OCT 23, 2002


I/ Introduction

Good afternoon, ladies and gentlemen.

NISSAN 180 is working... and it is working pretty well. Six months into our new three-year plan, Nissan expects to report record half-year earnings, for the fifth time in a row. NISSAN 180's performance is driven by the powerful combination of leaner, more efficient operations... increasing volumes... and decreasing costs. We have been tenaciously laying the groundwork for growth... and growth is here in a very challenging global market.

For the first half of fiscal year 2002:
* Nissan's operating profit is expected to increase 84% to 348 billion yen compared to the first half of fiscal year 01.
* Nissan's consolidated operating margin is expected to reach 10.6%, an industry leading accomplishment.
* Revenues are projected to be 3.28 trillion yen, an increase of 10.2%.
*Global sales increased to the level of 1,386,000 units, up 7.5%.

These numbers illustrate the profound transformation that has occurred at Nissan during its revival process. In October 1999, the Nissan Revival Plan commitments were put in place at a time when our company was facing serious doubt, anxiety, even fear. The NRP delivered everything that was expected and more -- in two years instead of three - establishing the discipline to manage our operations more efficiently.

NRP set the base on which NISSAN 180 was built, with the conviction that Nissan could now move to its second and final phase of the revival process, that of profitable growth. NISSAN 180 aims to grow sales by one million additional units by the end of fiscal year 04... to achieve an industry-leading level of operating profitability... and to become free of debt. These first six months show that we are firmly on course.

Today, I will brief you on our first-half global sales performance before reviewing our first-half preliminary financial results. I will then share with you the outlook and revised forecast for the whole year.

II/ Growth is on track: review of 1st half sales

You have heard me say repeatedly that profitable growth comes by planning for it. Let me remind you that we are planning for our future profitable growth as I highlight our recent investment in China.

Our investment is the first of its kind in the Chinese automotive industry. On September 19 we announced that we will be injecting 8.55 billion RMB, or 120.4 billion yen, into a new partnership with Dongfeng, resulting in an ownership of 50% of Dongfeng Motor. Through this integrated, full-line automotive company, we are targeting 550,000 unit sales by 2006 -- 220,000 of which will be Nissan-branded passenger cars. Beyond that, we see potential to reach 900,000 units in sales within 10 years.

This investment will make an impact on NISSAN 180 sales by adding a minimum of 80,000 units. But, as the numbers indicate, this new frontier represents a significantly greater opportunity for Nissan in the years to come after NISSAN 180.

So where are we today?

I will report our global sales progress on a fiscal year basis - that is, for the first six months of the current fiscal year. For Japan and the U.S., results are computed from April to September. In Europe, Mexico and South Africa, fiscal year results are computed from January to June. So Nissan's sales in all regions for the first six months of fiscal year 02 totaled 1,386,000 an increase of 7.5%. If you look strictly at the April-to-September results from all regions, the sales increase is actually 9.3% -- a good indication of how our sales are accelerating on a worldwide basis.

In all of our markets, this performance is being driven primarily by our product plan. Of the 28 all-new products we will launch under NISSAN 180, 12 of them will come in this fiscal year. To date, we have launched six.

Even when global market volumes have been reasonable, the quality of industry sales has often been mediocre. The markets in Japan and Europe both dropped in the first half and, even if volumes in the U.S. remained good, incentives continued at a very high level.

Let's look at our performance on a regional basis, starting with Japan. In our domestic market, we sold 383,000 units in the first half of fiscal year 02, up 12.1% from the same period last year. If we take just the registered vehicles, excluding mini-cars, our sales increased 4.1%. The all-important entry-level segments have driven this increase, where, as you know, we have launched three new cars recently.

The March has been selling an average of over 14,500 units since its launch, well above the life average target of 8,000 units per month. Moco, our first mini-car, has also been a strong performer, with sales over 27,000 units in six months of sales. The new Cube went on sale two weeks ago. With more than 11,500 orders, the Cube is off to a strong start. Finally, the Fairlady Z sold out its entire year's allocation in just two months.

Our domestic market share has begun to grow again after stabilizing last year. Including mini-cars, our market share totaled 13.8%, up 1.6 points from the first half of fiscal year 01. Excluding mini-cars, our share climbed from 17.6% to 18.8%. With this performance and with the new models still to come, we are in line with our target to sell an additional 300,000 units in Japan.

Turning to the United States, our performance in the first half has also been strong, fueled by new products. Sales in the U.S. in the first half of fiscal year 02 came to 378,000 up 8.3% compared to the first half of fiscal year 01. Our U.S. market share is now 4.2%, up from 4.0% in an extremely competitive market.

The Altima has continued on its initial strong pace, limited only by our capacity to produce more. The 350 Z is off to a strong start, taking more than 8,000 pre-sell orders before its launch in August. In the Infiniti channel, the launch of the G35 proved to be a true success and has been instrumental in driving sales of our luxury franchise in the U.S.

The strength of our products has permitted Nissan to stay on the sidelines of the incentive battle. As I said, industry incentives reached very high levels in certain months, but it has not deterred our intention not to fight for market share just for the sake of market share. For us, these tactics are unsustainable and incompatible with our profitability targets and, in fact, would undermine our efforts to build our brand power.

In Europe, Nissan sold 251,000 units from January to June, down 9.4% from the same period in 2001. Our market share declined to 2.5% from 2.7%. We were expecting a challenging year in terms of volumes as we are running out production of the Micra. Production of the new Micra, which was shown at the Paris motor show at the end of September, starts at the end of November. Profitability remains a priority in the European market, but, again, we will not chase volumes that cannot satisfy our profit targets.

On a positive note, the renewal of our product plan in Europe started with the Primera, which completed its launch phase in July, with the addition of the hatchback. New diesel engines sourced from Renault will be rolled out in the coming months across our passenger vehicle range. We have added the cross-badged Interstar and the Primastar, expanding our range of LCVs in Europe. Production of the Primastar began at the end of September in Nissan's factory in Barcelona.

Turning to the General Overseas Markets, including Mexico and Canada, our performance has been strong with 374,000 unit sales in the first half of the fiscal year, up 16.2% from the same period of last year. Since the General Overseas Markets is a region made up of numerous countries, calculating an overall market share does not have much meaning.

Even so, let me highlight a few of the most significant markets. In Mexico, we continued on our strong momentum with an increase of 18.4% to 105,000 unit sales. Sales have been supported by the launch of the Platina, a new model derived from the Renault Clio, complementing sales of the popular Tsuru. From April to September, China sales have increased by 80% compared to the same period last year, amounting to 36,000 units.

III/ 1st half preliminary financial results

Let us now turn to our preliminary first-half financial results. These numbers are the fruit not only of NISSAN 180, but also of the decisions made under NRP. I would like to highlight for you some of the key drivers this first half. All the figures I present today are preliminary and subject to minor change before full audited financial disclosure is filed on November 19.

Revenues are expected to reach 3.28 trillion yen in the first half of fiscal 02, up 10.2% from the same period in fiscal year 01, driven primarily by higher volumes and mix. I would like to point out two adjustments that are necessary to allow a direct comparison between FY 02 and FY 01. First, as we reported in the second half last year, we changed the accounting method for sales incentives in the United States and Mexico. Incentives are now deducted directly from revenues. The negative impact of this change to first- half revenues is 60 billion yen. Second, the positive impact of the change in the scope of consolidation to revenues is 20 billion yen. This was due mainly from the sale of Altia and our national sales company in Germany on the one hand, and from the inclusion of Diamondmatic, the new joint automatic transmission company formed with Mitsubishi that is now fully consolidated. Adjusted for these changes, revenues would have grown by 11.7% on a comparable basis.

Operating profits are expected to be up by 84% to 348 billion yen, compared to the first half of fiscal year 01. The operating margin is expected to be 10.6%, exceeding, for this six-month period, our commitment to reach 8% over the three years of NISSAN 180. This is the strongest operating performance ever reported by Nissan for a six-month period in its history, placing us at the top level of operating performance of the automotive industry. What were the drivers?

