Nissan Motor Ltd S/Adr

Good evening, everyone. Welcome to Nissan's full-year financial results for fiscal year 2025. I'm Lavanya Vagampar from Global Communications, and I'll be your host for today. Today's session is scheduled for 45 minutes. We have both on-site and live streaming happening at the same time. Let me start by introducing the speakers for today. Ivan Espinoza, Chief Executive Officer. George Leandros, the new Chief Financial Officer. Without much ado, I'll hand over to Ivan to start the session.

Good afternoon, everyone. Thank you for joining us today. It has now been one year since we launched the Renison plan, and during this period, we have maintained a clear focus on execution, and the progress has been steady, despite an operating environment that remains uncertain. This progress reflects the discipline efforts of our employees and the continued support of our partners. Together, we have taken decisive actions and have begun to establish a more resilient operational and financial foundation for Nissan. Today, George will present our financial performance for fiscal 2025 and the outlook for this year, and then I will provide an update on the progress of re-Nissan. George?

Thank you Yvonne and good afternoon everyone. I'm happy to meet you all in my new role as CFO for Nissan. Let me start with our sales performance. Nissan sold 3.15 million vehicles during the year. Unit sales declined by 5.8% for the full year with a decrease of 5.9% in the final quarter. This performance reflects a competitive, uncertain environment and an uneven market performance. Looking at our key markets, in China, sales declined by 6.3% year on year and 1.9% in the fourth quarter. However, the second half showed progress supported by launches of new energy vehicles. In Japan, unit sales were down 13.5% for the full year. The decline slowed in the final quarter with new vehicles such as Rooks and Leaf attracting new customers. In North America, unit sales remained broadly stable over the year. Sales in the fourth quarter declined by 6% due to fewer fleet sales, while sales to individual consumers continued to deliver retail share growth in the US. In Europe, unit sales decreased by 9.7% for the full year and 11% for the fourth quarter. Rest of the world, unit sales declined by 8.1% for the full year. Turning to our financial performance for FY25, consolidated net revenue reached ¥12 trillion. Against our initial assumption, we achieved a positive operating profit of ¥58 billion, supported by strong contribution from Renison Cost Actions. One-time items, mainly manufacturing consolidation and impairment, resulted in a net loss of $533 billion. On capital expenditure, the remits and actions have enabled us to prioritise our spending. This is reflected by CapEx reduced by 13.5% year over year and R&D spending by 9.1%. These reductions were made without significant cuts to R&D projects or programs. In the automotive business, net revenue is at $10.7 trillion. We are reporting an operating loss of $250 billion including a tariff burden. Full year free cash flow was at negative $481 billion. Automotive operating profit was positive without the impact of tariffs and free cash flow turned positive in the second half to $112 billion supported by disciplined working capital management. At the end of the period net cash importantly stood at $1.17 trillion. Let me take you through the operating profit variance. Foreign exchange was a $21.7 billion headwind. driven by volatility in emerging market currencies, while the US dollar was fairly flat year on year. Raw material costs increased by 5 billion, reflecting rising prices for commodities, including copper and aluminium. The total negative impact of US tariffs on operating profit was 286 billion yen. Sales performance was negative $35 billion. While we saw improvement on our sales mix and volume recovery in key markets like the US, we increased selling expenses to support sales momentum. We more than compensated for inflation of $95 billion through strong cost discipline. Monazukuri savings reached $227 billion, supported by efficiencies across manufacturing, logistics, R&D and purchasing. One-time benefits delivered a positive impact of $148 billion, with lower compliance costs related to the US and the UK emissions regulations, and we had reduced warranty estimates. Other items were $55.6 billion positive as we lowered expenses in sales finance, remarketing and G&A. Taking all this together, we delivered an operating profit of $58 billion ahead of expectations. FY2026 outlook. As Renison takes effect and demand evolves, we see improved performance this year. We expect our unit sales to rise by 4.7% to 3.3 million units. We expect the launch of new and refreshed models to drive higher sales and share across all key markets. This year, we anticipate a broad based growth across all markets. To support this demand, we plan to increase production to 2.95 million units. Now for the profit outlook. Our full year revenue outlook is 13 trillion yen driven by higher unit sales. We expect profit of 200 billion representing an operating profit margin of 1.5%. Automotive operating profit and free cash flow are expected to be positive before tariffs and net income we are projecting to be positive 20 billion yen. This assumes forex rates of 150 yen to the dollar and 175 yen to the euro. Allow me to walk you through operating profit outlook. Foreign exchange is a negative $20 billion and rising raw material costs including risks associated with aluminium and oil are a further negative $85 billion. US tariff burden improves by $30 billion with Japan exports to the US at 15% for the full year. The most significant profit improvement comes from reness and actions, included in the improvement of ¥340 billion in manufacturing costs. This includes both fixed and variable cost savings. We anticipate a negative impact of inflation at ¥60 billion and one-time negative items amount to ¥150 billion as In FY25, one-time gains do not repeat again in FY26. Taking all of these factors together, we arrive at an operating profit outlook of 200 billion yen. In closing, I'd like to say we are making steady progress with a clear discipline focus on execution and improving fundamentals as we identify cost reduction opportunities and we execute with discipline and with speed. Our priority in FY26 is to continue to deliver on our targets. I now will hand back to Ivan.

