Nissan Motor Co on Thursday cut its annual operating profit forecast by 43 per cent, hit by a slump in vehicle sales and heaping more pressure on new management to fix a company still reeling from the scandal surrounding former leader Carlos Ghosn.

Nissan’s sharply waning earnings power has already prompted plans to slash jobs, close manufacturing sites and drop product offerings, sources have said, as the automaker steps back from an aggressive pursuit of market share championed by Ghosn.

The dismal outlook comes after Japan’s No.2 automaker posted its first quarterly net loss in nearly a decade, and contrasts with upbeat forecasts from rivals Toyota Motor Corp and Honda Motor Co. “We are making progress, but sales volumes have been weak so we need to do more restructuring than initially planned,” Makoto Uchida, Nissan’s new CEO and its third since September, told reporters.

He did not elaborate on what steps might be taken but added that the company’s financial position would continue to be tough in the next business year as it would take time to repair profitability in the United States, its No. 2 market.

Nissan now expects operating income of 85 billion yen ($775 million) for the year to March, far less than an average forecast for 134.5 billion yen from 20 analysts polled by Refinitiv.

It also said it would not pay a dividend for the second half and that its annual dividend would be 10 yen per share, a steep drop from the 57 yen paid a year earlier.

The automaker, which has suspended operations in China due to the coronavirus epidemic, said it would restart output at three vehicle plants on Feb. 17. Two plants, including one in Hubei Province, the epicentre of the outbreak, will remain shut until at least Feb. 20.

The outbreak has also caused Nissan to reduce production at three domestic vehicle factories throughout February due to a lack of parts and logistics issues.

Nissan’s global vehicle sales tumbled 11 per cent during the quarter, its brand image hurt badly by years of heavy discounting in the United States and other countries.

Sales dropped 18 per cent in the United States, with once popular models like its Rogue SUV crossover and its Sentra sedan falling out of favour. In China, the world’s biggest auto market, sales slipped 0.6 per cent.

It now expects to sell 5.05 million vehicles for the entire year, which would be its weakest sales performance since 2013.

During the October-December third quarter, operating profit tumbled 78 per cent and it booked a net loss of 26.1 billion yen.

Sources have said Nissan is set to eliminate at least 4,300 white-collar jobs and shut two manufacturing sites as part of broader plans to add at least 480 billion yen to its bottom line by 2023.

The moves, an expansion of a plan unveiled in July, will also include fewer car models, options and trims on offer, while marketing budgets as well as jobs at head offices in the United States and Europe will be slashed, the sources said.

Ghosn, who was also head of alliance partner Renault, was arrested in Japan in November 2018, accused of understating his salary and using company funds for personal purposes. He has denied any wrongdoing, and staged a dramatic escape to Lebanon in December while awaiting trial.

Nissan on Wednesday said it had filed a civil lawsuit in Japan against Ghosn, seeking 10 billion yen in damages over his alleged misconduct.

Nissan Motor Co could be heading for its first quarterly loss in more than a decade, three company sources said on Wednesday, as news emerged the Japanese carmaker is seeking $91 million in damages from ousted former boss Carlos Ghosn.

Japan’s second-biggest automaker and its alliance with France’s Renault have been thrown into disarray since Ghosn’s arrest in November 2018 on financial misconduct charges.

Ghosn, currently in Lebanon after dramatically fleeing house arrest in Japan at the end of December, denies any wrongdoing.

The three senior Nissan sources told Reuters they anticipated a poor results announcement on Thursday, with one of them calling the figures “dismal”.

Two said there was the possibility of an operating loss, which would be the first quarterly loss since the period ending in March 2009.

Nissan, which is struggling to revive its brand image in the United States after years of heavy discounting, said it could not comment on its results ahead of the official announcement.

Separately, the company said it had filed a civil lawsuit in Japan against Ghosn, seeking 10 billion yen ($91 million) in damages over his alleged misconduct.

Reuters