Hi, ladies and gentlemen, thank you very much for participating in the presentation of Financial Results for the First Quarter and Full-Year of Fiscal Year 2021 of Nissan Motor Company Limited. To prevent the spread of COVID infection, we live streamed the meeting using Internet Conferencing System. And I will introduce the officers who are present at this meeting, Makoto Uchida, President and Chief Executive Officer; Ashwani Gupta, COO, Chief Operating Officer; Stephen Ma, CFO Chief Financial Officer. So first of all, I will call upon the CEO, Uchida for his opening remarks. Mr. Uchida over to you.

Thank you for joining us today. Nissan continues to place the highest priority on the safety and well-being of our employees and communities as we run our operations. We support international efforts to address the humanitarian crisis in Ukraine, and hope that the situation will be brought to an end as soon as possible. In addition to the crisis, we faced multiple obstacles including the ongoing COVID-19 pandemic, energy and supply chain disruptions resulting in extremely challenging business climate in the past fiscal year. Despite these difficulties, every individual in Nissan has been working hard to overcome the challenges with strong support from our suppliers, dealers, and business partners. Above all, we received great support from our customers around the world who chose our brands. Nissan is making steady progress implementing the Nissan NEXT business transformation plan. Today, we are pleased to report the key initiatives along with the financial results. Our COO Ashwani Gupta will cover the full-year performance for the fiscal year 2021, and I will present the outlook for the fiscal year 2022. Ashwani, over to you.

