Picture: REUTERS
Picture: REUTERS

Tokyo — Japanese car giant Nissan confirmed on Wednesday that it will report a plunge in first quarter operating profit as media reported the struggling car marker plans to cut more than 10,000 jobs worldwide.

The firm is working to turn around its fortunes after being plunged into crisis by the arrest of its former CEO Carlos Ghosn, and is fighting falling sales in the US and Europe.

On Wednesday, a day before it announces first-quarter results, Nissan confirmed that it will report a plunge in operating profit, but declined comment on news it plans to cut thousands of jobs.

The Nikkei business daily said earlier on Wednesday that Nissan would announce a 90% drop in operating profit for the first quarter because of declining US sales, with the cost of developing electric vehicles and autonomous driving technologies weighing on profits.

“While the financial results are still being reviewed, the operating profit reported in the Nikkei Shimbun article was broadly accurate,” Nissan said in a press release, declining to offer details before the official earnings announcement.

Motoo Nagai, a member of the board and chair of the firm’s audit committee, said the company would address the job cut reports on Thursday. “It’s not a simple restructuring. It’s about revitalisation to make Nissan grow again,” he said at an informal briefing.

Nissan had already said it planned to trim 4,800 posts from its global workforce of about 139,000, but the further cuts reflect the firm’s ongoing struggles. In May, it reported net profit fell to a near-decade low and warned of “a difficult business environment” for the next 12 months.

The job cuts are likely to hit some factories in South America and other regions where Nissan has low profitability, Kyodo news agency reported.

Governance overhaul

The company has seen weak sales in the US and Europe, and has also faced tensions with its French partner Renault, which owns 43% of the Japanese manufacturer. 

Nissan is currently undergoing an overhaul intended to strengthen governance after the Ghosn scandal.

In May, it reported net profits for the fiscal year to March of ¥319bn ($2.9bn) — the lowest amount since 2009/2010 when the company was struggling in the wake of the global financial crisis. It was a decline of 57% from the previous fiscal year and the profit outlook for the current fiscal year is forecast to be even worse, at ¥170bn.

Ghosn, who has been sacked from automotive industry leadership roles, is awaiting trial in Japan on charges of under-reporting millions of dollars in salary and of using company funds for personal expenses.

Last month, Nissan shareholders voted in favour of a series of reforms, including the establishment of three new oversight committees responsible for the appointment of senior officials, pay issues and auditing.

They also approved the election of 11 directors as the firm restructures, among them two Renault executives as well as current Nissan CEO, Hiroto Saikawa.

The reforms are designed to put Nissan on a more stable footing after the shock caused by the arrest of Ghosn, considered one of the industry’s most powerful executives.

Ghosn forged a three-way alliance between Nissan, Renault and Japan’s Mitsubishi Motors that is the world’s biggest-selling automotive group. But relations in the alliance have been seriously strained by Ghosn’s arrest, which has excerbated long-standing tensions over how closely the vehicle makers should be integrated.

AFP