed)