May 9, 2002

Speech text for Carlos Ghosn on "Fiscal Year 01 Business Review", May 9, 2002

Good afternoon Ladies and Gentlemen,

I/ Introduction

The Nissan Revival Plan is over. Two years after the start of its implementation, all the official commitments we took have been overachieved one full year ahead of schedule. Today, as I review our performance in fiscal year 2001, you will see that Nissan will post its best-ever full-year earnings and fourth consecutive record half-year operating profit. This is the fruit of NRP, fruit that even the most optimistic of outside observers in 1999 didn't even think of. Last year, I told you that Nissan was back; this year I will tell you that Nissan moved decisively towards establishing itself as a world-class, competitive and profitable global automotive company.

In October 1999, we committed to returning Nissan to bottom-line profitability in the first year of the plan. We did it.

Second, we committed to an operating profit margin of 4.5% by the end of fiscal year 02. We did that too. Already in FY 00, we achieved a 4.75% margin; today, twelve months ahead of schedule, we will report an operating margin of 7.9%.

Third, we committed to reducing our net automotive debt in half to no more than 700 billion yen by the end of FY 02 while at the same time increasing our investment rate from 3.7% to nearly 5% of net sales. Well, we did that too. At the end of FY 01, our net automotive debt stands at 435 billion yen, the lowest it has ever been in the past 24 years.

Because of NRP and its achievements, Nissan is now ready to grow. The new fiscal year opened under the banner of NISSAN 180, a plan designed to take Nissan to a higher level of performance; a plan that opens a new perspective for our company, a perspective of lasting profitable growth.

In my speech today, I will review our business performance in fiscal year 01 and share with you our preliminary key financial numbers. I will then give you a detailed presentation of our new three year plan, NISSAN 180, before closing with our outlook for the new fiscal year. We will then hand out our presentation package and I will answer your questions.

I must caution you that all the fiscal year 01 numbers I will be commenting today are preliminary and subject to minor adjustments before we disclose final figures on May 20th after our board of directors meeting. Today's presentation has been filed with the Tokyo Stock Exchange as a revision to our last forecast disclosed October 18, 2001.

II/ FY 01 achievements

A/ NRP update

In addition to achieving all the official commitments, the major action plans that supported the NRP and gave it consistency have been fully implemented and have achieved their goals. Let me quickly review them for you:

The 20% reduction in purchasing costs has been reached. We have significantly shrunk our supplier base by 40% down to 700 parts suppliers while service suppliers are down 60%. Thanks to a complete overhaul of the purchasing function, ranging from globalization to the creation of Renault Nissan Purchasing Organization, Nissan is closing the gap with its benchmarks and approaching a much more competitive position.

Critical to this performance has been the role of Nissan 3-3-3, a specific action plan that we put in place, which has fundamentally changed our relations with our suppliers and our own business practices. Nissan 3-3-3 contributed more than 40% of total purchasing cost reductions.

In manufacturing, the plan to close five plants has been completed. There is one slight exception due to an increase in demand coming from the Middle East, production of the Z24 engine will continue for a few more weeks at the Kyushu plant before being discontinued in June at the latest.

The impact on manufacturing efficiency has been significant. Capacity utilization rates have increased from an average of 51% before the start of NRP to the current 75%. Our platform and production map has been simplified; compared to 7 plants that produced cars based on 24 platforms at the start of NRP, our current 4 plants in Japan now produce cars based on 15 platforms.

The execution of the plan has been exemplary. Not a single unit of production was lost and we suffered no stoppages or disruptions related to the transfer of so many people, machines and equipment.

In our distribution network in Japan, all our action plans have been executed. We rationalized the network by closing a total of 355 unprofitable and overlapping outlets, more than 10% of our total points of sale when we started.

As announced, we also reduced the number of wholly owned subsidiary dealers in Japan by 20% to a total of 80. The rationalization of our distribution network was made by merging selective subsidiary dealers for more efficiency, by selling others to independent dealers or by management buyouts to enhance their entrepreneurship spirit.