Thank you George. To summarise, our results reflect the challenging operating environment and we have worked steadily to manage it. In the U.S., we have put the strategic focus on pure retail sales with reduced reliance on fleet. Mexico remained resilient with solid demand throughout the year. In China, performance strengthened in the second half, supported by demand for new energy vehicles. Japan and Europe experienced weaker demand and faced challenges from model cycle timing. From a financial perspective, we are beginning to see clear signs of a turnaround. By the fourth quarter, fixed cost savings had reached 200 billion yen and variable costs, 55 billion. Importantly, automotive free cash flow turned positive in the second half, driven by strong working capital inflows and capital discipline. Excluding tariff impact, our core automotive operating profit is recovering ahead of plan. At year end, net cash stood at 1.17 trillion. Looking ahead, the combination of improving demand for our products, continued cost savings, and financial discipline supports a more confident outlook. While external headwinds remain, demand for new models is expected to lift unit sales to 3.3 million. Operating profit and free cash flow are moving in the right direction, and core automotive profitability is set to improve further. Net cash is expected to remain above $1 trillion at year end. This reflects solid momentum as we enter the final year of re-Nissan. Let me now turn to the progress of re-Nissan. At its core, re-Nissan focuses on three priorities. Strengthening our cost structure, redefining our market and product strategy, and reinforcing our partnerships. We began with a clear and immediate focus on costs, taking actions to reduce our fixed cost base, improve efficiency, and restore financial discipline. As these actions have taken hold, we have shifted to growth, refining our market approach, aligning product cycles with demand, and accelerating the launch of new and refreshed models. At the same time, partnerships continue to play a critical role. I will now take you through the progress of each of these pillars. Turning to cost reduction, we set to deliver $500 billion in savings from fixed and variable costs. On fixed costs, we are ahead of plan with $200 billion in savings. This progress has built steadily, supported by disciplined execution, including the actions taken across our manufacturing footprint. I would like to sincerely thank everyone who has contributed to this achievement. Restructuring manufacturing is a central lever in reshaping our cost base. We are targeting a reduction in global production capacity by one million, supported by a consolidation of our footprint from 17 to 10 sites. We have already announced all seven site actions within 10 months, with consolidation of six to be completed this year. Within R&D, A key focus has been improving engineering efficiency with a target to reduce cost per hour by 20%. As with manufacturing, progress has been strong with an 18% reduction delivered in 10 months. All these achieved while continuing to advance key programs without disruptions. On variable costs, we have identified more than 5,000 initiatives with the potential to deliver savings of $270 billion. In FY25 we delivered 55 billion with further benefits to come as measures are embedded in new and refreshed models from FY26 onward. These actions expand a broad range of areas from technology to production innovation and smarter logistics. Let me summarize our cost actions. On manufacturing, all seven site actions announced within 10 months were made. And now we are on execution and production adjustments and will continue to do so. On R&D, we improved