Nissan Motor Stock

Good afternoon, everyone. 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 1 hour. We're meeting here and the session is also being live streamed. Let me start by introducing our speakers for today, Ivan Espinosa, Chief Executive Officer; George Leondis, Chief Financial Officer. I will hand over to Ivan to begin the session. Ivan?

Thank you, Lavanya. Good afternoon, everyone, and thank you all for joining us today here in our 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 Re:Nissan before I turn it over to George to review our first quarter results. Re:Nissan 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 U.S.

Total deliveries of the Frontier pickup grew 35%. Nissan Rogue grew nearly 39% as we approach 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 Infinity 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 Roox increased by 52%. We also have 2 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 van 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 the 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 15%, 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 JPY 60 billion in fixed and variable cost savings recognized. Our 20% reduction target in engineering cost per hour has been achieved 3 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 Obeya activities, working in partnership with teams across the company and with our suppliers. Combined with the JPY 255 billion in total fixed and variable reductions that we achieved in FY '25, this brings the running impact linked to Re:Nissan actions to around JPY 315 billion.

But the work is not done. Our actions ensure that we remain on track to deliver JPY 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 3 months to June 30, 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 U.S. market, thanks to contributions from the Rogue, Pathfinder and the Frontier. In Europe, sales declined by 14.6% amid intense competition and portfolio optimization. In the Rest of the World, sales declined by 16.8%, driven primarily by disruption in the Middle East that Ivan 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 favorable foreign exchange rate with additional support from improved revenue quality through pricing and improved product mix. Operating profit reached JPY 77.9 billion, an increase of JPY 157 billion from the prior year. Net income was JPY 3.8 billion, reversing losses in the previous year quarter.

CapEx was approximately JPY 114 billion. While this is an overall reduction, we actually increased CapEx spend in support of new product programs. R&D spending was JPY 120 billion, demonstrating our continued investment discipline as part of the Re:Nissan plan. In the automotive business, including eliminations, net revenue was JPY 2.6 trillion. Automotive operating loss was JPY 8.3 billion, near breakeven, including the impact of the cost of tariffs. Automotive free cash flow improved to JPY 324 billion, an increase of nearly JPY 67 billion year-on-year. However, excluding onetime impacts in the first quarter, the improvement in our free cash flow was actually JPY 100 billion.

At the end of the prior period, net cash stood at a healthy JPY 970 billion. We retain solid liquidity with more than JPY 2.1 trillion of automotive cash and cash equivalents on hand. I will now explain the operating profit bridge. Foreign exchange contributed a positive impact of JPY 35 billion, largely driven by the depreciation of the yen against the U.S. dollar. Higher raw material costs, primarily for aluminum and copper had a negative impact of JPY 24 billion. Tariffs had a positive impact of JPY 18.3 billion. Sales performance improved by JPY 23.7 billion due to favorable pricing and selling expenses, particularly offsetting the raw material headwinds I just mentioned.

Monozukuri savings contributed around JPY 82 billion, reflecting Re:Nissan driven variable cost reductions. Inflation remained a headwind with a negative impact of JPY 14 billion. One Time gains contributed JPY 32 billion, including JPY 61 billion related to FY '25 U.S. tariffs clawbacks. Other items contributed a positive JPY 4 billion. Taking all these factors together, operating profit reached JPY 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 JPY 13 trillion and we reaffirm our operating profit of JPY 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 JPY 20 billion. 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 aluminum, 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 we'll update our assessment as visibility improves. There may also be some upside from foreign exchange if the yen remains at current levels. In addition, onetime gains recognized 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 JPY 200 billion. 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 JPY 157 billion with automotive operating profit nearly breaking even, including tariff and positive net income is achieved. Cost reduction activities delivered more than JPY 60 billion, keeping us on track to reach JPY 500 billion by the end of the fiscal year. And we maintained automotive net cash at around JPY 1 trillion 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 onetime impacts, we expect to offset these significant challenges. All our financial targets such as JPY 200 billion operating profit and net income of JPY 20 billion are reaffirmed. Our revised volume outlook primarily reflects the changed market conditions in China. Delivering this outlook will take focused 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 Elgrand 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 Re:Nissan 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. [Operator Instructions]

Hans Greimel from Automotive News. Thank you for calling. 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?

Yes. 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, Hans. Yes. This is the -- 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, Hans.

Can you give us maybe a percentage range of increase?

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

If I go to the person -- third person from the right, please.

[Interpreted] [indiscernible] speaking. Talking about outlook in China, which was revised. And it has been 3 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? Is it a change in the policy or regulation? Or is it about macro economy? In the past 3 months, there was a reason why you had to make a revision. And what was the particular reason behind this?

Thank you. Yes, 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 a strong commercial policy around NEVs that we are putting in place. We have a regionalized approach versus a year ago, we were operating in China with one nationwide commercial policy. We are moving away from that into a more regional-oriented commercial policy because depending on the part of the country that you're looking at, some provinces are a lot more NEV heavy and some provinces are still a bit more heavy on ICE. So you cannot have one commercial policy for the whole country.

And what we're doing is running the business on a more regionalized approach. So this is what we're doing. And as I said, this is what made the change, both the impact on the TIV as well as the shift on the mix to more NEV product demand. I hope that answers the question.

[Interpreted] Okay. In relation to this earlier question, in Re:Nissan, 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 the 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 Re:Nissan 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 Beijing in Shanghai Motor Show, we presented these 2 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 this regionalized approach.

And we will start also the exports quite soon around end of second half of this year, we will start the deliveries of products outside of China, starting with the N7 to some markets as well as the Frontier Pro and the NX8 will follow. So with these combined actions, we expect that the volume will gradually continue growing in the midterm. Thank you. Thank you for the question.

Thank you. If we go to the first person on the third row.

[Interpreted] NHK Taruno speaking. Kumamoto earthquake impact, what was it? In Fukuoka Prefecture, there are 2 production you have announced to suspend operation. Will this result in the suspension of 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 and 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 we can come to the right, second row.

[Interpreted] I -- my name is Takamura.

I have 2 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 Page 13. You said multiple positive factors. Can you elaborate? That's my first question.

Yes. 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 for the question. I don't know, George, if you want to complement.

If I may add, Ivan, thanks for the question. Yes, we are reaffirming our outlook of JPY 200 billion. In the first quarter, we generated JPY 78 billion almost with some onetime impacts in there. If you take out those onetime impacts, the core business is delivering somewhere around JPY 30 billion or JPY 40 billion. And so 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 U.S.A. So that goes to show we're improving the situation in the U.S.A. and we're offsetting raw material, plus we've got the U.S. tariffs. There's a program to continue to find opportunities in U.S. content. And we took some of those as onetime impacts in this quarter in relation to last year's U.S. 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 JPY 150 is going to reap rewards for us. And even with the intervention that we've seen in the last couple of days, we're hovering at around JPY 156 to the dollar. So we feel confident that, that's a reaffirmation of our outlook. Thank you.

[Interpreted] okay. The second question, may I -- U.S., 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 how -- what is your assumption on Japanese and U.S. dollars? And if possible, this JPY 150 after buying before -- this was determined before the coordinated intervention or did you adjust it after the intervention was made?

No, our outlook -- I mean, 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 an 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 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. The -- 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.

[Interpreted] [indiscernible] speaking. I have 2 questions as well. Today, you talk about Re:Nissan progress. And this Re:Nissan, you consolidated 7 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. Yes, as we have said before, we don't have any restructuring additional actions in view at the moment. Regarding powertrain, as I have answered before, we are looking at our strategy for the future. It's very fluid because of what we see happening in different markets around the world. We just spoke about China with all the NEV shift. In the U.S., we see heavy hybridization coming. 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.

[Interpreted] 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 [indiscernible] 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.

[Interpreted] [indiscernible] Speaking. I have 2 questions, too. Talking about Middle East impact, what is the latest update on the impact on Middle East? In May, you said that JPY 15 billion will be a hit on operating profit because of logistics 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 of Middle East?

Do you want to take that one?

Yes, I can take that one. Thanks for the question. It's very important for us, this situation, and we have a task force that monitors it, and 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 believe the impact on our business would be around 19,000 units deficit relating to the Middle East market alone. In the first half and also an impact of around JPY 15 billion in the first half. And we were always projecting out first half because of also a lot of actions we were taking to rightsize 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 JPY 20 billion and on vehicle sales around 18,000 units. So if you look back 3 or 4 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 because of -- 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 aftersales 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, we can try to reduce the impact that I just mentioned. So thanks a lot. Thank you for the question.

[Interpreted] There's another thing, another concern, which is Chinese business. Chinese business, profitability of Chinese business in the past, one of the -- this was used to be a cash cows, but because we 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 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?

Yes. Thanks for the question on China. I think Ivan mentioned it before, but I just want to emphasize 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, okay? That's the first thing I will tell you. The second thing is that in the first half, under China GAAP, our business, our joint venture in China was actually breakeven, okay? So we were not losing money in the first half, January to June. And in the first quarter, we actually made a little bit of money on the operating profit. Now where the business impacts Nissan consolidation is in the net income because we equity account our JV, a 50% JV interest 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, JPY 20 billion 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 Ivan mentioned, there's a lot of countermeasures in place. I won't reiterate because I'll end up requoting them, 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? Yes. Thank you.

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

[Interpreted] Akita-san 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? -- the mics. So yes, I guess you might have seen -- thank you. You might have seen the Tanshin document, and you're referencing that question to the Tianjin document. And the losses, in fact, that you see in that document are pretty flat from 1 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 the Micra, and it's going very well in the marketplace. And these 2 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 2 initiatives going on. We are rightsizing the footprint of the business to ensure that we can reduce the breakeven point of the business to a lower level than it is today. And on top, we are discussing that we publicly announced we're discussing with another OEM in fact Chery. 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...

No, I think it was clear. Maybe I don't know if that answered your question, [indiscernible]

[Interpreted] 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?

