Nissan Motor Co. is the latest automaker to slash its earnings outlook, saying it will cut output and its workforce to bring inventory into line with tumbling U.S. demand.
The company halved its earlier profit forecasts for the fiscal year ending March 31, 2009. It now expects operating profit to plunge 65.9 percent, to 270 billion yen ($2.62 billion), while net income is seen falling 66.8 percent, to 160 billion yen ($1.55 billion).
COO Toshiyuki Shiga said Nissan would cut global production by 200,000 units this year and trim 3,500 jobs in the U.S., Spain and Japan as a result. The U.S. cuts come in the form of previously announced voluntary worker buyouts.
The Japanese layoffs will total 1,000, mostly affecting contract workers.
“To say the current operating environment is severe is an understatement,” Shiga said Friday, October 31, while delivering July-September earnings results. “If we look at the current trend, we must be more pessimistic, and we should steer the company under such assumptions.”
Nissan’s lowered expectations follow similar downward revisions at Honda Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp. North America was the common weak link.
Nissan now expects this fiscal year’s global sales to be flat at 3.77 million vehicles. That goal was also lowered—from an earlier target of 3.9 million units.
The production cuts will come at factories in the U.S., Europe and Japan.
The company did not give sales forecasts by region, but first-half performance shows the trend.
U.S. retail sales slid 3.4 percent, to 516,000 vehicles, in the April-September fiscal half. North American operating profit nearly evaporated—plummeting 88 percent, to 19.9 billion yen ($187.7 million). Shiga said North American operations should stay in the black for the full year.
European sales gained just 0.7 percent, to 306,000 vehicles. Regional operating profit there declined 19 percent, to 32.2 billion yen ($303.8 million).