Nissan Motor Aktie

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.

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[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.

Good evening, everyone. Welcome to Nissan's First Quarter Financial Results for Fiscal Year 2025. Today, along with financial results, we will also cover Re:Nissan progress. Today's session will be for 45 minutes and is held on site with live streaming.

First, let me start by introducing the speakers for today. Ivan Espinosa, Chief Executive Officer; Jeremy Papin, Chief Financial Officer.

Before I hand over to our CEO, I will explain the flow for today's session. First, Ivan will provide an update on our Re:Nissan recovery plan, followed by Jeremy will then cover the financial results for the 3-month period ending June 30 and our latest outlook. We will then take your questions.

Let me hand over to Ivan.

Thank you, Lavanya. Good evening, everyone. I hope all of you are safe in light of the tsunami morning. Please take all necessary precautions and stay close to your loved ones.

11 weeks ago, I announced the Re:Nissan plan and outlined the scale of our recovery efforts. Since then, we've made meaningful progress. We have a clear understanding of the work ahead and have mobilized teams across the organization to execute the plan with discipline and urgency. While our financial results for FY '25, especially H1, reflect the magnitude of the challenge we face, they also reinforce why the Re:Nissan transformation is so critical and why our disciplined approach must continue.

Let me begin by recapping the plan and detailing the concrete actions we have taken so far. As a reminder, the focus of Re:Nissan is to restore out of profitability and achieve positive free cash flow by fiscal year 2026. This is not the final goal. It is the foundation.

To drive a robust and sustainable recovery, we are executing a comprehensive recovery across 3 key drivers. We are implementing measures to reduce costs. We are redefining our approach to products and markets by aligning offerings more precisely with the real market demand. And we are reinforcing key partnerships to unlock economies of scale and deliver value at significantly lower cost.

Today, I will update progress on 2 drivers: First, reducing costs. We are reshaping our cost structure, aiming to save JPY 500 billion through both fixed and variable cost reductions. We have taken a decisive action to reduce variable costs and the Obeya office is now driving this transformation forward with speed, discipline and measurable impact.

The Obeya team brings together 300 specialized experts backed by 3,000 colleagues, who have temporarily shifted from long-term product work. For 3 months, they are focused entirely on reengineering how we approach cost reductions, working in fast-paced sprints to deliver impact quickly. The team has already generated over 4,000 cost-saving ideas, 1,600 of which are now implementation ready.

We have already identified actions that are giving us visibility in 2/3 of the net cost savings, underscoring our commitment to disciplined cost management and rapid delivery. In addition, we are eliminating inefficiencies that still exist in some areas and challenging legacy practices with discipline and urgency. The momentum is real and the transformation is underway.

We're still in the early stages of our recovery, but we are already making steady progress in reducing fixed costs. Of the 7 manufacturing sites, we plan to reduce from our footprint, 5 have already been announced. To go through this again, production in Argentina of the Frontier and Navara pickups is being transferred to Mexico. We have sold our 51% in our joint venture plant in India to our partner, Renault, which will continue to produce Nissan vehicles in the future.

Here in Japan, we will transfer production from the Oppama plant to our Q2 production base with vehicle assembly in Oppama ending by fiscal year 2027. The production of the NV200 van at the Shatai Shonan plant will end by fiscal 2026, marking the end of Nissan model production at the site. And today, we announced the fifth production site in Mexico. We will transfer production from the CIVAC plant to our Aguascalientes production site with vehicle assembly in CIVAC ending by fiscal year 2025.

Beyond this, we continue to execute measures for efficiency. And so far, we have consolidated production at the plant in Thailand, moving to a single assembly line and announced changes to ship in U.S. and the U.K. plants. To drive fixed cost reductions beyond manufacturing, we have formed a dedicated cost task team. These efforts are already delivering results. They are showing more than JPY 30 billion realized in Q1, providing strong visibility for the full fiscal year. We also have a clear road map to achieve our target of 20% reduction in the average engineering cost per hour.

The task team is conducting a comprehensive review of expense overheads and auditing capital expenditures across the value chain to ensure every opportunity for cost efficiency is captured. We will continue to update you as they -- as we have available updates.

