Nissan's Financial Report Worse Than Expected

On Wednesday, we reported Nissan was preparing a financial report that was presumed to involve quarterly profit falling by around 90 percent — necessitating roughly 10,000 job cuts. At the time, Nissan gave some vague confirmation that the estimates were accurate while halfheartedly attempting to refute them.

However, when the official numbers came out on Thursday, the reality was worse than initially assumed. Nissan reported an almost 99-percent drop in operating profit in the latest quarter, citing falling sales in every major market except China. Rather than 10,000 job cuts, it’ll require 12,500.

From Nissan:

The company is moving quickly to optimize cost structures and manufacturing operations, while also enhancing brand value, steadily refreshing its lineup and achieving consistent growth globally, including in the U.S.

To improve its overall utilization rate, Nissan will reduce its global production capacity by 10 [percent] by the end of fiscal year 2022. In line with production optimizations, the company will reduce headcount by roughly 12,500. Furthermore, the company will reduce the size of its product lineup by at least 10 [percent] by the end of fiscal year 2022 in order to improve product competitiveness by focusing investment on global core models and strategic regional models.

While some of these initiatives are already underway, the company expects that substantial improvements in its performance will take time.

During the announcement’s press conference, CEO Hiroto Saikawa admitted the results were worse than expected but reminded the media that the company’s restructuring efforts were already underway. Of the 12,500 job cuts, 4,800 had already been announced earlier in the year.

An estimated 6,400 of the total staffing reductions are to commence immediately. Roughly 1,500 will take place in the United States, with another 1,000 in Mexico and 830 in Japan. The rest are spread out between the United Kingdom, Spain, Indonesia, and India.

Those reductions are supposed to be finalized before April of 2020. Saikawa said to expect the remaining layoffs to wrap in 2023. Details on those were scant, however.

Nissan’s net income dropped 95 percent to 6.4 billion yen ($59.3 million) during the last quarter. Revenue slid 13 percent to 2.37 trillion yen ($21.97 billion) in the three months ending in June, with global retail volume declining by 6.0 percent. The automaker addressed the generally negative trend within the industry claiming it’s own profitability was “negatively impacted by the decrease in revenues and external factors such as raw material costs, exchange rate fluctuations and investments to meet regulatory standards.”

Its current goals involve improving capacity utilization worldwide and weening itself off fleet sales and heavy incentive spending in the United States. Saikawa said it would take some time for the changes to take effect.

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