Thank you, Uchida-san. Hello, everyone, I will now take you through our annual financial performance for the FY21 and our progress on our four-year business transformation plan, Nissan NEXT. Our results today coincide with the midpoint in the Nissan NEXT transformation. We are on track with our transition from a volume-led to value-driven strategy. And I will explain the progress made in both rationalizing our business and how we are prioritizing markets, product segments and technologies that will drive future profitable growth. I will now go through our results in detail. Starting with our sales performance, Nissan managed to exceed its full-year forecast in terms of retail volumes. We sold 3.876 million units in the latest 12-month period, which was 2 % ahead of the 3.8 million guidance that we provided in our full-year outlook. This was a satisfactory outcome, given that total industry volumes were 1% lower than our forecast. Against this background, we achieved unit sales in Japan 428,000 units. In China were 1.38 million and in North America 1.18 million of which the United States accounted for 842,000 units. In Europe, the unit sales reached 340,000 in the challenging marketing environment. One of the key success factors, which supported our sales was the digitization in our sales operations. We are able to grow customer engagement by providing online shopping processes in key markets and as a result, the engagement increased by 6 points in FY ’20. Over the past two years, our Nissan NEXT transformation plan gained strong momentum in the key markets. The volume to value transition is reflected by our performance in core markets. In United States, we are rebuilding the quality of our business and improving our product, brand and sales through three pillars change the product; change the business and change the culture. From contribution of our key models, average net revenue per unit have increased by 19% over the past three fiscal years. By focusing on healthy channels and by minimizing exposure to lower margin fleet sales, we have reduced rental mix by 14 points since fiscal 2019. And most importantly, as a result of our collaborative culture with partners, our dealer engagement has shown significant improvement, which we can see from another score, which rose by 12 points from FY ‘19. After -- alongside with building quality in United States, we are reaffirming the importance of our presence in Japan among key models Note and Aura has seen new segment share in Japan rise to 14% and net revenue per unit have jumped to 38%, compared to the previous model. Also in the second half of fiscal year ‘21, we have Note and Aura have topped the ranking in electric power train. The Aura is also generating brand value for the company winning three major awards, including Car of the Year Japan. We see a growing demand for the all new Nissan Ariya, a vehicle that is a beautiful fusion of our 80-year SUV heritage and 110years of EV legacy. We have received 6,800 pre orders. Further, with the revitalization of our product range as part of Nissan NEXT, our average product range in Japan has reduced from 5% to 3.3%. Now when we look at our performance in China and Europe, China, we are sustaining momentum in customer acceptance with the higher connectivity levels of vehicles and additional e-power model options. Acceptance of models such as Sylphy and Altima are moving in the right direction with more segment share increasing in the past three fiscal years. Importantly, our higher grade mix is also increasing, which is leading to higher margins. Chinese customers increasingly place higher value on advanced smarter technologies and connectivity in their vehicles. Recognizing this, we have increased the proportion of vehicle connectivity in Nissan models sold in China by 10% to 86% percent We are glad to see positive acceptance of our award winning e-power technology in China. Meanwhile in Europe, we focused our efforts on increasing our presence in the growing crossover segment. All new Qashqai already has the 136,000 orders with the net revenue per unit rising by 38%. We believe that our European liner will gain further momentum with the introduction of e-power models further underlining our electrification efforts in the region. As a part of rationalization effort, we have right size our production capacity from moving from three shift to two shift, as well as our decision to close the Barcelona production. These efforts contributed to significant reductions in fixed cost, which I will explain in more detail shortly. Our core market -- core business transformation progress is a clear proof point of the momentum we created Nissan NEXT plan. When we embarked on Nissan NEXT in May 2020, we vote to number one rationalized cars; number two, streamline our operations to prioritize and focus on core markets, core products and technologies; number three, the sow seeds for the future. As a result of these actions, we have completed the rationalization phase of Nissan NEXT and ongoing prioritization efforts have led a performance that is ahead of our plan. We have been continuing to build this foundation, while investing in the next generation production capacity. Let me elaborate on the progress points. On rationalization, we have optimized our production capacity by 20%, enabling us to tailor production to match demand. We are also track -- on track to achieve our target of optimizing our global product lineup, the number of models have been reduced by 15% so far. We have gained momentum by exceeding our target to reduce fixed cost by more than JPY350 billion. We have focused our global core models around enhanced C&D segment on electrified vehicles and sports cars, with plenty of new models introduced in first 18 months of the plan despite ongoing headwind. And the net result has been 18% increase in the net revenue per unit. In summary, we have achieved the main elements of Nissan NEXT by rationalization -- rationalizing and focusing our business during the first half of the plan. Now as we turn our attention to the second half of the plan, we are intensifying our focus on the seeds of future growth. As part of our long-term direction, Nissan ambition 2030, we are leading to an electrification mix of more than 40% by fiscal 2026. In parallel, we are ramping up our battery development, we are working on cobalt-free batteries and aim to bring down the cost and improved performance of our liquid lithium-ion batteries by 2028. At the same time, Nissan is developing game changing all solid state batteries in-house with double the energy density and right material packaging. Our goal is to offer more dynamic performance, better charging time and competitive cost. We will begin the construction of our pilot production line this year to get it ready in 2024 and intend to start mass production in 2028. Great technology requires great production lines with the talented workforce that's why we are investing up to billion pounds and creating more than 6,200 jobs, including our suppliers at our Sunderland plant in United Kingdom under EV36Zero, a fully integrated manufacturing and service ecosystem connecting, mobility and the energy management. In the United States, we decided to invest $500 million to transform Canton assembly line to deliver all new Nissan and Infinity EV models. As part of our electrification ambition, we are focused on significantly expanding battery reuse and recycling and taking advantage of our 10-year head start in EVs, that's why we have created for our energy cooperation, a battery reuse, resell, recycle, refabricate business model, which operates Japan's first plant is specializing in the reuse of lithium-ion batteries. And we intend to expand its presence to the United States and Europe. With this strong transformation, we are able to deliver confident results every year and it is no difficult for fiscal year ending 2022. As you can see, despite the challenging environment, we have over achieved the outlook that we announced in February 2022 at our third quarter earnings announcement. The slide shows our key financial indicators on both China JV proportionate and equity. On equity basis, which is without our China JV operations, our operating profit for the year was JPY247.3 billion with an operating margin of 2.9%. Net income was JPY215.5 billion, free cash flow for the automotive business was negative JPY294.7, due to working capital usage as a result of low production from the semiconductor supply shortage in the first half of the year. However, as explained in the previous announcement we have succeeded to bring it breakeven in quarter three and turned it positive for the second half, which is great accomplishment towards FY ‘22. Then our net cash for the automotive business was JPY728 billion. On a proportionate basis, which includes our China JV operations, our operating profit for the year reached JPY360.5 billion with an operating margin of 3.7%. This is well above our Nissan NEXT operating margin milestone of 2% for FY ‘23. Net cash for the automotive business exceeded JPY1 trillion, we continue to maintain strong levels of liquidity, our cash and cash equivalents for the automotive business was JPY1.7 trillion on an equity basis. We also maintain approximately JPY1.9 trillion in unused committed credit lines. Turning now to the operating profit variance analysis for the fiscal year ending March 31st. This slide shows the variance from operating loss in ’20 to operating profit in ’21. Foreign exchange had a positive impact of JPY63.4 billion, primarily due to the strong U.S. dollar. The increase in raw material prices had a negative impact of JPY139.2 billion, as a result of the price hike in the materials such as steel, aluminum, plastic and rhodium. Sales performance had a positive impact of JJPY339 billion, this was primarily driven by the excellent acceptance of high value products coupled with disciplined price management. This is result of our continued initiatives to improve quality of sales, as well as the tight market environment, due to semiconductor supply shortage. These ongoing challenges made us look beyond yesterday to rethink and realign our strategies, which led to our Monozukuri performance showing positive impact of JPY27.6 billion, primarily due to the improvement in operational efficiency. Other items which had a positive impact of JPY107.2 billion, include an increase in operating profit from the sales finance business, primarily due to the release of provisions, as well as the impact from the increase used vehicle prices. Next is the income statement for the fiscal year ’22 March 31st 2022, on an equity basis, the net revenue increased 7.2%, improved by JPY562 billion from the previous year to JPY8.4 trillion, operating profit increased by JPY398 billion to JPY247.3 billion, representing an operating margin of 2.9%, an increase of 4.8 points from the previous year. The net income increased from the previous year by JPY664.2 billion to JPY215.5 billion we booked a non-cash adjustment charge related to Russia and Ukraine businesses in the fourth quarter of FY ‘21, which amounted to JPY52.6 billion, including the impact from the equity method companies. However, this was more than offset by the positive contribution from the equity method companies, excluding the Russia impact and extraordinary income, which included gain on our sale of Daimler shares in Q1 FY ’21. In addition to the improvement shown for the year, the columns on the right show the progress we made in quarter four. This concludes my summary of Nissan NEXT business transformation progress and fiscal year 2021 sales and financial results. All our performance indicators operating profit, net revenue, net income and auto free cash flow in the second half are higher-than-expected, despite strong headwinds. In closing, let me impress upon you that Nissan is moving ahead with cautious optimism to ensure diligent delivery of our transformation plan with agility, resilience and discipline in the current volatile environment. We set out off on this journey when the company was at its lowest and we are transforming ourselves and growing steadily during the extraordinary difficult times. This is not a easy task and this is where we needed stronger focus on key priorities and greater agility in our plans. Our strong conviction and our future helped us course through the transformation and set our ambition towards the progressive future. I will now hand back to Uchida-san for the fiscal year 2022 outlook, where we take your questions.