At the end of the fiscal year, our global headcount came to 125,100 compared to our target of 127,000 by the end of fiscal year 02, exceeding the 21,000 reduction announced in October 1999. This number has been reached mostly by natural turnover, retirements, and pre-retirement programs, but also by spinning off non-core businesses.

The efficiency of our research and development effort per program has also exceeded plan. We have achieved a more than 25% efficiency improvement in less than two years, freeing up resources to support further technology and product development.

Finally, the sale of non-core assets will have generated a total of more than 530 billion yen in cash in two years, also one year earlier than expected. These funds have been used to reduce our automotive debt significantly, giving us the financial flexibility needed to support the development of our core automotive business.

This performance has been made possible because the execution of NRP has been swift, relentless and without compromise. In 1999, when I announced its contents, I said that putting the plan together was 5% of the revival effort and 95% of our work remained before us. Completing it in two years instead of three is testimony to what the people of Nissan and our partners, suppliers, dealers, distributors and all who embraced the spirit of NRP have accomplished. It also heralds the potential of the alliance between Renault and Nissan.

B/ Business performance

Let me now review some of the key business highlights of the year. I will not comment extensively our unit sales and market share data, which have already been amply reported and are available in your presentation packages. Of course, I will answer any question you may have on these figures. Rather, I would like to take you a bit behind the scenes and give you a more qualitative assessment of our sales performance.

Overall, we sold 2,597,000 vehicles worldwide in FY01, down by 1.4% from FY 00. If we look at our performance on a half-year basis, we see that our second half was stronger than the first half. Our sales were down 3.6% year on year in the first half, but up 0.8% in the second half. This is due to the acceleration of our product launches, which were all planned under NRP.

Let us look at our products in more detail on a regional basis, starting with Japan.

As you know, much of our weakness on the domestic market comes from the fact that our product plan has been ill adapted to what customers presently buy. Particularly, our entry-level cars were so old and their profitability so bad that we could not compete effectively. Dealers complained that they had little showroom traffic, fewer young buyers, and few opportunities for conquest.

The new March, which was developed on a common platform with Renault, is the first car that renews Nissan's entry-level line-up. Our order intake has been very strong: at the end of April, we took more than 55,000 orders on a cumulative basis. Not only are volumes high but also this car is attracting buyers into Nissan stores who did not previously own a Nissan.

The capacity of a car to attract buyers to your brand is what makes the difference between a good product and a hit. Today, 40% of buyers of March are coming to us from another brand. We believe this is an extremely positive sign of the significant contribution we expect from this vehicle to our overall performance in Japan.

As you know, March is not the only car in the all-important entry-level segment. We launched our first-ever mini car in April, just after the close of the fiscal year, which means that it made no impact to our accounts yet. However, I can report that the order intake for this car is also high. By the end of April, after three weeks of sales, we received more than 9,500 orders. Each mini car represents an incremental sale for Nissan since we were completely absent from the segment previously.

Let us turn now to the United States.

The first striking feature of fiscal year 01, is our sharply different performance in the first half compared to the second. If you remember, our sales were down 14% and our market share had fallen to 4% in the first half. At that time, we had no new product launches, no minor changes and no product carry over from the previous half. The second half of fiscal year 01 is a completely different story. US sales are up 9.4% in the second half with market share reaching 5% in the month of March. Not surprisingly, product was the main driver of our performance in the second half.

Just as with the entry-level car segment in Japan, we took a close look at customer expectations in the mid-size family sedan segment in the United States. Our conclusion was that we needed to reposition the Altima, in terms of size, power, styling and overall performance. We launched the new car in September, under very tumultuous and difficult market conditions and have been selling everything we are able to build since.

In January, at the Detroit Auto Show, the car was named North American Car of the Year, a first for any Japanese brand. In the following month, it was also awarded Canadian Car of the Year. This car is a hit, and hit cars produce immediate positive repercussions. Let me highlight a few of them.