Now moving to the next driver, redefining our product and market strategy. Since the launch of Re:Nissan, we have taken decisive steps to reshape our market approach and align our product offerings with customer demand across key regions. The models introduced in Q4 of last fiscal year are gaining strong traction and we are building on that momentum. In Q1 of this year, we introduced additional models and we will continue to expand our lineup throughout the remaining part of the year and beyond.

Highlights for Q1 is our new heartbeat model, the all-new LEAF, which will be introduced in the U.S., Europe and Japan. In addition, we are focused on high demand models, including the next-generation Kei car and the Elgrand in Japan. In the U.S., we are expanding our SUV portfolio with the PHEV Rogue, alongside the Armada, Pathfinder and INFINITI QX60. A new Sentra will also be introduced as a core model for North America.

In Europe, where electrification continues to drive demand, we have launched the Micra EV and the Qashqai with the next-generation e-Power system. In Mexico, Nissan maintained its leadership position with successful launches like Magnite, contributing to solid sales and segment dominance. In China, the new N7 NEV is already proving to be a sales success, and we are preparing to export China-made vehicles to other markets.

Our product offensive is accelerating, and further model announcements are planned for the months ahead.

Let me stress again, Re:Nissan recovery is a 2-year plan, and we are progressing with discipline and intent at the right pace. Fiscal year 2025 is our transition year, the year in which we are taking decisions as we simultaneously execute actions. These actions are being delivered in structured phases, each with clear milestones and accountability.

While we expect to see tangible impact of our variable cost transformation by the end of this fiscal year, we do acknowledge that viable costs will take a bit of time to show in our results. This is due to the nature of changes we need to implement in our operational framework.

The consolidation of our manufacturing footprint is on track for completion by fiscal year 2027. We are also working on the consolidation of our powertrain production, and we'll share progress in due course. Our workforce reduction is progressing in phases, aligned with the timing of operational changes across locations.

In parallel, we are also executing actions to optimize G&A expenses, an area where we are already seeing good progress. Our focus on streamlining development activities is on track with benefits expected to begin showing in the first half of fiscal year 2027.

Now let me conclude with reaffirming that each stage of the Re:Nissan plan is being implemented with discipline, dedication and with a focus on delivering enduring value.

With that, I will hand it over to Jeremy, our CFO, to present the Q1 results. Jeremy?

Thank you, Ivan. Good evening, everyone. As Ivan noted, we are advancing steadily with Re:Nissan and that progress is encouraging. At the same time, the magnitude of our challenge remains significant as reflected in our Q1 results, which reinforces the urgency of continued disciplined execution.

Let me begin with a brief overview of our Q1 performance. As expected, we had a muted start to the fiscal year with retail sales down 10%. Our operating loss of JPY 79 billion was better than we had guided in May, thanks to onetime gain and early signs that our fixed cost control are starting to take effect. Free cash flow was a negative JPY 390 billion, but our automotive gross cash position remained solid with more than JPY 2 trillion.

To reinforce our financial flexibility, we raised JPY 860 billion in July through straight and convertible bonds, fully covering FY '25 debt maturities. At the end of June, our total automotive liquidity stands at JPY 3.1 trillion, including the $2.1 trillion cash on hand and another JPY 1 trillion auto cash lent to Sales Finance. On top of this JPY 3.1 trillion of cash, we also have access to JPY 1.8 trillion in committed unused credit lines.

Looking ahead, we are maintaining our fiscal year '25 retail sales forecast. And we are introducing a Q2 operating loss expected at negative JPY 100 billion. Our free cash flow in Q2 is forecast at approximately JPY 350 billion negative with a return to positive territory anticipated in the second half of the year, supported with our seasonal pattern.

Let me go through the details of the Q1 results. Unit sales in Q1 were down mainly due to continued challenges in China. Competition in China remains intense. The non-premium JV segment continues to shrink and the price war has escalated further. As a result, our unit sales in China dropped by 27.5%. We faced an 11% decline in Japan with returning competition in the Kei car segment and consumer hesitations toward Nissan.

The 2.4% decline in North America is partly due to our adjustments to the tariff impacts that are reshaping the competitive landscape. In particular, we focused our sales efforts on U.S.-produced vehicles and prioritized private retail channels, while scaling back rental fleet sales.

