KYODO NEWS - Jul 25, 2019 - 22:58 | All, Japan

Nissan Motor Co. said Thursday it will cut 12,500 jobs in the next three years as the carmaker, struggling to recover from the arrest of former Chairman Carlos Ghosn, logged a record-low operating profit for the April-June quarter.

The job cut, which represents around 10 percent of its global workforce, will be carried out at 14 loss-making plants, mainly abroad, by the end of March 2023. It marks an end to Ghosn's expansionist business strategy that the company says overstretched to meet numerical goals.

The downsizing is "a major revision of the investments we have made in the past," Nissan CEO Hiroto Saikawa told a press conference at its headquarters in Yokohama, stressing the need for cutting costs as the group's sales have been slumping in the United States and other major markets.

Saikawa again signaled he would resign once Nissan has clear prospects of business improvement.

As part of its structural reforms, Nissan said it will reduce model lineups by 10 percent by the end of fiscal 2022.

The number of job losses is much bigger than the 4,800 the company estimated in May when it also said it will scale back its global production capacity by 10 percent to 6.6 million cars a year by fiscal 2022.

Nissan said it will first cut a total of 6,400 jobs in eight locations by the end of the current fiscal 2019 through next March.

The locations are the United States, Mexico, Britain, Spain, Indonesia, and India, as well as Fukuoka and Tochigi prefectures in Japan, company sources said.

The automaker will then cut an additional 6,100 in other locations by fiscal 2022.

The plants subject to job cuts mainly produce compact cars as well as Datsun brands for emerging economies.

Nissan is trying to get back on its feet following the arrest and ouster last November of Ghosn for alleged financial misconduct. He had led the Japanese firm for nearly two decades and created one of the world's biggest auto groups with Renault SA and Mitsubishi Motors Corp. as alliance partners.

For the three months that ended June 30, the carmaker's group net profit dropped 94.5 percent from a year earlier to 6.38 billion yen ($59 million), the lowest since 2009, due to sagging sales in the U.S., European and Japanese markets.

Operating profit for the first quarter of fiscal 2019 plunged 98.5 percent to a record-low 1.61 billion yen. Sales came in at 2.37 trillion yen, down 12.7 percent.

Nissan maintained its full-year earnings estimates, expecting net profit to fall 46.7 percent to 170 billion yen and operating profit to decline 27.7 percent to 230 billion yen on sales of 11.3 trillion yen, down 2.4 percent.

"The first-quarter results were worse than expected," Saikawa said. "I hope in two years we will return to recovery."

Nissan is aiming for sales of 14.5 trillion yen in fiscal 2022 compared with the current 13 trillion yen.

But Saikawa and other Nissan executives have been urged by some shareholders to quit because they lacked oversight of Ghosn's conduct. The former chairman is suspected of underreporting remuneration in Nissan's securities reports and misuse of company funds.

"It is my responsibility to get Nissan on track to achieve a sales target of 14.5 trillion yen in fiscal 2022," Saikawa said.

But he also said, "I hope preparations for the next three-year medium-term business plan beyond fiscal 2022 will be carried out by the next generation."

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