Things appear to have gone from bad to worse for troubled automotive company Nissan Motor Co. (OTC:NSANY) as the company reported a 99% plunge in its first quarter operating profit.
The company, based in Yokohama, Japan, said it was hurt by an aging product lineup and a slide in vehicle sales in the U.S. and Europe. In response to the massive loss, Nissan has announced that it will cut about 12,500 jobs globally. Those cuts represent about a tenth of Nissan’s total work force, and more than double the 4,800 reductions the company announced in May of this year.
The drop in operating profit was much worse than the 66% decline forecast by automotive analysts. The poor results come after the arrest last November of former Nissan Chairman Carlos Ghosn on charges of financial crimes and corruption.
Nissan also said in a news release that it will cut global production capacity by 10% by the end of fiscal 2022 and reduce its product lineup by at least 10% in that period to improve product competitiveness. Still, the automaker has maintained its full-year forecasts. The carmaker issued an outlook in May for operating profit of 230 billion yen on revenue of 11.3 trillion yen.
Nissan saw U.S. vehicle sales drop 15% in June, bringing the total decline this year to 8.2%. Deliveries in China, Nissan’s biggest market, dipped 0.3% in the first half of this year. The shares of Nissan are down 11% this year, following a 22% slump in 2018.
The carmaker recently revamped the Nissan Skyline with design changes and features to make it more appealing to the Japanese market, and is also betting that passenger cars, especially electric sedans, will help drive future sales in China, Latin America and other markets.
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