June 23, 2010

Annual General Shareholders' Meeting

Carlos Ghosn:
As we review Nissan's business performance in fiscal year 2009, it is important to begin by recognizing the severity of the global financial crisis and economic recession that started in late 2008.
The automotive industry went through the worst crisis in its history.
Nissan moved quickly to respond to the abrupt deterioration in the economic environment. We suspended our five-year business plan, NISSAN GT 2012. We also began to implement the Nissan Recovery Plan, focusing on protecting our cash and reestablishing our profitability. At the same time, we did not compromise on strategic projects that are important for Nissan's future.
Nissan was able to finish fiscal year 2009 with better-than-expected positive financial results. Importantly, we are also on track to complete Nissan's recovery by the end of 2010.
Our fast recovery demonstrates that Nissan is now capable of adapting with speed and effectiveness whenever a crisis hits, no matter where it's coming from.
It also affirms the value of the Renault-Nissan Alliance, particularly at a time when consolidations are clearly occurring in our industry.
The crisis highlighted that automakers need to be present in many technologies; in all segments of the car market, from small cars and family cars to 4x4s, crossovers and luxury models; and in every geographic market, especially in fast-growing emerging markets that will drive global automotive growth. No automaker can allow itself to bypass any technology, segment or geographic market. We saw new partnerships being formed during the crisis, and more will no doubt follow. Companies want to keep their own identity and autonomy from one side while they need the benefits of larger scale from the other side.
The Alliance brings us the scale we need to compete effectively, and we want to take full advantage of this. To give you two examples: By fiscal year 2014, 37% of the models launched by Nissan will share common platforms with Renault, and 66% of our powertrain components will also be shared within the Alliance.
The strong ties we have established over the past 11 years with Renault helped us accelerate synergies during the crisis. We achieved 228 billion yen of synergies for the Alliance in 2009. We expect to realize 120 billion yen in savings from new actions in 2010, mainly by sharing parts, platforms and powertrain components, by optimizing local sourcing and by collaborating on support services, research and logistics.
The proven success of the Alliance also continues to open new doors for us. In April, we signed a strategic cooperation agreement with Daimler, the group that owns the Mercedes and Smart brands. We will work together on vehicle platforms, powertrains, light commercial vehicles and other areas of common interest. For Nissan, one of the first fruits of our cooperation will be seen in Daimler's supply of diesel and gasoline engines to Infiniti. Nissan, Daimler and Renault will also work together on gearboxes.
The Renault-Nissan Alliance has become the largest industrial shareholder in Daimler. Cross-shareholding underlines our commitment to work together with respect, trust and transparency over the long term. Each company will share its strengths while maintaining its own identity and autonomy. Each company will look for ways to make the most of its opportunities and support future growth.
Nissan's growing presence in the global auto industry... our ability to weather the storm... and our commitment to creating value over the long term - these are clear signals that emerged out of the challenges of the past year. Growing, creating value and contributing to sustainable mobility are important to Nissan. This is how we build trust.
I now invite Shiga-san to review our fiscal 2009 performance and share some of Nissan's action plans for 2010.

Toshiyuki Shiga:
Let me begin with a review of our sales performance.
The global automotive market increased 2.5 million units in fiscal 2009, to 64 million units, and the increase was mainly due to government-led stimulus programs that helped to boost new car sales and the increased demand in emerging markets, especially in China.
In this context, Nissan's global sales were up 3% from the prior year. Our overall market share was 5.5%.
Our sales results were supported by the launch of eight new models, including:

  • The PIXO in Europe;
  • Patrol in the Middle East;
  • NV200, Fuga Hybrid and Roox in Japan;
  • Infiniti G Convertible and the 370Z Roadster in the United States; and
  • In Thailand, the new March, the first in our global compact car series.

