Nissan Motor Ltd S/Adr

Welcome to Nissan's first quarter financial results for fiscal year 2026. I'm Lavanya and I'm from Nissan Global Communications. Today's session will run for one hour. We're meeting here and the session is also being live streamed. Let me start by introducing our speakers for today. Ivan Espinoza, Chief Executive Officer. George Leondis, Chief Financial Officer. I will hand over to Ivan to begin the session. Ivan.

Thank you, Lavania. Good afternoon, everyone, and thank you all for joining us today here in Global Headquarters. Before we begin, I would like to express my heartfelt sympathies to all of those affected by the earthquake in Kumamoto Prefecture. Our thoughts are with the impacted communities and we sincerely hope for everyone's safety and swift recovery. I would also like to thank our colleagues and our partners for their resilience, dedication and support during this challenging time. I will now begin with an update on Renison before I turn it over to George to review our first quarter results. Renison is gaining traction with tangible cost improvements and momentum building in key markets. At the same time, we are navigating significant industry challenges and are taking decisive actions to strengthen the resilience, agility and competitiveness of our business. When we share our full year results for fiscal year 2025, we demonstrated the impact that our actions have delivered. We made measurable progress in our cost management efforts to build a new foundation for Nissan's future. Our strategy is now translating into momentum in key markets around the world. However, global industry challenges, particularly in China and the Middle East, have affected parts of our business. This reinforces our focus on building agility and speed into the business to mitigate the impact of shifts and respond to opportunities. Now, first, let's talk about market momentum. The actions we have taken to strengthen our brands and connect with customers is shown in key markets like the United States and Japan. Our business in the U.S. continues to deliver strong retail performance with sales growing more than 9% year on year. This growth is supported by the vehicles produced in the market. Pathfinder sales have increased 32% as the model delivered its best quarter ever, a significant achievement given the 40-year history of the nameplate in the US. Total deliveries of the Frontier pickup grew 35%. Nissan Rogue grew nearly 39% as we approached the launch of the all-new model with hybrid e-power technology later this year. Rogue also earned the top spot in J.D. Power initial quality study, which was just released last month. We also see Infiniti making good progress as QX80 delivered its best Q1 sales performance in the model's history. Our all-new QX65 SUV is now on sale, bringing new buyers into Infiniti showrooms. Importantly, our results were supported by incentive effectiveness, ensuring that spending remains targeted and aligned with growth. In Japan, we are seeing our strong product lineup and enhanced marketing efforts beginning to pay off after a challenging period. Sales in the quarter grew 1%. Deliveries of the Rooks increased by 52%. We also have two important new models and we are seeing very strong demand building up. Since the reveal of the all-new Kicks with e-Power technology, we have collected more than 11,000 customer orders. Our Elgrand Premium band is off to a good start with more than 8,000 orders and deliveries starting last month. These are very strong indications that our plan is working, driving sales momentum in Nissan. And we have seen that continue with July sales pacing ahead of a prior year totals. We are sincerely grateful to our customers for the renewed trust they are placing in our brand. That said, China remains a significant challenge for Nissan and the broader industry. In the first half of China's fiscal year, the total industry volume declined 22% year on year, reflecting a rapidly evolving and increasingly competitive market. Against that backdrop, Nissan's performance has been relatively resilient. In Q1, retail sales increased 7.2% year-on-year, supported by strong momentum from our recent N-series launches. Nissan's total first-half sales declined 50%, outperforming the broader industry decline and resulting in a modest gain in market share. The market transition to new energy vehicles is accelerating rapidly. We have strengthened our position through several recent model launches, and our focus is now to accelerate the shift to NEVs and capture the opportunities created by this transition. Encouragingly, our NEV lineup is already gaining traction with Chinese customers, led by the N6, the N7, the NX8, and our Frontier Pro. We are also expanding our export business with shipments starting from July, creating additional opportunities beyond the domestic market. The uncertainty in the Middle East is another major challenge. While customer demand for Nissan's vehicles remains resilient, we have seen disruptions to logistics and supply chains. We have identified alternative shipping lanes into markets in the region, mitigating some of the impact. However, elevated logistics costs associated with these alternative routes and the ongoing geopolitical uncertainty are expected to moderate profitability until supply chains normalize. Now, let's shift to an update on re-Nissan cost management actions. In Q1, we saw the impact of our efforts grow further, with a combined total of $60 billion in fixed and variable cost savings recognized. Our 20% reduction target in engineering cost per hour has been achieved three quarters ahead of schedule. We have seen strong expense control deliver fixed cost improvements. On variable costs, we are driving greater implementation of ideas generated by our OVIA activities, working in partnership with teams across the company and with our suppliers. Combined with the 255 billion in total fixed and variable reductions that we achieved in FY25, this brings the running impact linked to re-Nissan actions to around 315 billion yen. But the work is not done. Our actions ensure that we remain on track to deliver 500 billion cost reduction by the end of this fiscal year, and we will continue forward. Now, I would like to hand over to George to take you through the Q1 results. George.

