Nissan to delay supplier payments to preserve cash flow: internal e-mails

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

New CEO Ivan Espinosa, who took over in April, has unveiled plans to shed about 15% of Nissan's global workforce and close seven plants as he targets ¥500bn (R60.53bn) in cost cuts over the next two years. Battered by slumping sales and weighed down by an ageing vehicle line-up, the car maker reported a $4.5bn (R80.11bn) 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 EU 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 e-mails 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 e-mails 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 e-mails 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 ¥550bn (R67.85bn) for its automotive business this quarter, worse than the ¥303bn (R37.38bn) in the same period last year.

After typical seasonal patterns, the first quarter is expected to be Nissan's most challenging, CFO 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 e-mails, a director in the treasury department appeared to refer to a target of freeing up €150m (R3.11bn), stating in an e-mail last month the need to deliver on a “purchasing task of €150m”. Delaying supplier payments until July — the start of Nissan's second quarter — was an option to help achieve the “purchasing task” of €150m, the director wrote in another e-mail. Nissan said in its statement it would not comment on internal discussions or specific targets.

The e-mails 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 carmaker estimated it could boost free cash flow by up to €59m (R1.23bn) 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 OSK Lines, a company document from October 2024 showed.

Both ManpowerGroup and Mitsui OSK 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 (R268.31bn) in cash and cash equivalents on hand at the end of March. It faces ¥700bn (R86.34bn) 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.