1) The effect of foreign exchange rates to first-half operating profits was minimal. In total, the impact of all currencies was a positive 7 billion yen to operating profits. The average dollar rate came to 123.1 yen compared to 122.2 in the first half of last year while the euro moved from 108.1 yen to 116.3.
2) The change in sales incentive accounting had no effect on operating income, but the change in scope of consolidation added 3 billion yen to first-half operating profits.
3) Combined higher volumes and mix contributed 64 billion yen in operating profits in the first half of fiscal year 02 compared to fiscal year 01. As I mentioned earlier, strong volumes in Japan, the United States and General Overseas Markets more than offset the drop in volumes in Europe. Globally, the mix effect was slightly negative, as a lower mix in Japan offset a higher model mix in every other location.
4) As our volume has grown, so have the activities of our finance companies, creating a positive contribution of 7 billion yen.
5) Selling expenses produced a slight positive impact, contributing 5 billion yen. Our incentives are well controlled, with incentives being lower in all markets except Europe.
6) Manufacturing expenses and other items produced a positive impact of 22 billion yen.
7) Purchasing continued to turn in a strong performance as lower purchasing costs generated a positive contribution of 102 billion yen to operating profits. This amount represents a purchasing cost reduction rate close to 7%, much higher than our yearly commitment of 5%. In addition to the benefits of higher volumes under NISSAN 180, we are seeing today a follow-through of the purchasing policy implemented under NRP. The higher level of efficiency brought on by Nissan's purchasing policy since 1999 is now making a significant positive impact on Nissan's suppliers as well, most of whom, as you may know, have already started revising upward their first-half forecasts.
8) Product enrichment and the cost of regulations had a negative impact of 32 billion yen.
9) Expected higher R&D expenses generated a negative impact of 17 billion yen as we continue to reinforce technology and product development under NISSAN 180.
10) General and administrative expenses produced a small negative impact of 2 billion yen, an indication that our administrative expenses are being managed effectively even in a period of growth.

On a regional basis, our four regions are reporting improved performance.

Profits coming from Japan in the first half will rise significantly from last year's level. We are expecting to report 178 billion yen compared to last year's 128 billion yen profit.

In North America, which includes the United States and Canada, profitability more than doubled. Our operating profit increased from 49 billion yen to 114 billion yen this year.

Europe is continuing to improve, and we have shifted away from losses. Europe increased profits from a loss of 5 billion yen in the first half of 2001 to a gain of 7 billion yen this half.

Finally, the General Overseas Markets are increasingly contributing to our total profits, from 32 billion yen to 46 billion.

Inter-regional eliminations will result in a positive 3 billion yen contribution compared to a minus 15 billion yen in the first half of last year.

We are expecting non-operating items to come to a loss of 25 billion yen, slightly less than last year due to lower net financial costs.

Ordinary income is projected to be, as a consequence, 323 billion yen, double last year's level.

Finally, net income after tax is expected to be 286 billion yen, 24% higher than last year. Our net income after tax will not rise as much as our operating profits as we progressively return to a standard tax-paying situation. We will no longer benefit from the recognition of deferred tax assets that had been created by prior years' losses.

A critical aspect of NISSAN 180 is financial flexibility as measured by net automotive indebtedness. As you know, our target is zero net automotive debt by the end of the plan. Here too I am happy to report that we have made an important step forward in achieving our zero debt target. Net automotive indebtedness came to 274 billion yen at the end of the first half, down from 432 billion yen at the end of fiscal year 01. Asset sales, which had contributed 530 billion yen in debt reduction in two years under NRP contributed 74 billion yen in the first half of fiscal year 02. Debt reduction has been primarily realized by improved cash from operations.

IV/ Outlook

We operate in the context of a changing world, and risks and opportunities are before us.

Risks include the current U.S. downturn, concerns about the West Coast ports situation... which is still not definitely settled at this time - and weakened confidence in the Japanese financial markets.

Our major opportunity lies within NISSAN 180 itself. Restructurings are largely behind us. Our focus now is on growth-related actions and the successful roll-out of the most intensive product plan in Nissan's history. This year, we have 12 all-new products, leading to 21 regional product launches worldwide, 10 of which are yet to impact the second half.