Thank you. Turning now to our outlook for the fiscal year 2022. We are expecting another year in the very challenging business environment with the continuous semiconductor supply shortage, geopolitical issues surrounding Russia-Ukraine and the sharp increase in raw material prices, which is accelerating further with the crisis in Russia-Ukraine. For fiscal year 2022, we are forecasting a global sales volume of 4 million units or 3.2% increase over the prior year. Sales volume Europe is expected to decrease year-on-year due to loss of sales in Russia. Sales in China are expected to remain flat year-on-year, due to the impact of the lockdown and other factors. However, sales in all other markets are expected to increase as a result of new product introduction and the easing of semiconductors supply shortage. This Slide provides the year-on-year operating profit variance for the fiscal year forecast. Due to the depreciation of yen foreign exchange and regulatory and product enrichment costs are expected to have a positive impact of JPY50 billion. The business environment is becoming increasingly challenging with the sharp increase in raw material prices, as well as the logistics cost, which is expected to have a negative impact of JPY257 billion, we will offset this negative impact by improving our performance, which is forecasted to have a positive impact of JPY300 billion. We will continue investing in new products, which will impact our profit by JPY90 billion. However, these are necessary investments towards achieving Nissan NEXT and Nissan Ambition 2030 long-term vision. All-in-all for fiscal year 2022, despite the challenging environment, Nissan will keep on investing for the future, while expecting to maintain similar level of operating profit as fiscal 2021. This is a summary income statement for the outlook for this fiscal year on an equity basis. Net revenue is expected to increase by 18.7% year-on-year to JPY10 trillion. The rate of increase is higher than that of the retail volume primarily, due to continued improvement in quality of sales and the impact of yen depreciation. As explained on the previous chart, we are forecasting our operating profit to stay almost flat at JPY250 billion, which equates to an operating profit margin of 2.5%. Net income is expected to decrease by 30% to JPY150 billion, primarily due to the one-time positive impact from the sale of Daimler shares last year, which will not repeat in fiscal year 2022. In our previous financial announcements, we mentioned that we would consider resumption of the dividend payment when we generate positive operating profit and net income, positive automotive free cash flow for the second half of the fiscal year 2021 and maintain a healthy level of net cash for the automotive business. We met all these conditions in the fiscal year 2021 and made steady progress towards achieving the Nissan NEXT objectives. At the Annual General shareholders meeting in June, we will propose to pay the fiscal year 2021 year-end dividend of JPY5 per share to the shareholders as of March 31st 2022, which represents payout ratio of approximately 9%. For fiscal year 2022 with regards to the year-end dividend, we expect to pay JPY5, the same level as in fiscal year 2021, as for the interim dividend due to the external factors that have been fluctuating significantly in the recent past, it is undecided at this time. And we would like to make a final decision based on future situation. As I said, the year-end dividend of JPY5 is what we expect and more than JPY5 for the full-year, that's our expectation. Improving shareholder returns is one of our priorities and we will work to increase the amount to an approximate -- appropriate level in the future. Next, I would like to talk about the priority items for the fiscal year. As I said, the environment is expected to remain challenging this year. We need to surmount the difficulties in order to transform Nissan into a healthy and strong company that is capable of ensuring stable earnings and sustainable growth irrespective of the business climate. Fiscal year ’22 is a crucial year to work on Nissan NEXT, while sowing seeds for our long-term vision, Nissan Ambition 2030. Electrification and vehicle intelligence in which our strength lies are the pillars of Nissan Ambition 2030. We have started preparing for necessary investments and continuous innovations in these two domains. You have seen the examples when we presented engineering status of our all solid state battery and driver assistant technology equipped with the next generation lighter technology last month, it was encouraging to receive positive reactions from the journalists and analysts, who joined the events. Nissan is increasing its competitive edge and economies of scale by leveraging alliance benefits, which other car makers do not have in developing technologies. We plan to introduce 23 new electrify models, including 15 EVs by 2030. We started seeing the all new ARIYA crossover EV on the streets. It is pleasant and encouraging to see big smiles on our customers’ faces, while driving the car. The long awaited all new KEV, which we announced a launch in early fiscal year 2022 is going to be unveiled next week on May 20th. The all new KEV that is co-developed with our alliance partner Mitsubishi Motors will definitely give impede us to the democratization of EV in Japan. Nissan continues working with various partners to drive initiatives to empower society, including development of energy management system, mobility services, and EV ecosystem using electrification and vehicle intelligence technologies. Innovations are driven by every Nissan person, Nissan has been creating numerous innovations in the spirit of do what others don't dare do since its establishment. Our people are the company's greatest assets. The most important thing is to foster a company culture in which every individual can reach their full potential. It takes time and dedication to reform our company culture yet. This is the key to the success of Nissan Ambition 2030 and the company's growth beyond. We are working as one team to carry out the reforms so that at the end of the day, many of you will tell us good to have Nissan and Nissan makes my life exciting. The impacts of global issues such as the COVID-19 pandemic and semiconductor supply shortages have been much bigger than our initial expectation. Despite the difficulties, Nissan is delivering results that exceed the plan. This is the demonstration of a strong foundation that we have been building in the past is. Fiscal year 2023 is the final year of Nissan NEXT. We will keep a tight rain and strengthen the efforts to make our company's business foundation even stronger. We will start working on the next mid-term plan, which will be a concrete action plan to achieve Nissan Ambition 2030. I will present the new mid-term plan in due course. Your continued support will be appreciated. Thank you for your kind attention.