All our new models were highly appraised and accepted by the market. The March was named "The Most Environmentally Friendly Car" in Thailand. And our NV200 small van was named the "International Van of the Year 2010" by a jury of Europe's leading automotive journalists.
Other products in our lineup were also acclaimed. For example, the 370Z Roadster was selected as a "Consumers Digest Best Buy" in the United States. In Japan, our Skyline Crossover won "RV of the Year Award," as part of "Consumers' Choice Award Car of the Year." The ongoing success of the Nissan GT-R continues to strengthen our brand, winning seven awards, including "Car of the Year" and "Sports Car of the Year" in the Middle East and "Performance Car of the Year" in Australia.
Consumers are responding to our products. In fiscal 2009, we either maintained or increased our market share in all our major regions - in Japan, Europe and the United States - and we saw a substantial increase of sales in China.
In Japan, our market share remained stable, at 12.9%. The Nissan Eco Series of fuel-efficient models contributed to our sales. Serena was the number-one minivan for the second year in a row, and X-TRAIL ranked first in the SUV segment for the third consecutive year.
In the United States, our market share increased four-tenths of a percent, to 7.6%. We saw a big jump in the fourth quarter, boosting our share to a record 9%, with strong sales of Altima and Versa. In fact, Versa was number one in its segment, with a 23% segment share.
In Europe, our market share increased slightly, to 2.8%. QASHQAI and Micra were strong sellers. Government scrap incentives contributed to our 24% increase in sales in Western Europe, but those gains were largely offset by a sharp sales decline in Russia.
The news from China in fiscal 2009 was mixed. On the positive side, our sales continue to grow, boosted by our main models, Teana and Sylphy. For the full year, our sales were up 38%, and sales in the first quarter of fiscal 2010 climbed further, up 68%. Nissan now holds the number 1 position among all Japanese automakers in China. Unfortunately, our production capacity is not able to meet the strong market demand, so our market share was down four-tenths of a percentage point in fiscal 2009. We are now working to boost our production capacity in China, expanding our Huadu, Guangzhou and Zhengzhou plants to serve our customers better.
In every market, our global production network constantly adapts to make sure that our production volumes stay in line with demand.
Due to careful inventory management, our inventory of new vehicles remained at a low level, at 470,000 units, at the end of fiscal year 2009. We continue to manage inventory carefully to limit its impact on our free cash flow.

2009 financial results
Let's take a look at how our performance was reflected in our financial results.
At the close of fiscal 2009, our revenues reached 7.5173 trillion yen. We returned to profitability, with operating profits of 311.6 billion yen, after losses in the prior year.
We also generated positive free cash flow for our auto business, which in turn strengthened our balance sheet. As a result, net debt for our auto business was greatly reduced - a significant improvement compared to the prior year's level.
For non-consolidated figures, please refer to the business report you have received.
Although these results do not reflect our full potential, they are very good results when you consider that we started the year under severe conditions, dealing with impacts from the financial crisis, widespread recession, the decline in the global car market, and volatile exchange rates.
I am very proud of the women and men of Nissan and their disciplined focus on our recovery efforts. In a difficult time, they delivered.

FY10 outlook
That was 2009. Now let's look at our outlook for fiscal year 2010.
We ended fiscal 2009 with better-than-expected results, but market conditions will continue to be volatile this year. We will keep holding firm to three core pillars - namely, revenue growth, disciplined cost management and free cash flow generation - to complete Nissan's recovery this year.
First is revenue growth. In each major market, we have concrete actions to increase market share and improve our performance. For example:

  • In Japan, our customer base reinforcement program is a guideline that clearly defines how and how often our sales and service teams communicate with our customers - inviting them to outlet events, sending service notifications and periodicals, making courtesy calls and so on.
  • In the United States, we are enhancing our dealer network, using a thorough performance evaluation of each individual dealer.
  • In China, as I mentioned, we are boosting our production capacity.
  • In Europe, a Share Improvement Program is in place to build on performance improvements that began in the middle of 2009.

