Nissan plans 9,000 job cuts, slashes annual profit outlook

Nissan Motor (7201.T), announced a $2.6 billion cost-saving plan on Thursday, including 9,000 job cuts and a 20% reduction in global production capacity as it battles falling sales in China and the United States.

Japan's third-largest automaker also cut its annual operating profit forecast by 70% to 150 billion yen ($975 million), its second downward revision this year. It scrapped its net profit forecast due to ongoing restructuring efforts, which Nissan said would cut costs by 400 billion yen ($2.6 billion) this fiscal year.

Nissan is among many foreign automakers struggling in China, hurt by intensifying competition from more nimble local manufacturers in the booming electric vehicle segment.

The Yokohama-based automaker is also battling slumping sales in another key market, the US, which shows no immediate signs of recovery.

CEO Makoto Uchida said the company does not have the hybrid and plug-in hybrid line-up it needs for the US market yet.

"We didn't foresee HEVs ramping up this rapidly (in the US)," Uchida told reporters.

"We did start to understand this trend towards the end of last fiscal year, but the model year switching for our core models didn't go as smoothly," he said.

In response to falling sales, Nissan plans to cut its production capacity by 20%, reduce vehicle development lead time to 30 months and deepen collaboration with its partners including Renault Group (RENA.PA), and Mitsubishi Motors (7211.T), it said.

It is also selling up to 10% of its stake in Mitsubishi Motors to raise up to 68.6 billion yen.

"Globally, we currently have 25 vehicle production lines. Our current plan is to reduce the operational maximum capacity of these 25 lines by 20%," said Chief Monozukuri Officer Hideyuki Sakamoto.

"One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel."

Of 133,580 employees, the company is planning 9,000 job cuts, losing 6.7% of its staff.

Operating profit for the July-September second quarter tumbled 85% to 31.9 billion yen, far below an LSEG consensus estimate of 66.8 billion yen.

Nissan's global sales fell 3.8% to 1.59 million vehicles for the first half of the financial year, largely due to a 14.3% drop in China.

US sales fell almost 3% to about 449,000 vehicles. Together, the two markets account for nearly half of Nissan's global sales by volume.

Honda Motor (7267.T), reported on Wednesday a surprise 15% drop in second-quarter operating profit due to a heavy sales drop in China, sending shares in Japan's second-largest automaker down 5%.