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Re:Nissan Transformation Progress

• The Re:Nishan turnaround plan is gaining traction with tangible cost improvements, keeping the company on track to hit its full-year cost reduction target
• 6 billion yen (60 billion JPY) in combined fixed and variable cost savings were achieved in Q1 FY26, bringing cumulative running cost savings from Re:Nissan actions to 31.5 billion yen (315 billion JPY, including 25.5 billion JPY from FY25)
• The 20% target for engineering cost per hour reduction was achieved 3 quarters ahead of schedule
• The company remains on track to deliver a total of 50 billion yen (500 billion JPY) in cost reductions by the end of FY26

Regional Market Momentum

• United States: Retail sales grew over 9% YoY, with Pathfinder posting its best ever quarter (32% sales growth), Frontier up 35% YoY, and Rogue up nearly 39% YoY ahead of the all-new hybrid e-Power model launch. Rogue ranked top in the J.D. Power initial quality study, and Infiniti QX80 achieved its best ever Q1 sales performance. Incentive spending remains targeted and aligned with growth.
• Japan: Sales grew 1% YoY, with Roox deliveries up 52% YoY. The all-new Kicks (with e-POWER) has over 11,000 orders, and the new Elgrand premium van has over 8,000 orders ahead of full delivery rollout. July sales are pacing ahead of prior year levels, and the company targets a return to sustainable double-digit market share.
• China: The market remains challenging with total industry volume down 22% YoY in the first half amid rapid acceleration of the shift to new energy vehicles (NEVs). Nissan outperformed the industry, with a 15% first half sales decline (vs 22% industry decline) and gained modest market share. NEV models (N6, N7, NX8, Frontier Pro) are gaining customer traction, and export shipments from China will begin in July to expand market opportunities. The company has shifted from a single nationwide commercial policy to a regionalized approach tailored to local NEV vs ICE demand mix.
• Middle East: Customer demand for Nissan vehicles remains resilient, but geopolitical uncertainty has caused logistics and supply chain disruptions. Alternative shipping lanes have been secured, but elevated logistics costs from these routes are pressuring profitability until supply chains normalize.

Operational Updates

• The Kumamoto earthquake caused no damage to Nissan facilities and no human losses, but has created limited supply chain disruptions leading to partial production suspensions, with an expected near-term volume impact of approximately 5,000 units. The situation remains fluid and the company is working to recover lost production as quickly as possible.

• Full year fiscal 2026 sales volume guidance is revised downward to 3.15 million units, reflecting worsening industry sales conditions in China and ongoing geopolitical uncertainty in the Middle East. Production guidance is also revised downward to 2.8 million units.
• Full year consolidated revenue guidance of 13 trillion yen (13 trillion JPY) and operating profit guidance of 200 billion yen (20 billion JPY) are reaffirmed. Expected net income for the full year remains 20 billion yen (2 billion JPY).
• The maintained profit outlook reflects: minimal profit impact from lower China volumes due to Nissan's 50% equity consolidation of its Chinese joint venture; expected volume stabilization in China in the second half of the fiscal year; new cost control measures in China; stronger than expected performance and pricing in the U.S. market; upside from current favorable foreign exchange rates (yen weakness against the U.S. dollar); and one-time gains realized in Q1 that offset emerging headwinds.
• Full year automotive free cash flow is projected to be positive when excluding the cash impact of tariffs, consistent with prior guidance, with stronger cash generation expected in the second half of the fiscal year driven by seasonal trends, cost reductions and new model launches.

For the three months ending June 30, 2026, Nissan sold over 700,000 units, a 2.5% year-on-year decline excluding China. Consolidated net revenue rose 9.5% year-on-year, driven by favorable foreign exchange and improved revenue quality from pricing and product mix. Operating profit reached 7.79 billion yen (77.9 billion JPY), an increase of 15.7 billion yen (157 billion JPY) from the prior year. Net income was 0.038 billion yen (3.8 billion JPY), reversing a prior year quarter loss. Capital expenditure was 11.4 billion yen (114 billion JPY), and R&D spending was 12 billion yen (120 billion JPY). The automotive business (including eliminations) posted net revenue of 2.6 trillion yen (2.6 trillion JPY) and an operating loss of 0.083 billion yen (8.3 billion JPY), near breakeven including tariff impacts. Automotive free cash flow improved to 32.4 billion yen (324 billion JPY), a year-on-year increase of nearly 6.7 billion yen (67 billion JPY), with a 10 billion yen (100 billion JPY) improvement after excluding one-time impacts. End-of-period net cash stood at 97 billion yen (970 billion JPY), with total automotive cash and cash equivalents of 2.1 trillion yen (2.1 trillion JPY). Key regional performance: China: Q1 retail sales up 7.2% YoY, first half sales down 15% YoY (vs 22% industry decline, gaining modest market share); Japan: unit sales up 1.3% YoY, with strong new model demand; North America: sales up 4.2% YoY, U.S. sales up 9.6% YoY supported by Rogue, Pathfinder and Frontier; Europe: sales down 14.6% YoY due to intense competition and portfolio optimization; Rest of World: sales down 16.8% YoY driven by Middle East logistics and supply chain disruptions.