Nissan was suffering an important transaction price gap with comparable models from our main competitors and had to spend higher levels of incentives. The transaction price gap with Toyota, which we follow closely as an indicator of the performance of our brand, has been closing faster than planned.

Despite the onslaught of incentives, including 0% financing campaigns led by the biggest auto companies in the United States, we have been able to stay our course and actually reduce the amount of incentive money we need to spend.

Altima is attracting new and younger customers in our showrooms. And because showroom traffic is up, buyers can look at our other products. If we just look at sedans in the second half, Maxima sales are up 9% and have suffered no cannibalization from the new Altima, while Sentra is up 14.3%.

You have heard me say in the past that there was no problem at a car company that good products could not solve. Second half 01 results are a concrete illustrations of this statement. More illustrations will be coming in the near future.

C/ Financial performance

Let us now turn to Nissan's consolidated financial performance and start with the income statement.

Consolidated net sales came to 6.2 trillion yen, up 1.8% from last year. However, with consistent accounting methods and scope of consolidation, sales would have increased by 5.4%. We made two changes. First, in a further move to bring our accounts in line with internationally accepted standards step by step, we now deduct C&I, contest and incentive spending in the United States and Mexico directly from sales rather than account for them as expense items. The impact was a drop of 98.9 bn \ or 1.6% in revenues. Second, the spin-off of 18 previously consolidated companies such as Vantec, Tennex, Nissan Transport and domestic dealers also had a negative impact on revenues of 113.2 bn \ or 1.8%.

Nissan's consolidated operating profit improved by 68% from 290.3 bn \ in fiscal year 00 to a record 490 bn \ in fiscal year 01. As a percentage of net sales, the operating profit margin came to 7.9%, the highest in the company's history, and one year earlier than the NRP commitment of 4.5% for fiscal year 02. The second half of the fiscal year was particularly strong as our operating margin exceeded 9.0%

Let us now look in detail at the variance between last year's 290.3 bn \ operating profit and this year's 490 bn \. I will analyze eight different items:

  1. The improvement in purchasing costs was again the single most important factor contributing to the improvement in profitability. The net accounting impact of this year's 9% out of the 20% reduction in purchasing costs came to 245 bn yen.
  2. R&D costs increased by 28 bn yen net of the impact of foreign exchange. This increase in spending is needed to support the renewal and expansion of our product line up as well as on the development of new technology.
  3. Product enrichment and the cost of regulations had a negative impact of 62 bn \. Even though this year's impact is slightly lower than last year's, this is a permanent feature of our industry.
  4. The drop in volumes and mix globally generated a negative impact of 71 bn \ for the full year. Compared to the negative impact we reported for the first half of 01, the second half shows a clear improvement, especially in the U.S.
  5. Selling expenses, increased by 11 bn yen, mainly due to an increase in Japan in the second half as we phased out products like the former March. In the US and Europe, selling expenses were largely unchanged.
  6. Other items had a negative impact of 9 billion yen.
  7. The accounting changes relating to income recognition that I described earlier did not impact operating profits. However, the spin-off of 18 companies that were profitable in the aggregate produced a negative impact of 11 bn \.
  8. The weakening value of the yen produced a positive impact of 147 bn \ to consolidated operating profits for the full year.

On a regional basis, Japan continued to show a strong rebound in profitability as the percentage of profitable cars out of our total sales continued to increase and as the exchange rate environment was more favorable. Operating profits came to 290 bn yen, compared to 174.3 bn yen in FY 00.

After a lower first half due to a drop in volumes, profitability in the United States and Canada recovered sharply in the second half. For the full year, we made 159 bn yen compared to 113.4 bn yen in fiscal year 00.

As I had previously reported, Europe was profitable in fiscal year 01. We expect to report an operating profit of 3.0 bn yen, compared to an operating loss of 27.3 bn yen for fiscal year 00.