efficiency and speed with 18% lower engineering costs per hour and shortened development timelines. And next, we will complete reductions and shift fully to a product family-driven strategy. On workforce and expenses, we are on track with tighter SG&A discipline across functions and regions. In FY2026, our focus remains on execution, cost discipline, and a smarter resource use. On the reason, recovery and growth are progressing in parallel. Having focused on stabilization in the first half of the year, we have now moved into a growth phase. This is reflected in the rollout of a more targeted product portfolio aligned to the diverse needs of each market. In China, We launched the N7 early in the year, the Frontier Pro, followed by the Tiana Huawei and N6 plug-in hybrid towards the end of the year. In Europe, we introduced the Qashqai e-Power and Micro EV, while in Japan, the new Rooks strengthened our presence in the mini vehicle segment. In the U.S., we launched the all-new Sentra and continued freshening key products like the Pathfinder SUV. In India, we introduced the Gravite to support both domestic demand and export potential. As we look at our momentum throughout FY25, what stands out is the increasing clarity in how our market and product strategy is taking shape. In the U.S., we are strengthening the quality of our business with sustained retail momentum and a deliberate shift towards higher value channels supporting product performance. In Japan, focus launches are building share. Our marketing actions have accelerated, and customer traffic is now picking up. In China, our approach is becoming more targeted, with new energy vehicles beginning to define a clearer position. Across our high-value strategic markets, we are reinforcing our presence. At the same time, we are improving how we run the business with tighter inventory management, a more selective channel strategy, and greater precision in marketing. This momentum carries into FY2026. In Japan, we will introduce Kix, Elgrand, and Murano, which will be imported from the U.S. In the U.S., we will launch the Infinity QX65, followed by the Rogue with hybrid e-power technology. In China, we have introduced NX-8 and within one year, launch models based on the Toronto and the urban SUV concepts. India will have the Tecton. China exports will start with the N7 and Frontier Pro, further strengthening our global product flow. Coming to the third pillar, we continue to build and scale our partnerships as a core enabler of innovation and growth. We are advancing AI-enabled autonomy, including real-world robo-taxi testing with Wave and Uber. In China, our collaboration with Huawei supports intelligent cockpit development. We continue to leverage our alliance with Renault and Mitsubishi Motors, capturing scale and complementary strengths across key markets. Before I close, let me step back to the direction we are setting. Re-Nissan is not only about recovery. It is about repositioning Nissan and building a strong foundation for what comes next. Our new vision of mobility intelligence for everyday life defines a new direction, guiding how we compete and how we grow. Today, that direction is already taking shape. We returned to operating profit in FY2025 and generated positive automotive free cash flow in the second half. As we enter the final year of Renison, our focus is consistent execution to deliver on our targets. With that momentum, we move from recovery to sustainability, building a more resilient and grounded business, and from sustainability to growth, translating that strength into performance as we bring mobility intelligence to everyday life into reality. Thank you very much for your attention.