This strategy is beginning to gain traction as seen in month-over-month improvements in our U.S. retail market share trend. A notable highlight is Nissan being ranked the #1 mass market brand in J.D. Power's initial quality survey, an achievement that could positively influence both our brand image and sales performance.

In Europe, we saw a 5% decline primarily driven by reduced overall demand for electrification, particularly due to the LEAF full model changeover and the end of production of the NV400. The 9% decline in other markets was mainly driven by the Kicks model change in Brazil.

On a positive note, volume growth in the Middle East was fueled by strong demand for the Magnite and the introduction of the new Patrol. Proceeding to the right-hand side of the chart, our production volumes declined by 14%, primarily due to a 31% reduction in China. This was driven by ongoing restructuring efforts and production optimization, including reduced operating hours and capacity adjustments.

In parallel, we are proactively managing lower dealer inventories ahead of the model year changeover in the U.S. and the launch of new models in Europe and in Japan, aligning production with anticipated demand and managing impacts to our free cash flow.

Consolidated net revenues for the period were JPY 2.7 trillion with an operating loss of JPY 79 billion and a net income loss of JPY 116 billion. Excluding sales and leaseback operation, CapEx was largely flat year-over-year. And through disciplined control in R&D, we reduced our expenses from JPY 148 billion to JPY 140 billion. In the core automotive operations after elimination, revenues were JPY 2.4 trillion, reflecting lower wholesale volumes as well as a roughly JPY 200 billion negative foreign exchange impact.

Our operating loss deepened to JPY 158 billion, including a tariff impact of nearly JPY 70 billion. Consequently, free cash flow in the automotive business was a negative JPY 390 billion. This was expected due to seasonal factors, specifically lower payables in Q1 that adversely affected working capital. At the end of the quarter, net cash stood at JPY 1.1 trillion.

The operating loss of JPY 79 billion for the period reflects some specific factors. Of these, we were adversely impacted by nearly JPY 40 billion of ForEx effects, mainly due to the weakening of the U.S. and Canadian dollars. There was a JPY 69 billion negative impact from tariffs.

Our sales performance resulted in nearly JPY 5 billion positive, reflecting positive momentum in volume and mix and incentives and pricing. However, this was offset by declines in after sales, mainly due to lower wholesale volume.

Monozukuri costs resulted in positive JPY 25 billion burdened by higher variable costs but benefiting from better fixed costs and lower depreciation on production assets. Inflation came in at minus JPY 26 billion. This quarter, we recognized a JPY 29 billion improvement in onetime item, thanks to revised provisions for warranty costs.

Sales Finance and remarketing contributed positively year-on-year with a JPY 19 billion improvement. However, we had to accrue costs related to CO2 compliance. Our first quarter operating loss of JPY 79 billion was better than the initial forecast as we have taken a cautious stance at the start of FY '25 to account for potential risks.

Adjusted for the onetime positive, our underlying Q1 consolidated operating profit stands at negative JPY 109 billion. Several factors outperformed our expectations, including lower tariffs, a greater positive impact from product mix, lower credit losses in sales finance and stronger remarketing results. We also benefited from solid fixed cost reductions.

We continue to actively manage our automotive liquidity. In early July, we issued JPY 660 billion in euro and dollars trade bonds with maturities ranging in form 4 to 10 years, and JPY 200 billion in our convertible bonds with a 6-year maturity. Proceeds from the straight bonds will be used to refinance JPY 700 billion of debt maturing this fiscal year. The net proceeds from the convertible bonds are intended to be used over the next few years for investment in new products and technologies, such as electrification and software-defined vehicles.

For Q1, prior to the bond issuance, we ended the period with total available liquidity of JPY 3.1 trillion. This includes JPY 2.1 trillion of auto cash and cash equivalents on hand and around JPY 1 trillion of auto cash that is linked to sales finance companies. In first quarter, sales finance repaid some of the cash it borrows from auto, while increasing its securitized funding. Additionally, we have JPY 1.8 trillion in unused committed credit lines if needed. We maintain ample liquidity for upcoming maturities and to cover our funding needs as we continue to restructure the business.

I will now move to the outlook. We are -- on volume, we are confirming our previous forecast that we provided in May. We expect retail sales to reach 3.25 million vehicles this fiscal year, down by 2.9%, mainly due to a projected 18% decline in China. Sales in Japan, North America and Europe are likely to be flat year-on-year, while other markets are forecasted to grow 6.6%.