Thank you very much, Mr. Uchida. Now, we'd like to open the floor for questions-and-answers. [Operator Instructions] So let us begin. Mr. [indiscernible] Okasan Securities, sir please go ahead.

Thank you very much. This is [indiscernible] from Okasan. Can you hear me?

Yes. We can hear you.

First question is about the other the sales production and the wholesale, via volume? And second question is about the shareholder return. Number one, the sales. So the 3% that is the according to your plan, you expect the 3% -- only 3% increase in the sales. Is it because of the sluggish demand? Or how do you see the production and the supply chain? How much would you like to produce? Could you please give us more detailed plan? For the production, it seems that for short-term period, you are not able to produce a lot. Is that because of the semiconductor shortage. How do you see all these constraints to an extent? You can increase your production? So that's my first point. Second point is a dividend. Thank you very much for the resuming the dividend payout. And the shareholder return from now on how do you see that? And what is your idea about the shareholder return? Of course, it depends upon your profitability, but are you going to use the payout ratio? Or well, if Renault sells the shares, then the -- do you also think about the share buy book. So what is your view about the shareholder return, including the dividend? Well, the environment is changing. So could you please specify your dividend policy once again?

Yes, sir, thank you very much for your question. So I'd like to respond to the second part and they as for the first question, Ashwani Gupta is going to respond to the first part. So well, of course, and the -- if our financial input is needed, I will also ask CFO. So the payout ratio, and as I mentioned, well the operating profit and also net profit that we need to achieve positive the profitability. And we have done that, because we have achieved the target of Nissan NEXT and the free cash flow, the -- within the period of the Nissan NEXT, that we promised that we are going to turn that to positive in the -- JPY54 billion, that is the level of a free cash flow right now. And the net cash flow -- net cash and is also sufficient. So in that sense, JPY5 is a dividend that we decided upon for this time and is the current decision about the year and the dividend. JPY5, that means 9% payout ratio and generally, what you are looking at? The label what you're looking at is higher and we'd like to raise, so that means up to 30% payout ratio, that is what we intended to achieve. But for fiscal ‘22, interim dividend is to be decided it is yet to be decided because currently, the situation is very difficult, meaning uncertain. There are uncertainties and free cash flow in the first half of the year. Well, there are -- the risk factors that may affect the free cash flow in the first half. So we have to take a look at that and then make decision about the interim dividend. But on a full-year basis, the JPY5 or more on a full-year basis that is we’d like to maintain, and as for the payout on the dividend policy. Yes, so we have a dividend policy internally. So based upon that, we would like to -- well they tried to swipe to achieve 30% payout ratio. The first one will be answered by Ashwani-san

For the question, the 3% increase in the sales is the consequence of the supply chain. Our sales potential is much more than 4 million and some of the examples, which I tried to show today, we have 136,000 customers waiting for all new Qashqai. And we have more sales potential on it. If we supplies for sure, we will fill that. We talked about all new ARIYA. Unfortunately, we had to stop the orders in United States, because we are not able to supply that. Same as the situation with our models in China, same other situation with our models in another part of the world, so we can do much more, if we have more semiconductors. Last year, if you remember, we announced 4.4 million after including some of the semiconductor shortage. But finally, we landed up at 3.876. Of course, when we started from a higher number, come to the lower number, we create inefficiency in the system of the production. On the other side, we created efficiency in our sales by reducing the inventories. But because we are at bottom of the inventories when we are entering into FY ’22. So we have to keep a very good balance between retail and wholesale and the production. That's why on the numbers, it looks like it's a 3% increase. But if we have more semiconductors for sure, we have a much more higher sales potential to move forward. So we have opportunities to get more semiconductors converting into production and sales. For which customers are already waiting. On the other side, we have risk coming from the China lockdown as you would have seen in April, we were 46% less than our plan and May is also looking to be not great, and I'm pretty sure that June will also have the impact. So considering risk and opportunities, I think the sales volume outlook of 4 million is more realistic. And nobody knows what happens tomorrow, but I think to start with 4 million is more realistic. Thank you.

And as you ask Renault, if Renault sell the stake in Nissan, I think that was what you were asking. Some of the media reported this, but in reality, we have -- we don't talk about this matter, but what Renault planed for the future here Renaulution is the name of the plan. And I think this is the extension or is the next step of the Renaulution. And now our intention we will just focus on discussion to strengthen alliance and as part of it, one of the alternatives options is to see how we structure the company. And this may be what the amount of the discussions going forward. Therefore, we don't have a specific talk underway yet. But what -- how are we going to prepare for this? Here we need to discuss about this in the company.

Thank you. That was clear. Thank you very much.

Thank you. Moving on to BofA Securities, [indiscernible] please.