In general overseas markets, we made an operating profit of 58 bn yen compared to 42.2 bn yen in fiscal year 00. We are continuing to build our presence in numerous countries and are encouraged by our increasing level of profitability there.

Finally, inter-regional eliminations came to 20 bn yen, compared to 12.3 bn yen in fiscal year 00.

The last preliminary number of the income statement that I would like to comment is the bottom line net income after tax. Subject to minor changes in our consolidated tax position, which is not closed, we expect to report net income of 372 bn yen, representing a 6% return on sales. This net income takes into account an extraordinary loss of 27 bn yen resulting from the sale of all remaining marketable securities in Japan.

As a result of such positive figures, the Board of Directors has decided to propose a 14% increase in the dividend from 7 to 8 yen per share at the Annual General Meeting in June of this year. Our intention is to build a sustainable dividend policy that can satisfy our shareholders over the medium term. In addition, our share price continued to appreciate significantly. It is particularly striking when compared to the evolution of the Nikkei stock index.

On the balance sheet side, the improvement in fiscal year 01 has been substantial. Net automotive debt decreased sharply, exceeding our forecasts and NRP commitment. Due to continued sales of assets, which totaled 192 bn yen in FY01, but increasingly from the generation of cash from operations and improvements in working capital, net automotive debt stood at 435 bn yen at the end of the fiscal year, down 518 bn yen from the beginning of fiscal year.

All these numbers encourage us. They vividly demonstrate what NRP was intended to do; reestablish a firm financial foundation on which to base a strategy of lasting profitable growth. Nissan has improved its competitiveness and built the momentum needed to face the prospect of a new three-year business plan; NISSAN 180.


A/ Commitments

NISSAN 180 is designed to capitalize on NRP and complete the revival process of Nissan with, this time, an emphasis on profitable growth.

As you are already aware, the objectives of NISSAN 180 are contained in the name of the plan; let me review them briefly one by one:

The "1" stands for an additional one million unit sales worldwide by the end of FY 04, based on FY 01 figures. What do we mean by the end of FY04? The end of FY04 will be the midpoint of a one year period starting October 1st, 2004. This objective includes Nissan and associated brands in passenger cars and light commercial vehicles. The growth in unit sales will not be at a constant pace. We expect to see an acceleration in the latter period of the plan due to the cumulative effect of new products and our entry in new segments (like mini cars in Japan, full-size trucks in the US) and new geographical markets (like Brazil, Indonesia, and China).

The "8" stands for an 8% operating margin based on constant accounting standards. Our objective is to consistently position Nissan at the top level of profitability in the global auto industry.

Finally, "0" stands for zero net automotive debt at the latest with constant accounting standards at the end of fiscal year 04.

We have made a series of key assumptions, which describe the external environment that we foresee in the next three years. We have made reasonably conservative assumptions, both in terms of foreign exchange rates and total industry volumes.

Our foreign exchange rate assumptions are 125 yen to the dollar for FY02 and 115 yen to the dollar for 03 and 04, and 110 yen to the euro for the three-year period of NISSAN 180. We will maintain the 100-yen to the dollar and euro assumption for planning purposes for the period beyond NISSAN 180.

We expect the mature automotive markets to grow modestly over the duration of the plan with Japan at +6.7% excluding mini cars, the United States down slightly by 0.5% and Europe up by 2.1%. We believe that other markets such as Asia or South America will provide more opportunities for growth. In summary, we are making a reasonable global volume growth assumption of 3.9% for the three year period or 1.3% per year on average, including mini cars.

B/ Four Pillars

The achievement of NISSAN 180 will rely on four pillars: more revenue, less cost, more quality and speed and a maximized alliance with Renault.


On a regional basis, we are aiming for the following breakdown of our additional million units in sales: 300,000 in Japan, 300,000 in the United States, 100,000 in Europe and 300,000 in the general overseas markets. From our base of 2.6 million units in fiscal year 01, this represents growth of close to 40% in unit sales in three years.

