Nissan cut plants and workers as new CEO Espinosa takes axe to costs

By Daniel Leussink

YOKOHAMA, Japan (Reuters) - Nissan Motor unveiled sweeping new cost cuts on Tuesday, saying it would eliminate 11,000 more jobs and close 7 plants, capping a tumultuous year that has left the Japanese automaker fighting to turn itself around.

Nissan, which held off on releasing estimates for the financial year just starting, saw its profit almost wiped out in the one just ended. Operating profit totalled 69.8 billion yen ($472 million) in the 12 months to March, a decline of 88% from the previous year.

The automaker has been badly damaged by weakening sales in the U.S. and China, and then saw merger talks with Honda collapse and was recently forced to replace its chief executive. Like rivals, it is also being squeezed by U.S. tariffs and threatened by fast-rising Chinese EV makers in markets in Southeast Asia and elsewhere.

New CEO Ivan Espinosa is aiming for total cost savings of some 500 billion yen. But he faces the difficult job of turning around an automaker that has seen its once-mighty brand value eroded. 

"Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support," Espinosa told a press conference.

The new job cuts will bring Nissan's total workforce reduction to around 20,000 jobs, after it previously announced plans to cut 9,000 positions. It will cut the number of its production plants to 10 from 17 and reduce the complexity of parts by 70%. It did not give specifics on which plants it expects to close.

Analysts have said Nissan, among its many missteps, is also paying the price for years under former Chairman Carlos Ghosn where it focused too heavily on sales volume, and used heavy discounts to keep cars moving off lots. That has left it with an ageing line-up that it is now scrambling to update.

Still, it seems unlikely to expect a sudden turnaround - the automaker sees a 200 billion yen operating loss in the first quarter, CFO Jeremie Papin said.

($1 = 147.8400 yen)

(Reporting by Daniel Leussink; Editing by Christian Schmollinger, David Dolan and Louise Heavens)