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nissan hq Tomohiro Ohsumi / Stringer/ Getty Images

Nissan Says Report of 90% Plunge in Profit Is ‘Broadly Accurate’

The carmaker won’t be able to release its results until they’ve been approved by its board of directors on Thursday.

Nissan Motor Co. said a media report that the company’s operating profit dropped about 90% last quarter was “broadly accurate,” in the latest indication that pressure is building for Chief Executive Officer Hiroto Saikawa to step up efforts to turn around the automaker.

Though the figures reported by the Nikkei newspaper on the company’s fiscal first quarter were roughly correct, the carmaker won’t be able to release its results until they’ve been approved by its board of directors on Thursday, Nissan said in a statement. Analysts had been projecting, on average, a 66% decline from a year earlier, according to estimates compiled by Bloomberg.

Separately, Kyodo News earlier reported that Nissan is planning to cut at least 5,200 additional jobs globally to improve its performance, on top of a plan unveiled in May to shed 4,800 jobs. The further cuts would take the total number of reductions to 10,000, or more than 7% of Nissan’s workforce.

Saikawa is facing intense pressure to turn around the automobile manufacturer following the arrest in November of Carlos Ghosn, the former chairman and architect of the global alliance between Nissan, Renault SA and Mitsubishi Motors Corp. Profits are at a decade low and Nissan is struggling in the U.S., where years of sales incentives eroded margins and expanded volumes through fleet sales.

“Once chasing nothing but volume under Ghosn, Nissan is now scrapping that strategy and is shifting its focus more on profitability,” said Koji Endo, an analyst at SBI Securities. “In order to achieve this, they are reducing the size of the company — this includes its inflated capacity and number of employees, as well as a bunch of unprofitable cars and trucks.”

Nissan is planning to refresh all core models, introduce 20-plus new products and focus on American retail sales over the next three years. 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 growing markets.

Vehicle sales in the U.S. fell 15% in June, bringing the decline this year to 8.2%. Deliveries in China, Nissan’s biggest market, dipped 0.3% in the first half.

The surprise arrest of Ghosn, who led Nissan and Renault for more than a decade, exposed rifts over control and decision-making between Nissan and Renault. Currently out on bail, Ghosn has denied all charges against him, saying his arrest was due to a “dirty game” played by some Nissan executives. He is now preparing for his trial, which may start later this year or next year.

TAGS: Finance
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