Thank you, Ivan, and good afternoon, everyone. As Ivan outlined, our first quarter results reflect both the momentum we are building and the realities of a challenging operating environment. For the three months to June 30th, Nissan sold over 700,000 units. unit sales were almost flat year on year, which is a solid result given the competitive global environment and continued volatility in the Middle East. Turning to our key markets. First, China. Unit sales rose by 7.2% as demand for Nissan's new energy vehicles enabled us to withstand increasingly challenging market conditions in the period from January to March. From April to June, the market conditions weakened further and Nissan sales declined by 15%, but this was versus a 22% decline in total industry volume in the first half. In Japan, we saw early signs of recovery with unit sales rising by 1.3% and strong customer demand for new models such as Kicks. In North America, sales were up by 4.2% and increased by 9.6% in the US market thanks to contributions from the Rogue, Pathfinder and Frontier. In Europe, sales declined by 14.6% amid intense competition and portfolio optimisation. In the rest of the world, sales declined by 16.8%, driven primarily by disruption in the Middle East that Yvonne outlined earlier. Overall, unit sales fell by 2.5% year-on-year, excluding China, and production fell by 4% as we adjusted output to meet demand. Q1 financial performance. Turning to our financial performance, consolidated net revenues rose by 9.5% year on year, primarily driven by favourable foreign exchange rate with additional support from improved revenue quality through pricing and improved product mix. Operating profit reached 77.9 billion yen, an increase of 157 billion from the prior year. net income was 3.8 billion, reversing losses in the previous year quarter. CapEx was approximately 114 billion yen. While this is an overall reduction, we actually increased CapEx spend in support of new product programs. R&D spending was 120 billion, demonstrating our continued investment discipline as part of the Renison plan. In the automotive business, including eliminations, net revenue was 2.6 trillion. Automotive operating loss was 8.3 billion yen, near break even, including the impact of the cost of tariffs. Automotive free cash flow improved to 324 billion yen, an increase of nearly 67 billion yen year on year. However, excluding one-time impacts in the first quarter, the improvement in our free cash flow was actually 100 billion yen. At the end of the prior period, net cash stood at a healthy 970 billion yen. We retain solid liquidity with more than 2.1 trillion yen of automotive cash and cash equivalents on hand. I will now explain the operating profit bridge. Foreign exchange contributed a positive impact of 35 billion, largely driven by the depreciation of the yen against the US dollar. Higher raw material costs, primarily for aluminium and copper, had a negative impact of 24 billion yen. Tariffs had a positive impact of $18.3 billion. Sales performance improved by $23.7 billion due to favourable pricing and selling expenses, particularly offsetting the raw material headwinds I just mentioned. Monozukuri savings contributed around $82 billion, reflecting Renison-driven variable cost reductions. Inflation remained a headwind, with a negative impact of $14 billion. One-time gains contributed $32 billion, including $61 billion related to FY25 US tariffs clawbacks. Other items contributed a positive $4 billion. Taking all these factors together, operating profit reached $77.9 billion. I will now turn to our outlook for the current fiscal year. Although sales volumes were broadly flat in the first quarter, we are indeed revising our full year sales volume outlook to 3.15 million units. This reflects the impact of the deterioration of industry sales in China and the continued uncertainty in the Middle East. As a result, we are also revising our production outlook to 2.8 million units for the fiscal year. The outlook for fiscal 2026, we reaffirm our outlook for revenue of 13 trillion and we reaffirm our operating profit of 200 billion. This represents revenue growth of 8.3% year on year and an operating margin of 1.5%. Net income is expected to be 20 billion yen. The variance analysis. I will now explain the key factors behind our maintained profit outlook. We expect continued pressure from raw material costs, particularly for aluminium, copper and oil-related materials, especially as purchase prices still remain elevated. In the Middle East, geopolitical tensions and shipping constraints are expected to persist, resulting in higher logistics costs and pressure on volumes despite the resilient customer demand. Given the evolving situation, we continue to monitor the impact closely and will update our assessment as visibility improves. There may also be some upside from foreign exchange if the yen remains at current levels. In addition, one-time gains recognised in the first quarter together with offsetting factors are expected to help mitigate some of these headwinds. Taking these factors all into account, we remain confident in our ability to balance those risks and opportunities and therefore we reaffirm our operating profit outlook of 200 billion yen. That concludes my remarks. I will now hand back to Ivan to summarize the quarter.

