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Nissan Motor announced sweeping restructuring measures, including plans to cut 9,000 jobs and reduce global production capacity by 20%, as the Japanese automaker battles weakening sales in China and the United States.
The company also slashed its annual operating profit forecast by 70% to 150 billion yen ($975 million), marking its second downward revision this year, highlighting the scale of the challenges facing the country's third-largest carmaker.
"Nissan will restructure its business to become leaner and more resilient, while also reorganizing management to respond quickly and flexibly to changes in the business environment," CEO Makoto Uchida said in a statement.
Uchida acknowledged that Nissan "didn't foresee hybrids ramping up this rapidly" in the US market, where the company lacks a credible lineup of electrified vehicles compared to rivals like Toyota. Nissan's US sales fell almost 3% to around 449,000 vehicles in the first half of the fiscal year.
Nissan's global sales declined 3.8% to 1.59 million vehicles over the same period, largely due to a 14.3% plunge in China - a market that accounts for nearly half of the company's worldwide volume. The automaker is struggling to keep pace with nimble local players like BYD that are rapidly gaining market share with affordable electric and hybrid models.
Operating profit for Nissan's July-September quarter plunged 85% to 31.9 billion yen, far below analysts' estimates of 66.8 billion yen. The automaker scrapped its net profit forecast due to the ongoing restructuring efforts, which it said would reduce costs by 400 billion yen ($2.6 billion) this fiscal year.
As part of the turnaround plan, Uchida said he would voluntarily forfeit 50% of his monthly compensation, with other executive committee members also taking pay cuts. Nissan will trim its global workforce by 6.7% or 9,000 positions and reduce its maximum production capacity by 20%.
The company is also selling up to 10% of its stake in Mitsubishi Motors to raise up to 68.6 billion yen ($445 million) as it seeks to shore up its finances.
Nissan's struggles mirror those faced by other major automakers in China, the world's largest car market. Honda Motor reported a surprise 15% drop in second-quarter operating profit on Wednesday, citing a heavy sales decline in China that sent its shares down 5%.
Shares in Nissan closed 2.2% higher prior to the earnings release, compared to a 0.25% drop in the broader market. Investors will be watching closely to see if the restructuring efforts can help the company weather the twin headwinds of a China slowdown and US market share losses.
