November 2, 2015

Fiscal Year 2015 First-half Financial Results
Media Conference
November 2, 2015
Hiroto Saikawa, Chief Competitive Officer, Nissan Motor Co., Ltd.

Overall, Nissan delivered solid business results for the period. This reflected a strong performance in North America and Western Europe; increased unit sales in China; and the benefits of our continued cost discipline and the favorable impact in year-over-year changes to the yen-dollar exchange rate. These trends helped offset declining market conditions in Japan and several emerging markets.
Today's reported earnings are solid and show the company's overall performance continues to improve.
For the first half of fiscal year 2015, Nissan is reporting consolidated net revenues of 5.93 trillion yen. This represents an increase of 15.3% over the same period in 2014. Operating profit totaled 395.0 billion yen, which equates to an operating margin of 6.7%. Net income increased to 325.6 billion yen, which represents a 5.5% net margin. Free cash flow for the automotive business was 213.0 billion yen for the first half, and we ended the period with an automotive net cash position of 1.5 trillion yen.
Before going through the financial results in more detail, I will first briefly outline some of the business highlights as well as our sales performance for the period.

FY15 FIRST-HALF BUSINESS UPDATE

As part of our Power 88 mid-term plan, Nissan has maintained its product offensive around the world.
In the key Chinese market, we launched three new models; the Murano in August, and the Qashqai and Lannia in October. These launches follow a healthy momentum in Chinese passenger vehicle sales of 9.5%. Underlining the importance of this market for Nissan, we have also made China the first launch country for the hybrid version of Murano.
In North America, another key market, we unveiled the new 2016 Nissan Altima sedan with revised styling, enhanced performance and best-in-class standard highway fuel economy. Altima sales have grown more than 60% in the US over the past five years, and we anticipate further sales growth with the latest model, complementing the success of our SUV range led by the Rogue.
Meanwhile, in Europe, Nissan underlined its ambitions for the Infiniti premium brand at the recent Frankfurt auto show by unveiling the Q30 active compact. This is Infiniti's first global entry in the compact segment, which we expect to attract a new generation of premium buyers.
Our brand appeal is growing globally. Interbrand has again named Nissan as one of the world's most valuable brands for 2015. Nissan ranked 49, up from 56 in 2014 and is the fastest-rising automotive brand in this year's study. Our brand appeal continues to be enhanced by links with high-profile sports events including the UEFA Champions League in Soccer, the Rio Summer Olympics in 2016 and the International Cricket Council, which was announced last month.
Nissan further expanded its global sports marketing footprint as its Chinese joint venture, Dong Feng Nissan Passenger Vehicle Company, announced a multi-year marketing partnership with National Basketball Association China. A significant number of basketball fans are the young generation known as "Post-80s" and "Post-90s". They are evolving to become the most powerful consumer segment in the Chinese automotive market and they are the focus of our "Young Nissan" strategy. The partnership with NBA China is expected to enrich our interaction with these young consumers, building our profile around recent product launches.
In Japan, Nissan initiated a new branding strategy focused on the theme of "Challenge". This builds on our continued promotion of Nissan as a brand combining advanced automotive technology, particularly through electrification and vehicle intelligence to cut emissions and enhance safety. The brand appeal of these last two themes are represented by two "zeroes": "zero emission" and "zero fatality".
We remain committed to our zero-emissions strategy. Recently, we introduced the 2016 all-electric LEAF, which features a new battery delivering more than a 20% improvement in enhanced range between charges. Nissan remains the world-leader in zero emissions with cumulative sales for our entire EV line-up now surpassing 200,000 units.
Reflecting our commitment to zero-emissions, the Renault-Nissan Alliance recently announced that we will provide 200 pure electric vehicles, the world's largest electric-vehicle fleet, to the United Nation's COP21 climate conference in Paris.
And at the Tokyo Motor Show, Nissan last week revealed the IDS Concept, which embodies our vision of the future of autonomous driving and zero emission electric vehicles. This concept combines long-range battery technology with artificial intelligence, autonomous systems, cutting-edge design and advanced materials in a vehicle that enhances the driver-experience, produces no emissions, reduces the risk of accidents and improves passenger comfort. It is a sign of things to come.
During the fiscal first half, we saw continued benefits from our Alliance strategy, led by our long-standing partnership with Renault. In July, the Renault-Nissan Alliance announced record synergies of 3.8 billion Euros, reflecting the benefits of increased convergence in key areas such as purchasing and joint model development.
Our Common Module Family symbolizes this synergy potential. At the Frankfurt Motor Show in September, Renault unveiled the all-new Megane, which is the sixth model for the Alliance based on the CMF-C/D architecture. Earlier this year, Renault unveiled the first small car on the Alliance's CMF-A architecture, which is the Kwid model designed for the Indian market. Nissan Motor is also developing a new Datsun model using this architecture that will be introduced at the beginning of 2016.
At Frankfurt, we also explained the latest co-operation between Renault-Nissan and Daimler. Since the launch of the partnership in 2010, the combined project portfolio shared between Renault-Nissan and Daimler has more than quadrupled to 13 projects in Europe, Asia and North America.
In September, we broke ground for our joint-venture manufacturing complex COMPAS, in Aguascalientes, central Mexico, to build next-generation premium compact vehicles for the Mercedes-Benz and Infiniti brands. The plant is expected to have an annual production capacity of more than 230,000 vehicles by 2020.
We also continue to derive Alliance benefits from our partnership with Dong Feng in China and the AvtoVAZ business in Russia.
In a further example of our Alliance strategy, Nissan, Mitsubishi Motors Corporation and our joint venture NMKV have agreed to extend our joint project on developing the next generation of minicar models. NMKV will continue to be responsible for planning and development. But Nissan will be more deeply involved in development operations. Alongside Mitsubishi's expertise in minicars, we will be able to use Renault-Nissan technology and assets to develop more competitive and attractive minicars to consumers. EV minicar will also be developed through the cooperation with Mitsubishi.