Second is strict cost management. Cost reduction within the monozukuri team will continue to be the main pillar of our 2010 Recovery Plan. By "monozukuri," I am referring to our teams in Engineering, Purchasing, Manufacturing and Supply Chain Management. We will continue to keep down expenses for marketing, manufacturing, R&D, overtime, travel and G&A, adopting the frugal mindset we adopted during the crisis.
The third pillar of our plan is free cash flow generation. In fiscal 2010, working capital will have a negative effect on free cash flow, due to the expected increase in sales and additional sourcing from India and Thailand, but we will minimize this impact through strict inventory management. We will also continue to control all major components of free cash flow other than working capital, such as investing activities.
By holding firm to these three core pillars, Nissan will complete its recovery this year.

FY10 financial forecast
For fiscal year 2010, we forecast increases in revenues, operating profit and net income.
Capital expenditures will increase to 360 billion yen, and R&D expenses will amount to 430 billion yen.
Free cash flow will be positive, and we will totally eliminate net auto debt by the end of the fiscal year.
We will use our available resources to aim for increased market share, to go further in reducing costs and to keep our working capital requirements at a low level. And we will continue to accelerate synergies with Renault as part of the Alliance.

New models, new technologies
Our growth will be supported by the 10 new models we will launch in fiscal 2010.
First is Juke, which we just launched in Japan this month. Juke will be introduced in the United States, Europe and other markets as well.
Also coming to Japan are Elgrand, a new minivan and a new minicar.
The Infiniti QX will be launched in the United States, followed by GCC and Russia.
The NV series of commercial vans and a convertible crossover will also launch in the United States, along with the new Quest minivan for both the U.S. and Canadian markets.
Sales of the Nissan LEAF zero-emission car will begin in the United States and Japan, followed by Europe.
And, finally, the second car in our global compact car series, an affordable sedan, will be launched.
In fiscal 2010 we forecast declines in Europe and Japan as government incentives end, and growth is expected in emerging markets and in the U.S. recovery. Overall, we are forecasting 3% year-on-year growth for the world automotive market in 2010. For Nissan, we forecast that our global sales will grow 8% to a record level of 3.8 million units. Our sales will be supported by our 10 new models and more than 15 innovative technologies.
"Zero emission" and "PURE DRIVE" are the pillars of our environmental technology. PURE DRIVE refers to a range of low-carbon and low-emission technologies for our internal-combustion-engine vehicles.
Nissan LEAF will be powered by our compact lithium-ion battery, which delivers twice the energy of a conventional battery.
The Fuga Hybrid we will introduce this fall will feature Nissan's original hybrid system, which has a unique one-motor-two-clutch system that enables higher-response acceleration compared with a two-motor system.
Our new Xtronic CVT featuring the addition of an auxiliary gearbox proves to be lighter and more compact, offering better acceleration at start and better fuel efficiency at high-speed driving.
With so many innovative technologies and products, 2010 will be the year when the "Nissan of Technology" image is reignited in our customers' minds.
For more information about our strategic outlook, I turn the program back over to Mr. Ghosn.

Carlos Ghosn:
Nissan has taken many actions to manage through the crisis. We have operated frugally. We optimized costs. We cancelled or postponed non-priority projects. And we have not given up on priorities that are important to Nissan's future. Allow me to review some of them with you.

Quality leadership
Nissan is now in its third year of pursuing quality leadership in our industry. We are making good progress.
Several products have been rated favorably by "Most Influential Indicators" in major markets. For example:

  • In China, four Nissan models were among the Top 3 in their segments in the J.D. Power IQS.
  • In the U.S., Altima and Infiniti G37 were named "Top Picks" by Consumer Reports, and four Nissan and two Infiniti models were rated among the Top 3 in their segments in the J.D. Power IQS, with Frontier at the top of its segment.
  • In Great Britain, "What Car?" gave four-star ratings to QASHQAI and Note.
  • And in Germany, QASHQAI and Note earned the top reliability rating given by ADAC.