Thank you. Thank you, George. To sum up, we see signs of progress in our first quarter. We grew sales in the important U.S. and Japan markets. Our operating profit improved by 157 billion yen, with automotive operating profit nearly breaking even, including tariff and positive net income is achieved. Cost reduction activities delivered more than 60 billion yen, keeping us on track to reach 500 billion by the end of the fiscal year. and we maintained automotive net cash at around 1 trillion yen level. We are taking actions to manage our inventory and leverage our NEV lineup to combat the industry declines in China. And in the Middle East, cost increases to overcome logistics and supply chain challenges will continue to have an impact on profit, even though demand for Nissan in the region remains robust. With the progress we are seeing, combined with one-time impacts, we expect to offset these significant challenges. All our financial targets such as ¥200 billion operating profit and net income of ¥20 billion are reaffirmed. Our revised volume outlook primarily reflects the changed market conditions in China. Delivering this outlook will take focus market-specific strategies in each region. In the U.S., we will continue to leverage our locally produced vehicles to grow our sales and prepare for the launch of very important new models like the new Nissan Rogue Hybrid e-Power in the second half. In Japan, we will build on our recovery actions and leverage interest in exciting new models like Kicks and L-Grant to return to a sustainable double-digit market share. In China, together with our JV partner, we will manage inventories in line with the market and rebalance our sales mix to grow our NEV sales with models like the new NX8 joining N6, N7, and the Nissan Frontier Pro. This better positions us for growth in 2027. One of the biggest shifts under reNissan is how quickly we are responding to challenges and adapting to changing market conditions. I'm truly energized by the commitment I see from the Nissan teams around the world. Whether supporting growth in our key markets, responding to customer demand in the Middle East, or strengthening competitiveness across our business, we are taking the actions needed to deliver our outlook. Thank you very much for your attention.

Thank you, Ivan. We'll now open the floor for Q&A. Please raise your hand if you have a question, and our team will come to you with a mic. To help us manage time, could you please restrict it to two questions per person? So I see the first hand pent up right in the front.

Hans Greimel from Automotive News. Thank you for calling on me, and thank you for your presentation. I'm wondering if you can tell us a little bit more about how important North America will be for offsetting the sales decline you're going to see or you're predicting globally. You still kept the outlook unchanged for North America. What makes you think that you can hold that and maybe you can give us an outlook for the U.S. in particular for this fiscal year, a U.S. specific fiscal year target maybe? How important is that U.S. stronghold now to offsetting China and the Middle East in particular?

Yeah, thank you, Hans. And you've heard me before. I'm not in a race for volume. I'm recovering the fundamentals of the company. And as such, of course, we need to keep performing in North America. The traction is very good, very strong, as you heard, 9% growth year over year. and we have very strong performance in the different vehicle lines. It means the strategy is working and we will continue focusing our efforts in the same strategy. Building cars in North America, cars that are tariff free, cars that are profitable, and we will continue with this sharp focus on the strategy. Specifics, I think you saw our outlook for volume. This is what we have announced and we are going to continue pushing on that direction, Hams. As for the importance, of course, every market is important. There is no one market more important than the other when you're running a business like ours, so every single market has to deliver and this is what we are focusing on.

Can you give a breakdown of the U.S. versus North America?

No, I don't think we're giving a breakdown with the U.S. and the total North America markets today, hence.

Can you give us maybe a percentage range of increase?

Again, we are not giving a breakdown. Thank you for the question.

Thank you. If I go to the third person from the right, yes, please.

is speaking. Thank you for this opportunity. Talking about outlook in China, which was revised, and it has been three months You are changing the number. I think there was a sharp change in China. What was different from your assumption? What didn't you foresee? Was it a change in the policy or regulation, or is it a macro economy? In the past three months, there was a reason why you had to make a revision, and what was the particular reason behind this?