FY15 FIRST-HALF SALES PERFORMANCE
While overall global industry volumes increased 1.2% to 43.2 million units, Nissan's total retail volume was up 1.3% at 2.62 million units in the first half with improved sales in North America, Europe and China, offsetting weaker performances in Japan and emerging markets.
Looking across the regions…
In Japan, the overall market is experiencing a decline with total industry volumes down 5.8%. Our retail unit volume in the first half of fiscal 2015 was 265,000 units, down 9.0% versus the same period of the prior fiscal year. Our market share was down 0.4 percentage points to 11.4%.
Despite the decline in the Japanese market as a whole, we were encouraged by demand for the X-Trail, notably for the hybrid version, which we sold more than 29,000 units in the first half. The DAYZ and DAYZ ROOX remained our highest volume model, selling more than 62,000 units in the period.
In China, Nissan's sales of 588,000 units increased by 5.7% in the first six months of the calendar year, out-performing the trend for the overall industry. Encouraging sales of the X-Trail and Sylphy helped lift Nissan's market share in China by 0.2 points to 5.2% in the first half. Looking at the nine-month period to the end of September, Nissan's unit sales increased by 1.8% to 859,000 units and market share remained stable at 5.2%.
Looking deeper at our 9-month sales performance in China, we see that the results reflects healthy growth in passenger vehicles, where Nissan unit sales rose by 9.5% to 722,000. This was partially offset by continued weakness in Chinese demand for light commercial vehicles where our sales fell by 25.7% to 137,000 units.
Our solid growth momentum continues in October with Dong Feng Nissan passenger vehicle sales expected to increase more than 19%. Including LCV and Infiniti, total China sales in October is expected to increase more than 16%.
Turning to North America: in the US, our sales grew 6.6% to 755,000 units, showing that Nissan outperformed the overall market with our US market share rising to 8.3%. This performance included strong demand for the Rogue and the Altima. In Canada, sales increased 11.7% to 73,000 units and our share increased 0.5 points to 6.7%. Sales also increased in Mexico to 166,000 units, where Nissan has continued to be the market leader with a market share of 26.0%, up 0.4 points versus the prior year period.
In Europe, Nissan saw sales increase by almost 10% to 367,000 units in the first half of the fiscal year and our market share increased to 4.1%. Sales in Europe excluding Russia increased 17.1% to 306,000 units, amid strong demand for the Qashqai and Pulsar. This helped lift our market share to 3.8%.
In Russia, our sales fell 15.9% to 61,000 units, which was approximately half of the rate of the 31.5% decline for the industry overall. Despite continued economic volatility in Russia, our market share rose by 1.4 points to 7.6%.
In other markets, sales volume was down 5.2% to 401,000 units, which reflected the economic downturn in the emerging markets. In Asia and Oceania, sales declined 6.4% to 168,000 units, by 2.5% in Latin America to 86,000 units and by 12.0% in the Middle East to 97,000d units. This was offset partially by a 10.7% increase in Africa, where we sold 50,000 units.

