Nissan Motor Ltd S/Adr

Good evening and welcome everyone to the Nissan Financial Results for the third quarter of fiscal year 2024, Investor and Analyst Session. This is Julian Krell speaking, Head of Investor Relations. Thank you very much for joining. The presentation material can be found on the Nissan IR website. Please be informed of the disclaimer included on the last page of the document and read it carefully. Thank you. For today's financial results presentation, I am joined by Mr. Uchida, President and CEO, and Mr. Papen, CFO. Mr. Uchida will begin the presentation with a brief introduction. Following that, Mr. Papen will present the financial results for the first nine months of 2024 and full year outlook. Afterwards, Mr. Uchida will provide an update on the company's turnaround actions. The session will conclude with a Q&A session for which additional EC members and executives are joining today. So, Mr. Uchida, thank you very much for your time.

Thank you all for joining today. Well, this conference is for our financial results announcement. I would like to start by making some comments regarding the business integration discussions with Honda, which was announced earlier. Following that, our CFO Jeremy Papanson will explain the fiscal year 2020 for third quarter results. After this, at the end, I will take you through the update on our turnaround actions and our progress. As announced earlier, our company held a board meeting today and decided to terminate the MOU for discussions toward the business integration with Honda, which was announced on December 23rd of last year. This has been agreed between the two companies. We also decided to cancel the three-party MOU which involves Mitsubishi Motors Company. Post the signing of the MOU, Nissan and Honda began discussions in the Integration Preparation Committee, and we confirmed that significant synergies could be expected as part of the initial stage of considerations. However, during this process, Honda proposed to change the integration structure, which was different from the framework agreed in the MOU, to a complete acquisition of Nissan through a stock exchange. This revised structure was suggested by Honda with an intention to realize synergies quicker, hence the integration needed to be carried out quickly. Subsequently, we carefully and sincerely considered it at our board meeting, but ultimately reached the conclusion that we could not accept the new proposal. There were several reasons for this, but I will discuss the most significant ones. Let me reiterate that the purpose of implementing the business integration was for both companies to join forces and become a stronger entity to compete in the global market. However, with the proposal suggesting that Nissan could become a wholly owned subsidiary of Honda, we were not confident that our autonomy would be preserved or that Nissan's potential could truly be maximized. This led us to ultimately reject the new proposal. With this decision, discussions regarding the business integration between the two companies have been terminated. However, we will continue to focus on exploring strategic partnerships that aim to create new value and achieve synergies through efficient methods. That concludes my presentation for now. I would like to hand it over to Jeremy Papin. Go ahead.

Thank you, Shida-san. Good evening, everyone. My name is Jeremy Papin, and I am honored to introduce myself as the new Chief Financial Officer from January 1st. I will now take you through our nine-month to date results for fiscal year 2024. First, allow me to summarize with three main figures. Our net revenue was 9.1 trillion yen, our profit was 64 billion, and net income was 5.1 billion. On this slide, we see retail sales year to date and Q3 standalone. Year-to-date, global retail sales decreased by less than 2% to 2.4 million units. If we exclude China, our unit sales increased slightly. This reflects growth in North America of 2.4%, which offsets declines in both Japan and Europe. In China, the market remained challenging with our retail sales down as a result. Looking at retail sales for Q3 alone, excluding China, we see an increase of nearly 2%, in particular, an increase of close to 10% in North America, where new models are ramping up. Now let's look at our key financial performance indicators. On a consolidated basis, net revenue was flat at 9 trillion yen. On the same basis, operating profit decreased to 64 billion and net income decreased to 5 billion. Our auto-free cash flow year-to-date is a negative $506 billion. And our upcoming product offensives maintains CapEx and R&D at higher levels than last year. In the automotive business, our net revenue remains around $8 trillion. We had a negative operating margin of 1.8%. We finished the nine month period with 1.2 trillion in net cash in the auto segment with gross cash at over 2 trillion yen and unused committed credit lines over 1.7 trillion yen. This slide shows the variance factors year to date. Foreign exchange had a positive impact of 31 billion, and better raw materials cost added 23 billion. However, our sales performance declined by 214 billion due to lower volumes, increased selling expenses, and continued investments in marketing to support our new model launches. Monozukari cost had a negative impact of 59 billion, while inflation also had a negative impact of 106 billion. we saw a total negative impact of $89 billion in others, which includes the effects of net credit losses in sales finance and higher remarketing expenses. Overall, these results are due to a mixture of Nissan-specific challenges in a competitive industry. However, we also see some signs of progress with our actions. We have said that our new vehicles will be a major driver of a better second half of the year, and we are seeing positive contributions while those sales are ramping up. Some highlights include the new Patrol in the Middle East, the new Kicks, Infiniti, QX80, and Armada in the US. Now I'd like to move to our outlook for 2024. In terms of sales and production volume, we are maintaining our outlook as announced at our Q2 financial announcement. This includes retail sales of 3.4 million units and global production of 3.2 million. Despite maintaining our sales and production volume outlook, we have trimmed our net revenue outlook by 200 billion yen to 12.5 trillion in consideration of slightly lower wholesale and higher variable marketing expenses. We have reduced operating profit by 30 billion yen to 120 billion, an operating profit margin from 1.2% to 1%. The net income forecast for FY24 includes the current financial initial estimate of approximately 100 billion for restructuring costs, which is expected to be finalized in Q4. For Q4, our forex assumptions are 100 yen to the US dollar and 161 yen to the euro. Here, we see the variance factors behind our revised outlook to 120 billion operating profit, which is 30 billion reduction from our previous update. Based on our revised assumptions, we expect forex and raw materials to each contribute 5 billion positive. However, we anticipate 20 billion higher sales expense, 5 billion higher monetary cost, and a negative 15 billion from other factors. I would like to point out that as shown on this slide, we have managed to implement first improvements such as fixed cost savings in manufacturing, marketing, and G&A versus our previous outlook. I will now turn the presentation back to Ushida-san for an update on our turnaround actions.