Thank you for the presentation. I’m [indiscernible], I have two questions too. So starting with the first one for this fiscal term in the full-year guidance, raw material price hike and logistics cost negative consequence, how much are you going to offset this? What's the assumption here? Here, could you elaborate on how much you are going to offset this cost increase in the presentation Page 12 performance in the performance is JPY300 billion. Pricing is included here right? And also the cost reduction efforts, everything is included in JPY300 billion, I believe. And if possible, could you talk digitally how are you going to offset the negative consequence of the raw material price hike? Could you elaborate on this? That's my first question? And the second question, Russia. Russian business. Going forward, as a potential risk, what do you assume? What are we anticipating as a potential risk in the business administration? Could you elaborate on this? In the fiscal year 2021, I think you reckoned impairment loss, which Renault announced. I mean, this is already booked, I believe. But going forward, the sales in Russia to start with, is Russian volume counted in this full-year guidance or not? If the situation continues as it is, will there be additional negative consequence that you need to anticipate? Or in relation to this how will it impact European business within the -- that you can anticipate for now, what are the potential risk related to Russia? This is my second question. Thank you.

Starting with the second question, what's our assumption? Let me refer to it and for the first question, which is about the raw material price hike what kind of things we are doing to compensate for this. Here, I would like to the extent that we disclosed CFO is here to answer and for Russian assumptions for the volume going back to the page, Russia-Ukraine volume is not counted. Therefore, it's zero for Russia-Ukraine. Last year in 2021, we assume 50,000 units in this region, but we didn't count this at all in this full-year guidance. And in fiscal year 2021, Renault including -- Renault portion, we included this in our net income, but JPY15 billion of consequences what we -- this includes the investments in new models and the inventories. These are put in. So the visible risk today is that in net income in -- is already reflected in the 2021 net income. But what will happen going forward? Here, we need to continue monitoring the Russian business carefully and take right action, but because of the logistics, we are -- we have suspended the operation in Russia. In Russia, we have 2,300 people working. In Russia, so these expenses are booked, these numbers are included in the full-year guidance. Having said that what's beyond this? What's in addition to this? Are we going to exit? I think you are talking about possibility for exit. But here, we need to take -- we are going to think about the right action. But CFO will elaborate on this. In Nissan NEXT, when we announced Nissan NEXT, we assess all the circumstances and if necessary we put the impairment loss. So a big impact will there be a potential big state spending? No, we have counted what we needed. So could you elaborate on this Stephen?

Okay. Thank you, Uchida-san. So [indiscernible] good to talk to you again. For Russia business as we mentioned, as Uchida mentioned, we don't have any volume in our budget for Russia assumption, given the current situation, and we will judge and monitor as the situation changes. For the financials in FY ’21 similar to what Renault did, stated EUR2 billion, which impact us JPY37 billion, if you remember in announcement number. We also for Nissan say, we took some provisions roughly JPY15 billion in our number, booked in FY ’21 closing. So the reason is not so big, because if you remember we did a global impairment two years ago, and at that time, we already had marked two more realistic level, the asset value in our European operations. So that's if that was your question, I think, then that's the answer of that one. For the raw material hike, obviously, raw material is a big headwind for all the OEMs, not just us. And you can see it from all the announcement for all the competitors. For us, the raw material in here JPY212 billion first of all, we're going to try to find ways to compress the cost as much as we can. And in here, of course of the JPY212 billion more than about 70% is still aluminum, those are the biggest ones. And what we have done so far is we were able to pre buy some of the steel. So we had some inventory more than usual, sitting in at the end of FY ’21. So we have some of that what we call physical hitch in here. For some other raw materials, we obviously do some financial hedge, but limited very small portion. Roughly 10% of financial hedge, so on costs are we trying to mitigate as much as possible? Your question was specifically some pricing as Ashwani has mentioned many, many times, we are bringing to the market to the customers, product that they really value and recognize the value and the technology and the featuring our cars. So the customer acceptance of the value of our vehicle is what's driving the revenue per unit up, including the fact that we are now able to sell higher grade mix, as well as focus much more on higher profit margin vehicle. So, yes, average price in this project is going up, but it's not just for the covering cost, it's more because good product, good quality of sales and the focus we have on our operations. And you can see on this chart, the performance -- combination of many factors, volume increase, pricing, model mix, country mix, all that is able to absorb the raw material and logistics costs. Is that answer your question?

[indiscernible] did that your question?

Yes. Thank you. Well, I shouldn't be lengthy, but in that sense, you say that volume -- probably volume will increase to a certain level, I think that's your assumption, right? So depending on the circumstances, I believe, cost inflation you are offsetting the cost inflation, and generate JPY250 billion and like the 2021. How much are you going to see the upside on top of JPY250 billion is what you are intending to do in running the operations. Am I right?

And see, as Ashwani mentioned in the beginning, the volume assumption is based on what we have supply. Yes, so this is what we have visibility on. If the semiconductor recovered faster and there's more, of course, we can sell more volume. And then volume impact will be bigger. But right at this point, we have based on the 4 million level, relevant corresponding volume impact. But what I've tried to mention is that the new product we're launching and the new product we bring into the market as we mentioned are having more value that customer are accepting and recognizing and therefore the price of this vehicle or the revenue per unit is higher. On top of the fact that we have also better mix and focus on core model, so all of these combined efforts are helping us on the performance side, so we can absorb the headwind that we have.