And the 2 answers are yes. So we are looking at every single opportunity, Akita-san . 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. Conversely, we also launched Tekton 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. And in the short term, this is something that we could potentially do. In the mid-, long term, of course, there's a heavier transformation that has to happen in order for us to be defending ourselves in front of Chinese players. And this is what we're working in parallel as well. So this is what I can tell you about that one, Akita-san. Thank you for the question.

Thank you. Let me go to the gentleman over there.

[Interpreted] My name is Nakamura. I have a couple of questions. First one is for Ivan-san. Re:Nissan, how do you assess Re:Nissan as of today? And what is the projection going forward? So far, JPY 355 billion of improvements in costs were made. Having said that, JPY 500 billion is full year objective. So you need to do more. So what is the -- how do you assess the current status in order to reach JPY 500 billion, is there any challenges that you need to overcome? This is my first question for Ivan-san.

Thank you. So yes, 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, 3 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's further opportunities, we will continue pushing to have a lower breakeven point. And then the work is on the top line. So continue to deliver good revenue. And so as long as we do the 2 things, the company's profitability will be structurally healthy and sustainable. This is what we are working on, Nakamura-san.

[Interpreted] Okay. 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.

Yes, 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 at Nakamura-san.

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

I'm [indiscernible] From Bloomberg News. I have 2 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. So as for the details on the R&Os 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 size 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 hedging on Forex, I'm sorry, but we would not disclose the details of that. You can -- I'm assuming you can easily understand. But the -- 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 a good position with this. It's going to help us protect to further risks 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.

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

[Interpreted] My name is Yamamoto. I have 2 questions as well. The first question is about Chinese business projection. I want details earlier, as Espinosa-san, you said that in the letter, this -- the second half of the year, things will be better. Specifically, what makes you think that it will be better in the second half of the year? Because between April and June, looking at the volume, NX8 was introduced and 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.

We said earlier, there's 2 phenomenon happening, Yamamoto-san. One is the economy slowed 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. So 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 4 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 2 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. There's a lot of demand for NEV product as we speak. So that's the reasoning behind Yamamoto-san.

[Interpreted] Okay. Thank you very much. Second question, which is about free cash flow, FCF. Automotive free cash flow in Re:Nissan, along with operating profit, you are focusing a lot on free cash flow. In first quarter, you came to JPY 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?

Yes. 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, okay?

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 have a -- 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 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 of the year, the growth of our business in the second half of the year, including with the introduction of e-POWER hybrid in the U.S., 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 a very healthy position, almost JPY 1 trillion. And our gross cash facilities are in excess of JPY 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 onetime last year, onetime gains of around JPY 50 billion. So the actual comparable number is JPY 440 billion to JPY 320 billion. So there is an improvement of over JPY 100 billion year-over-year for the quarter.

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

[Interpreted] My name is Khushika. 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. 10 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. Once again, what are the new challenges that are revealed and what are the necessary action to address them?

Question. 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 why 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 Monozukuri 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, Khushika-san.

[Interpreted] 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. It is -- this will be extended until August 7 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, 7, 5,000 units will be the impact that you are foreseeing?

What we are confirming is that we have these disruptions until the August -- 5th of August. And as I said, the partial -- all lines are stopping. And we will provide further information as soon as it becomes available, Khushika-san. Thank you.

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

[Interpreted] 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.

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

[Interpreted] I have another question. Last month, Chinese manufacturer announced K-Car in the EV market and the K 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, it will require a strong transformation. This is why we are doing what we're doing today. So today, with Re:Nissan, 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, short...

Daniel Leussink From Reuters. I just want to take it back a little bit to the U.S. 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 U.S. And third, it will give us access to a market that we didn't have access before. So it will serve 2 purposes, Daniel. One, it will give us incrementality because today, there's a part of the market that we are unable to tap into because some of our competitors are already 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 Rogue e-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. So we believe we have the right product, a winning product for the U.S., 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.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good evening, everyone. Welcome to Nissan's Full Year Financial Results for Fiscal Year 2025. I'm Lavanya Wadgaonkar 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 Espinosa, Chief Executive Officer; George Leondis, 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 Re:Nissan 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 disciplined 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, Ivan, 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 Roox 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 U.S.

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 FY '25. Consolidated net revenue reached JPY 12 trillion. Against our initial assumption, we achieved a positive operating profit of JPY 58 billion, supported by strong contribution from Re:Nissan cost actions.

Onetime items, mainly manufacturing consolidation and impairment resulted in a net loss of JPY $533 billion. On capital expenditure, the Re:Nissan actions have enabled us to prioritize 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 JPY 10.7 trillion. We are reporting an operating loss of JPY 250 billion, including a tariff burden. Full year free cash flow was at negative JPY 481 billion. Automotive operating profit was positive without the impact of tariffs. And free cash flow turned positive in the second half to JPY 112 billion, supported by disciplined working capital management. At the end of the period, net cash importantly stood at JPY 1.17 trillion.

Let me take you through the operating profit variance. Foreign exchange was a JPY 21.7 billion headwind, driven by volatility in emerging market currencies, while the U.S. dollar was fairly flat year-on-year. Raw material costs increased by JPY 5 billion, reflecting rising prices for commodities, including copper and aluminum. The total negative impact of U.S. tariffs on operating profit was JPY 286 billion. Sales performance was negative JPY 35 billion, while we saw improvement on our sales mix and volume recovery in key markets like the U.S., we increased selling expenses to support sales momentum.

We more than compensated for inflation of JPY 95 billion through strong cost discipline. Monozukuri savings reached JPY 227 billion, supported by efficiencies across manufacturing, logistics, R&D and purchasing. Onetime benefits delivered a positive impact of JPY 148 billion with lower compliance costs related to the U.S. and the U.K. emissions regulations, and we had reduced warranty estimates. Other items were JPY 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 JPY 58 billion, ahead of expectations.

FY 2026 outlook. As Re:Nissan 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 JPY 13 trillion, driven by higher unit sales. We expect profit of JPY 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 JPY 20 billion. This assumes ForEx rates of JPY 150 to the dollar and JPY 175 to the euro.

Allow me to walk you through operating profit outlook. Foreign exchange is a negative JPY 20 billion and rising raw material costs, including risks associated with aluminum and oil are a further negative JPY 85 billion. U.S. tariff burden improves by JPY 30 billion with Japan exports to the U.S. at 15% for the full year. The most significant profit improvement comes from Re:Nissan actions included in the improvement of JPY 340 billion in manufacturing costs. This includes both fixed and variable cost savings.

We anticipate a negative impact of inflation at JPY 60 billion and onetime negative items amount to JPY 150 billion as in FY '25, onetime gains do not repeat again in FY '26. Taking all of these factors together, we arrive at an operating profit outlook of JPY 200 billion. In closing, I'd like to say we are making steady progress with a clear disciplined focus on execution and improving fundamentals as we identify cost reduction opportunities and we execute with discipline and with speed. Our priority in FY '26 is to continue to deliver on our targets. I now will hand back to Ivan.

Thank you, George. To summarize, our results reflect the challenging operating environment, and we have worked steadily to manage it. In the U.S., we have put a 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 JPY 200 billion and variable costs, JPY 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 JPY 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 JPY 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 JPY 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 1 million, supported by a consolidation of our footprint from 17 to 10 sites. We have already announced all 7 site actions within 10 months with consolidation of 6 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 this 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 JPY 270 billion. In FY '25, we delivered JPY 55 billion with further benefits to come as measures are embedded in new and refreshed models from FY '26 onwards. These actions span a broad range of areas from technology to production innovation and smarter logistics.

Let me summarize our cost actions. On Manufacturing, all 7 site actions announced within 10 months were made. And now we are on execution and production adjustments and we'll continue to do so. On R&D, we improved efficiency and speed with 18% lower engineering cost per hour and shortened development life time lines. 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 FY 2026, our focus remains on execution, cost discipline and a smarter resource use. On the Re:Nissan, 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 Teana Huawei and N6 plug-in hybrid towards the end of the year. In Europe, we introduced the Qashqai e-POWER and MICRA EV, while in Japan, the new Roox 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 FY '25, 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, focused 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 FY 2026. In Japan, we will introduce Kicks, Elgrand and Murano, which will be imported from the U.S. In the U.S., we will launch the INFINITI QX65, followed by the Rogue with hybrid e-POWER technology. In China, we have introduced NX8 and within one year, launch models based on the Terrano and the Urban SUV concepts. India will have the Tekton. 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 Robotaxi testing with Wayve 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 the new direction, guiding how we compete and how we grow. Today, that direction is already taking shape. We returned to operating profit in FY 2025 and generated positive Automotive free cash flow in the second half.

As we enter the final year of Re:Nissan, 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, and we will now open for Q&A.

[Interpreted] My name is [Terasaki]. 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 leading 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 going to take Nissan to the next phase. What kind of company will it be eventually? That's what I would like you to describe with the stakeholders across the world.

Thank you. Thank you for your question, Terasaki-san. What has changed and how has Nissan changed? I think there are 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 Re:Nissan 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 Terasaki-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's 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 Nissan, I would like to create an environment that is very open, that has a lot of trust in 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. I hope this answers your question. Thank you very much.

Next question. Can we go to the third row?

[Interpreted] I am from The Yomiuri Shimbun. My name is Takamura. I have 2 questions. The first question, in 2025 fiscal year in the financials, the net loss was JPY 533.1 billion, earlier in the timely disclosure, impairment was described as JPY 240 billion out of this number. this JPY 533 billion 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 year 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 Nexperia 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.

Takamura-san. 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 is -- 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 product to other regions to minimize the impact.

Financial impact that we have taken into account already inside the outlook is JPY 15 billion. This is inclusive of both this volume impact as well as material cost 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. Yes, clearly, the JPY 533 billion loss includes a large amount of extraordinary nonrecurring expenses, as you pointed out. And I'd like to give you 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 JPY 360 billion, JPY 360 billion 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 JPY 125 billion 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.

