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

Nissan Motor said it would slash 9,000 jobs and cut global production capacity by a fifth, while revising its annual profit outlook sharply lower as it battles headwinds in China and the United States.

Japan’s third-largest automaker cut its annual operating profit forecast by 70% to 150 billion yen ($975 million), marking its second downward revision after a 17% cut earlier this year.

Operating profit for the July-September second-quarter tumbled 85% to 32.9 billion yen, far below an LSEG consensus estimate of 66.8 billion yen.

“Nissan will restructure its business to become leaner and more resilient, while also reorganizing management to respond quickly and flexibly to changes in the business environment,” CEO Makoto Uchida said in a statement.

“These turnaround measures do not imply that the company is shrinking,” he added.

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 where it has been looking to mount a comeback in the face of local rivals.

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

Uchida said that core models in the U.S. did not sell as well as expected and that the automaker been surprised by the rapid growth in demand for hybrids and did not have the hybrid and plug-in hybrid line-up it needs for the market.

Nissan joins a growing number of foreign automakers struggling in China, hurt by intensifying competition from nimble Chinese manufacturers in the booming electric vehicle segment.

Honda Motor 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%.

Shares in Nissan closed up 2.2% prior to the earnings, versus a 0.25% drop in the wider market.