"We take this very seriously," says CEO Ghosn.

Despite posting a 2% increase in its quarterly net profit, the mood was sour at Nissan Motor Co. Friday morning as CEO Carlos Ghosn cut the Japanese maker’s forecast for the year and reshuffled its leadership team.

Among those impacted by the management reorganization, Chief Operating Officer Toshiyuki Shiga has been shuffled aside and appointed vice chairman while three other executives will now serve as co-COOs.

“Our slow performance required immediate action to be taken,” said Ghosn from Nissan’s headquarters in Yokohama. “We are really tightening. We take this very seriously.”

The second-largest of the Japanese makers posted a 107.8 billion yen, or $1.1 billion, profit for the July – September period, the second quarter of its fiscal year. That was up just 2% from the 105.7 billion yen net posted a year earlier.  Quarterly sales, however, rose 16%, to 2.5 trillion yen, or $25.4 billion.

The maker put the blame on a variety of factors for its weak performance, including costly recalls and unexpected sales challenges in key emerging markets such as Russia, Australia, Brazil and Indonesia. On the other hand, it regained some momentum in China as the impact of a territorial dispute between the Chinese and Japanese governments began to fade.

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Though it has not had nearly as many recalls as its two main Japanese competitors, Toyota Motor Co. and Honda, Nissan has nonetheless had to recall almost 1.1 million vehicles worldwide since just the beginning of September due to a variety of problems including faulty brakes.

Nonetheless, the maker announced a sizable 15.5% reduction in its forecast for the full fiscal year, which will end next March 31, to 355 billion yen, or $3.6 billion.

“A little bit of the bad news, we could overcome. Too much of the bad news, impossible,” Ghosn said.

The shake-up of Nissan’s management team came as a bit of a surprise considering Shiga had been taking an increasing role as Ghosn was expected to relinquish the Japanese side of his duties as CEO of both Nissan and its French alliance partner Renault. During his Yokohama news conference, Ghosn said he had no comments regarding his own plans, making it apparent there will be no transition at his level while Nissan tries to get its house in order.

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Ghosn said the new assignment for Shiga was not meant as “revenge,” since the vice chairman’s post is a largely ceremonial one in Japan. “I can tell you nobody is taking this as a kind of punishment,” insisted the Brazilian-born executive, adding that the shake-up gives Nissan a chance to “rejuvenate” its management team.

The realignment comes at a critical time for Nissan which has been struggling to gain ground with its high-profile electric vehicle program, and which has been investing heavily in emerging markets around the world. It is launching a major new manufacturing facility in Mexico this year that will serve as a regional export base. It also expects to launch a new assembly plant in Brazil next year.

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While sales in Europe and emerging markets fell 1.5%, they gained 3.6% in Japan and a full 14.5% in the recovering U.S. market.