Next question. Go to the last row.

[Interpreted] Matsumoto, Nikkei Newspapers. First question, this term's 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 breakeven? Or will it be a lot of profitability? Can you share with us the size of the profits or surplus?

And breakeven volume in February '25, 2.5 million. Espinosa-san said that it will be dropped to that. But therein after cost has also been reduced. So what about -- what is the breakeven volume for this current running term? And what is your estimate of breakeven volume? And in the midterm, how will the breakeven volume fare?

Okay. Just one clarification. Your first question is related to 2025 landing. 2026. Okay. So the outlook. So I will probably let George elaborate on that. As for the breakeven point, in Re: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 6 out of the 7 sites within this year. So this will put us in -- on track for the 2.5 million target that we set in the Re:Nissan 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 '26. on those 2.5 million units. So I hope this helps you understand what we're doing. We will continue, of course, optimizing because another site will be consolidated later on in 2027, which is Oppama, and we have been clear about that. And this will further enhance the utilization rate forward. Yes. Thank you. Thank you for the question, Matsumoto-sam. George?

Yes. Just in relation to the first question on free cash flow, as I said before, the important thing to emphasize is this, that in the second half of this fiscal -- of FY '25, the fiscal year, we reported actual results. The important thing to emphasize 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 FY '26, 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 FY '26 will be positive before tariffs, okay? And we are projecting a tariff of approximately 250 -- around JPY 250 billion 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 FY '25. The final thing I'll say is this. To give you some confidence, what we're aiming to do towards the end -- towards the tail end of FY '26 is to be automotive 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 FY '26, and that will take us into a progression into FY '27. I hope that clarifies to you where we're heading on automotive free cash flow.

Next question, please. The gentleman over there.

[Interpreted]Nippon NHK. My name is Hatanaka. I have 2 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 how does -- 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 Oppama 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 as of this juncture?

Thank you. On Oppama, 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, oil-derived products, yes, we do see some increases on the costs. As I mentioned before, this is embedded into our plan within the JPY 15 billion provision that we have put in.

We, of course, continue monitoring the 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, Hatanaka-san.

I'll take the question from the gentleman in front of...

[Interpreted] Toyo Keizei, My name is [indiscernible] I have 2 questions, too. The first one is fiscal year 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 going -- 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. U.K. Sunderland plant utilization rate is at 50%. I think you are struggling here. Chinese Chery, you're going to do a joint production with Chery, 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 market. While there's an EU restriction, how are you going to position Europe in your global portfolio or global footprint?

Thank you for the question. So several questions in your questions, San, 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 new products that we have launched and also on the back of some more tactical approach to the market composition in China. We know NEVs and ICE are behaving differently depending on the region of the market, and we are making plans to address that singularities in 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're 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 from -- 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 pre the slump 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. We -- 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 a 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 -- 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 Re:Nissan 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 that are lead, the role is double. It's -- the 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 that are successfully working in the market. So this is what I can tell you about Europe. Thank you. Thank you for the question.

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

[Interpreted] Kusaka of Kyodo News. I have 2 questions. Re:Nissan progress. Headcount reduction, 20,000 headcount reduction is embedded in the plan. And recently, you've announced headcount reduction in Europe. But will we hear new announcements one after another? And a related question, Oppama, 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?

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 our capacity. As we mentioned earlier, we will be at the end of 2026, running at around 80% of utilization ratio, 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 the 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 a people-first policy.

As such, bridging to your question on Oppama, 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 Oppama 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. We come to the front row, please.

Hans from Automotive News. 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 '26. 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 many -- how much that might cost in terms of impairments?

Maybe George, do you want to?

Yes. So yes, thank you for the question. The impairments that I mentioned earlier were JPY 360 billion. They were -- there's a breakdown as far as regions are concerned, the regions that we assessed cash-generating units for were including in North American business. So in particular, the United States, which has plants. We have three plants in the U.S. 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 utilization. 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, the -- 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 inside 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 FY '26.

In FY '25.

Sorry, in FY '25. 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, feel free to get in touch with the Nissan Communications team. We are here to help you. Have a good day.

[Portions of this transcript that are marked

[Interpreted] were spoken by an interpreter present on the live call.]

Good evening, everyone. Welcome to Nissan's Third Quarter Financial Results for Fiscal Year 2025. I'm Lavanya Wadgaonkar from Nissan Global Communications, and I'll be hosting today's session. Today, the session will run for 45 minutes. We are meeting here on site, and the session is also being live streamed. Let me start with the introduction of our speakers. Ivan Espinosa, Chief Executive Officer; Jeremy Papin, Chief Financial Officer.

I will now hand over to Ivan to begin the session. Ivan?

Thank you, Lavanya, and good afternoon, everyone. Thank you for being with us today. This has been a quarter of tangible progress in our operations and in advancing Re:Nissan, thanks to the sustained efforts of our employees and the strong support of our partners during this demanding period. Today, Jeremy will begin the session with the details of our financial performance and the latest outlook for the full year, and then I will update on the progress of Re:Nissan recovery plan. After that, we will be taking your questions. Jeremy?

Thank you, Ivan. Good afternoon, everyone. Like Ivan said, this is a quarter where Nissan's determination has truly shown through with teams across the company pushing forward with resilience. I will begin with our sales performance. For the 9 months to December 31, Nissan sold 2.26 million units, down by 5.8% year-on-year. And excluding China, the decline was 5.2%. In the latest 3 months period, we saw a slowing rate of decline with unit sales down by a more modest 2.9%. North America stayed steady with sales up 1% over the 9 months and flat in the last quarter. However, our U.S. for U.S. strategy, sharper incentives and stronger dealer engagement pushed pure retail volume up and kept profitability tight. Retail sales rose 3% year-on-year with Q3 retail share up 80 basis points, powered by our U.S.-built lineup of Pathfinders, Frontiers, Rogues, and QX60s.

In China, sales were down by 8% over the 9 months. However, in the most recent quarter, we saw a strong rebound of 12.7%, driven by increased demand for the N7. Our sales in China have now been growing year-on-year since June 2025. Japan remained challenging with year-to-date sales down by 17.7% and Europe is also soft, posting a 9% decline. Across other regions, sales were down 7.6%. Even though our overall sales performance is negative, we are mitigating the impact of tariffs like in the U.S., where we are strengthening dealer engagement and increasing pure retail volume. Our negative year-on-year sales performance is partly driven by changes in our car flow as we had to adjust to the new tariff conditions. The new models we have launched are resonating well with customers worldwide, even as we continue the broader renewal of our lineup.

Turning to our financial performance. For the 9 months, net revenue declined by -- net revenue declined to JPY 8.58 trillion, reflecting lower unit sales. However, our operating loss of JPY 10.1 billion represents an improvement from the first half as the benefits of Re:Nissan cost actions begin to come through. Our net loss was JPY 250 billion, largely reflecting noncash asset impairments and restructuring costs taken so far. We maintained disciplined capital allocation with CapEx at JPY 349 billion and R&D at JPY 412 billion as we eliminated nonessential investments, prioritized key programs and saw accelerated development benefits flow into an R&D cost.

In the Automotive business, net revenue was JPY 7.6 trillion. Our operating loss was JPY 234 billion, and we recorded a negative free cash flow of JPY 691 billion. At the end of the period, net cash stood at JPY 958 billion. We continue to retain strong liquidity with JPY 2.15 trillion of automotive cash and cash equivalents on hand and JPY 2.58 trillion of unused committed credit lines. These liquidity levels are unchanged since March. This slide shows the year-on-year operating profit variance factors. Foreign exchange had a negative impact of JPY 52.2 billion, reflecting continued currency pressure. Raw materials provided a positive contribution year-to-date of JPY 9.3 billion.

As in previous quarters, tariffs remained the single largest headwind with a total impact of JPY 232 billion. Weaker sales performance despite an improvement in mix contributed an JPY 11.8 billion negative impact on the operating profit. On the positive side, we delivered strong Monozukuri cost improvements, primarily driven efficiencies across manufacturing and R&D as well as logistics optimization. This is an area where we continue to see strengthening sequential benefits. Inflationary pressures accounted for a further JPY 63 billion. We have enjoyed onetime gains of JPY 81 billion, of which the newly added item was a JPY 16.4 billion benefit from lower U.K. CAFE costs. Other items were JPY 84.4 billion positive with efficiencies in sales finance, remarketing and G&A all contributing positively.

Taken together, these factors resulted in an operating margin of 0.1% for the period. In addition to the 9-month result, it is important to note that the latest 3 months period shows clear sequential improvement from the first -- from the second quarter. We delivered a positive operating profit of JPY 17.5 billion, supported by gains in foreign exchange and raw materials, but mostly due to continued progress in Monozukuri cost efficiencies. While tariffs and softer volumes still weighted on performance, the quarter showed a slowing rate of decline in sales and an improving contribution from an internal cost actions. These sequential gains in operating profit and operating efficiency demonstrate a stronger underlying trend reinforced by Re:Nissan measures.

Let me move to the outlook where the stronger trends allow us to lift our forecast for the remainder of the year. I'll start with volume. Given the challenging sales in the first 9 months, we now expect global sales volume to come in at 3.2 million units for fiscal 2025. This represents a downward revision of 1.5% from our previous sales forecast. We maintain a positive view on delivering this outlook, grounded in the strength of our products, including new models, stakeholder recognition and a more stabilized tariff environment. In the U.S., we continue to prioritize retail sales, which have grown month-over-month, and we expect further gains as brand perception strengthens.