If I may [indiscernible] this is Ashwani, so exactly what Stephen said, so 4 million for us is the reference. Of course, we have opportunity based on semiconductor availability, but we have risk also. As you would have seen that in April, China, we went down by 46%, May should be similar and June should not be great. So I think now what has happened exactly is the case of volume, but also it is the case of inflation. In some markets, the inflation is very well accepted in terms of purchasing power by the people, by the customers. But in some market, it is not -- I mean when we talk about Japan, for sure, the purchasing power of the Japanese customer is not increasing in the same way it is increasing in United States, which means what we may do to take care of inflation in terms of pricing in United states, we may not be able to do the same thing in Japan. But on the other side, [Technical Difficulty] by market, product by product, we are going to address it and Nissan is so fortunate, because of our diversified product portfolio and the diversified market portfolio that we are managing our global operations based on risk and opportunities across the product portfolio and across the countries and the regions. And that's why exactly as you said, our operations are being worked on daily basis to minimize the risk and enhance the opportunities. Hope it answers your question. Thank you.

Thank you so much. Operator Okay, thank you [indiscernible]. Moving on to Nomura Securities, Kunugimoto-san please?

Yes. Thank you. Do you hear me?

Yes. Go ahead, Kunugimoto-san.

I have two questions starting with production, Renault said that in 2022 calendar year, 200,000 units will be the volume down impact, because of semiconductor in the second half of the year Renault foresees the things to be normalized between Renault and Nissan, is there a difference in the circumstances? Or Chinese lockdown is impacting Nissan more than Renault? What's the difference here? Because those production volume assumptions seems to be conservative on Nissan side? So could you elaborate on this? This is my first question. Second question. Demand because demand is strong, so there are regions where you can price or increase the price, because demand are larger. And in other regions, it may not be the case. For Nissan, with the market circumstances brand what are the markets where it's easier to increase the prices and which are the markets where it's hard to increase the prices? These are my two questions.

Thank you, it’s more operational side, I would like to ask Ashwani-san to answer the question. Ashwani-san?

Yes, thank you Kunugimoto-san, very precise question. At first, I don't think we can compare the semiconductor shortage magnitude with Renault, because Renault is focused on Europe, including Russia. And we know the Russia situation. Whereas Nissan, in Europe, we are just 2.4% market share. So Europe is just 9% of our total business portfolio. So that's why it's very difficult based on the product lineup and the market lineup up that we can compare what Renault did. To be honest with you, as I said in the press conference also, semiconductor shortage is a new normal. It will continue and we have to live with it and that's why we are not able to count what exactly the semiconductor shortage, because now we have China lockdown, because of China lockdown, sometimes we can say it is semiconductor shortage, sometimes we can say it's other parts shortage. Sometimes we can say that dealerships are closed, so that's why we are getting impact on our vehicle grade this thing. So to be honest, what we did is first we got the visibility of what we can produce, then we put opportunities and then we came to the figure of 4 million, I think this is what I could say today to yourself. The second, which are the markets to increase the price? Once again, we are not increasing the price unless until customer is willing to pay. If we go back to customer and say, we are increasing the price, I don't think that we are doing justice to the customer. As you would have seen in United States, our customer facing transaction price first, we are increasing our value with all new Rogue, all new Frontier or new Pathfinder. On the other side, we are using this opportunity to reduce our incentives. If you remember 2019, we used to be much higher than the industrial average in terms of incentives. And now if you look at our incentives in last one year, we are below the industrial average, but this is not coming from the semiconductor shortage, this is coming from our transformation of quality of sales. So once again, as I said, for example, in Japan, we just can't think of increasing the price, because the customer purchasing power is not increasing in the same way. So what we can do in Japan is to capitalize our new technology, new products driven by the brand, which is Note, Aura and you will see the KEV, we are the only one with the KEV in the markets. Ariya, with this kind of SUV, we are the only one in Japan. So why to increase the price, why not to create that value and have customer enjoy what we are preparing, our customers do not offer. Our competitors do not offer. However, in some cases, for example, when it comes to the pickups in United States, you know, our competitors Big threes, Big Three are increasing their price, so definitely we follow them, because we are not the leader in United States, we are the follower when it comes to the pickup. So exactly as you said, market by market depending on the customer, depending on the competition, depending on our capability of the product value, we decide what should be the price.

Thank you.

Thank you very much. Next [indiscernible] from Goldman Sachs, please.

Thank you very much. This is [indiscernible] from Goldman. Can you hear me?

Yes. We can hear you.

I have two questions. First of all, this year, well the -- you're not going to announce the downward revision probably, so the JPY250 billion, and the -- of course, the foreign exchange is another factor. But for the March 2024, well 5% of the OP margin on a proportional basis, how certain is it? How the -- are you sure about that, profit target. Are you confident that you can achieve that? So that's my first question. And second question, it's a little difficult to ask you, but there are some media reports about Renault, EV business the spin-off that is reported by media. So as Nissan, what are the positive and negative factors of that idea by Renault. So well the hybrid and also the electrification that you have been working. Well, the -- I think that there's a benefit for you to do that all by yourself, but because of the financial and the resources and the Renault thinking about this -- the spending of the EV business. Also the -- could you please elaborate upon your idea about that?

