February 9, 2017

Fiscal Year 2016 Third-quarter Financial Results
Media Conference
February 9, 2017
Joji Tagawa, Corporate Vice President, Nissan Motor Co., Ltd.

Overall, our business is solid – we continue to generate strong automotive free cash flow and we remain on track towards the achievement of our full year unit sales and profit guidance.

For the period we are reporting today, our business performance was solid despite the adverse impact of year-over-year currency exchange headwinds.

For the nine-month period to December 31st, consolidated net revenues totaled 8.26 trillion yen.

Operating profit totaled 503.2 billion yen, which equates to an operating margin of 6.1%.

Net income was 414.2 billion yen, which represents a 5.0% net margin. Free cash flow for the automotive business was 166.1 billion yen – here please note this is after the acquisition of the 34% stake in Mitsubishi Motors. Excluding this acquisition, the Auto business generated very strong free cash flow of 403.5 billion yen. And we ended the period with an automotive net cash position of 1.07 trillion yen and a very solid balance sheet.

The reported results for Revenue, Operating Profit and Net Income are below the prior year’s actuals – here the shortfall is completely explained by the substantial negative year-over-year FX impacts which were not entirely offset by solidly improved operational performance, particularly on the cost side of the business.

On a constant currency basis, net revenues would have been 9.43 trillion yen. Operating profit would have improved 30.1% to 764.6 billion yen, reflecting an operating profit margin of 8.1%.

FY16 THIRD-QUARTER SALES PERFORMANCE
During the nine months ending December 31, global total industry volumes – or TIV – reached 67.16 million units, an increase of 4.5%.

Nissan’s total unit sales were 3.99 million units, an increase of 2.6%. However, for the third quarter alone, Nissan out-performed the industry with sales increasing 8.3% to 1.38 million units.

Looking at our key markets in detail…

In Japan, TIV increased slightly by 0.9% to 3.5 million units. Nissan saw unit sales decline by 10.0% to 344 thousand units, resulting in a market share of 9.8%. The decline was due mainly to our suspension, earlier in the year, of sales of Dayz and Dayz Roox minicars.

We have now resumed sales of the Dayz and Dayz Roox minicars, and we have successfully launched the all-new Serena and the Note e-POWER. As a result, Nissan’s sales increased 13.1% in the third quarter versus 4.9% for the industry.

In China, where our sales performance is measured on a calendar-year basis, TIV for the nine-month period was up 13.0% to 18.59 million units.

Nissan’s sales increased 8.2% to 929 thousand units, representing a market share of 5.0% for the period – reflecting solid demand for both Nissan and Infiniti models.

For the 12-month period to the end of December, our sales totaled 1.36 million units, which was up 8.4% versus the prior year period, but behind overall TIV growth.

This was due mainly to low demand in the market for light commercial vehicles. Our sales declined 4.3% in the 12-month period to December 31, resulting in a 5.7% market share. In the same period, however, sales of our passenger vehicles increased 10.9%.

In North America, TIV increased by 1.0% to 16.26 million units, and Nissan out-performed the market by delivering record unit sales of 1.58 million units. Furthermore, in the third quarter, Nissan’s sales increased 7.9% versus a TIV increase of 1.7%.

In the U.S., TIV was down 0.4% at 13.46 million units for the nine month period. However, Nissan’s sales rose by 4.2% to 1.16 million units, equivalent to a market share of 8.7%, amid strong demand for the Rogue and Altima.

In Canada, sales rose by 0.4% to 104 thousand units, resulting in a market share of 6.7%.

In Mexico, we remained number-one with unit sales increasing 17.0% to 313 thousand units, equivalent to a market share of 24.9%.

In Europe, including Russia, our sales totaled 542 thousand units. However, for the third quarter, while TIV increased by 2.9%, Nissan’s sales increased 4.0%.

Excluding Russia, sales rose by 5.5% to 474 thousand units for the nine-month period. This resulted in a market share of 3.6%.

In Russia, the market continued to be impacted by the weak ruble and economic uncertainty. Our sales decreased 25.0% to 68 thousand units, resulting in a 6.1% market share, but remain in line with our expectations.

In other markets, our sales decreased 3.9% to 596 thousand units due to overall weak industry demand. However, in the third quarter alone, we outperformed the industry.

For the nine-month period, unit sales in Asia and Oceania decreased 3.6% to 253 thousand vehicles. Sales in Africa and others were down 14.3% to 64 thousand units. This decline is in-line with the TIV reduction in the markets where we are active.

Sales in Latin America increased to 132 thousand units and the Middle East decreased to 147 thousand units.

FY16 THIRD-QUARTER FINANCIAL PERFORMANCE
Moving to the detail of our financial results, as with previous quarters, Nissan is presenting its financial performance under the equity accounting method for our joint venture in China.

On this basis:

• Consolidated net revenues totaled 8.26 trillion yen.
• Operating profit totaled 503.2 billion yen, which equates to an operating margin of 6.1%.
• Net income was 414.2 billion yen, which represents a 5.0% net margin.

Looking at the operating profit movement:

• Volume and Mix produced a positive impact of 126.6 billion yen.
• The increase in selling expenses resulted in a 163.8 billion yen negative movement.
• Cost items, including purchasing cost reduction efforts, resulted in a net savings of 214.3 billion yen.
• R&D expense decreased by 22.8 billion yen.
• Manufacturing expense increased by 9.7 billion yen.
• Other items had a negative impact of 13.1 billion yen.
• On a constant FX basis, the net total of these operational items results in a year-over-year Operating Profit improvement of 177.1 billion yen or 30.1% and resulting OP margin of 8.1%
• FX however had a negative impact of 261.4 billion yen, resulting in an actual reported operating profit of 503.2 billion yen (6.1% OP margin).

On a management pro forma basis, which includes the proportional consolidation of our Chinese joint venture, our key indicators showed that:

• Net revenues totaled 9.01 trillion yen.
• Operating profit was 601.9 billion yen.
• Net income totaled 414.2 billion yen.
• Automotive free cash flow was 253.4 billion yen; and
• We ended the period with automotive net cash of 1.26 trillion yen.

On a pro forma basis, our actual operating profit margin was 6.7%. If we did not have significant headwinds by FX, the operating margin would have been 8.5%.

Relative to our outlook for the full fiscal year, we are maintaining our previously announced financial and volume guidance.

Nissan continues to maintain a progressive dividend policy reflecting our profitability and solid free cash flow generation and remains committed to a minimum pay-out ratio of 30%. Furthermore, we completed the share buyback program of 300 million shares last November. For the 2016 fiscal year, we are maintaining our previous projection of increasing the full year dividend by 14.3% to 48 yen per share.

CONCLUSION
In summary, despite FX headwinds, our business has performed solidly and we have continued to leverage improved operational efficiency.

We continue to generate strong free cash flow and we have a healthy balance sheet – a proof point here is the 1 notch credit rating improvement for both Long Term and Short Term debt announced by Moody’s in January.

Our performance is on track.

Looking forward, we are committed to growing our business in a sustainable way to deliver solid earnings, positive automotive free cash flow and attractive shareholder returns.

# # #