Nissan Motor Corp. CEO Hiroto Saikawa delivered somber 2018 earnings news to the media and investors. The company’s 2019 earnings are expected to be worse.
Nissan is expected to announce plans to trim 10,000 jobs, as part of a global retrenchment aimed at addressing what the automaker has previously described as “a difficult business environment.”
Nissan sales and earnings have been in a tailspin in recent quarters, a situation that has grown worse since the arrest of former Chairman Carlos Ghosn on corruption charges last November. The company has forecast a 28% drop in earnings during the current fiscal year ending March 31, 2020.
The reports indicate the cuts could come as early as today or, perhaps at the company’s earnings news conference on Thursday, but a spokesman said, “We have not decided yet what we will announce” at that meeting. He declined to address the media reports.
(Young Buyers May be Ready to Shift Back to Sedans, Claims Nissan)
The automaker has seen sales slide in many key markets. In the U.S., for example, demand for Nissan and Infiniti-brand vehicles fell 14.9% last month and are off 8.2% for the first half of the 2019 calendar year. For the fiscal year that ended in March, Nissan’s worldwide sales were off 4.4% at 5.52 million vehicles.
In May, Nissan announced net income of $2.9 billion for the final quarter of the previous fiscal year, a 57% drop and the lowest figure in a decade.
Nissan’s planning to cut 10,000 jobs due to falling sales and earnings, but it’s unclear if the company’s plant in Smyrna, Tennessee, will be impacted.
The forecast for the just ended quarter, the first in the fiscal year, is $1.6 billion, which would mark another sharp decline.
While Nissan is not discussing the Japanese media reports, it announced in May plans to trim 4,800 jobs out of a worldwide workforce of 139,000. It is unclear if those cuts would be included in, or on top of, any new announcement.
(Nissan Recruits New Design Chief from Lincoln)
The reports indicate the carmaker will focus on regions where sales have been stumbling, such as South America. It is not clear whether North America also would be impacted. Nissan operates one of the biggest assembly complexes in the U.S. in Smyrna, Tennessee. It also runs two big production centers in Mexico.
Some cuts to production levels are anticipated in Japan, though it is unclear if job reductions would also be in the works. The Nikkan Kogyo newspaper also reported Nissan will prepare to end production of its NV200 van at a plant in Barcelona.
If the reports prove accurate, the cuts would mark a dramatic reversal from the global expansion plans put in place by Ghosn. The executive served for years as CEO, and then chairman, at Nissan, while also leading its French ally Renault and running the global Renault-Nissan-Mitsubishi Alliance.
Ghosn is currently out on bail and awaiting trial in Japan on a number of charge
The Japanese automaker is suffering from slow sales in its largest market, the U.S.
s including allegations he hid income and diverted company funds.
(Nissan Earnings Plunge on Lower Sales, Rising Warranty Costs)
The case has generated significant controversy, some contending he was targeted by Nissan in a bid to head off a planned takeover by Renault. The relations between the two companies have remained strained since the arrest.