In a desperate effort to accelerate its restructuring, Nissan Motor Co. will cut its annual domestic production capacity by about 25 percent to 1.5 million units over the next few years, President Yoshikazu Hanawa said Friday.
Hanawa disclosed the plan during a news conference in Tokyo, in which he also announced a downward revision of the firm’s earnings in fiscal 1998.
The Nissan group’s nonproduction workforce, which now stands at 45,000 worldwide, will be cut by more than 5,000 over the next three years, he said. It has a total workforce of 137,000.
According to the revised earning estimates, Nissan’s unconsolidated net loss is expected to be 35 billion yen, compared to its earlier estimate of a 10 billion yen loss.
The nation’s No. 2 car maker said it will forgo a dividend payment for fiscal 1998, the first time it has done so since the company’s stock was listed in 1951. “We want to put priority on reduction of interest-bearing liabilities over dividend payment,” Hanawa said.
The Nissan group is saddled with net interest-bearing liabilities of 1.93 trillion yen, excluding 1.18 trillion yen from the group’s sales financing business as of March, according to Nissan officials.
Hanawa blamed a sharper-than-expected decline in domestic sales for the downward revision. He ruled out the possibility of fully closing any major domestic plants in the immediate future, but indicated that Nissan may shut down manufacturing lines within them.
Business overseas, meanwhile, is recovering, according to Nissan officials. Nissan’s North American units, which posted losses of 80 billion yen for fiscal 1997, now are expected to post net profits of 5 billion yen, they said.