In Japan, we are executing highly targeted marketing investments to drive showroom traffic up. Additionally, in Q4, we anticipate good sales from the retention of a strong customer base. China market continues to be soft, but our focus remains on sales of our core models to meet customer demand. In line with the revised sales volume outlook, we are revising our production volume forecast to 2.9 million units. We now anticipate full year revenue of JPY 11.9 trillion, an upward revision of JPY 200 billion from our previous outlook. Our forecast for consolidated operating loss is JPY 60 billion, reflecting strong progress we're making on fixed cost reduction under the Re:Nissan plan. Our net loss outlook of JPY 650 billion includes restructuring charges under Re:Nissan and potential additional restructuring and business alignment decisions that we may make in Q4. This projected net loss is predominantly the result of noncash accounting changes. This assumes ForEx rates of JPY 149 to the dollar and JPY 173 to the euro.

Here is a brief walk through of the key drivers of operating performance. We expect a JPY 35 billion negative impact from currency for the full year. Raw materials are expected to have no impact year-on-year, but tariff cost will be a headwind of JPY 275 billion. Monozukuri savings of JPY 200 billion will offset inflationary pressures of JPY 95 billion. We also expect onetime gains of JPY 81.3 billion and JPY 33.9 billion positive contribution under other items. This captures the main financial trends shaping our performance. Fixed cost reductions are firmly in place and are already contributing. Variable cost efficiencies are showing early signs of improvement. We are strengthening the foundation and momentum is building.

I will now hand it over to Ivan.

Thank you, Jeremy. In summary, our results reflect a tough sales backdrop, but they also show that our decisive actions are stabilizing the business and setting the stage for recovery. In the U.S., our focus on retail and reduced reliance on fleet helped maintain performance even as Japan and Europe faced weak demand and intense competition. At the same time, we are seeing encouraging early signs of recovery in China, where demand for our new energy vehicles continues to build as well as strong customer response to Teana's advanced in-vehicle technology. Our product momentum for the rest of the year is positioned to contribute towards achieving our revised volume ambition while we continue to manage the challenges in key markets.

Financially, our performance has been better than expected. We have already reached fixed cost savings of JPY 160 billion, and we are confident to exceed JPY 200 billion in FY '25. Disciplined working capital management is improving free cash flow and net cash remains close to JPY 1 trillion, reinforcing our balance sheet strength. We delivered a JPY 17.5 billion operating profit in Q3 with disciplined cost savings covering an JPY 82 billion tariff impact and confirming improving operating trends. With Re:Nissan gaining momentum, we expect to limit our FY '25 operating loss to JPY 60 billion and return free cash flow to positive in the second half. To reiterate, while our underlying operating performance is improving, allowing us to revise our outlook significantly for operating profit, our net loss outlook reflects mostly noncash charges driven by restructuring, we are undertaking to strengthen our long-term operating performance.

Now let me shift to Re:Nissan, the plan that is laying down the foundation for a stronger and more competitive Nissan. As you will recall, we are targeting JPY 15 billion of savings split between variable and fixed cost savings. On the variable side, our identified ideas have increased to more than 5,100 with a potential to deliver savings of about JPY 240 billion. These ideas include more than 3,500 new technical efficiencies alongside 740 manufacturing and logistics innovations and hundreds of other proposals. We are moving from feasibility into implementation, staying on track with our target dates, while we accelerate the delivery of cost reductions through continuous review of our development processes.

On the fixed cost side, we have moved with speed and discipline. We have now announced consolidation of the 7 out of 7 vehicle production sites within 10 months of the Re:Nissan planned launch. Most recent one is the agreement to sell our manufacturing assets in South Africa to Cherry South Africa. Our fixed cost savings have already reached JPY 160 billion, ahead of plan, and we remain firmly on track to surpass JPY 250 billion by fiscal year 2026. This progress reflects decisive actions across outsourcing, more efficient use of marketing funds, expanded shared services and disciplined expense management.

As for engineering cost per hour reduction, we have delivered 15% so far, and we are progressing solidly towards the goal of 20%, reflecting faster development cycles and stronger efficiency across our global engineering footprint. We are advancing as well workforce resizing responsibly, ensuring the process remains disciplined and thoughtful. Re:Nissan is also about repositioning Nissan for the future, and our latest product launches show that the market is responding. Our product momentum is accelerating with good acknowledgment for the newly launched models.

In Japan, the LEAF has received around 5,000 orders. This icon of ours has been widely acknowledged with major industry awards globally, a clear sign of customer trust returning to the brand. Roox continues to resonate strongly with more than 40,000 orders supported by recognition from design and industry juries. In the U.S., Sentra retail sales rose by 30% year-on-year in January, demonstrating renewed relevance in one of the most competitive segments. And in China, the Teana Huawei reached 10,000 orders in its first month, reflecting strong acceptance from customers and media alike. These results highlight real market traction and give us confidence that the next phase of Re:Nissan is already established.

Looking ahead, our product lineup is giving us increasing list. We are now entering the next wave of launches with models that bring both innovation and strong customer appeal in key segments. In December, we launched the new Frontier Pro and the N6 plug-in hybrids in China, one of the most competitive markets in the world. We will start exporting Frontier Pro to key markets soon. And in the coming months, we are rolling out several strategic products, the Gravite in India, the INFINITI QX65 and the new Navara pickup in Australia.

By prioritizing these great models, we are laying the foundation for future growth and positioning Nissan to compete more effectively across global markets. Before we take your questions, let me reiterate. Nissan is on the right track to recovery. We remain firmly committed to financial discipline as we accelerate the introduction of breakthrough products and technologies. And we are taking the necessary steps decisively and consistently to deliver a sustained recovery and set up the next chapter of Nissan. Thank you very much.

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. To help us manage the time, we request you to limit the questions to 2 per person. So may I see the hands up? Already see the gentleman over there.

Toyo Keizai, Hatano speaking. I have 2 questions. The first question is about the full year guidance. So far, you haven't disclosed it, but JPY 650 billion of net loss is what you have -- are expecting for the year. For 2 years in a row, you have JPY 600 billion worth of losses. Why? Noncash restructuring expense, what's the breakdown here? In the next 3 months, JPY 400 billion of net loss will be generated. What is the EV-related asset? Is this included here? And today, utilization rate is declining in Tochigi plant. Does this include potential impairment in Tochigi? So can -- did you clean up all the bad news for this year with this number?

Thank you for the question. As you know, we are systematically and continuously reviewing the performance of the business and the cost of any recovery and stabilization of the business. So I don't think -- today, we're providing you with an estimate. I don't think I can provide you with the details of that estimate. Obviously, the estimate comprises what we've already indicated to you, which are decisions that we have made under the Re:Nissan plan and further decisions that are being made potentially before the end of the fiscal year as well as revisiting the business conditions for our various assets. And I don't want to go beyond making those comments today and disclosing a guidance of a net loss of JPY 650 billion. What I do want to insist on is the fact that the very vast majority of those costs are going to be accounting charges with no cash component attached to it.

Next question, please, to the gentleman with blue shirt.

Kanagawa Shimbun, Kanagawa Shimbun, Sato is speaking. Thank you for the presentation. Re:Nissan, 7 plants rationalization is all decided and 20,000 people reduction, where are you today with this? This is related to the previous question, by the way. Out of the net loss, what is the ratio here to the extent that you can disclose about the headcount reduction?

Thank you. We don't disclose details on the workforce reduction. But what I can tell you is that we are moving swiftly with responsibility and taking care of the actions that we have to follow. So we are a bit ahead of the schedule in terms of our workforce reduction, but we are not sharing the breakdown. Again, it's about thoughtfulness and responsibility, the way we are managing these adjustments on the workforce. Thank you for the question.

Next question, please. Can you come to this side? To the gentleman in the middle.

The Yomiuri Shimbun. My name is Takamura. Let me reiterate, JPY 650 billion of net loss, out of which you cannot give all the breakdown, I understand. But restructuring charges is how much? What's the order of magnitude of restructuring charges? Just to give me a rough image here out of the JPY 650 billion. And the second question, Honda's business integration talks with Honda, this broke off, and it has been 1 year since then, tomorrow. So where are you with Honda? In terms of progress, maybe you cannot answer this question if I'm asking for the progress with potential partnership with Honda. Let me reiterate today, auto industry is facing a lot of changes, and it's very difficult to survive or compete effectively alone. So the criticality of collaboration is Honda, what are the priority areas? What are the things that you would like to focus? What is the vision by which you are discussing with Honda in pursuing the collaboration? What is the approach or a vision in which you are discussing about the potential partnership or collaboration with Honda?

Thank you for the question, Takamura-san. Let me start with the second question, and then I will let Jeremy address your first question. So as for the discussions with Honda, we keep a very open and collaborative spirit. We both, I think, recognize the challenges that the industry is facing, and more so both being Japanese companies, I think we need to find common footing and common ground where we can collaborate. With that said, I will just repeat what we have said last time. We are focusing on finding projects that bring a win-win to both companies. And the latest discussions are mostly focused around the U.S. and how we can collaborate in North America, given the difficult environment that we have with tariffs and the fact that we can both support each other in these hard circumstances. So this is as far as I can go in terms of the details of discussion with Honda. But as I said, the discussion is very constructive and very positive. Thank you. So Jeremy, if you will.

Yes. Thanks. What I can share with you is that after 9 months and the components of the JPY 250 billion net loss, I think you could -- we have booked about JPY 60 billion in impairments and we have booked about JPY 100 billion in Re:Nissan items. And on top of that, we have obviously also executed on the sale and leaseback of the global headquarters, which has reduced the total amount. But those are the 2 numbers that you can use as a reference for what's in the JPY 250 million net loss year-to-date. And again, I don't want to speculate on the full year outlook. We are obviously going through all the processes of the company in order to provide the estimate.

Thank you. If you go to the gentleman there, middle row.

Nikkei. Ochi, Nikkei. Let me speak in Japanese. First of all, I have 2 questions. Sales volume, full year estimate has been revised downward. So in comparison to the assumed volume, Mr. Espinosa, you aren't seeing growth in terms of sales volume. Do you think that there will be recovery in volume from '26 onwards? Second question, China. Rare earth supply, dependency on China, there are concerns that there would be cut off. Have you actually met with realistic challenges? What do you -- how do you evaluate the challenge going forward?