Thank you. Yeah, we see a couple of things. One is the economy itself has slowed down at the beginning of the year, particularly the second quarter. Second is the Iran war had an impact on the fuel costs, and this further accelerated the shift to NEV. and this is basically what is driving this behavior change in the market. And as such, what we're doing is, the good thing is we have a product ready. So we have NEVs that are ready and are performing well. What we have to do is to shift quickly our inventory into more NEV product. Together with the strong commercial policy around NEVs that we are putting in place, We have a regionalized approach versus, you know, a year ago we were operating in China with a one nationwide commercial policy. We are moving away from that into a more regional oriented commercial policy, because depending on the on the part of the country that you are looking at, some provinces are a lot more heavy and some provinces are still a bit more heavy on ICE. So you cannot have one commercial policy for the whole Thank you.

Okay, thank you. In relation to this earlier question, Irini-san, 1 million units is the number that you are pursuing. In order to attain this number, Chinese circumstances should be better than what we see today. In order to make things better, what do you need? What is visible? Until when will these circumstances remain? Is there any visibility that will help you increase and attain 1 million units?

One clarification, we don't have a 1 million target for renaissance in China. We gave a long term ambition of 1 million combining domestic sales plus some exports. So this is what we aspire to achieve. Now, how to get there? Of course, we need to push more on the quick shift to NEV, and we need to consistently deliver products that are hitting the market the way our NEVs are doing. We had also, we presented a couple of SUVs in the motor show, In Shanghai Motor Show, we presented these two products that are coming quite soon later this year and the reception of those products was quite strong. So we expect to continue building on the back of new product with these regionalized approach and we will start also the exports quite soon. Thank you. If we go to the first person on the third row.

Thank you.

Yes.

NHK.

NHK, Taruno speaking. Thank you for this opportunity. Kumamoto earthquake impact. What was it? In Fukuoka Prefecture, there are two production you announced to suspend operation. Will this result in the suspension operation in other plants elsewhere? Will this be lasting? And what is the visibility and projection with regards to the impact of the earthquake in Kumamoto?

Thank you for the question. We are monitoring the situation very closely. It's evolving. At the moment, the visibility we have is that we will have some partial stops this week and the visibility is around 5,000 units that we are still checking, scheduling to see how quick can we recover them. But again, the situation is quite fluid and we will continue sharing information with you as we get more clarity. Thank you.

Thank you very much. If you can come to the right, second row.

Thank you for the presentation, Yomiuri. My name is Takamura. I have two questions. First of all, performance outlook was maintained. What's the reason? Volume target was reduced, but despite the reduction in volume outlook, you maintained the performance. And I'm focusing on PACE-13. You said multiple positive factors. Can you elaborate? That's my first question.

Yeah, the volume from China has a small impact in our operating performance or operating profit because the way we consolidate the business, maybe George can give more detail if needed, but this is why you don't see a decrease in our operating profit. On top, in China, we expect the volume to start recovering in the second half of the year as well. We see that the TIV might start recovering according to some of the forecasts that we are reading. So we expect that the volume will help stabilizing a bit in the second half of the year. And we have already started, of course, cost controlling measures in China as well. So on the operating side of operating profit, we won't see an impact. That's why we are confident to continue with our outlook. and also because we see strong performance in some markets as we explained earlier during the presentation. Thank you. Thank you for the question. I don't know, George, if you want to compliment that.

If I may add, Ivan, thanks for the question. Yeah, we are reaffirming our outlook of 200 billion yen. In the first quarter, we generated 78 billion yen almost with some one-time impacts in there. If you take out those one-time impacts, The core business is delivering somewhere around 30 or 40 billion yen. That's despite the headwinds we're facing from the Middle East, as well as the raw materials. And we're in fact able to price some of the raw material impact that hit us in the first quarter already and a lot of that pricing is indeed in the USA so that goes to show we're improving the situation in the USA and we're offsetting raw material plus we've got the US tariffs there's a program to continue to find opportunities in US content and we took some of those as one-time impacts in this quarter in relation to last year's US content, but we've got more to come. So notwithstanding the issues we're facing in the Middle East, notwithstanding the issues we're facing with raw materials, we've got those opportunities plus FX, Forex at the current rates, anything above the 150 yen is going to reap rewards for us and even with the intervention that we've seen the last couple of days we're hovering at around 156 yen to the dollar so we feel confident that that's a reaffirmation of our outlook thank you thank you okay thank you the second question may i um us you were talking about that then

U.S. and Japan made a coordinated intervention to buy Japanese yen. While there are uncertainties in the rate, how will this impact your performance or projection? And what is your assumption on Japanese and U.S. dollars? And if possible, this 150 yen after buying, this was determined before the coordinated intervention or did you adjust it after the intervention was made?