As explained by Ivan earlier, we are ensuring our global product momentum. This will enable us to reverse the Q1 and grow our global retail sales starting from Q2 onwards. Production volume is projected to be 3 million units as we continue to manage inventories. We expect net revenue of JPY 12.5 trillion for the current fiscal year. But given the external market environment, in particular, the ongoing uncertainty related to tariffs, we are not able to provide a detailed full year forecast.

I would like to share our current visibility for the second quarter. Revenue of JPY 2.8 trillion, an operating loss of JPY 100 billion and automotive free cash flow of negative JPY 350 billion. These results reinforce the urgency of executing the Re:Nissan plan. At the same time, they show some improvements compared to the first quarter once adjusted for onetime gain.

Let me reiterate Ivan's words. Re:Nissan is more than a plan. It's a company-wide commitment. With clear oversight and cross-functional execution, it's helping us rebuild competitiveness. We truly appreciate our employees and partners' commitment and the support on this journey.

Thank you.

Thank you, Jeremy. We will now open for Q&A.

[Operator Instructions] Okay, we go straight in the middle. Yes.

I am from Nikkei. My name is Ochiai. I have 2 questions. The first question, originally, the Q1 forecast was operating loss of JPY 200 billion. And free cash flow was JPY 550 billion negative. That was the guidance, but the result is better than these expectations. What were the reasons behind this? What were the positive contributors? Could you give us an elaboration on this point? This is my first question.

And the second one is the impact of the tariffs. Initially, maximum JPY 450 billion was the exposure that you showed us, if I remember correctly. And since then, there was a reduction in the tariff. But as of today, for the full year, what is the tariff exposure for the full year? Is it still JPY 450 billion? Or is it lower than JPY 450 billion? These are the questions.

Yes. Thank you for the question. Maybe I'll start with the second one, and I will let Jeremy answer the first one. On the tariff, you are right, there is a change, but it's still not clear to us some of the conditions and when the change for the tariff from Japan to the U.S. will come in place.

So at the moment, it's a bit difficult to give a very accurate forecast. What we can tell you is that the forecast that we see is a worst-case scenario will be hitting from JPY 450 billion that was our original estimate to JPY 300 billion. This is what we're seeing now, and we will continue updating the number as the rules for the new tariffs come clear, and we will keep updating the market. Jeremy, would you take the first question, please?

Yes, on the gap between the initial projection for Q1 and the actuals in Q1, I would start by saying that initial projection was a cautious one. And as we had -- we were managing several risks. The tariff, also a few supplier risk, supply chain uncertainty that did not materialize. In the end, we also benefited in the quarter from a onetime gain on this warranty accrual change, thanks to the improved quality of our products.

So -- beyond that, I would say, tariffs were slightly better and we had good contribution from many various small factors. I mentioned in my speech, credit losses, remarketing, product mix, a number of factors coming in a bit better than expected as well as impact from our fixed cost reduction being slightly stronger than we expected in Q1.

We move on to the next question.

[Interpreted] My name is [indiscernible]. I have 2 questions. Earlier, you talked about the sales decline in Japan because consumers are losing confidence in Nissan or they are hesitant to by Nissan cars in order to increase or regain the confidence what you need to do. And Oppama plant and Nissan Shatai Shonan, you are going to stop the production of vehicle at these entities.

Explanation to the employees and suppliers are underway. That's what I understand. So where are you in terms of progress? And Espinosa san, what kind of things did you hear from these stakeholders? And Espinosa san, was there any impressive examples of VOC that you can share with us? These are the question.

Thank you for the questions. So on the sales decline in Japan, what we're doing is accelerating our product offensive. You have seen the all-new Nissan LEAF, which is the first car -- of a series of cars that will come in Japan. Japan is our home market and these are one of the most important, of course. So this car will be followed by new Kei car, and we will also have Elgrand, right after that. And then entering early next year, we'll have a new Kicks.

And as we announced on May 13, we are working on preparing an all-new Skyline, which will be the first car that will be utilizing our new development process, that is to develop new cars under 30 months. And it's an icon of speed as a car, and we expect it to be an icon of speed of our company on how we develop cars. So we are very actively preparing this. And we are, of course, focusing on satisfying our customers' requirements and bringing very exciting cars. There's a multitude of cars coming into Japan, as I said, in the next 8 to 12 months. And I'm sure customers will be surprised with what we're preparing for them.