Yes. Thank you for the question. Let me start with the second one. So as for the rare earth and other supply challenges, at the moment, we don't see anything that will affect the landing of the year. We keep, of course, monitoring very closely because it's a very dynamic situation. We have the DRAM chips that we need to monitor closely because there seems to start being some shortages. But we are having very close communication with our suppliers to ensure the stability of the supply chain. At the moment, we don't see anything that is coming at us, but we are keeping a very close eye on it.

Then as for the sales volume, I think the results are a bit mixed, as explained by Jeremy in the presentation. When you take China, for example, China had a slow start in the first calendar -- in the first half of the calendar year. But once we started to launch the new products, we saw a recovery, and this is bringing growth since June up to the end of the year, we've seen growth year-over-year. And we have, I would say, a prudent view because the market softened in December and in January, yet the response to our products remains strong. In the U.S., we see that the strategy that we put in place to move from reliance on fleet and rentals and focusing more on the retail part of the business is working. So we keep pushing in this direction, pushing also in marketing more our U.S. built product so that we can stay away from heavy tariffs.

And the strategy is working. We had a good month of January in the U.S. So our share was remarkably strong, and we continue pushing. Then we have Japan, which is a market that is the most difficult at the moment for us. And as I shared with you before, part of it is because of what happened and all the corporate news we had, unfortunately, last year. This affected the traffic that we had from customers into the showroom and the trust in Nissan. But from the Japan Mobility Show onwards, we start to see a recovery, which was the strategy. We started to communicate much more heavily on product and technology, leaving the restructuring news behind and focusing on what matters, which is product, which is a great car that we can build.

And this is working. We see the traffic coming at the showrooms recovering gradually. It's reaching levels at which we were 1 year ago, which is encouraging. Now we have to convert this traffic into sales. The positive is we see the take -- the order take of the new product that we have launched consistently growing. So the example of LEAF with 5,000 orders in January. And we are now rolling out the small battery LEAF, which will greatly help in boosting more the volume. And we have Roox, which has 40,000 orders, and we are rushing now to match those orders with the production so we can deliver the product.

So we will continue pushing. We will invest more in advertising in the Q4 in the sustaining the good initial launch of those products in Japan, and we will continue doing so continuously sustainably and focusing our marketing efforts on bringing more traffic, hopefully spreading this traffic also to the minor changes of X-Trail and Serena that are also recently coming into the market. Yes. So that's a summary on the sales. Thank you.

Thank you, Ivan. We go to the left side, the gentleman in the first row, first.

My name is Suzuki. I have 2 questions. Earlier, it's related to what Yomiuri asked, collaboration with Honda, you are positively pursuing this. Once again, I think you will deny anything here, but capital tie-up or deeper collaboration or deeper partnership. Is this possible? Is there a possibility of having a capital tie-up or deeper collaboration with Honda and you are building new products. That's what you are saying. But on the other hand, in Nissan, many -- some people are saying that they don't find a car which they want to buy in the lineup. Well, you will -- you are accelerating the effort, but maybe you cannot make it on time for some of the models. Is there any thoughts that you can share with us on this front?

Thank you, Suzuki-san. As I said before, we are always open to collaboration. Anything that brings value to Nissan, we will always be open to explore. Now, there is nothing concrete on capital discussions. We are working and discussing on projects, as I said, projects that are win-win and projects that bring value to Nissan and of course, to Honda in return. Now our model lineup, as I said before, I think this belief that there's no products that anybody wants to buy, we should gradually remove from our thinking because we have numbers saying a little bit different story. 40,000 orders of Roox, I think, is a good measure of the acceptance of our product. Same thing goes with the LEAF, 5,000 orders in Japan in 1 month, I think also speaks highly of the product being well received.

And also, we've seen great response to the products that we showcased in October in the Japan Mobility Show like Elgrand. And we will continue the rollout of products. We have Elgrand. We have Kicks. We have many other products coming in, in the coming months that will help us bringing more traction in Japan.

So the answer to your question is, yes, we have enough product. We have enough product to keep the momentum and to sustain a good response and turnaround in the sales performance in Japan. I don't know exactly what or how long it will take to recover, but the product is solid, and we have a very strong cadence of product coming up in the coming months. Thank you for the question, Suzuki-san.

If we can go to the gentleman here. Yes, please.

Nikkei BP, Kurihara. I have one question. This was mentioned in another question previously. Semiconductor supply, you said, you monitor the situation having some concerns. But specifically regarding procurement policy, have you changed anything in your procurement policy? Or do you have any plans to change your procurement policy?

Well, I don't know if we will change the procurement policy. But here, the focus is to stabilize the supply chain. So we will source where we find competitive costs and ensuring stability of the supply chain. And we do that through our purchasing organization, having very close communication with our Tier 1 suppliers and supporting where we see the need. Sometimes it's done directly by the Tier 1. Sometimes we can help connecting and finding suppliers that support stability in the supply chain.

As I said, we don't foresee at the moment anything coming at us, but we keep a very close eye because it's a very volatile environment, and we need to react accordingly. So we have dedicated teams looking at this on a daily basis, ensuring that we have stability of supply. Thank you for the question.

Next question, we come to the middle, to the front. Second person.

TV Tokyo, my name is Abe. I have 2 questions. First off, for 2 years in a row, you have a JPY 600 billion level of net loss that you are going to generate. If that is the case, this means that this is a huge problem for you. Sales volume is low, and operating loss will be generated. If so, is there something wrong with the top management, Ivan-san? How do you see or evaluate your performance so far, including how you assume the responsibility for this performance? And the second one, is it standalone alliance expansion? That's what you are discussing to survive. Stakeholders, especially the main bank, I understand, wants the alliance to be stronger, including the potential business integration. They want you to expand the collaboration or partnerships. Which direction are you going to pursue from the financial aspect? Maybe I want Mr. Jeremy to express his opinion as well. That's all.

Let me start by the first question. From the beginning, we said that this year was a year of restructuring. And when you do a restructuring, unfortunately, there are costs that are incurred and impairments that are incurred. So it's unfortunate that we have a net loss this year. But in a way, it's expected. This is what we were set to do. We had to reset the clock of a company, and this is what we're doing with the plan. I think it's remarkable to recognize from the teams the discipline and the dedication that they have put, moving the company from where we were to where we are in the Q3.

I want to remind you and everyone that the Q3 was a positive OP, even paying more than JPY 80 billion of tariffs. So Q3 stand-alone operating performance was good. Is it good enough? No. We need to continue working, and we need to do more, and we need to do it faster. But I think what is important is that we recognize that the plan is on track, and we're doing exactly what we said we will be doing, and the results are showing. So this is what it comes to the first question.

Then as for the alliance and partnerships, as I said, we will always be open to find and collaborate with partners in any space so as long that they bring value to Nissan and they help us protect the future of our company, and they help us have a stable future. This is the approach and everyone in the management has the same mindset. So you can ask Jeremy his point of view from finance or you can ask [indiscernible] in engineering or you can ask Hirata-san in manufacturing. We all have the same thinking. The thinking is how do we protect Nissan for the future. In a very harsh and difficult environment, you need to remain open and thinking of how you collaborate and leverage other companies' strengths. So we will continue with this philosophy and moving forward in this difficult environment. I don't know if you want to complement.

Not much to add, but synergies are important in this industry. And so again, any cooperation or partnership that can yield synergies fast, lower entry tickets and higher economies of scale will be always welcomed.

Go to the next question to the gentleman behind.

Hatanaka, NHK. Here, Japanese and non-Japanese OEMs, especially North America, the introduction of EV timing, they have revised the strategy for EV. And Nissan, are you going to revise the EV strategy going forward, just like the North American entities? Will this affect Re:Nissan or the organization of Nissan? I think revival of the company is a top priority. What do you say about this?

Thank you for the question. And we are, of course, focusing on what the customers are expecting to get. And we see a very strong shift, particularly in North America to hybrids. And this is why we decided to anticipate our role hybrid e-POWER. So it's coming to market earlier than we originally planned. We are leveraging on an accelerated development schedule. I shared this news with you, the fact that we are now operating with a quicker schedule for development. That is helping us adjusting our portfolio planning with more freedom and at the same time, is showing in the savings that you saw today in the financials.

So we will continue adapting to the market and bringing what the customers are expecting. The good thing about Nissan is we have the technology in the -- on the shelf. So we have hybrid e-POWER. We have very competent and competitive ICE powertrains, and we have also EV technology. So we can adjust and pivot depending on what the markets are looking like. And for the moment, given the policy changes in North America, it's moving to hybrid. And as I said, we are going to bring very quickly a very competitive e-POWER system to North America. Thank you. Thank you for the question.

If I come to the gentleman in the front row, the last.

Yasunaga, NHK. I have 2 questions. First, Oppama Plant, what about the after-use? Do you have any progress you can report to? Specifically, what are the conversations you are having? To the extent you can disclose, please share us information. Secondly, this was already touched upon, but North America EV decline of demand, and in Europe, with the policy change, impairment cost has been incurred. So because of these factors, do you foresee negative factors to your performance, and what kind of negative factors are you expecting, and what's your response?

Thank you. Regarding the use of Oppama after -- as I mentioned before, and I'm sorry that I'm not giving you clarity, but the focus for the moment continues to be the employees and making sure that we have a smooth transition of the employees to the new activities and new options that we're providing them. So we continue to do that with a lot of responsibility and thoughtfulness, as I explained before. And this continues to be the focus. So once that is set, we will then start engaging into what comes for the usage of Oppama later on. So this is what I can tell you on Oppama.