We're constantly reviewing our outlook. We take it at a point in time. Obviously, we've been monitoring the forex. We saw the news like you did that there could have been intervention. In fact, we have done some partial hedging. We did early in the year for this financial year. and we're confident that that hedging protects us on the downside and we're able to you know make sure we're mitigating our risk if it falls below certain levels so that's one of the actions we took well prior to this intervention but at these current rates we see opportunity into the outlook and on top as I said I reiterate we've been taking pricing and we believe that the market itself and our competitors will not stand still they and they've shown already around the world the propensity to increase prices for the raw materials impact so that's how we're managing this and we feel confident the balance will give us that outlook thank you

Thank you. If you come to the middle row, first person in the second row.

Thank you. Asahi Shimbun Yamashita speaking. I have two questions as well. Today, you talk about renegotiation progress. You consolidated seven plants. Will there be further restructuring of the production footprint, especially Yokohama plant? This attracted a lot of attention in the past. What is your approach here?

Thank you. As we have said before, we don't have any restructuring additional actions in view at the moment. Power Train Strategy for the Future And in Europe, we see acceleration of EV. So it's very hard to define one single lane at the moment. So we are looking at our strategy in detail. And we will share more details when we are ready to do so. Thank you. Thank you for the question.

I have another question. Honda with Honda you are talking about collaboration SDV Collaboration SDV will be announced soon. At least that's what we understand or at least Honda said or Mibe-san said so Where are you today with regards to this front?

We are discussing a lot with Honda. As we have said before, it's different layers, starting with hardware, but also looking at what layers of the different software areas we can collaborate on. And we don't have any further detail to announce today. We will come to you as soon as we are ready. Thank you for the question.

Thank you. If I go to the second row on the last.

Thank you. Toyo Keizai Hatai speaking. I have two questions too. Talking about Middle East impact, what is the latest update on the impact on Middle East? In May, you said that 15 billion yen will be a hit on operating profit because of largest cost increase, raw material cost increase. What was the real impact in Q1, and is there any revision on the full year forecast of the impact on Middle East?

Yes, I can take that one. Thanks for the question. It's very important for us, this situation, and we have a taskforce that monitors it. We are taking all sorts of mitigating actions, trying to ameliorate the impact on our business. Now, if you may recall, in the May announcement, we had projected at that time, despite the uncertainty, that we believed the impact on our business would be around 19,000 units deficit. in the first half and also an impact of around 15 billion yen in the first half and we were always projecting out first half because of also a lot of actions we were taking to right size production and in an attempt to reallocate vehicles as much as we could to other markets. Now, I will talk first half again. So you have that yardstick. And in the first half this year, we're expecting an impact of around $20 billion. and on vehicle sales around 18,000 units. So if you look back three or four months, we were pretty close to the forecast and why the profit impact was a little bit higher or is projected to be a little bit higher is mostly because of logistics costs. that have shown inflation to get cars into that region as we're competing with others. And on top, we have lost some after-sales business, again, due to logistics. In fact, on a positive note, we see the demand for Nissan vehicles is actually quite healthy and holding up in the market. So the more cars we can get there, Thank you very much.

Thank you. There's another thing, another concern, which is Chinese business. Profitability of Chinese business in the past, this used to be a cash cows, but because you have been seeing a loss making in the past, maybe the TIV is falling with intensified competition and price, and I'm sure it's very difficult to boost the volume in these circumstances. Chinese market, is there any visibility to make it profitable again? or in order to improve the profitability in China, is there any additional action that you are taking, such as restructuring our production footprint or fixed cost reduction?