So I'd like to respond to the second question about the Renault, how to approach that our idea. Yes, first of all, the first point is that we need to fully understand that the Renault’s position. So we are currently in the position to -- they hear that, confirm that and they digest that information. And then in order to strengthen the alliance, what shall we do, you know, that to strengthen the electrification business with Renault. So that's what we are doing, but from Renault’s point of view in Europe, well the -- the Renault, the European OEM, this idea itself. Well the -- it fits we see our next step envisioned by their Renaulution, that's our understanding, but how to do that in the framework of alliance. So the -- before talking about that, we have to first all digest and really understand their idea. But they also listed at least in other on the development in the future lead follow and the relationship the other -- what we announced in January, it's not going to change, because of this announcement or the intention by Renault. So they worried, if possible we like to work together with Renault in various areas. But now they -- at this meeting, we are not ready to give any new sense official opposition about the one is reported about Renault. Well they are our partner and they have their actions and at some adequate timing in the future we would like to explain about our position about Renault. And as for the first question, 5% Nissan NEXT, the OP margin target of 5%. Are we able to achieve that? So looking at last year 2021, there are various external factors and despite of that, well 3.7% OP margin was achieved including China, so based upon that. Well and to improving the quality of services and the rationalization, it is proceeding according to the plan. We have our momentum, so if we follow that, 5% OP margin by 2023 to achieve that target, we are certain and we are confident to achieve that. Of course, we have to pay close attention to what is happening right now. But in the new models, and we are gaining capabilities to make profit. And if we follow this route, and then 5% on the level OP margin is achievable. But there may be some risks as you mentioned. There are uncertainties to be sure. So China, for example, we need to pay close attention to what's going to happen in China. And also the Russia-Ukraine situation, how will that the development have an impact upon the economics? Well if unpredictable development that happens, then that's going to be another risk factor. So we have to pay close attention to what's going to happen in the environment that is most important.

Thank you. Well, additional question, if I may, competitors for this fiscal year, they are saying that they are going to boost the volume about 10%, while you look very conservative, production volume, I'm not sure, I think the product of volume is on par with the prior year. Is there any specific issue to Nissan, which makes a volume less and this will come back or pick up in the next year onward?

Is it specific to Nissan? No I don't think many issues are -- is packed to Nissan. The circumstances in China between April and May, for example, lockdown impact. This started in Shanghai and this is expanded to other districts, suppliers, this is impacting the tier end suppliers. So how this will turn out is what we need to monitor carefully, because including other car makers, this will have an impact on the volume. So if things become visible, we can calculate a more accurate volume guidance. While I don't think this will last long, but when this will pick up, that's what we need to pay close attention to. Excuse me, I'm not sure whether this is answering question, but that's what I can tell you.

Well, that was a good reference. Thank you very much.

Okay. Thank you. Moving -- any other questions. If you have any please at us know. Yes, sure. Daiwa Securities, Hakomori-san.

Yes, hello. I am Hakomori from Daiwa Securities. Do you hear me?

Yes. We do.

Okay. Thank you for the opportunity. Automotive business and sales finance business, what's the profit for these two businesses in the fiscal year 2021, automotive business is still a loss and sales finance, because a one off benefit there was a big profit. In the 2022 Sales finance business, will no longer have a one-off positives and the interest rate will rise. So I think things will be tough. And automotive business will compensate for this, I believe. So am I right about this. This is my first question. And on top of this, retail volume will only increase by 3%, while automotive business the profit will improve. Why, what makes you sure that automotive business will increase it’s profitability, while the volume will not increase much. Because maybe the wholesale will increase, so volume impact is a big contributor or as you said, this is because the commodity price hikes or the better quality of sales are more than offsetting this. This is the first question.

Wow, very precise question. So here I would like to ask CFO to answer the question to the extent that we can explain, including the level of our self confidence. I think that's what he want to know. So Stephen.

I understand your question. I understand very much Hakomori-sans interest. Yes, you're right automotive business is still lost making in FY ‘21. But as you also noticed is significantly improved versus just a year ago. So we had done a great effort -- combined effort by all the regions, the whole company to make more profitable by focusing on profitability. For FY ’22 in our current assumption, we cannot say exactly, but we have a good chance to be breakeven for other business. So that's why we try to be for FY ’22, we don't declare this as a go externally, but we have a good chance. That's all I can say at this point. Sales finance business, of course we had many one-off in FY ’21, as you know well. Credit loss provision release and other also remarketing but it's not part of sales finance, but we had these things that affect us, the used car value obviously help us in some of our least deals et cetera. So sales finance business, one-off cannot be repeated for next year, that's for sure. But because the good quality of sales actions we've done on certain marketing side. And the good product we are attracting now, we’re also attracting much higher quality customers with more household income. So the quality of our portfolio has improved. But given the last two years a lower volume, of course, our asset portfolio has declined versus previously. So the underlying profit by year just based on the smaller size of asset portfolio, but the quality of the business has improved. Because the profit, therefore actual amount will be slightly downwards since last year, because we don't have the one off. Hakomori-san, I think that's answering your questions, yes. Is that clear?

Yes, right. What I wanted to check is that was it 2 times before a month and so the fixed cost is at the right level, but more than that production volume is declining more that is why you deliver the losses in automotive business. You are -- don't have an intention to reduce the fixed cost further. So without changing this fixed cost will be stable while on the sales side, you are trying to increase the earning ability. Am I right?