Then on the EV, as I mentioned before, I think the same applies to Europe. On the positive side, we have e-POWER third-generation Qashqai there. The performance is good. We continue to grow steadily. The recognition of the system is very strong. So we have that to help us coping through this period of instability. We will be also launching the LEAF quite soon, the LEAF EV. So again, we have a product that has enough variety to cope with customer demands in the market, and we will continue providing very attractive product to them. Yes. Thank you for the question.

Thank you. We have time for one last question, if you can give it to the gentleman here.

Daniel Leussink from Reuters. My question is related to the plan that was floated previously about exporting cars from China. Could you give us an update on the status of the plan and the models that you're exporting or looking at exporting and how that's going? And what regions are you looking at?

Thank you. Well, it's going according to our plan. So we're moving very quickly, Daniel. And I think the beauty of what we have in China is that we have access to what other Chinese manufacturers have, which is the speed, the technology and the cost. And we are going to use this to defend ourselves outside of China. You can imagine that we will bring these products where we are aggressively being attacked by Chinese competitors. So think of the Middle East, think of the Southern Hemisphere of the world. And the good thing also is we have several products on shop. So we have Frontier Pro, which we mentioned earlier today, which is a wonderful plug-in hybrid pickup that will help us cover many of the markets in which today we sell our pickup, help us complement the range.

We have also EVs like the N7, and we have plug-in hybrids like the N6. And we have other products as well. We have also ICE products that we could potentially export if we see the fit. Now the important thing is to have a very robust complementation of our existing lineup. So we're doing this quickly, but we are doing it also orderly so that we don't create an issue in the logic of our great walk and showroom logic and make sure that customers don't get confused. So this is what we're doing. And very soon, you will start seeing some of these products coming out of China.

I think I can fit in one short question, just one more. Please go to the gentleman.

Journalist Momota is speaking. EV resale value strategy is what I would like to hear about. One of the impediment of the EV penetration is resale value of EV. It's not only specific to Nissan, [indiscernible]. Nissan will create a working team to protect the retail value, N7 is popular in China, thank is this because of resale value strategy, which is working? So please tell me how you're going to implement, improve the resale value of EV.

I think it's a very broad question. But I think one of the things that we have to consider more and to start marketing more is the benefits that EVs bring beyond the car itself. On one end is the battery value. So batteries and the reuse of batteries will help in improving and increasing the resale value of EVs in the future. Second is as more and more customers start using EVs also to complement the energy management at home, this will also increase the resale value of EVs beyond ICE because it creates more value than a normal car.

So these are the things that we need to continue discussing. And as you said, it's not purely a Nissan effort that has to happen, but there's an industry-wide effort that has to be put in place, to have clarity on certain regulations of usage of -- reusage of batteries, have -- for example, a common collection system of batteries will also help the industry and accelerate the adoption of EV. So there's multiple things that we could think of. Some of those, as you said, being discussed in the [indiscernible] as industry initiatives. Thank you. Thank you for the question.

That brings us to the end of the session. Once again, thank you for joining us today. If you have any further questions, Nissan Communications team is available any time to answer. Have a good day. Thank you.

Good evening, everyone. I'm Lavanya Wadankkar, Corporate Executive for Global Communications Office. Welcome to Nissan's First Half Financial Results for Fiscal Year 2025. Along with financial year results today, we will be presenting an update on Re:Nissan. Today's session is for 45 minutes and is held on site as well as online.

First, let me start with the introduction of the speakers today, Ivan Espinosa, Chief Executive Officer; Jeremy Papin, Chief Financial Officer.

We will begin with the presentation. So I'll hand over to Ivan. Ivan?

Thank you, Lavanya. Hello, everyone. Thank you all for your continued support. It was a pleasure to meet and host many of you at the Japan Mobility Show. Before we begin, I want to emphasize that Re:Nissan is on track, and I am grateful to all who have shown patience and trust during these decisive actions. Despite ongoing challenges and volatility, we remain focused on recovery.

Today, Jeremy will present our first half performance, second quarter results and full year outlook. I will then update you on the Re:Nissan before the Q&A. So Jeremy, please.

Thanks, Ivan. Building on the disciplined approach, our cost control measures are showing encouraging signs amid a challenging environment. Now let's take a closer look at our retail sales results. Total unit sales reached about 1.5 million in the first half, down by 7.3% year-on-year.

Second quarter sales, excluding China, were down by 3.6%, an improvement over the first quarter. We are already seeing clear acceleration in Q2 with North America delivering stronger results and China posting year-on-year growth since the month of June for the first time in 15 months. North America saw acceleration with 2% growth overall and 6.7% in Q2. U.S. sales were flat, Mexico up 8%, maintaining market share leadership.

China sales declined by 17.6% in H1, but have grown year-on-year for 5 months, led by N7 demand. Japan dropped by 16.5% in H1, but our showroom traffic has been recovering from a low point reached in July, thanks to marketing and dealer program initiatives. Europe and other markets had temporary declines from model year changeovers and increased competition.

First half consolidated net revenue was about JPY 5.6 trillion with an operating loss of JPY 28 billion, better than we had expected. Net loss was JPY 222 billion, largely due to lower equity method income, impairments of assets and restructuring costs. The automobile business revenue was about IDR 4.9 trillion, driven by foreign exchange effects and lower wholesale volumes impacted mainly by tariffs.

R&D spending was controlled at JPY 275 billion through disciplined resource allocation, some project deferrals, thanks to a shortened development schedule and optimized hourly engineering costs. Our operating loss widened to minus JPY 177 billion. Automotive free cash flow was negative JPY 593 billion in H1, but Q2 performed better than expected at negative JPY 202 billion.

At the end of the period, net cash stood close to JPY 1 trillion. Importantly, we maintained solid liquidity at IDR 2.2 trillion in automotive cash and equivalents and unused committed credit lines at IDR 2.3 trillion. This slide shows the year-on-year operating profit variance factors. Foreign exchange had a negative impact of about JPY 65 billion, driven by weaker U.S. and Canadian dollars as well as the Argentinian peso and Turkish lira. Raw material costs were slightly positive at JPY 3 billion, while tariff had a negative impact of JPY 150 billion.

Sales performance contributed ID 24 billion but negative volume was offset by a favorable mix. Together, volume and mix delivered IDR 62 billion improvement. However, competitive pressures continued to weigh on incentives. Monozukuri improved by IDR 67 billion as the Re:Nissan recovery plan delivered cost savings alongside lower R&D spend and purchasing efficiencies. Inflation absorbed JPY 50 billion, moderating the overall benefit.

Onetime items added JPY 65 billion, mainly due to lower warranty costs recognized in Q1 and reduced U.S. emission expenses recognized in Q2. Other items, including sales finance and remarketing expenses added JPY 45 billion. We achieved a positive impact on G&A costs through Re:Nissan initiatives. Taken together, these factors resulted in an operating loss of JPY 28 billion for the first half.

I will now move to the outlook for the remainder of the fiscal year. For the second half, we anticipate a strong rebound in volume driven by new products and marketing initiatives. In China, demand for N7 is encouraging, and sales are expected to exceed previous outlook by 13%. North America is expected to sustain momentum, and we will intensify our efforts in Japan, Europe and other markets. Although the first 6 months showed a year-on-year decline, we are confident the next half will deliver growth. The markets remain challenging, but the industry volumes are stable.

Our full year sales forecast remains unchanged at about 3.25 million units, representing a 2.9% decline year-on-year. We are adjusting our outlook to reflect the positive developments ongoing in China, but we are reducing our consolidated retail sales to account for the lower performance of the first half. The production is projected to remain around 3 million units as we maintained a very disciplined inventory management and actively manage supply risk. Recent launches and model enhancements will strengthen the lineup and attract customers in H2.

Operational improvements, including a third shift at Nissan [ Shatai Kyushu ] will boost output. Net revenue is expected to be about JPY 11.7 trillion for the current fiscal year. As outlined in our revised outlook last month, we anticipate a full year operating loss of about JPY 275 billion, breakeven before the impact of tariffs. Our operating profit outlook includes JPY 25 billion for assumed supply risk, which we will revisit as the situation evolves. We are still evaluating the impact of Re:Nissan, so we are not of Re:Nissan initiatives, and we are not providing a net income outlook today. The forecast is based on an exchange rate assumption of JPY 146 per dollar.

Let me outline the factors behind our operating profit forecast. Compared to last year's JPY 70 billion operating profit, we expect significant headwinds from tariffs and currency. On the positive side, we anticipate benefits from an improved product mix and continued support for our U.S. built models. Year-on-year, we expect cost improvements as Re:Nissan initiatives take hold even amid inflationary pressures. Tariff-related carrefour adjustment will add cost in the second half, limiting manufacturing efficiency gains, but we are expecting savings in logistics, R&D and purchasing.

Onetime positives include lower warranty provisions and reduced emission penalties. Overall, we forecast an operating loss of JPY 275 billion for the year. We remain disciplined in our balance sheet management, and we are retaining sufficient liquidity. Total liquidity is about JPY 3.6 trillion with JPY 2.2 trillion in cash and JPY 2.3 trillion in unused credit lines. Year-end automotive debt is forecast at about JPY 2.1 trillion, fully in line with our initial plans, and this is following the successful refinancing of JPY 700 billion in debt maturities this year.

Let me now hand over to Ivan.

Thank you, Jeremy. I will briefly recap H1 performance and the outlook. First, on sales performance, despite volatility and competition, we stay resilient. Q2 declines narrowed signaling stability. North America showed strong Q2 growth. Retail non-EV share has risen for 3 straight quarters and continued in October.

China turned positive since June, while Japan and Europe experienced some softness, but we expect recovery with upcoming launches and dealer programs. Second, on financial performance, we possessed JPY 3.6 trillion of total liquidity. Over JPY 80 billion in fixed cost savings were achieved in H1 through Re:Nissan recovery initiatives. While tariffs and currency headwinds pressured profitability, disciplined cost management and structural efficiencies continue to deliver benefits.

