Shares of Japanese automaker Nissan dropped sharply by as much as 10.12% on Friday, following a disappointing quarterly report and the announcement of a significant 20% reduction in global production capacity.
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| The Nissan ARIYA on the EV test track at the New York International Auto Show on March 28, 2024. Danielle DeVries | CNBC |
The company's stock hit a four-year low during intraday trading, reaching 368.5 yen, a level not seen since September 2020.
On Thursday, Nissan released its financial results for the second quarter ending in September, revealing a net loss of 9.3 billion yen (around $62 million). This stands in stark contrast to the same quarter last year, when the company reported a net profit of 190.7 billion yen.
The automaker also experienced a substantial decline in operating profit, which plunged nearly 85% year-over-year to 31.9 billion yen. Revenue fell by 5%, totaling 2.99 trillion yen.
In light of these results, Nissan significantly revised its full-year projections, lowering its revenue forecast from 14 trillion yen to 12.7 trillion yen. The company also cut its operating profit outlook, reducing it from 500 billion yen to 150 billion yen.
Additionally, the board decided not to issue an interim dividend and canceled the anticipated year-end dividend as well.
Acknowledging the challenges, Nissan stated it is “facing a severe situation” and outlined a series of “urgent measures” aimed at improving performance. These steps include cutting 9,000 jobs globally, implementing further cost-saving strategies, rationalizing its asset portfolio, and prioritizing investments in research and development.
The company aims to reduce fixed costs by 300 billion yen and variable costs by 100 billion yen compared to its 2024 financial baseline.
Nissan also announced plans to adopt a sustainable, profit-generating structure by its 2026 fiscal year, with a target to achieve consistent profitability even if annual sales stabilize at 3.5 million units. For the first half of the current fiscal year, Nissan reported sales of 1.6 million units, marking a slight decline of 1.6% compared to the same period last year.
CEO Makoto Uchida has opted to voluntarily forfeit 50% of his monthly salary starting in November, while other members of the executive committee have also agreed to voluntary pay reductions.
