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Nissan to cut 12,500 jobs as net profit tanks 94.5% in April-June

25 July 2019 18:34

YOKOHAMA. KAZINFORM Nissan Motor Co. said Thursday it will cut 12,500 jobs in the next three years as the carmaker, struggling to recover from the arrest of former Chairman Carlos Ghosn, reported a 94.5 percent plunge in net profit for the April-June quarter, Kyodo reports.

The job cut, which represents around 10 percent of its global workforce, will be carried out at 14 loss-making plants both in Japan and abroad including those in Indonesia and Spain by the end of March 2023, according to Nissan officials. The names of other countries were not immediately known.

The number of job losses is much bigger than 4,800 the company estimated in May.

The downsizing is «a major revision of the investments we have made in the past,» Nissan CEO Hiroto Saikawa told a press conference at its headquarters in Yokohama, stressing the need for cutting costs as the group's sales have been slumping in major markets.

Nissan will first cut more than 6,400 jobs in eight locations by the end of the current fiscal year through next March. It will then reduce an additional 6,100 by fiscal 2022.

Nissan is trying to get back on its feet following the arrest and ouster last November of Ghosn for alleged financial misconduct. He had led the Japanese firm for nearly two decades and created one of the world's biggest auto groups with Renault SA and Mitsubishi Motors Corp. as alliance partners.

Nissan has been reviewing Ghosn's expansionist business strategy, acknowledging it was overstretching to meet the numerical goals.

For the three months ended June 30, the carmaker posted a group net profit of 6.38 billion yen ($59 million), the lowest since 2009 and down sharply from 115.83 billion yen recorded the same period last year due to sagging sales in the U.S., European and Japanese markets.

Operating profit for the first quarter of fiscal 2019 fell 98.5 percent to 1.61 billion yen. Sales came in at 2.37 trillion yen, down 12.7 percent.

Nissan maintained its full-year earnings estimates, expecting net profit to fall 46.7 percent to 170 billion yen and operating profit to decline 27.7 percent to 230 billion yen on sales of 11.3 trillion yen, down 2.4 percent.

«The first-quarter results were worse than expected,» Saikawa said. «I hope in two years we will return to recovery.»

Nissan has planned to scale back its global production capacity by 10 percent and reduce model lineups also by 10 percent by late March in 2023

It is also aiming for sales of 14.5 trillion yen in fiscal 2022 compared with the current 13 trillion yen.

But Saikawa and other Nissan executives have been urged by some shareholders to quit because they lacked oversight of Ghosn's conduct. The former chairman is suspected of underreporting remuneration in Nissan's securities reports and misuse of company funds.

«It is my responsibility to get Nissan on track to achieve sales target of 14.5 trillion yen in fiscal 2022,» Saikawa said.

But he also said, «I hope preparation for the next three-year medium-term business plan beyond fiscal 2022 will be carried out by the next generation.»

Keywords: Economy, World News,