Finally, the outlook. We anticipate a stronger second half driven by Re:Nissan product-led growth and momentum from Q2. We remain on track for operating profit breakeven, excluding the tariff impact. We target JPY 1 trillion net cash at year-end and expect positive out of free cash flow in H2. We will balance optimism with prudent risk management as we navigate challenges.

In short, we are prepared for second half growth, leveraging new launches, operational improvements and disciplined execution.

Building on this momentum, let's turn to the strategic update. While navigating a challenging environment, Nissan is advancing steadily through Re:Nissan, redefining our strategy, accelerating innovation and reinforcing the foundations for sustainable growth. We have been driving a transformation that goes beyond tackling current challenges to redefining our future. It rests on 3 powerful drivers: First, disciplined cost reductions to strengthen our financial base. Second, a bold redefinition of markets and products to deliver what customers truly want. And third, reinforcing partnerships that unlock scale and efficiency and with clear target, returning to positive automotive operating profit and free cash flow by fiscal year 2026, excluding tariffs. And we know what it takes to get there. That's why we're targeting JPY 500 billion in savings split between variable and fixed costs to reshape our cost structure and strengthen our competitiveness.

Let me take you through how we are tracking against these targets. Over the course of this year, our variable cost reduction initiatives have gained notable momentum. As of November 2025, we have generated 4,500 ideas, identifying a potential impact of JPY 200 billion, a progressive leap from JPY 75 billion in May and JPY 150 billion in July. Over 2/3 of these ideas are technical solutions like redesigning headlamps for efficiency or optimizing seat designs to cut material costs.

Major cost reductions target high-volume models like Rogue, Kicks globally, Pathfinder in North America and Serena in Japan. Every action upholds our commitment to quality with no compromise on safety, reliability or performance. We are advancing in manufacturing and logistics, including parts diversity reduction and supplier collaboration. Encouragingly, ideas are maturing with more moving from concept to implementation. This structured approach ensures credible, sustainable savings embedded in design and operations, always with quality as a top priority.

We have delivered over $80 billion in fixed cost savings in H1, a strong start. We aim to exceed $150 billion by fiscal year-end and surpass $250 billion by fiscal year 2026. In manufacturing, we have completed 6 of 7 targeted site actions with Compass, the sixth plant ending production later this month. On engineering, we are progressing towards our 20% cost per hour reduction target currently running at 12%. Parts complexity reduction is delivering also strong results, complemented by Obea activities with models like the next-generation Rogue using 60% fewer parts. We are also optimizing assets to unlock value for transformation.

A key step is our global headquarters in Yokohama. We will proceed with a sale and leaseback transaction under a 20-year agreement. This ensures Nissan's continued presence and commitment to Yokohama while ensuring no impact on employees or operations. Part of the proceeds will fund critical investments like accelerating AI-driven systems, digital modernization and transformation initiatives while preserving our ability to invest in innovation and growth. These steps go beyond cost. They create a leaner, more agile Nissan ready to compete and win. We have made strong progress on cost actions, and now the momentum is shifting towards the next 2 drivers of Re:Nissan, redefining our product market strategy and reinforcing partnerships.

On product lineup, our product lineup tells the story. From the award-winning Leaf to the new generation [indiscernible] car, we are gaining traction. Between now and fiscal year 2027, we will be introducing 9 new models. As we look ahead, our product strategy rests on 3 pillars. Hartbeat models, icons that showcase Nissan's DNA and innovation like the globally recognized Leaf. Core models, vehicles that lead in key markets such as the Kashkai ePower with class-leading fuel economy and the Kicks recently named Best Buy 2025 in Brazil. Partnership models are collaboration that strengthen our reach, including the N7 with 40,000 units sold in China and the Ros KCar with 15,000 presales in just 6 weeks. Finally, I want to stress the importance of partnerships for our future. Many of our products, as I mentioned earlier, reflect the strong power of collaboration.

Now coming to partnerships in technology. These are critical to strengthening our presence in next-generation mobility. In recent months, we have announced several initiatives, a tie-up with Boldly, Premier Aid and KQ Corporation to pilot autonomous mobility services here in Yokohama. Collaboration with WAVE, the U.K. pioneer of AI driver software to set new standards for driver assistance in our next-generation ProPilot technology.

And in China, our new Tiana features advanced intelligent connectivity, becoming the first ICE vehicle equipped with Huawei's Harmony Space 5.0 smart cockpit. These partnerships are more than projects. They are strategic moves that position Nissan at the forefront of intelligent mobility.

In conclusion, our first half results reflect the challenges we face, but they also confirm that Nissan is firmly on the path to recovery. We have made meaningful progress. And while there is more to do, the foundation for future success is in place.

Having implemented decisive cost-saving measures to secure profitability, we are now accelerating forward, prioritizing new products, key markets and breakthrough technologies that will define our next chapter.

The second half will bring challenges, but with focus, discipline and the actions we are taking, I am confident we will deliver strong results. We have the right strategy, the right products and the right team to capture growth and create value. Together, we will navigate the road ahead and with confidence, seize the opportunities and lead with innovation. Thank you for your attention.

With that, we will now take your questions.

[Operator Instructions]. I already see a lot of hands going up. [Operator Instructions]. Just so we go with maybe the first front row middle.

[Interpreted] My name is Taki. I have 2 questions. The first question is as follows. Last week, Japan Mobility Show started. And here, you have a stand, new L Grand and new Petrol were displayed in the show. Sspinosa-san, you made the presentation personally. That's what I heard. What's the reaction of the people who saw it? And what's your opinion about the overall show? This is my first question to Ivan-san. And the second one, partnership. Was it -- since last fiscal term with Honda, you have been -- well, capital tie-up is kind of went back to scratch, but you are trying to continue with the collaboration with Honda. What is the progress so far to the extent that you can disclose? These are the 2 questions.

Okay. So thank you. Thank you for your questions. On the Japan Mobility Show, first of all, thank you for visiting. I really enjoyed the show and having the opportunity to guide many of you through the booths and show you what Nissan is capable of doing. Then as for the reaction, the reaction has been extremely positive, both for L Grand and for Petrol. The level of buzz that we are seeing, and I have some numbers for you actually. The conversations on social network spiked by 15x versus the normal average that we have.

And out of that, we have 35% positive sentiment in total, which is a 25% increase versus where we were before. So clearly, the products are well received and Nissan is starting to become attractive to customers again, which was exactly the goal. It's exactly the goal of the second phase of our RNissan program. As I've mentioned before, the first step was about cost and restructuring. Now we are shifting gears into the second phase, which has to do with product, market strategy updates, innovation and technology. As for the partnership with Honda, well, we keep discussing with them, as I have said before, on several projects. There's nothing that we can disclose at the moment, but we keep discussing with them opportunities in several fields as we outlined in previous announcements. Thank you. Thank you for the question.

Take the question from the right side.

[Interpreted], my name is [indiscernible]. There are 2 questions from me. The first one is the regional breakdown of the sales. China and U.S. are better, but how about Japan and Europe? There's a decline which is continuing in Europe and Japan. Sunderland and [indiscernible], what is the utilization rate so far? ELV and Micra, you are going to introduce new cars. You are talking about the second stage of Re-Nissan. Europe and Japan, when will it grow? The volume -- when will the volume in these 2 regions grow? This is my first question.

And the second one is the objectives of the Re:Nissan. In May, when you devised the plan in fiscal year 2026, automotive profit and free cash flow will be the positive. That's what you said. But you said that you didn't talk about excluding tariffs, but now you are saying it's excluding tariffs. Does that mean that you made a downward revision on the goal for 2026?

So let me start with the first question. So the volume, as we explained earlier in Europe and Japan was soft on the first half. Europe had some impact from the model changeover. So we were on the runout of the previous [ Cashkai ] and entering with a new Cashkai that has the third-generation e-POWER. So we expect Europe to pick up in the second half now that we are launching full blast, the third-generation ePOWR, which has been very positively received and evaluated by media.

In Japan, we had a slow first half and for several reasons. One, of course, the impact of media and communications, the negative media coverage that we had in the first half, because of the situation that we went through. This had an impact on showroom traffic and customers were wary of Nissan's situations because of the financial condition.

Now we are seeing change. We see, as I mentioned before, sentiment from the public is changing towards us. They are understanding that Nissan is a great company that makes great cars, and we start to see the positive sentiment changing. A lot of this, thanks to your support as well as media because you have been providing a lot of support to us. And we see that the sentiment is changing.

The showroom traffic starts to improve. And the proof of that is also the very strong reception to rucks, around 15,000 orders received in only 6 weeks. So this signals that we can start bouncing back, and we expect a strong bounce back in Japan as well in the second half.

As for the objectives, the objectives have not changed. The fact that we are now clarifying tariffs is because we didn't know when we announced at the beginning for how long tariffs will be remaining. We thought initially as many in the industry that it was a temporary thing. But now that this is here to stay, it's -- we are just recognizing that the tariffs will have to be managed. And this is not a downward revision. It's just a clarification of what we expect for next year. Thank you for the question.

Yes. On the FY '26 guidance, there is absolutely no change, fully in line with what we had announced in the month of May.

Thank you. If I go to the last left side, first row.

[Interpreted]. My name is Sakamura. I also have 2 questions. First of all, Re:Nissan. So far, 20,000 people headcount reduction was talked about. In which country will you be reducing headcount in what degree? Can you substantiate that plan and give us an update on the substance of that plan?

Second question, new model introduction. In China, N7 is doing very well. So in the future, China produced cars exporting to other countries. I thought that you were studying such possibility. How far has that study gone? And is there a possibility for export to Japan?

Thank you, Sakamura-san, for the question. So on headcount, on your headcount question, what I can tell you, we are not providing a breakdown. What I can tell you is these numbers that we announced are global, and we are tracking according to our plan. So the plan is ongoing, and we are tracking according with our expectations in terms of speed and size of adjustment of the workforce. But we are not providing details on the breakdown. As for the new model, N7 and future exports, the answer is yes, we are working on export plan. You maybe heard we established already an export JV company that will help us enable and facilitate and speed up this.