Yeah, thanks for the question on China. I think Yvonne mentioned it before, but I just want to emphasise and reiterate the reduction of the China volumes and the impact that's going on in China due to the uncertain conditions. That does not necessarily impact in a material sense the operating profit of Nissan on a consolidated basis. That's the first thing I will tell you. The second thing is that in the first half, under China Gap, our business, our joint venture in China was actually break even. Ltd Ltd Ltd in DFL and on that up to the end of the first quarter and indeed first half we're not expecting a deviation to our original expectations on that and we're monitoring closely now how this adjustment of volume as we've announced is going to impact the second half of the net income of the China JV, and it's within our projection of net income that I mentioned before, 20 billion yen, is including that adjustment regarding the equity interest that we have in the joint venture. Why are we still confident we can do that? Because as Yvonne mentioned, there's a lot of countermeasures in place. I won't reiterate because I'll end up re-quoting him, but there's a lot going on where our teams are leading initiatives to ensure that we try and ameliorate as much as we can that adverse impact, not only on the Chinese profitability, but on the net income of Nissan Motor Consolidated. Is that okay? That answers your question? Yeah, thank you.

Thank you. Can you come to the middle row, third row, please?

Ikeda Sanken newspaper. European business is the subject of my question. Operating gain and losses, operating losses continue to be booked. What's the backdrop of losses in Europe? structural reform is not making progress? Is that the reason? Or Sunderland production system has been reviewed and is that going to have a positive impact to the outlook of profitability?

You can hear me, right? So yeah, I guess you might have seen, thank you, you might have seen the The Tanshin document and you're referencing that question to the Tanshin document and the losses in fact that you see in that document are pretty flat from one year to the next and the European business is obviously facing competitive pressure at the moment and the influx of, in particular, Chinese competition. The bright sparks for our business are that we are launching and progressively ramping up the production of leaf. It's the same leaf that is available in Japan that's being launched in Europe this year. We've launched a micro. and it's going very well in the marketplace and these two cars are hitting the sweet spot in terms of the TIV which is growing. That's the first thing. The second thing is we have announced restructuring in Europe. and some there's two initiatives going on we are right sizing the footprint of the business to ensure that we can reduce the break-even point of the business to a lower level than it is today and on top we are discussing that we've publicly announced we're discussing with Another OEM, in fact, Cherry. We're discussing a contract manufacturing opportunity in Sunderland to absorb some of the capacity that we have there. It's a very efficient plant. It's very efficient compared to other European players. It has a highly motivated and highly skilled workforce, and that's the attraction that obviously other third parties have. That particular initiative can continue to drive down cost per unit and increase the utilization ratio of that plant. And combined with the new models we're launching, and the restructuring, we're aiming to deliver in the future a better performance and return to profitability in the European market. I'm not sure, Ivan, if I've covered everything.

No, I think it was clear. Maybe, I don't know if that answered your question. Okay, that's on.

I have a related follow-up question. What about the competition against Chinese manufacturers in Europe? From Nissan's Chinese plants, are you planning to export from your Chinese plants to Europe? Is that an option? And what about your co-working with Renault? Are you planning to use that in order to strengthen your product lineup? Thank you.

And the two answers are yes. So we are looking at every single opportunity. We have product built in China that could be marketed in Europe in the future. So yes, this is one opportunity. And of course, we will continue working with our partner Renault. The products that we are getting from them are proving to be successful. We started the Micra a few months ago, and it's gaining a lot of good traction. It's very well received. Coversely, we also launched the Tecton in India, and it's also getting very good reviews. So we will continue working with them. And at the same time, as I said, we have products built in China that we could utilize. As I've said before, the objective of exporting cars from China is to defend ourselves from the Chinese in the short term. Thank you.

Thank you. My name is Nakamura. I have a couple of questions. First one is for Ivanson. How do you assess as of today and what is the projection going forward? So far, 355 billion yen of improvements and costs were made. Having said that, I think the performance is showing the resilience and the dedication of our teams. We are ahead of plan in several areas of cost transformation. One example is our engineering average cost per hour.

We gave ourselves a target of achieving a 20% reduction by the end of the program, and we have achieved that already, three quarters ahead. So this is showing you the determination and the focus that the teams have on the program. So we will continue because we should not stop. If there is further opportunities, we will continue pushing to have a lower break-even point. Thank you.

Okay, thank you. There's another one in relation to what I said the other day. When you talk about long-term vision, you didn't talk about specific financial objectives and you said that you're going to announce it at a later date. When are you going to announce the concrete numbers? What will be the timing? What kind of target will be announced about long-term vision? You didn't give any financials last time.

Yeah, we are working on that. And as I said before, we are expecting to come out in the second half of this fiscal year. We will let you know as soon the date is confirmed, but they will be in the second half of this fiscal year. Thank you.

Thank you. If I go to the gentleman on the third row, first person. Yes.