• Persistently weak macroeconomic conditions and accelerating industry shift to NEVs in China are creating ongoing volume and profitability pressure, requiring rapid rebalancing of product inventory and sales mix
• Geopolitical uncertainty in the Middle East has disrupted logistics and supply chains, leading to higher shipping costs that are projected to create a 2 billion yen (20 billion JPY) operating profit impact in the first half of FY26, up from the prior projection of 1.5 billion yen (15 billion JPY)
• Raw material costs (particularly aluminum, copper, and oil-related materials) remain elevated, creating ongoing cost headwinds
• Foreign exchange volatility, including potential yen appreciation from central bank intervention, is a source of uncertainty, though partial pre-hedging has mitigated downside risk
• Intensifying global competition from Chinese OEMs is creating pricing and volume pressure across all major regions, including Europe and Japan's kei car segment
• The Kumamoto earthquake has created temporary supply chain disruptions that may impact near-term production volumes, though the full impact remains fluid
• European operations continue to post operating losses amid strong competitive pressure, requiring further restructuring to return to profitability

Q: How important is North America to offsetting global sales declines from China and the Middle East, and can you share a U.S.-specific volume growth target?

A: Management prioritizes recovering company fundamentals over chasing volume, and notes North America is already delivering strong 9% YoY sales growth with strong performance across key model lines. Nissan’s North America strategy of building locally produced, tariff-free, profitable vehicles is working, and management will not provide a U.S.-specific volume breakdown or growth target at this time. All regional markets are expected to deliver on their performance targets.

Q: What changed in China to require a volume outlook revision, and what steps is Nissan taking to hit its long-term 1 million unit ambition for the market?

A: The revision is driven by faster-than-expected macroeconomic slowdown in Q2 and accelerated consumer shift to NEVs from higher fuel costs linked to the Iran conflict. Nissan now has NEVs ready that are performing well, and is shifting inventory to NEVs and moving from a single nationwide commercial policy to a regional approach tailored to local demand. The 1 million unit target is a long-term ambition combining domestic sales and exports. Exports will begin in the second half of FY26, with gradual volume growth expected mid-term as new NEV models launch.

Q: Why is operating profit guidance maintained despite a lower volume outlook?

A: Lower China volumes have minimal impact on consolidated operating profit because Nissan equity accounts its 50% stake in the Chinese joint venture. Q1 FY26 delivered almost 7.8 billion yen (78 billion JPY) in operating profit including one-time gains; core operating profit was 3-4 billion yen (30-40 billion JPY) even with Middle East and raw material headwinds. Pricing improvements in the U.S. offset raw material costs, additional one-time gains from U.S. tariff programs are expected, and current yen/dollar exchange rates above 150 create upside. These factors offset the volume reduction.

Q: How important is the upcoming Rogue e-POWER launch to Nissan's full year results, and could a successful launch lead to an upward profit forecast revision?

A: The Rogue e-POWER is Nissan's most important launch of the year. It serves the largest vehicle segment in Nissan's key U.S. market and opens access to the hybrid market, where competitors already hold 50-60% mix that Nissan could not tap. It is also expected to reduce incentive spending by allowing Nissan to retain existing customers seeking hybrid vehicles who would otherwise leave. Early media feedback on the product is very strong, though management did not confirm whether a successful launch would trigger an upward profit revision.

Q: What is the current projected profit impact of Middle East disruptions, and how does it compare to prior guidance?

A: In May, management projected a 1.5 billion yen (15 billion JPY) first half profit impact and a 19,000 unit volume loss. Current projection is a 2 billion yen (20 billion JPY) first half profit impact and 18,000 unit volume loss, very close to the original forecast. The slightly higher profit impact comes from elevated logistics costs and lost after-sales business, while end-consumer demand for Nissan vehicles remains healthy in the region.