In Japan, where we expect total industry volume to be 5.74 million units, which is slightly lower than our initial forecast of 5.79 million, we are projecting unit sales of 816,000 units, including mini-cars, up from our initial forecast of 807,000. In the U.S., where total industry volumes have been strong to date, we have revised our full fiscal year forecast from 15.6 to 16.9 million units. Nissan sales will come to 795,000 units up from our initial forecast of 771,000. In Europe, industry volumes will be slightly higher than our initial plan of 18.6 million units, rising to 18.8 million units. We expect sales of 484,000 units, lower than our initial plan of 500,000. In General Overseas Markets, including Mexico and Canada, we expect sales of 743,000 units. In total, we are expecting global unit sales of 2.838 million units for the full year, up 9.3% from fiscal year 01, projecting a year on year sales increase of 241,000. This would represent one fourth of the 1 million additional units to be delivered by the end of NISSAN 180.

With all these factors in mind, today we are filing a revised forecast for the full year with the Tokyo Stock Exchange. We expect full-year revenues to reach 6.8 trillion yen, operating profits to be 720 billion yen, which would give a 10.6% operating margin, ordinary profit to reach 660 billion yen and a net profit after tax of 490 billion yen. In addition, we are forecasting net automotive indebtedness to fall to 80 billion yen by the end of the fiscal year. This forecast for the second half is made with the assumption that the dollar will remain at 125 yen, unchanged from our previous forecast, but that the rate of the euro would reach 120 yen, up from 110 yen. Our NISSAN 180 commitments to deliver an 8% operating margin and zero debt are on a fast track.

The Board of Directors met this morning to approve the contents of today's presentation. Nissan's dividend policy was reviewed and I would like to share with you the conclusion that was reached. At the last annual general meeting in June 2002, individual shareholders had legitimately expressed their desire to see the dividend increase. The Board of Directors of Nissan has decided a transparent and, hopefully, attractive dividend policy for the three years of NISSAN 180 that would see the dividend triple by the end of the plan.

In June of this year, Nissan paid a dividend of 8 yen per share for fiscal year 01. After official filing on November 19th, we expect an estimated interim dividend of 4 yen per share for fiscal year 02 to be paid on December 10th. For the full fiscal year 02, we will propose to pay another 10 yen per share at the next annual general meeting in June 03, making a total of 14 yen for fiscal year 02. For fiscal year 03 we will expect to increase the annual dividend to 19 yen, and to 24 yen per share for the full fiscal year 04.

Twenty-four yen per share for fiscal 04 is three times the amount paid in fiscal year 01. This is how confident we are that Nissan has not reached its peak.

V/ Conclusion

The financial results I am sharing with you today are significant, and they make a strong statement about the growing performance of our company. We are making changes. We are making progress. We are delivering measurable, meaningful performance.

The evidence appears in our financial statements... and in our showrooms. To give you a glimpse of yet another example of the "revived" Nissan, I would like to introduce another addition to our product lineup. I mentioned earlier that we have unveiled six new models globally since the start of this fiscal year. Please direct your attention to the new Nissan Teana.

The Teana is a new luxury sedan designed for Japan and Asian markets. This car reflects a contemporary Japanese DNA, balancing comfort and dynamism. We will share more details about the Teana when sales begin February of next year. NISSAN 180 will deliver globally six new products in the five months to come in addition to the six already launched.

As I conclude my remarks today, I will remind you that Nissan is only halfway through its revival process, which began with the implementation of NRP in April 2000. In the beginning, skeptics doubted our ability to survive, much less succeed. The performance I have summarized today is a tribute to the strengths that form the core of our company and to the talent and dedication of our people.

Our plan is far from complete. We are fully aware of the fiercely competitive nature of our industry and of the highly volatile environment in which we operate. We will maintain our focus on growth, profitability and financial fitness.

Our vision is clear. Our confidence is growing. Our commitment to long-term success is unwavering. October 2002 does not mark the peak of our performance. We are convinced that our best is yet to come. You can expect it from Nissan.

Thank you for your attention.

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