Thank you, Ivan, and we will now open for Q&A. Please raise your hand if you have a question, and our team will come to you. To help manage the time, please keep two questions per person, and we will come back to you if there's more time left. So, can I see? Okay, first row, please.

Best car. My name is Terasaki. Thank you for this opportunity. Espinosa-san, this is a question for you. The first one. It has been one year since you became a CEO. Espinosa-san, in the past one year, after leaving the company, how did Nissan change in the past one year under your leadership? This is my first question. And the second question is as follows. At Nissan, at NML... not only Japan, but Japan and globally, there are a lot of fans and stakeholders who are supporting Nissan. What is the... What kind of Nissan are you going to create? You said that you are grinding Nissan to the next phase. What kind of company will it be eventually? That's what I would like you to describe to the stakeholders across the world. Thank you.

Thank you. Thank you for your question, Terazaki-san. What has changed and how has Nissan changed? I think There's several things that have changed in the way we operate. We became a lot more decisive. I think we have a much speedier working environment. The focus is also sharpened. We have common goals. We have an executive team that is very aligned and has aligned the whole organization behind one single objective. We have also, I think, in the past months, I think one big achievement, if I may, were the Q3 results. I think this was a milestone because we started to see progress of Renitha's plan, and the environment and the motivation of employees started to change as well. So I think we have employees that feel more confident. I think we have employees that feel more empowered. Of course, there's still a lot to do, Terosaki-san. There's still a lot of further actions to implement. But I think looking back one year, the company has changed dramatically, and we will continue doing so. I think we have shown our potential, and we will continue growing this potential forward. Thank you for that question. Then in terms of what company do I want to create, I think we shared a lot on the Vision event a few weeks ago. We want to keep building products and experiences that excite people and that make customers smile. This has always been the purpose of Nissan, enriching people's lives, and we will continue doing that. We want to create a company that is bringing smart technology to everyday lives in customers. We want customers to be delighted with simple solutions that solve their daily life issues. and that make them happy while they experience our products and services. Inside Nikon, I would like to create an environment that is very open, that has a lot of trusting between employees and management, that is speedy, that is a company that is able of being nimble and quick, and is a company that is able of collaborating with external partners, because this is what the environment is asking us to do. So these are some of the thoughts that come through your question, Terasaki-san. Hope this answers your question. Thank you very much.

Thank you. Next question. Can we go to the third row first?

Thank you. I am from Yomiuri Shimbun. My name is Takamura. I have two questions. The first question is, In 2025 fiscal year, in the financial, the net loss was 533.1 billion yen earlier. In the timely disclosure, impairment was described as 240 billion yen out of this number. This 533 billion yen of net loss, within this, what is the restructuring expenses? How much is this? What is the total amount of restructuring expenses out of this net loss? And what is the breakdown of the restructuring expenses? And for fiscal year 2026, what is the projection on this front? And what are the restructuring expenses that you have counted for 2026 fiscal year? And what is the breakdown? This is my first question. And the second question is as follows. This full view guidance for 2026, how much did you count the impact of Middle East? Did you count it in this projection for 2026 if it's included? How, I'm sure, this NAFSA supply shortage, delay of vehicle transportation, what is, how much did you count for 2026? How much did you count for the Middle East? These are my questions.

Thank you, Dr. Murizan. I will answer the second question, and then I will let George elaborate on the first one. As for the Middle East, what we see so far is an impact of around 19,000 units in the first half. This is again assuming first half. It's very fluid, so the number is changing on a daily basis because we are looking at how we can make further deliveries by alternative routes that we have found. So we want to continue delivering product to our customers in the Middle East in the amount possible. as well as we are looking at reallocation of some of these products to other regions to minimize the impact. Financial impact that we have taken into account already inside the outlook is 15 billion yen. This is inclusive of both this volume impact as well as material costs increases that may come. Again, this is an estimate for first half. This is what we have assumed into the outlook that we have explained a minute ago. Now, for the first question, I will kindly ask George to help us.

Thanks, Ivan. Thank you for the question. Yeah, clearly the $533 billion loss includes... large amount of extraordinary non-recurring expenses as you pointed out and I'd like to give a bit of detail about that. Before I go there, annually we have a process and a policy to evaluate what we call our cash generating units across the world. All of our assets are reviewed methodically and within our policy and we make certain projections and analysis and based on that analysis and policy we arrived at an impairment of assets around the world of around 360 billion yen, 360 billion yen is included in that net loss On the other hand, in terms of re-Nissan actions, so restructuring that we have been deciding and doing during the year, we booked in relation to re-Nissan around 125 billion yen of cost relating to those actions. And there were some offsets in that number. We generated some positive gains from asset sales within that, the total number. So I hope that clarifies the detail of your question. Thank you.

Thank you. Next question, please.

Go to the last row. Thank you.

