NISSAN MOTOR CO.,LTD. Q2 FY2026 earnings call

• Re-Nissan Cost Actions: The company is firmly on track toward its target of $500 billion in fixed and variable cost savings. Cumulative savings reached $365 billion in the first half, with $110 billion delivered in H1 alone. Priority remains on maximizing these benefits in the final two quarters.
• US Market Performance: Sales grew by 5.5% in a flat market. Localized production strategy is yielding results, with models like Frontier (+36%), Pathfinder (+12%), and Rogue (+31%) showing substantial gains. The new Rogue Hybrid and e-power technology are receiving positive feedback.
• Japan Market Momentum: First-half sales increased by 6.3%, driven by new products like the Elgrand (11,000 orders) and Kicks (20,000 orders). Customers are seeking higher trim levels, indicating brand value recognition. Products have won multiple industry awards for design and technology.
• China Market Challenges: The most difficult market, with industry volume down 22% and Nissan retail sales down 15%. Response strategies include rebasing ICE production, accelerating New Energy Vehicle (NEV) adoption, and expanding exports from China to other markets (e.g., Mexico, Philippines).
• Product Pipeline & Exports: Expanding export footprint from China, starting with Frontier Pro/Navara Pro to Mexico and the Philippines, with plans to launch N7 and NX8 in Latin America. A new business plan will be unveiled in February to define long-term strategic priorities.
• Financial Discipline & Liquidity: Strong liquidity position maintained with $2.2 trillion in automotive cash and cash equivalents and $1.88 trillion in unused committed credit lines. Focus remains on sustaining momentum in strong markets while adapting quickly in volatile ones.

Note: The transcript provides consolidated financial results rather than a breakdown by specific product segment revenue contribution percentages. Key financial highlights include:

• Consolidated Net Revenue: Increased by 8.8% year-over-year, driven by favorable foreign exchange rates, pricing discipline, and improved product mix.
• Operating Profit: Reported at 80 billion yen, an improvement of 108 billion yen from the prior year period, with an operating margin of 1.3%. This was supported by Re-Nissan cost savings ($127 billion impact) and lower tariff costs, partially offset by higher raw material costs and logistics disruptions.
• Net Income/Loss: Reported a net loss of $39.7 billion, a significant improvement from a $222 billion net loss in the prior year, primarily due to substantially lower restructuring costs.
• Automotive Business: Operating loss narrowed to 81.4 billion yen. Automotive free cash flow improved to negative 493 billion yen (an improvement of approx. 100 billion yen YoY). Automotive net cash stood at $831 billion at period end.

• Full-Year Sales Volume: Global retail sales projected between 2.97 million and 3 million units. This reflects a downward revision for China but upward revisions for Japan and North America. Excluding China, sales are expected to increase by 4.1% year-over-year.
• Production: Full-year production estimated at approximately 2.65 million units, aligning closely with demand.
• Financial Outlook (Maintained): Despite volume adjustments, full-year financial targets remain unchanged due to strong performance in Japan/North America and continued Re-Nissan efficiencies.
  • Net Revenue: $13 trillion.
  • Operating Profit: 200 billion yen (margin of 1.5%).
  • Net Income: $20 billion.
• Foreign Exchange Assumptions: Updated to 157 yen to the US dollar and 183 yen to the euro.
• Second Half Expectations: Management expects second-half operating profit to reach 120 billion yen, driven by seasonality, new model launches, richer product mix, and continued Re-Nissan cost benefits, offsetting one-time Q2 headwinds like the Kumamoto earthquake and tax settlements.

• China Market Volatility: Significant uncertainty regarding industry demand and intensifying competition from domestic NEV manufacturers. Sales declined sharply, requiring urgent strategic adaptation.
• Raw Material Costs: High volatility in core materials such as aluminum, copper, and oil prices. Raw material costs increased by 69.9 billion yen in H1, posing a continuous headwind to profitability.
• Geopolitical & Regulatory Changes: Exposure to changing regulations, including US GHG/CAFE standards and potential shifts in EV policy following US elections. EU subsidy discussions may also impact operations.
• Logistics & Supply Chain Disruptions: Issues in the Middle East have negatively impacted logistics, costing approximately 40 billion yen in the first half.
• One-Time Items & Adjustments: Warranty estimate changes in the US and emission-related expenses contributed to negative impacts, though some are non-recurring.

Q: Journalists asked about the recovery path for the full-year guidance despite the downward revision in China volume guidance and the Q2 net loss. They sought specific actions to ensure the maintained financial targets.

A: Ivan Espinosa highlighted strong momentum in North America (19 months of growth) and Japan, supported by localized US production and new product launches. He emphasized expanding exports from China to five products across 12 clusters to defend against aggressive Chinese OEMs. George Leondis added that second-half operating profit is expected to exceed the first half by 40 billion yen, aided by tax planning initiatives and the fact that China’s equity-accounted losses do not directly hit above-the-line profitability. He stressed that achieving positive net income is a paramount KPI.

Q: Hans Greimel requested clarification on the 'one-time items' in the Q2 profit walk, specifically questioning if the $36 billion emissions provision reversal and other $30 billion adjustments were truly non-recurring.

A: George Leondis clarified that only the $36 billion benefit from reversing previous US GHG CAFE provisions was one-time. The additional $30 billion consisted of ongoing run-the-business costs, including warranty adjustments, quality issues, and hyperinflation impacts in Argentina and Turkey. These are not extraordinary items but part of normal operational variances. He noted that excluding Q2-specific headwinds (earthquake, tax settlements), the quarterly profit would have been around 30 billion yen, aligning with expectations.

Q: Journalists asked for details on the Obama plant situation, citing media reports of talks with Angry Industries, and inquired about the impact of potential EU restrictions on UK-manufactured goods.

A: Ivan Espinosa firmly denied any negotiations with Angry Industries, stating they have not been in contact and have no plans to talk. He reiterated that decisions will prioritize community and financial benefits. Regarding the EU, he expressed hope that UK and Japanese manufacturing sites would be included in future incentives. Nissan is actively lobbying through JAMA and government channels to ensure fair treatment and avoid operational risks associated with new regional subsidy rules.

Q: An NHK journalist asked for unit estimates regarding the expansion of exports from China to five models and 12 clusters.

A: Ivan Espinosa provided practical numbers, noting that approximately 4,000 cars have already been shipped. The company aims to reach 16,000–17,000 units by the end of the fiscal year. Looking ahead, exports are expected to grow significantly next year, with a mid-term goal of reaching high-two-digit volumes (eventually targeting 100,000 to 200,000 units annually) to hedge against domestic Chinese market contraction and capture growth in emerging markets.

Q: A journalist asked why US performance has been so strong and how the recent US midterm election results might impact their EV strategy and policy environment.

A: Ivan Espinosa attributed US success to three factors: focusing on tariff-free US-built products, simplifying dealer partnerships to focus on profitability and customer satisfaction, and reinforcing brand trust/reliability. He stepped away from fleet rentals to focus on retail buyers who offer better margins and loyalty. Regarding policy, he deemed it premature to predict changes post-election but emphasized agility and resilience. The company remains focused on its current investments and product roadmap, monitoring developments while maintaining operational stability.