As for your question on how are we addressing Oppama situation. As we said at the beginning, Nissan is very responsible. So we're moving very quickly, but we're being fast and decisive but with responsibility. And maybe you have seen I've been interacting with many stakeholders throughout the past few weeks, of course, starting with employees.

First action I took right after the decision was made was to have a town hall meeting in Oppama to explain them the situation, explain them why the decision was taken and try to -- listen to their concern and try to alleviate anxiety. We have also started to engage very actively with the government at the different levels, including national government, perpetual government, city of Yokosuka government, and city of Yokohama government. There's a task force in place in which we are participating very actively providing appropriate information about the suppliers that are affected. And we will continue to work with the government in a very transparent manner to manage the situation, as I said, in the most responsible manner, trying to make the transition as smooth as possible.

So this is what we are doing in the situation of Oppama, which, as I said, is a difficult decision that we had to take, but a decision that had to be made. And we will move forward with the plan with the support of all the stakeholders. They have been very, very supportive in our journey. Thank you for the question.

Next question, please. If you can come to the first row.

[Interpreted] My name is [indiscernible]. I also have 2 questions. First of all, regarding the units forecast. 3.25 million, down by 96,000. It hasn't been adjusted, but there has been a reduction of 80,000 in the Q1, and domestic in China has been the blunt.

And early June, the performance wasn't so good. And Nissan has frequently downgraded the unit forecast. But -- what's the probability that your guidance on the second half of units would be right?

Secondly, you mentioned the CIVAC. And my question is with regards to consolidation in Mexico, is the first one. And here from Mexico, Mr. Espinosa, it wasn't an easy decision, but why CIVAC? Could you explain the basis of that decision?

Thank you. Let me start with the second one. As we have explained before, we are consolidating our footprint from 17 plants to 10. And one of the beauties of a Nissan industrial system is a wide coverage that we have around the world. The issue that this system has is that it's too big. So we have to -- or we are trying to keep a very strategic geographical coverage, while we resize the system to something that is more manageable for the level of revenue that we are commanding.

Now the decision of consolidating in Aguascalientes is because there's many advantages around Aguascalientes in terms of logistics, in terms of efficiencies that can be found by integrating the operation there. We had originally anticipated to stop some operation in CIVAC. So CIVAC has 2 lines: passenger vehicle line, which was already scheduled to stop activities this year.

And then when we made the analysis, we found that the most efficient way was to consolidate everything into Aguascalientes. And this is the reason why we made this, again, painful decision, as you said, not only because I'm from the region because it's affecting the lives and sustain of families. And this is regardless of where we are operating in the world. The impact is the same. And we will behave in the same way, as I said, with responsibility and caring for the employees trying to support in the best way we can.

As for the forecast on the sales, the reason why we're keeping the number at 3,250 is that, as we explained earlier, we have a very strong product offensive coming. We have cars coming in Japan, and we have also some car that will be introduced in the U.S. We see some early signs of good tractions in our retail sales performance in North America in the past months.

Year-over-year, we have a 2% increase on the retail sales. And quarter-over-quarter, we have a 12% increase on the private retail sales. So this is giving us, I would say, a prudent confidence that the number can come as we originally planned. This is what I can tell you about the forecast of sales.

You want to complement, Jeremy. Yes.

Maybe just to complement on China, the China numbers that you see here are for the calendar year, first 3 months. We consolidate China with a 3-months lag. In the calendar Q2, the sales in China were actually only down 8% year-on-year and June was up year-on-year. So June -- year-over-year is the first time we have growth in the past 3 months. So to give you a bit of a flavor of how the volume is looking recently. And again, it's with prudent confidence that we see the performance coming in.

We move on to the next question. Any hand raises. Can you come to the first row. To the lady, please.

[Interpreted] I'm from Nikkei BP and Nikkei Automotive. My name is [indiscernible]. In Re:Nissan program, I have 2 questions. The first question is as follows: Cost -- as part of cost reduction, Nissan's Canton plant, pickup trucks for Honda may be produced, and that's under consideration according to the media report is this true? If it were true, where is -- what is the progress of the discussion with Honda, which you can disclose as of today? That's my first question.