Matsumoto Nikkei Newspapers. Thank you for this opportunity. First question. Systems automotive business. Free cash flow, positive and operating profit. You said that free cash flow is slated to be positive, but how positive? What's the degree of positiveness? Tariff impact, how much will the tariff impact be? Will it be very close to break-even or will it be a lot of profitability? Can you share with us the size of the profits or surplus? And break-even volume. In February 25, 2.5 million. Uchida-san said that it will be dropped to that. But thereafter, cost has also been reduced. So what is the break-even volume for this current running term? And what is your estimate of break-even volume? And in the midterm, how will the break-even volume fare? Thank you.

Okay. Just one clarification. Your first question is related to 2025 lending? Yes. 2026, okay, so the outlook. So I will probably let George elaborate on that. As for the break-even point, in Green Nissan, we set a target of capacity of 2.5 million cars outside of China. This is what we are working to achieve. And we are, as you heard during the presentation, on schedule, and we have announced all the sites that will be optimized in the manufacturing footprint. And we will be consolidating six out of the seven sites within this year. So this will put us on track for the $2.5 million target that we set in the Renison plan, which will help us deliver the targets that we have laid down for the future business. Capacity will be running at around 80% by the end of fiscal year 2026. on those 2.5 million units. So I hope this helps you understand what we're doing. We will continue, of course, optimising because another site will be consolidated later on in 2027, which is Opama, and we have been clear about that. And this will further enhance the utilisation rate forward. Yeah, thank you. Thank you for the question, Matsumoto.

George? Yeah, just in relation to the first question on free cash flow, As I said before, the important thing to emphasise is this, that in the second half of FY25, the fiscal year, we reported actual results. The important thing to emphasise is we were positive auto free cash flow in the second half. This is a big breakthrough for our business. I think that's something to note of significance. Now in relation to the projection into FY26, I can't speak to the exact number today. We're not releasing that number as far as this projection goes. But what I will say is this, that auto-free cash flow in the projection of FY26 will be positive before tariffs. And we are projecting a tariff of approximately... 250, around 250 billion yen next year. Obviously we have a task force behind that is trying to ameliorate that impact of tariffs by doing very strategic and tactical actions and we're working on many measures to try and bring that down and of course we are aiming to improve the profitability of our business and we're trying to be very disciplined as far as our capital allocation into programs, into what we are doing in terms of our footprint into the future and we will continue to manage very strongly our working capital as we have been doing towards the second half of FY25. The final thing I'll say is this. To give you some confidence, what we're aiming to do towards the end or towards the tail end of FY26 is to be automated free cash flow after tariffs. I can't confirm that at the moment but that's what we're seeing as a potential trajectory towards the end of FY26 and that will take us into a progression into FY27. I hope that clarifies to you where we're heading on automotive free cash flow.

Thank you. Next question, please. I'll go to the gentleman over there.

NHK. My name is Hatanaka. Thank you for the opportunity. I have two questions, starting with the Middle East situation impact. For example, it's a different industry, but in the food, they have to replace or change their package for the snacks. Oil-derived products components, is it impacted? And is there a possibility that this will result in the design change of the vehicle? This is my first question. And next is about how to utilize Obama plant as of today. How many candidates do you have? Who are the potential candidates? Is there Japanese entities, non-Japanese entities? When are you going to make a final decision? Is there any progress that you can share with us at this juncture? Thank you.

Thank you. Onopama, we are making progress. We will be announcing more information as it becomes available, but nothing specific to share. today on that. Unfortunately, apologies for not answering your question. On the Middle East, all derived products, yes, we do see some increases on the costs. As I mentioned before, this is embedded into our plan within the 15 billion yen provision that we have put in. We, of course, continue monitoring that situation, trying to optimize as much as possible both the costs of materials, trying to find alternatives, and also focusing on the delivery of product. As we said, we have found alternative routes, and this is allowing us to continue delivering product to our customers in the Middle East. Thank you. Thank you very much for the question.

Thank you. I'll take the question from the gentleman in front.