Since fiscal 2007, according to our 3-months-in-service internal indicator, we have improved by nearly 50%. And we continue to shorten the time it takes to respond to product quality issues globally.
Our global network of Field Quality Centers - which are unique to Nissan - helps the speed and effectiveness of our response. These regional centers allow local employees to get involved and coordinate with R&D, manufacturing and suppliers as soon as a problem is identified. Our experts are in the field and can move quickly to conduct a full technical evaluation and resolve issues. Our Field Quality Centers have helped to reduce our lead time on quality issue countermeasures, boosting the speed of our response by 30% compared with fiscal 2007.
In fiscal 2009, based on recall response times - from the time the incident was triggered through to the campaign decision and launch - Nissan led major Japanese carmakers in responding to customer concerns on a timely basis. In fact, the way we respond is becoming well recognized. Ray LaHood, the Secretary of the U.S. Department of Transportation, told me last month during a meeting in Tokyo that our recall process should be the benchmark for the entire U.S. auto industry.

Sustainable mobility promoter
Quality is about putting our customers at the center of our company. And so is our drive to promote sustainable mobility.
Sustainable mobility means offering cars that are not only environmentally friendly, with maximum fuel efficiency or no fuel at all, but cars that provide a high level of value and performance.

Zero-emission leadership
By now, you have seen and heard a lot about Nissan LEAF, the first model in our lineup of eight all-electric cars from the Alliance. I have driven LEAF to confirm its performance, and I can tell you this is a global car for the 21st century. Acceleration is smooth and linear, handling is great, driving is a pleasure. It's quiet, clean, with information technology that changes the way people can interact with their cars. This car will be a true game changer as the world's first mass-marketed and affordable 100% electric zero-emission car. Nissan LEAF is creating a class of its own.
The way the Alliance is approaching electric cars is entirely different from what any other car maker is doing. We are putting in place a zero-emission mobility system. We are not selling electric cars as stand-alone products. We are involved in every aspect of the EV experience. We are working with governments around the world, building public-private partnerships to promote sustainable mobility. We are developing batteries with partners. We are producing batteries and vehicles. We are involved in the infrastructure for charging and recycling the batteries. For example, in Japan we will have regular chargers in all 2,200 Nissan dealer locations, and at least one quick-charge unit will be located within a 40-kilometer radius throughout the country.
Nissan LEAF won't arrive on the market until December, and yet we have already received 6,000 pre-orders in Japan and about 14,000 pre-orders in the United States. These numbers are much higher than what we can produce in 2010.
Individual customers are lining up to buy this car, and media around the world now feature the Nissan name in their stories about electric cars. Last week, more than 400 journalists, government officials and influentials from around the world came to Japan to drive Nissan LEAF, and they liked what they saw and felt as they drove.
They are not the only ones who like our new car.
Earlier this month, Apple CEO Steve Jobs used Nissan LEAF to demonstrate Apple's new iAd mobile advertising network, which the company will launch on July 1. Excitement is building for a zero-emission future, and Nissan is helping to lead the way.
Let me give you one example. Last year the Alliance and the City of Yokohama began working together in a five-year partnership called the Yokohama Mobility Project "Zero." Since then, many actions have been put in place:

  • More than 40,000 people have participated in our E1 Grand Prix, an online eco-driving site that allows drivers to monitor their fuel consumption and rewards them if they do.
  • We have a new partnership for a traffic guidance system to reduce the number of cars stuck in traffic emitting CO2 into the air.
  • Yokohama is developing EV infrastructure, such as charging stations in public areas, and has 34 EVs in the government fleet.

Yokohama could become a model for other cities around the world.
Nissan's vision for cleaner transportation is creating quite a stir, not just in Japan, but worldwide. Governments are coming to us, asking what they can do to promote the adoption of EVs. The appeal is real, as you can see in this brief video.