And the second question, with Honda -- in collaboration Honda, commonization of software is being considered. That's what the media reported. If you do so, ASIMO OS will be adopted by Nissan eventually? Is there anything that you can disclose as of today?

Thank you. I think you said it. This is a media report, so we have not confirmed any of this. What I can tell you is that we are actively working with Honda on several projects around vehicle collaboration and also around intelligent car technology. Domains of software and domains of autonomous drive technology. This is what we are working and discussing with them. But we have nothing to announce or confirm at the moment. Thank you for the question.

[Interpreted] I am a journalist. Oppama plant, people are asking when -- how you are going to use the landlord? And you are talking to several potential partners, there's nothing that you can disclose. Can you disclose whether there was progress in the discussion? And was there any prioritization in the way you reuse the land? Is there any update about the Oppama plant reuse?

For the question, at the moment, what we have decided is that we will stop the vehicle plant. So this is a confirmed decision. And there is no visibility of having anything related to vehicle production at the moment. So the visibility of any partnership or anything is very low. So we are not confirming anything on this.

What I can tell you is that we will be discussing potential utilizations in the future, including, of course, the community because we would like to continue adding value to that community by utilizing the land and the location that we have for something that is contributing to society and as a responsible corporate citizen. So -- this is what Nissan will be doing.

And we are -- again, for the moment, we are focused on the employees. We are focused on the transition. We are focused on alleviating the anxiety, having clarity on what the options for them will be. And at the second step, we will start seeing how we repurpose the land for the moment, the priorities of the employees. Thank you. Thank you for your question.

Next. Yes, please.

[Interpreted] My name is [indiscernible]. I have 2 questions. The first one, compared to the initial expectation, the results are better, but operating loss was generated in Q1? And how do you assess it? What's your take? And for tariff exposure, JPY 450 billion will come down to JPY 300 billion. Compared to initial expectation, it's better. How do you assess this? What's your thinking?

So on the -- I mean, obviously, the Q1 results are weak and just are further stressing the importance of the Re:Nissan plan. We -- and the need to address the cost competitiveness and to resume the growth of the business. So I think we take them as a -- as the situation that we have to deal with further exacerbated by the size of the tariff headwind. And it just highlights the fact that we need to be decisive and speedy in implementing decisions that can turn around the business and build a sustainable growing platform.

On tariffs, yes, the exposure is lower. It obviously, -- tariffs rules, regulation have been evolving, and that's been driving some of the decline. We've also made adjustments to our cash flow. We've made some adjustments to where production are built or parts are imported from and this is why we can confidently say that the worst exposure -- the worst level of exposure should be JPY 300 billion now.

Okay. And then please to the gentleman.

[Interpreted] TV Tokyo, my name is [ Abe ]. Espinosa san, I have 2 questions for you. The first question, the other day, between Japan and U.S., they agreed on the tariff. Based on this agreement, from the 1st of August, 15% will be imposed. With regards to the content of agreement, what's your assessment? What's your take? This is my first question. What's your reaction to the agreement between the 2 countries?

I think that is helping. But again, as we said, still the starting date is not clear. You said it's August 1st, but it's still something that is not confirmed. So we are observing these very closely. And of course, it's something that we welcome because it's alleviating the situation. And we will continue monitoring this and adapting ourselves to the environment as we go forward.

The good thing is we have flexibility of production, as you know. So we have one of our core products that is produced in Kyushu at the same time in Smyrna. So we have this flexibility that allows the business to balance in a smart way. And this is what we will be doing moving forward. But we do expect this to have some news in the future also about the tariff with Mexico because as you know, we have also a significant volume coming in from Mexico, and we are expecting something to come hopefully in the coming weeks. So this is what I can tell you about our view on the tariff situation. Thank you.

[Interpreted] You mean -- second question, yes, second question, may I. Okay. Second question, funding. I have a question about funding. JPY 860 billion has been issued for the bonds. On this point, you said that there was the demand for investors. The investors has an appetite. But after you announced the share price came down. More than 8% of high yields are seen in some cases. So there may be a financial risk here. This decision-making process and evaluation, how do you see this?

