Nissan Motor Ltd S/Adr

Thank you very much for attending the press conference announcing Nissan Motors fiscal 2020 financial results. Thank you for attending in such a large number. In view of the current situation, this meeting will be using the internet system and live streaming. First of all, let me introduce the attendees of the meeting. President and CEO, Mr. Makoto Uchida. COO, Ashwani Gupta. And CFO, Steve Marr. I ask for your kind cooperation. Now, without further ado, let me invite Mr. Uchida to speak.

Thank you for joining us today. To begin with, I would like to express our sincere gratitude to all the healthcare workers around the world who are on the front lines of battling COVID-19. Nissan continues to place the highest priority on the safety of everyone we work with and serve including the customers, dealers, suppliers, employees and their families. We are doing our utmost to prevent infections while running our operations. The fiscal year 2020 was a year of big changes dominated by the COVID-19 pandemic and impacted by multiple factors including the growth of environmental awareness and political and economic changes. Despite the challenges, Nissan has been making steady progress in implementing Nissan's next business transformation plan, which we announced last May. As I said in February, we are seeing encouraging results thanks to our employees who are doing their utmost every day to bring Nissan back despite the challenging climate, and all our business partners who are working with us to overcome the difficulties. I would like to express my sincere appreciation for your strong support and contribution. Our COO, Ashwani Gupta, will cover the full year performance for the fiscal year 2020, and I will present the outlook for the fiscal year 2021. Ashwani-san, over to you.