Toyo Keizai, my name is Hata. I have two questions too. The first one is, is there going to be a 2026 sales plan? What is the accuracy or the probability to achieve this number? 3.3 million units, which is 150,000 units up. There are a lot of new products that you are counting on, but after the last year, production or the sales plan has not been achieved, especially in China, Japan, and Europe. Are you sure that you can boost the volume that you expect? I think this will be a key for the success or recovery of the performance. That's my first question for Espinosa-san. And next one is European operation, European business. UK third-hand land plant utilization rate is at 50%. I think you are struggling here. Chinese cherry, you're going to do a joint production with cherry, reducing of headcount. There are a lot of media reports. What are the facts here? And the other day you announced the long-term vision in Europe was not part of the lead markets. While there's a EU restriction, how are you going to position Europe in your global portfolio or global footprint? Thank you.

Thank you for the question. So several questions in your questions. Let me try. So as for the sales, we are confident to achieve these numbers for two reasons. One is the models that we are launching, but not only. I think it's important that we look at the momentum. You mentioned China, you mentioned Japan, and you mentioned Europe. So in China, it's true that when you look at the whole calendar year 2025, our first half was slow. But in the second half, we achieved a growth year over year of 4.5%. And in the first quarter of this calendar year, we achieved 7% growth year over year. So these are factual numbers. This is what's happening on the back of a new product that we have launched. and also on the back of some more tactical approach to the market composition in China. We know NEVs and IEs are behaving differently depending on the region of the market, and we are making plans to address those singularities in China. Now, we remain very prudent because April was a slow month in terms of TIV in China as well. So we are cautiously optimistic, but the momentum is building in China, as I explained a moment ago. Japan is a bit of a similar case. We are still coming out from this corporate news cycle that affected the company's reputation a lot and affected a lot the trust of our customers in Nissan. And this is what we're working to address. So it's not only a matter of product. It's a matter of communication. And I'm hopeful that by customers, by seeing the progress that we have shown financially and the soundness of re-Nissan improvements they start trusting our company again. We will continue doing communications to customers. We will also address the distribution channel, make sure that the product is in the right places and in the right locations, and continue good communication in Japan because it's working. So we see the traffic improving. The traffic year over year is improving. We are at the same levels as fiscal year 2024 now. So the sunk that we had in terms of traffic. So it means that our communications and our marketing is working. We need to improve the trust of customers to actually close the purchase and get them behind the wheel of a Nissan. So we will continue working on that. In Europe, we will be capitalizing on the new models because we launched a couple of very important models in the European market. namely the Qashqai with the third-generation e-power. That came last summer, so we have not seen yet the full impact of the potential of Qashqai. We are also improving the availability of the product to improve the performance, and we are also seeing improvement with the Micra EV that was also recently launched, and it's starting to pick up. So, Based on that, we see that those markets can recover. The U.S., you didn't mention, but the U.S., the strategy is working well. As I have repeatedly said, we have focused on growing our pure retail performance, and we have 14 months in a row of growing this pure retail performance. So the strategy is working. We're moving to healthier channels, channels that are more profitable, channels that are individual customers that stick more with the brand than fleets. and the channel that is also helping us financially because a lot of these customers utilize our sales finance products that then generate more profit for the company. So this is what we are doing and the reason why we are confident. On top, in 2024, I think it's important to give perspective. In 2024, we sold 3.34 million. So it's not so far. So we are saying here we're going to sell 3.3 million. So we already... You know, 20-something months ago, we were selling that amount of car. So it's not a crazy number. We have the product, and we have the measures in place to deliver. So we will focus on that. Then, as for your question on Europe, yes, we are consolidating from two lines to one line in Sunderland. We have announced that, and this is part of the remission measures that we have put in place. We are looking at options. The plant is operating well. It's a viable plant. The problem that we have with this location is the volume. So if we can find a smart way of bringing more volume in, we might consider doing something. Nothing specific about any partner to announce today or any options, but this is something that we would likely look into considering. As for a market, Europe meaning not being a lead market. I think we should demystify this point. The markets are lead. Their role is double. Their first role is, of course, we have to excel in those markets. But the second role that these main markets have is to feed the rest of the markets. And this doesn't mean that the rest of the markets are not important. What we're actually doing is removing the burden from these smaller markets because today we are investing a lot of unique capital into these markets. that because of their size, these markets are not able of absorbing. So what we're doing is making it easier for the markets to grow and to be successful, to be profitable by putting these global product investments in the lead markets. And then these lead markets will feed the right product, the right competitive product to the other smaller markets. But it doesn't mean that Europe is not important. We should not confuse this. Europe is very important, and Europe will be fed by the lead market, and also we will be continuing to work with our alliance partner, Renault. We have very good examples of what is working there. These are products that we have worked on together with them, and our products are successfully working in the market. So this is what I can tell you about Europe. Thank you. Thank you for the questions.