FY15 FIRST-HALF FINANCIAL PERFORMANCE
Under the equity accounting method for our joint venture in China, consolidated net revenues increased 788.7 billion yen or 15.3% to 5.93 trillion yen, primarily driven by the increase in North American and European volumes and favorable currency translation. Operating profit increased 133.1 billion yen or 50.8% to 395.0 billion yen. Net income was 325.6 billion yen, an increase of 88.6 billion yen or 37.4% versus the prior year period.
Looking at Operating Profit movement in detail:

• The 46.6 billion yen favorable impact from foreign exchange came mainly from the correction of the yen against the U.S. dollar.
• Cost items including purchasing cost reduction efforts, lower raw material costs and product enrichment resulted in net savings of 88.6 billion yen.
• Volume and mix produced a positive impact of 125.2 billion yen.
• The increase in marketing and selling expenses resulted in a 75.0 billion yen negative movement.
• R&D costs increased by 10.8 billion yen.
• Manufacturing expenses increased by 6.7 billion yen.
• And other items had a negative impact of 34.8 billion yen.

At the end of the period, Nissan continued to enjoy a solid automotive net cash position of 1.47 trillion yen.
As we have done in prior quarters we are also presenting our financial performance on a management pro forma basis, which includes the proportional consolidation of our Chinese joint venture which is the basis on which our Power 88 targets were established. On this basis, as shown here, for the half, net revenues were 6.45 trillion yen, operating profit increased by 38.8% to 461.6 billion yen which reflects a 7.2% OP margin and net income was up 37.4% at 325.6 billion yen.

FY15 FULL YEAR OUTLOOK

In spite of this volume revision, based on our strong sales in North America and Western Europe, ongoing cost discipline and our assumptions on exchange rate movements, we are revising upwards our outlook on financial performance for the remainder of the fiscal year.
Nissan has filed the following full-year forecast with the Tokyo Stock Exchange, using a foreign exchange rate assumption of 117 yen to the dollar and 130 yen to the euro for the second half. It is based on the equity accounting method for our Chinese joint venture.

• Net revenue is expected to be 12.25 trillion yen – a 1.2% improvement against the previous outlook;
• Operating profit is forecast to be 8.1% higher at 730 billion yen;
• Net income is expected to reach 535 billion yen;
• Capital expenditure is expected to remain at 550 billion yen;
• And R&D expenses will remain at 530 billion yen.
  Looking at the change in operating profit from our previous outlook, we anticipate:
• A positive foreign exchange movement of 45 billion yen;
• A 5 billion yen positive impact from marketing and sales due to country mix improvements
• And a 5 billion yen improvement in monozukuri and others

CONCLUSION

In summary, our first half fiscal results were healthy, reflecting the continuing benefits of our ongoing product offensive and effective cost discipline, combined with the benefits of favorable exchange rate movements and good free cash flow generation.
Based on our revised Full Year outlook, we continue to expect to generate solid full year automotive free cash flow and deliver attractive returns to shareholders. Nissan remains committed to maintaining a minimum 30% payout ratio to net income during the remainder of the mid-term plan period, and we forecast a dividend payment of 42 yen per share for this fiscal year. Earlier today, our Board approved payment of an interim dividend of 21 yen per share to be made on November 26, 2015.
In conclusion, I would like to reaffirm that Nissan remains committed to improving our business performance and we are on track to achieve another year of solid, profitable growth.

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