As we said before, we have done more than we set out to do in the fixed cost reduction in Nissan NEXT in the first two or three years now. So I don't think we should reduce these structural foundation much more. Because if we do much more reduction, we will be perhaps impacting our future growth potential. So we want to keep this structure right now. And as I mentioned, I think previously also, we are going to be close to the capacity reduction. I think the main Ashwani showed, we’re going to hit the minus 20% capacity reduction by having two shift operation globally and reaching 5.4 million a year capacity by end of this year. That's we don't want to go any lower than that. Now what you have to remember is FY ’22, as we all see from everybody is that expectation is a semiconductor will come back a little bit. How much nobody can say for sure, but you will be better than last year. So having the fixed cost structure we have right now, if the volume come back, is more marginal profitability that comes and helps us.

Yes, just to because, yes, I -- Ashwani here, I think this question is very important about the fixed cost. The portfolio which we have today for us, it's very important to keep the -- our product portfolio refreshment, which we call it life cycle. And we have to manage the product life cycle age, much less than the average. If we really want to keep our net revenue per unit higher, so that's why with the markets which we have, United States, which is roughly 6% to 7% market share. China, roughly between 10% to 12% market share. Japan between 10% to 12% market share. Europe between 2% to 2.5% market share and the market coverage, which we have in each market in China, more than 90%, in Japan more than 95%, in United States close to 100%, excluding the full size pickup, and in Europe, we used to be 35%, but with all the new models which we are launching, we will be covering 70% of the European market. So if Nissan want to be the global business operation in these four regions with a significant presence, this is the bare minimum fixed cost, which we need for a sustainable growth. So that's why we have no intention to do further structural reforms on our fixed cost. However, crisis has always given us an opportunity to look at how we can take care of our fixed cost, for example, in Nissan NEXT, we never planned that we will not do the motor shows. But pandemic has taught us that we can save the money on the motor shows, for example. So these kind of Kaizen are continuous improvement, we will be doing it. But we will not -- we are not planning to do any structural reform. We believe this is the bare minimum we need for a sustainable growth in the future. Thank you.

Did that answer your question?

That was very clear. Thank you.

Okay. Thank you. Okay, we are running out of time. So last one UBS Securities, Takahashi-san, if I may, please limit the number of questions two one, sorry.

Sure. I am UBS, Kohei Takahashi is speaking. Numbers volume, let me check about the volume. It may be a similar question again. I will change my words production is a bottleneck, if were the case. The -- what I want to know is a wholesale volume model volume to ship. The clue here is in 2020 the revenue will go up by 19%. Forex is JPY120 to the dollar. So Forex impact will increase revenue by like 5% maybe. If that is the case, the number of parts to be shipped, wholesale volume will increase by 15% year-on-year, this is linked to the production volume, right? That's what I assume. Am I right to say this about those assumptions that I told you just now?

Kohei, very good estimates. I cannot say you're right or wrong, but you’re in the right direction. Okay, of course, FX will affect and will impact our revenue. And of course, wholesale will be more, so -- but then you have to also remember we have introduced -- we are introducing new models which are having more value and therefore the total unit revenue is higher on those new models. On top of that, as you saw I have explained several times, the model mix of the great mix within each model is improving. So we had also impact from better, great mix and before. So combination of that plus the fact that we are not spending as much incentive and therefore the revenue premium is also higher. So is combination all those factors, but you're trending in the right direction, Kohei. So I cannot say your numbers are right, but the idea is about is in the right direction.

Just one thing. Just one thing. In fiscal year 2022, what's the sales incentive per unit. Is there any opportunity to reduce it further? What you meant?

No, no, I said that as we mentioned in 2021, we have improved as Ashwani showed in the slide. The instant VME per unit, I think I forgot which page, but we show that in the -- on the slight reduction incentive unit. Of course, we want to keep this and then in this kind of inflationary environment, where the prices go up, it will be kind of strange if we increase incentive of course, especially when the supply is constrained on the semiconductor.

Yes, I think in 2019 we used to be higher than the industrial leverage. And now we are less than industry average and we would like to keep that in the future also, right? Stephen, is was the question.

Yes, I think what we say is the reduction in our incentive per unit that magnitude is bigger than industry reduction that we have, because we came from a higher pace. Right now, I think in the U.S. we are still slightly higher on the per unit than other Japanese, but still is very, very low level, compared to historical level and a reduction percentage is much better. What I'm trying to say and let me just be more clear, Kohei is that the incentive per unit that we have achieved in ‘21, we try everything we can't keep it at same level FY ’22.

Now, it’s clear. Thank you, gentlemen.

Okay. Thank you. Lastly, Mr. Uchida will be giving a short remark.

Thank you for giving us an opportunity to answer many questions. As you have seen, we intend to transform Nissan. Well, what -- we delivered on what we promised to the market so far, so going forward, we will remain focused on implementing Nissan NEXT. And at the same time, I would like to pursue the directionality, which is defined in Nissan Ambition 2030 and delivered the corporate value and ensure sustainable growth. We the top management will continue striving for the sustainable growth of the company. Thank you for your continued support. And we -- in terms of numbers, we need to be more transparent. So we would like to create many opportunities going forward that we will be able to explain where we are today to you. Thank you.

Thank you, Mr. Uchida. With this we would like to conclude the session. Thank you for joining us today.