Thank you, Uchida-san. Good afternoon, everyone. This year has been indeed an evolutionary journey for Nissan and a true test of our resilience and agility. Amidst all the uncertainty, we have been clocking regular progress thanks to the hard work of our employees and partners who are relentlessly driving forward Nissan's business transformation. Let me now go over the fiscal year 2020 performance and the progress of Nissan Next. First, as you can see on the left graph, our global retail sales for FY20 is 4.052 million, which is 0.9% ahead of our sales volume forecast. Second, quarter by quarter, we continue to adopt to the new normal and have been meeting the growing needs of our customers. Third, through the end of the fourth quarter, Nissan has achieved sales growth ahead of the average industry volumes, underscoring the importance of our recovery efforts. Despite many headwinds, pandemic, supply chain constraints, including semiconductor shortage, in the fourth quarter, our sales grew by 18% with respect to the market growth of 2%. This growth was fueled both by the performance of our current models and the newly launched ones including All New Rogue in the United States, All New Note in Japan, All New Magnite in India and others. With regards to current models, we saw changes an increase in segment share for models like Juke in Europe, Silphy in China. Now to recap, last year we began our four-year Nissan Next business transformation plan based on three pillars. At first, rationalization. It was focused on reducing our fixed cost in line with our sales potentials from 7.2 million to 5.4 million capacity. Number two, prioritization and focus on core markets with core products and technologies to strengthen quality of sales by shifting from volume to value. Number three, growth. Plan and prepare new products and technologies to drive growth during and beyond Nissan NEXT. Through FY20, Nissan made steady progress. We were able to balance our immediate performance recovery efforts with foundational elements to bridge to the future. Now, let me go through each pillar. First, rationalization. Over the course of the year, Nissan has undertaken several key initiatives to reduce fixed costs across our operations, leading to a significant overall reduction. We are optimizing production capacity. We decided to close two plants and moving worldwide operations from three-shift to two-shift, thereby reducing cost by 7%. With a clear focus on customer value, we decided to streamline our product portfolio from 69 to 55 models by 23, in fiscal year 20, the plan is on track bringing product related costs down by 5%. For marketing and sales, Nissan has made significant progress reducing costs by 27% as we strategically allocated budget toward a more focused impactful mixture of marketing, sponsorships and motor shows. Our enhanced efforts in digital sales experience resulted in 12% of our global sales coming through digital customer journey. To optimize general and administrative cost, we made some radical decisions. From consolidation of seven diversified regions into four equivalent regions, Americas, Japan, ASEAN, AMEO, and China. To efficiently manage the assets and facilities needed, These efforts led to an 11% reduction of G&A costs during the FY20. Altogether, we have delivered over 350 billion yen in cost reductions, exceeding our objective of 300 billion yen reduction versus FY18. With this fixed cost reduction, we are now able to bring down operating profit breakeven sales volume by 12%. In FY18, our breakeven volume was approximately 5 million units, but now we can start generating profit with approximately 4.4 million units. This reinforces our strategy to pull profitable growth by value. Turning to our efforts to prioritize and focus on Nissan's strengths, During FY20, Nissan made significant improvements to the quality of our sales globally, which is critical to achieving long-term profitable growth. If we look at our two topmost indicators, throughout FY20, we steadily grew revenue rate per unit quarter-on-quarter through value pricing and by delivering attractive all-new models and technology that meet customers' aspirations. Second, in line with our sales transformation plan, we moved from push to pull strategy. With this, our inventories were optimally managed, contributing to quality of sales, but most importantly, generating operating free cash flow. And finally, for each of our core markets, quality of sales was a central priority for as Nissan focused on value-based core offering for our customers. In the United States, all of our business transformation indicators are in the right direction. Nissan improved net revenue per unit by 3.8% and at the same time reduced incentives by 4.6%. We have also seen improvement in the franchise value for our dealers demonstrating strong business engagement and confidence. The response by customers to the all-new ROC has been positive with 7.4% segment share. This has helped lift our overall market share during the fourth quarter to 5.8%. Similarly, in Japan, While models like Kicks ePower and Rooks continue to do well, the introduction of the all-new Note ePower drove Nissan's segment share and overall market share to 11.4%, with an increase in the net revenue per unit. Our strength as a technology brand is demonstrated well in Japan, our home market, with more than half a million customers driving ePower. By the end of FY20, 50% of our cars have advanced driver assistance features, allowing customers to enjoy the choice of delegation or control. In China, we kept our discipline on incentives for existing models while gaining market share, which remains an all-time high for Nissan. This minimized the impact to net revenue per unit despite market transaction prices going down. Now, moving forward with the all-new X-Trail and the Silphy Power, along with a robust future lineup, we will target an increase in net revenue per unit, leveraging our core technologies to meet the aspiration of tech-savvy market, China. Lastly, in Europe, Our focused approach has delivered encouraging results throughout the end of the fiscal year. We achieved significant reduction of 34% in our fixed cost by rationalizing our production and leveraging the Alliance resources for the projects like EVVAN and ETEC. This supported an overall improvement in net revenue per unit. Moving forward, Nissan will continue to electrify crossovers like Qashqai and X-Trail with Nissan's unique e-Power technology. Our product offensive contributed to our positive results, with the Nissan Juke achieving an increase in sales and revenue per unit. With the launch of our core product, the new Qashqai, both ICE and e-Power, We aim to further increase net revenue per unit in Europe. Customer is at the core of our product and technology strategy. We based our Nissan A2Z proposal on the needs and aspiration of today's customer and promised to deliver 12 new products in 18 months. We are proud to say that we are delivering on this promise with 11 models launched or unveiled to date, which are and will bring growth during and beyond Nissan Next. As we continue to invest in innovative technologies, here are the three key focus ones. First, e-force, an electric traction system that allows the driver to have full confidence and control while at the same time enjoy the excitement of electric motor drive in a variety of road conditions. Second, ProPILOT with NaviLink, our newest autonomous human-centric feature that helps the driver to adjust vehicle control based on road conditions, including speed limits and sharp curves, et cetera. Third one, ProPILOT Remote Parking, an automated remote parking system which allows for control of the car from the outside to enter and exit narrow but also unmarked isolated parking spaces. Now finally, this slide illustrates our financial key performance trend quarter on quarter for fiscal year 2020. Despite the challenges faced by the automotive industry, we have continued our efforts to improve quality of sales and rationalize The cost base under Nissan Next. Our first quarter was negatively impacted by COVID pandemic and we finished the year with operating loss of 150.7 billion yen on equity basis and 28.6 billion yen on China JV proportionate basis. For the nine months period, quarter two, quarter three, quarter four, our operating profit totaled to positive 3.3 billion yen on an equity basis and a positive 107.4 billion yen on China JV proportionate basis. Similarly, from quarter two to three to four, our free cash flow for the automotive segment was positive 424.7 billion yen on an equity basis and 538.2 billion yen on China JV proportionate basis. For fiscal year 2020, consolidated net revenues were 7.9 trillion yen, operating loss total 150.7 billion yen, and net loss was 448.7 billion yen. Net revenues and operating profit decreased year-on-year primarily due to the decline in unit sales resulting from COVID-19 pandemic, especially in the first quarter. For the fourth quarter of fiscal year 2020, operating loss was 19 billion yen, which was an improvement of 75.8 billion yen from the previous year. The net loss was 81 billion yen for the quarter. This slide illustrates the variance analysis from the fourth quarter operating loss from the previous year. Foreign exchange had a negative impact of 15.2 billion yen, primarily due to depreciation in the US dollar. Volume and mix, part sales and others had a positive impact of 27 billion yen, thanks to the increase in the sales volume. The most notable improvement came from pricing and selling expense, which resulted in a 73.4 billion yen positive impact. This was primarily due to the enhancement in the quality of sales in United States which contributed to more than half of this improvement. Munizukuri fixed cost and others had a negative impact of 9.4 billion yen. Increases in regulatory and product enrichment costs, raw material prices, manufacturing and other expenses were partially offset by reductions in purchasing cost. In February, we revised upward Our operating loss outlook for fiscal year 2020 to 205 billion yen. From this outlook, we reduced the operating loss by 54.3 billion yen to 150.7 billion yen. 30 billion yen improvement from the sales performance, mainly driven by value pricing and 20 billion yen came from the sales finance business and 4.3 yen was from the other items. we continue to maintain strong levels of liquidity. At the end of March 2021, cash and cash equivalents were approximately 1.9 trillion yen and a net cash was 636 billion yen for the automotive segment. Furthermore, we continue to have approximately 2.2 trillion yen in unused committed credit lines. As a summary, I can say Number one, despite headwinds, we have reduced our losses more than we forecasted due to accelerated transformation. Focused on rationalization and quality of sales while enhancing investments in new products and new technologies. Number two, quarter two, quarter three, quarter four, positive OP and positive free cash flow, even on equity basis, which is without China JV, gives us confidence about the robustness of our operational efficiency and effectiveness. Number three, moving forward, our new breakeven point of 4.4 million volume gives us confidence to pull profitable growth for a sales potential of 5.4 million in Nissan Next. With our strengths, achievements, learnings, but also cautious recognition of the remaining and new potential challenges we get into 2021. I will now turn over to Uchida-san to walk through the outlook of FY21.