Thank you. I'm Tsuyoshi Inazuma from Bloomberg News. I have two questions. Regarding the foreign exchange hedging you mentioned earlier, what specific measures have been taken? Could you share the details to the extent possible? Second question is regarding the risks and the opportunity chart on page 13. I'd like to know the detailed figures for each item, including the Middle East impact. That's it. Thank you.

Thank you. So as for the details on the RNOs, the situation is quite fluid. What we can tell you today is that we see this balancing off. So we see the risks coming more closely to the types of opportunities that we have at hand. We are not giving details because the situation is very fluid, both in terms of forex, raw material and the Middle East situation. And we are rather focusing on bringing as many opportunities as possible to offset those risks that are beyond our control. So this is what we are working on. So unfortunately, no detail to give you other than what we see today, the assessment is that they are very, very balanced. As for hatching on forex, I'm sorry, but we would not disclose the details of that. I'm assuming you can easily understand. Maybe George can make some comments to the extent possible, but it's complicated to give that sort of information. What we can tell you is we are in good position with this. It's going to help us protect to further risks on on the eventuality of further strengthening of the yen. It was timely, and it's working in the way we expected it to work. So that's what we can tell. Thank you for that.

Thank you. If you come to the gentleman in the first row, please.

Diamond, my name is Yamamoto. I have two questions as well. The first question is about Chinese business projection. I want details. Earlier, Esminosa-san, you said that in the second half of the year, things will be better. Specifically, what makes you think that it'll be better in the second half of the year? Because between April and Looking at the volume, NX8 was introduced, but yet it declined by 30%, which was very challenging indeed. So for what reason do you think things will be better in the second half of the year? First question, please.

As we said earlier, there's two phenomena happening Yamamoto-san. One is the economy is low down, so there was a natural contraction on the TIV, but the second one is there was a big shift from ICE to NEV, and there's not enough product on the ground to satisfy this demand. The reason why we believe there will be a growth and I would say a prudent growth on the TIV in the second half and more specifically probably around quarter four is because that's the timing at which we see the supply chain shifting into NEV. This is the normal timing that it takes In between, you start producing a car, it gets distributed, and you get the ability to have it on the ground. So that's what we see. So it's two things. One, probably there will be still a contraction in terms of TIV versus the previous market sizes. But we see that the contraction that we see today will be less so because we will have more NEV in the market to satisfy the requirements of the Chinese customers, which is what they are demanding. Demand for any V product as we speak so that that's the the reasoning behind Yamamoto Okay, thank you very much second question Which is about free cash flow FCF?

Automotive free cash flow in Reni's son Along with operating profit, you are focusing a lot on free cash flow. In first quarter, you came to ¥324 billion of negative, which is almost even against the prior year. For this fiscal year, what will happen to the automotive free cash flow? What will be the level that you are projecting?

Yeah, thanks. That's a good question. And obviously free cash flow for us is a top priority. And for the full year, again, I will cast back to the May announcement where I believe I said that our automotive free cash flow we're aiming for this year and we believe we can achieve is going to be positive, excluding the cash impact of tariffs. So that's what I believe I said back in May and I'm holding to that position. That's the first thing. I also think that based on our profile of our business, where we are expecting a quarter over quarter improvement in our business and we have a seasonal let's say dip in the first quarter and we tend to generate higher cash flows in the back end of the year, I think that's going to be giving us that that tailwind that will then give me the backup for my assertion that we will be positive free cash flow excluding tariffs for the full fiscal year and I also said and I'm sticking to it that based on everything we are doing including the cost reduction initiatives that a lot of these will come in the second half the year the growth of our business in the second half the year including with the introduction of e-power hybrid in the US the profile of our free cash flow will be much stronger in that second half and we're tending to rely less on asset sales but we do have opportunities in asset sales that we're working on as well which will help to underpin that free cash flow I reiterate also that our net cash is very healthy position, almost ¥1 trillion, and our gross cash facilities are in excess of ¥2 trillion at the end of June.

And maybe one precision, Yamamoto-san, because you said that our cash, free cash flow was almost even versus last year. George was explaining during his presentation that we had one time last year, one time gains of around 50 billion. So the actual comparable number is 440 to 320. So there's an improvement of over 100 billion in year over year for the quarter.

Thank you. If you come to the lady in the first row.