This should give us a global market share of 6.1% in FY04 compared to 4.7% today. By region, we expect Japan to move from 17.9% to 22.5%, excluding mini cars, which is the approximate level where Nissan was 10 years ago. In the United States, our market share would reach a record high of 6.2%, up from 4.2% in FY01, while Europe would move up from the present 2.5% to 3.1%. It is not possible to calculate a market share for general overseas markets since it is a region made up of numerous different countries. We do expect, however, to significantly increase our presence in many of these.

Increasing unit sales and market share will not happen easily or automatically; it is something we have planned for in a methodic and disciplined manner. Already under NRP, we were hard at work, conceiving and designing new cars and light trucks and rebuilding our brand. The products under development then are all going to come to the market during NISSAN 180.

We have been measuring transaction prices compared to our competitors, resale values and brand power in all key markets. Much still needs to be done and will be done to improve our positions.

We have already set two objectives. The first one is to reduce the transaction price and resale value gap with Toyota by 50% in Japan and in the United States. The second is in Europe where we have selected Volkswagen as our benchmark with the objective to close the gap by 30% on average. For GOM countries, we will set specific objectives market by market in the coming months.

In order to ensure that Nissan will be again capable of developing innovative products and perceived as an innovative company, we have reorganized the upstream processes that lead to product concepts. According to our survey, in the early 90s, several of Nissan's models were ranked among the 10 most innovative cars in Japan. For example, in 1991, 4 out of the top 10 cars were Nissans. In the mid-90s, Nissan models disappeared from the top 10, which lead to a situation where only 42% of those surveyed in 2000 described Nissan as an innovative company versus more than 70% for the best in class. We need to change this perception back and for Nissan to be viewed as innovative. Our objective in Japan is to have at least 3 models ranked in the top 10 most innovative cars while at the same time receiving a positive overall opinion.

Our product plan is far more intense than under NRP. We have planned a minimum of 28 all new products in all segments. Already in fiscal year 02, 12 will be launched worldwide.

Rebuilding our presence in Japan is the cornerstone to increasing our unit sales and overall profitability. The product plan in place signaling the return of Nissan in the entry level segments with the March, the Moco and Cube, leads us to set the objective to place three Nissan cars in the top ten monthly selling list in Japan.

To support our growth in NISSAN 180, Marketing and Sales will play a significantly bigger role to maximize conquest while reinforcing our customer base and contributing to an increase in brand power. Specific objectives have been set on Purchase Intentions, Conquest and Loyalty ratios.

Our action plan will be based on a convenient retailer strategy, a new conquest strategy, and effective outlet management.

In the US, we will focus further on marketing and advertising skills and efforts, reinforce our distribution network, and improve significantly our customer satisfaction index and sales satisfaction index scores.

In Europe, we will work to improve on our brand power, continue to implement the hub strategy with Renault for efficiency and also improve our CSI and SSI scores.

Finally each market in the general overseas market has its own marketing and sales efficiency improvement in order to support sales growth.


This broad-based product offensive and brand enhancement is at the base of our increased revenues. But it cannot be accomplished without the necessary cost efficiency. NRP put Nissan back on the map; it did not create a competitive advantage relative to our competitors. All the global auto companies are working diligently at improving their cost base.

NISSAN 180 addresses the main cost drivers with specific action plans that I would now like to review with you.

As under NRP, purchasing remains the single most important cost item of our income statement. We announced our new targets to our suppliers at a convention last February. They call for a reduction of 15% over three years. However, the importance of this effort is quite different from NRP.

First and most importantly for our suppliers is the fact that NISSAN 180 will be growing volumes by one million units while NRP was based on flat sales.

Second, the 28 all new products to be launched during NISSAN 180 compare to only 9 all new products launched during the 2 years of NRP. Reducing the cost of parts on existing cars under NRP was much more challenging. I know from my past experience as a supplier how much growing volumes and a renewed product line up can support increased competitiveness and profitability.