Mobility for all
Being a responsible global automaker also means offering cars at a price people can afford to pay. This is what we are doing with the ultra-low-cost car, which we are developing with the Bajaj group in India, and with our new family of global compact cars. Nissan now has a full product offer, from very affordable compact cars to GT-R and Infiniti models, to meet a wide range of consumer needs.
Our global compact cars are modern cars that offer a safer, more reliable way for people to transport their families and achieve greater autonomy. Their engines will set a new standard for fuel efficiency worldwide. They will introduce many new customers to the Nissan brand, especially in emerging markets.
We just launched our new March/Micra in Thailand and India, and production in China and Mexico will follow. In each country where we're sourcing and building cars, we're building our brand and market share, which is good business, while we're contributing to local communities and economies, our social responsibility.
It's very important to be in emerging markets, where the potential for growth is high. Nissan is growing its presence with many actions:

  • In China, we will be able to produce more than 1 million cars a year in 2012, and we will expand our capacity further in line with market growth. Our intention is to grow our market share from 6% today to 10% as soon as possible.
  • Our Alliance plant in Chennai, India, has started production with a 200,000-unit capacity and plans double capacity at full ramp-up in order to supply the Indian market and to export to more than 100 countries in Europe, Africa and the Middle East. In addition to our project with Bajaj, we are partnering with Ashok Leyland to start LCV production.
  • In Brazil, through our growing product portfolio and network coverage, we plan to achieve 5% share in the midterm, contributing to the Alliance share objective of more than 10%.
  • In Russia, we will introduce the Murano in early 2011 in our new St. Petersburg factory, in addition to the X-TRAIL and Teana. The Alliance, together with our Russian partner Avtovaz, will pool our production capacities and platforms to fully deliver our product strategy, aiming for a 40% share of the Russian market by 2015.

Emerging markets and the people who live in them are becoming increasingly important in the world car market. Please watch the screen for a glimpse into that world.

Corporate Social Responsibility
As a global automaker, Nissan aims to enrich people's lives all over the world.
Sustainable mobility is part of that vision, and so is making a difference through various educational, environmental or humanitarian relief efforts. For example:

  • We teach 15,000 Japanese children about the environment and the science of making things through our Waku-waku Design Studio, Waku-waku Eco School and Monozukuri Caravan.
  • Now in its 26th year, the Nissan Children's Storybook and Picture Book Grand Prix provides tens of thousands of books for libraries throughout Japan.
  • Our employees have expanded their activities with Habitat for Humanity, now building homes in Australia and India, as well as in North America.
  • Our support of local communities takes many forms in areas ravaged by natural disasters, such as floods in the United States or earthquakes in Chile, Indonesia and Haiti. Nissan donated 30 trucks to the relief effort in Haiti and matched employee contributions, working hand in hand with the Clinton Foundation and the United Nations' World Food Programme.

These are just some of the ways our corporate sustainability actions and the 210,000 men and women in Nissan are working to make a better world. You can see many more in our annual Sustainability Report that is being released today.

President's Award
At last year's shareholders' meeting, we introduced some employees who made outstanding contributions to Nissan's performance during the fiscal year. We'd like to do that again this year, recognizing recipients of the Global Nissan President's Awards. This year's awards recognize two projects involving 43 individuals in our company.
The first award commends the efficient cross-functional work that allowed us to launch the Nissan Eco Series of models within a very short lead time, taking full advantage of the incentives offered to consumers to purchase fuel-efficient cars. I will call on Hideki Hyodo to speak on behalf of his team about that effort.
The second award recognizes the effective monozukuri teamwork that supported Nissan's recovery in fiscal year 2009. I would like to call on Toshiharu Sakai to tell you about that contribution.
The power of Nissan comes from the motivated men and women inside our company. They bring the Nissan brand to life.
Ladies and gentlemen, our dear shareholders, thank you for your trust in our ability to manage through the worst crisis in automotive history. We are planning to reinstate dividend payments for fiscal year 2010 at 10 yen for the full year. I and the members of Nissan's entire Executive Committee are committed to work very hard to build the future that you are expecting. We count on your support in our quest to be an effective global automaker and a responsible promoter of sustainable mobility.