My name is Koshika. Thank you very much. Kumamoto earthquake impact is what I would like to ask you about. Nissan subsidiaries plant. This wasn't damaged. That's what I heard. But partially, you are suspending the production operation. So I think there is a supply chain issue that was revealed. Ten years ago, there was one earthquake in Kumamoto. At that time, what kind of action did you take to prevent yourself? And these actions are still effective today? And once again, what are the new challenges that are revealed, and what are the necessary action to address them?

So thankfully, as you said, there were, first of all, no human losses, both for Nissan or our distributor partners there. So this is, first of all, the most important thing for us, as we are caring about people first and foremost. So that's the best news of everything that has happened. Secondly, we see, of course, some impact not in our facilities. We didn't have any disruption in our own facilities, neither on those of our distributor partners. But we do have some impacts in the supply chain. That's what, as I was saying earlier, we have partial stops in some of the lines. Not all of the lines will be stopped, but some of the lines will be stopped partially this week. And so far, the impact we see is around 5,000 units that we're still checking how and when we can recover. As for the learnings, of course, we have unfortunately gained a lot of experience through this crisis in the past, and we are putting the same protocols in place. We have a very strong manufacturing Montezucari team and supply chain team together with our purchasing teams visiting the suppliers and making sure that we're providing the right support and again taking care of people first, then of course trying to normalize the operations as soon as possible. This is what I can tell you today, Kushika-san.

Thank you. Another one. May I ask you another question? Just to make sure about what you said just now. Originally, until 5th of August, you are going to suspend the production for some of the lines. This will be extended until August 7th of this week. This is my first part of question. And 5,000 units of impact that you gave from last year up to 7th of August. If you suspend the operation until August 7th, 5,000 units will be the impact that you are foreseeing.

But we are confirming is that we have these disruptions until the August 5th of August and as I said is partial not all lines are stopping and we will provide further information as soon as it becomes available. Thank you.

Thank you. We have time for one last question if I go to the gentleman behind.

I'm with NHK Radio. First question, I have a related question to the previous one, impact of the supply chain. Specifically, what kind of components are in short? That's my first question.

Mr. I'm not sharing the detail today. As I said, the impact is 5,000 units, and we have this disruption until August 5th. We will continue sharing information as it becomes available.

Thank you very much. I have another question. Last month, a Chinese manufacturer announced a KEI car. In the EV market and the KEI domestic market, what kind of impact will there be from this Chinese manufacturer? And does Nissan planning to take any specific countermeasures against such challenges?

Of course, the Chinese OEMs are a serious threat everywhere in the world. And as I was saying earlier, we will require a strong transformation. This is why we're doing what we're doing today. So today, with Renisa, we're laying the foundation to be a more resilient and competitive company, and we will continue building on that. in order to make a strong foundation to fight the very aggressive Chinese OEMs. This is what I can tell you. So it's very important in every single market around the world that we transform ourselves and we become more resilient and stronger in order to fight with the aggressive Chinese OEMs. Thank you for the question.

I can accommodate one short question.

Thank you very much. Daniel Loesing from Reuters. I just want to take it back a little bit to the US market, because you're preparing for the launch of the e-Power Rogue. How important is that launch going to be for the company this year, especially financially, and say the launch would be a success? Would that be a reason for potentially upgrading the operating profit forecast for the whole year?

Well, whether it's important or not, of course, it's important. I think it's the most important launch of this year because of a few reasons. So one is in one of the most important markets of where Nissan operates. Second is in the largest segment in the US. And third, it will give us access to a market that we didn't have access before. So it will serve two purposes, Daniel. One, it will give us incrementality because today there is a part of the market that we are unable to tap into because some of our competitors are already, you know, marketing at around 50 or 60% of their mix on hybrid and we don't have that. So this will give us access to that. And second, it can help also reducing the level of spending that we have on incentives. Because we have many customers coming back from a lease that they want a hybrid. We don't have a hybrid. And in order for us to keep them with us, we need to sweeten the deal a little bit. So this we expect to change once we have the Rogi power in the market. And we're confident because we have received very strong feedback from media. So those that have tested it, the very specialized, strong media have been very, very supportive of the product. They recognize the strengths on the quietness and the acceleration, the smooth performance. And also, of course, it has a very competitive fuel economy. We believe we have the right product, the winning product for the US, and that's why we are confident that we can overcome these challenges that we have with the outgoing model. Thank you for the question.

With that, we will close the session for today. Thank you for joining us. If you have any further questions, we'll be happy to help as Nissan Communications team. Have a good evening. Thank you.