And we are looking at several products that we have a potential, and we are looking at different market options. But nothing specific to share today. But the answer is yes, we will be exporting cars because this is part of our strategy to defend ourselves outside of China, bring more scale to our China operations also and use the speed of China in terms of development, technology and costs to defend ourselves in markets where Chinese OEMs are being aggressive. So this is what we are set to do. Thank you for the question, Sakamura-san.

Thank you. If I move to the second row in the middle...

The question to CEO. So in relation to the previous question, you have a commitment of achieving operating profit in the automotive business by fiscal year 2026. However, net income forecast has not been disclosed with a massive loss loss in fiscal year 2025. Can this target be met? Can it be achievable in time? I think that Mr. Papin has already answered that question partly, but I need to -- I need an answer from Mr. Espinosa and a strong message in your commitment.

And the second question is very simple. So you emphasized the change of an atmosphere around Nissan. Does it mean the darkest hours of Nissan is over or still to come, the darkest time of Nissan is over or not?

Thank you. So for me, the important thing is to have customers looking at Nissan with eyes that represent what Nissan is capable of doing. And Nissan is a company that has over 100,000 employees working very hard to create great products. And that's proof of what we saw in the Japan Mobility Show. It's evidence and proof that this company, our company is a great company that can deliver great exciting products. This is what we're focusing on, and this is what our people with a lot of love for our company are doing every day.

As for your question on OP, the answer is yes. We are committed to deliver what we said. And proof of that are the numbers that we just explained to you. I think we have a couple of good examples. As we said, on the fixed side, we have achieved already more than JPY 80 billion in the first half of savings. We are on good track to achieve JPY 150 billion by the end of this year. And we are confident that we can overachieve JPY 250 billion next year that we have committed to achieve. And on the variable cost side, as mentioned, the progress is very consistent, gradually growing the impact or potential that we see, now reaching JPY 200 billion versus the JPY 75 billion that we had in May and the JPY 150 billion that we had in July.

So again, this is evidence that the company efforts is bringing fruits. So this gives us confidence to achieve the objectives that we have set for ourselves next year. Thank you for the question.

Darkest hour [indiscernible]?

Well, I don't know what you mean by the darkest hour. Again, for me, the important thing is to change the customers' minds and have them look at Nissan as a great company that it is. Thank you very much.

Stay in the middle...

[indiscernible] newspaper. First, Expedia semiconductor manufacturer impact. [ OPamMaushu] reduction has become clarified, but how much impact are you foreseeing in terms of volume? What's the maximum reduction? And are you thinking of alternative purchasing? So what's the progress in terms of choosing an alternative?

Secondly, how do we interpret volume? N7 was better than expected. So there was a hit, but the full year volume is unchanged and minus from 2024 and sales has been revised downward. So top management, how confident are you on the second half? And you will continue to introduce new models next year, but are you -- do you think that, that will really have a positive impact? What's your level of confidence?

Thank you. So I will answer the second question and then let Jeremy elaborate on the first one. On the confidence on the H2, I think there's 2 elements to consider, not only the new car launches, but the fact that in North America as well as in China from the second quarter, we already start seeing growth. So we have seen consistent growth in North America and the U.S., particularly, I can tell you, our retail share in non-EV has quarter-over-quarter grown.

If you look at the numbers, Q3 2024, we trail at 4.3% Q4 2024, we were at 4.8%, and now we're running at 5.3%. So this is proof that the performance is improving, thanks to the focus that we have put in our marketing and sales activities and the products that we are rolling out in the U.S.

Then Japan, as mentioned, we had a slow H1. So that's why we believe we will not be able of recovering the full year estimate, but we expect a strong bounce back in the H2. Thanks, as we said, from the good showroom traffic improvement that we see, the positive sentiment from the consumers that they are placing again their confidence in our brand and our company. And again, proof of that is the very good reception and the preorders of the old Nissan books. So that's why we are confident on the second half performance on sales. Jeremy, do you want to elaborate on the first one?

Yes. On the supply risk that we are managing at the moment, there are actually 2. One is an aluminum supply issue in North America that is affecting many market participants following the fire at a supplier.

The second one is obviously the situation with Nexperia and the chips that were being banned from export from China, but that ban in the last few days seems to have been lifted. So I would say the situation is extremely fluid, and we are, I would say, managing it extremely closely. This forecast, as I shared with you, includes a JPY 25 billion risk which we put as a placeholder last week when the situation was quite uncertain. I would say, as the situation clarifies, should this placeholder be unnecessary, we will be removing it from the forecast.

Next question. I can move to the media, please.

[Interpreted]. My name is Matsuka. I have 2 questions. For this fiscal term, in the first half, how do you assess the first half results of this year? And the sales and leaseback of GHQ without renting it, how by going to the suburbs where you have an R&D center, it would have been more beneficial. What was the thinking behind this? Wasn't there any opposition from other executives in the company? These are the 2.

Thank you for the question. So on the first half assessment, as mentioned, we had a result that came in better than we expected, but it was supported by external factors as well. So we had some onetime events and that are evident that we are doing well, but there's more work to do. So that's what we qualified earlier in the presentation. So the plan is on track, but we have to keep working hard in the second half to deliver the objectives that we have set for ourselves. Now as for the sale and leaseback, we discussed at length in the EC, and it's something that also we reported to the Board.

And the best option was to do what we did, the decision that we made, which is trying to minimize the impact on the employees and on the suppliers and on the local economy and having a good business strategy to utilize better our assets. bring some resources in that will help us, as I said, modernize and go further into digitization, AI implementation and many other things that we have to do, while also it allows us to spend the precious R&D resources that we need for our future, especially in a year where free cash flow will be negative. So this is the -- these are the considerations that we took for the decision that we made. Thank you -- thank you for the question, Ms. Matsuka-san.

Move to the left side, yes, please.

[Interpreted] from Bloomberg. Last time during the press conference, Papin-san, you said that net loss for this fiscal year, you said that details will be provided in November, if I remember correctly. But this time, you are not going to give a full year guidance for net income.

Once again, why are you in this situation? Was there any change that took place from last time? Is there something that you didn't see last time to the degree that you can disclose? Could you elaborate why you cannot give a full year guidance of the net income? And Page 16, Global Design Studio is reorganized and Global Information System Center is relocated. That's what it says. Did you sell assets in these moves? Could you elaborate on these 2 points?

So on the net loss outlook, I think the situation is the following. We are, at the moment, considering further implementation of restructuring actions under Re:Nissan, in particular, accelerating decisions. And as we are working on those options, we just didn't have a clear enough forecast to share something that was robust enough in order to make a communication. So we want the transparency and we want to provide the guidance, but today was just not the day where we could.

And so I think you just need to bear with us and understand that we're working on assessing further restructuring and implementation of Re:Nissan plans in fiscal year '25, and that will have P&L consequences that we are assessing. On -- more generally on the events that you mentioned, I would say that when we free up any assets today, there is a consideration of monetizing the asset if we own it. And so there is just a systematic review. So we will keep you informed as we progress with asset sales or any asset disposal.

[Interpreted] Hatanaka of Nippon Broadcasting. I have a question to Mr. Espinoza. During the Mobility show, your group company, Nissan Shatai Shona plant announcement was released. You will be using it for -- to manufacture service components. What's your take? And did Nissan -- was Nissan involved in that decision-making? And Mobility show was very popular. The main LGA and Petrol, Nissan Kyushu manufactures those models. So these models will continue to be manufactured in the same way? Or will the manufacturing site be transferred?

Thank you. As for the Nissan Shatai question on Shonan, I will kindly ask you to ask the question to Shonan. We cannot comment on Nissan Shai. However, on your question on L Grand, we are -- we will be continuously assessing the industrial strategy. So for the moment, we will start producing in Nissan Shatai Kyushu together with Caravan and frame vehicles. As you have seen, the welcoming of patrol and QX80 is very good globally.

So we are currently looking at what options we could have to further increase the capacity of such models because they are performing very well, and they are very profitable. Now this, as I said, we will continue to explore. But for the moment, there is no intention to move the products out from Nissan. Thank you for the question.

We have time for 2 or 3 questions. So next question, please.

[Interpreted] My name is Togashi. Espinosa-san, this is a question for you. Nissan Stadium naming rights is the question. Yesterday, Yokohama, Mayor Yamanaka, as of the end of last month, he said that he received a new proposal. Could you elaborate on the proposal that you made to the degree that you can disclose? But once they renewed the contract at JPY 50 million in response to your proposal. But once again, there was an instruction to review the proposal. What's your approach or thinking behind this?

So first of all, we are committed to Yokohama. This is our home base, our hometown. -- and we're going to stay here. This is why we also announced that we will continue to be the largest shareholder in the Yokohama Marinos because it's an icon of our company and a symbol of pride for many of our employees. With that in mind, we've been discussing with Yamanaka-san and the city of Yokohama because we want to continue our collaboration in the Nissan Stadium for the same reason. Now we have made an offer, as you said, we are discussing now with Yamanaka-san and the team in the city, and we will update you when this is concluded. So we will continue discussing with them based on this offer that we provided, but no detail to be shared today.

Thank you. Come to the middle.

[Interpreted] Tokyo, my name is Abe. Nissan GHQ will be sold, you said. In reality, you are going to rent it and there will be a rent which will be booked. For 20 years, what is the annual rent that you have agreed on? This is my first question, please.

So yes, we have agreed to do a sale and leaseback, as I said, and there will be a rent. We don't -- but we are not going to disclose the level of rent. I just tell you that it is a good financial decision. It's a good business decision that will allow us to invest resources in our future. Thank you for the question.

I think we're right on time. Thank you very much once again for joining us. If you have any further questions, the communication team is available. Please reach to us. Have a good day. Thank you.

Thank you.