Third, through Nissan 3-3-3 activities, we have increased significantly the contribution coming from Nissan's engineering department from 33% under NRP to 50% of the total purchasing cost reduction effort.

Finally, we are maintaining our focus on reducing the complexity and diversity of our line-up, especially here in Japan. For example, from the start of NRP, we have reduced the number of grades by 40% and the number of part types by more than 25%. Our efforts will continue globally and focus specifically on powertrain variations.

In manufacturing and logistics, we will continue to improve our productivity. Manufacturing has committed to reducing per unit costs by 12% over the course of three years. Global logistics costs are also to be reduced by 12% by the end of the plan.

In distribution, we have targeted specific reductions in total distribution costs by region. Distribution costs, which is the 2nd largest cost item after purchasing, represents all the costs from the time the car leaves the plant to the moment it arrives in the hands of our customer. These include marketing, advertising, sales costs, incentives, as well as dealer margins.

We have set a global objective to reduce distribution costs over 3 years by 3 percentage points going from 27% to 24% of revenues. This means a leaner and more effective sales and distribution system.

Indirect expenses, which are all the expenses not directly linked to purchasing, developing, manufacturing and selling processes, will necessarily go up in absolute terms as the company grows. However, their rate of increase will be limited to 50% of the actual rate increase in revenues during NISSAN 180.

In R&D, we will pursue along the course set by NRP. R&D expenses will remain in a range of 4% to 4.5% of revenues as we are continuing our efforts to reduce development costs per vehicle program.

During NISSAN 180, we expect our warranty costs to be stable despite our sales increase. Finally, finance costs will be almost eliminated in FY04 as the net automotive debt disappears.


The action plans that will generate more revenue at less cost are critical to achieving our targets. But they are not sufficient to ensure lasting profitable growth. Quality of our products, quality of our management and speed will make the difference.

Let us begin with quality for our customers. With the large number of cars to come, we have a responsibility to satisfy their expectations of quality. Because we are Nissan, expectations are high. Quality is our single most precious asset.

We have launched a new program called "Quality 3-3-3" which focuses on three categories of quality: product attractiveness, product initial quality and reliability, and sales & service quality. In the three years of NISSAN 180, the program targets to position Nissan products among the top three in each category in each region, or if not possible, like the SSIs in the U.S., to be the best Japanese make.

Quality does not stop with products or services. Developing and measuring the quality of management is as important. Best management practices arise when values and performance can be quantified and measured. To ensure that management is in tune with company and employee expectations, we will conduct a survey three times a year on the quality of management starting in September 2002.

During NRP, we have been building gradually the Nissan Management Way, of which the two cornerstones are the cross-functional teams and the value up program.

CFTs will continue to function with the same level of importance under NISSAN 180 as under NRP. The deployment of our value-up program will accelerate as an important tool for continuous process improvement and problem solving. 400 v-pilots are to be trained in FY02 and be in action.


Just as under NRP, the alliance with Renault will produce synergies that go beyond the performance that Nissan could achieve alone. It is a significant competitive advantage.

The alliance is key to the future growth and profitability of both Nissan and Renault. In the last few months, we have completed the shareholding transactions as announced last October fully and scrupulously implementing the alliance agreement signed in March 1999. Let me give you a brief update.

At the beginning of March 02, Renault exercised its warrants and increased its stake in Nissan to 44.4%. At the end of the same month, Nissan acquired a 13.5% stake in Renault and retained the right to move to 15%. Today, after having shown our financial situation, I can announce that we intend to acquire additional shares newly issued by Renault and increase our stake to 15%, which will allow us to consolidate our holding by the equity method. We will buy the shares at the average 20 day market price preceding Renault's board meeting which will authorize the issuance of the shares in the coming weeks. This simply concludes what was planned and decided in March 1999 and no further moves are contemplated for the future.