So on the funding, I think the funding was significant testimony of some confidence that the capital markets have in the ability for the company to be turned around. The share price impact you're referring to, I think, is driven by the fact we were issuing shares alongside the convertible.

And so the market share price was adjusting for that increase in the number of shares. I think adjusted for that. The market cap is actually higher than it was before on a fully diluted basis. In terms of funding costs, what I would say is that the base interest rates across Europe and the U.S. have obviously changed over the past several years. When we look at the Nissan spreads, they were at the same level as what we paid back in 2020. And the net interest cost that we are planning to face with this emission is to pay an average 3.5% when swapped in yen. So I think it's a very acceptable level of cost for the size of the funding that we had to exercise.

Sure. I have time for only one question. So let me check in more because -- I saw him going up. Yes. Second row first person. Yes. He was the first person.

[Interpreted] Newspaper. My name is [indiscernible]. In China, sales are coming down, but N7 has been quite popular. And Mr. Espinosa, how do you evaluate the model N7?

And you said that there's a possibility of exporting vehicles from China and the preparations are underway. Can you give us the time line and the size of that kind of export to the extent possible, can you share more information?

Thank you for the question. Yes, N7 is coming -- is a very popular car. Reason for this is a car that it was planned with the customer at the center. And successful cars usually are successful when you do that. And we achieved that by utilizing the 23 years experience we have with our partner there. As you know, we have the technical center Dongfeng Nissan, and we developed the car together with a Chinese customer in mind and leveraging on the assets and the experience that we have there.

So we were able of developing this car with China's speed, China technology and China cost. And this is what's making this car successful. And the launch was also very well done by the team in China. It gave us confidence that our brand still has some strength in the market. And it's proved that when you make a good car, then you can really still hit strong with the Nissan brand.

And China, as you know, is one of the toughest markets in the world. And this is giving us confidence that our brand is still strong. And when we make good cars, which is what we know how to do, we can still progress forward. And this is what we're going to do, not only in China, but in Japan and outside of Japan as well.

In the rest of the world.

So this is what we said to do with the new products are coming. As for the schedule, yes, we are nothing -- we have nothing to share today on the schedule, but we are progressing quickly, to bring this car to selected markets around the world.

Again, no detail to be shared today, but we want to leverage on these values that we have in China of speed of technology and of course, to bring this product and some other products that are being prepared to some selected markets outside of China. We will share more detail when we are ready. Thank you. Thank you for the question.

I think I can take one quick question maybe from NHK.

[Interpreted] U.S. tariffs is what I would like to ask about. In future plan, you are building cars for U.S., which is SUV and you are adjusting the production volume at Kyushu for this car. Now tariffs is agreed on 15%. The product -- is there any impact on the production plan in Japan?

In relation to this, in relation earlier, Espinosa san, agreement on 50% -- 15% is what you welcome, but 15% is not small. Is it in terms of absolute terms. Will this impact the pricing? Or how are you going to approach the pricing strategy in that market?

For the question, as you said, 15% is still 15%. So we welcome the improvement, but 15% is still a challenging number. And this is why we need to continue our efforts of improving costs, and improving -- or reducing our exposure to tariffs as much as we can, both by looking at component improvement in terms of tariff as well as pricing, as you said. We are monitoring very closely the market pricing, and we will follow whenever we have an opportunity.

As for production, we will -- as I said, one of the beauties that we have is that we have the production in both sides. We have this flexibility. And we will continue monitoring how the market is evolving and adjust to optimize the profitability that we can drive with the combination of the 2 production sites. The good thing also is that Rogue is also having out of the vehicles that are improving in terms of our retail sales. Rogue is also one of the products that is benefiting from this.

And it's a product that, as you know, is very important for us in the lineup, and we will continue pushing these vehicles forward with a good balance of pricing, a good balance of customer offer and taking a good close look at the inventory that we are carrying. Our inventories are also improving a lot, by the way. We have managed to adjust to be only around 60 -- 6 days, sorry. 6 days above the industry average at the end of June, which is a very strong improvement versus where we were at the beginning of the year, and we're managing that with a lot of discipline. Thank you. Thank you for the question.

Thank you. We are just about time. And this will be our last question. Once again, thank you for joining us. If you have any further questions, our communications team is always there to support. Thank you. Have a good day.