Thank you. I think we have time for one or two questions, depending on – let's go to the gentleman over there.

The lady, yes. I have two questions. Free Nissan, progress. Headcount reduction. 20,000 headcount reduction is embedded in the plan, and recently you've announced a headcount reduction in Europe. But will we hear new announcements one after another? And a related question, Obama, there was a press report on local company accepting, but... what will be the number of employees to be transferred to such a local company? That's my first question. And secondly, domestic plant, Tochigi plant utilization rate, what are the measures you have in place to improve the utility rate of Tochigi? Thank you.

Okay. Let me start with the last one. On Tochigi, we are consistently looking at how to allocate product and how to help the sites that will remain, the 10 sites that will remain in the industrial footprint to improve the capacity. As we mentioned earlier, we will be at the end of 2026, running at around 80% of our utilization radio, and we will continue improving. So nothing to announce today, but we will continue optimizing the utilization rate by allocating further products into the different manufacturing sites that remain in the industrial system. As for the headcount or workforce reduction, what I can tell you is we are on track with what we have announced and what we have laid as a target. We don't give specifics on numbers. We have this policy. What I can tell you is we continue working on this reduction with respect, with a lot of care and good, fair treatment to the people involved because, as I have mentioned from the beginning, this is touching families, this is touching lives, and we continue having people-first policies. As such, bridging to your question on OPAMA, what we are hoping is that as many employees as possible come to Kyushu, because we would love to keep our talented people working with Nissan. But we do understand that for particular individual reasons, some of them are unable of doing that, and this is why we have put in place a special program to identify companies and industries in the vicinity of Obama that are requiring people with the competencies that our people have. And we are, of course, making all the necessary actions to support this transition, trying to minimize the impact on the employees as much as possible. This is what I can tell you in that regard. Thank you for the question.

I think we can take just one more question. Please come to the front row, please.

Hello. Hans Kreml from Automotive News. Thank you for taking my question. Just a breakdown of the impairments, if you can, for this year and next year. Sorry, the just-ended fiscal year and the current fiscal year to the fiscal year 26th. Can you break down maybe what the charges or impairments might be for electrification or EVs in particular? There's been a lot of discussion these days about companies rolling back EVs and taking charges for that. I believe Nissan has adjusted its plans for EV production in the United States. Perhaps you could confirm that plan to... end EV production at the Canton plant and talk about how much that might cost in terms of impairments.

Yeah, so thank you for the question. The impairments that I mentioned earlier were 360 billion yen. There's a breakdown as far as regions are concerned. The regions that we assessed cash generating units for were including a North American business, so in particular the United States which has plants. We have three plants in the US and also we assessed the situation in Mexico as a result of some structural changes that we've seen with the tariff situation and the lower production volumes in Mexico and we also looked at Europe very closely. As was mentioned by Ivan, we're looking at our options for Sunderland to boost the utilisation and obviously based on our methodology and in conjunction with our auditors we assessed that we had to take a broad brush approach on the impairments and basically it includes all the regions that I mentioned and it also includes our electrification projects inside those numbers as well. Today I won't be talking to the specific or the specificities of the electrification side of that but obviously it's been included in there and by and large we feel comfortable that Based on our analysis methodologies, we've taken most of that investment impairment in FY26.

In FY25.

Sorry, in FY25. Sorry, in FY25. Apologies.

Thank you. That will be our last question. I took the liberty to go over time. Once again, thank you for joining us today. If you have any further questions, please feel free to get in touch with the Nissan Communications team. We are here to help you. Have a good day.