This shareholding will not change the way we work today, nor the way we develop the alliance in future years. The alliance remains focused on mutually enhancing performance. It is based on the respect of distinct corporate and brand identities while continuously developing synergies.

Much will happen with Renault in three main directions. The first is in the area of marketing and sales to derive a common approach in specific markets such as Mexico, South America and North Africa. The second deals with generating more efficiency through selective commonization such as the B&C platforms and common powertrains while maintaining distinct brand identities. The third direction is an extensive exchange of best practices in all fields of business between the two companies.

I have laid out in front of you the 4 pillars of NISSAN 180: more revenue, less cost, more quality and speed, and maximized alliance with Renault. This is our roadmap for you to judge our performance during the next three years.

IV/ Conclusion

A/ Volume forecast

Now let me share with you our forecast for fiscal year 02.

Our global sales volume forecast for the year is 2,792,000, up 7.5% versus last year. This forecast is underpinned by the most dynamic product launch schedule in Nissan's history: 12 all new products representing 21 regional product events worldwide. Many of these products will be key to our market presence and profitability, not only for FY 02, but also beyond.

In Japan, we forecast a slight decrease in total industry volumes to 3.9 million units, excluding mini cars. Our sales objective for the year is 757,000, up 6.1% with a market share of 19.2%. If we include the 50,000 Moco mini car sales, our sales objective goes to 807,000 units, a 13.1% increase over last year.

In the U.S., we forecast a market of 15.6 million units, an 8.2% decline from FY 01. Our sales objective is 771,000 units, an increase of 7.3%. This should give us a 4.9% market share supported by the full effect of the Altima and three significant new cars, Z-car, Murano, and Maxima.

Equally as important is the revival of the Infiniti channel with no less than one new car each quarter if we count the effect of the G35 that was just launched in mid-March. This car is off to a very strong start with more than 5,400 sales in just seven weeks, with no discounts. We now have a dedicated luxury car product plan in place on which we can seriously develop the franchise.

In Europe, we forecast total industry volumes of 18.6 million units, down 4.2%. Our sales objective is a slight increase from FY01 with 501,000 units, a 2.7% market share.

The launch of the Primera in March 02 and the sourcing of two LCVs to come from Renault will lend support as we continue to rebuild profitability and market presence. For General overseas markets, our sales objective is 655,000 units, a 7.1% increase. In all countries around the world, significant product launches are planned.

B/ Financial Forecast

As always, the new fiscal year will bring with it risks and opportunities.

We have identified two risks for the year which include a strengthening of the yen to the U.S. dollar and a harsher competitive environment than the one we have planned for.

On the side of opportunities, we see potential for more favorable total industry volumes particularly in the U.S. But the biggest opportunity for Nissan in fiscal year 02 lies in the swift implementation of NISSAN 180.

In weighing these factors, we are filing the following forecast with the Tokyo stock exchange using a foreign exchange rate assumption for the year of 125 yen per dollar and 110 yen per euro.

Sales: 6.5 trillion yen
Operating profit: 553 billion yen, up 12.9% from FY 01 giving an operating margin of 8.5%.
Ordinary profit: 488 billion yen
Net income: 380 billion yen using a reasonable assumption for the effective tax impact
Capital expenditures: 350 billion yen
Net automotive debt: less than 250 billion yen

C/ Wrap-up

1999 was a crucial and historic year for our company. Nissan was going through a near death experience after a decade of decline. The alliance with Renault was signed. On October 18, we took the challenge of revival. The only asset we had was our determination to make it happen. The only leverage we had was the motivation of our people. We all worked hard with at best a lot of skepticism surrounding us. No effort was spared. No sacrifice stopped us.

Through NRP, we transformed a struggling company into a good company. Through NISSAN 180, we will transform a good company into a great company. We are committed to performance and to enriching people's lives, for the benefit of our customers, our shareholders, our partners, and our employees.

We have a clear idea about our future. Now we have to earn it. You can expect the best from NISSAN.

Thank you.

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