Nissan Motor Co., Ltd.
Annual Report 2016

Plain-text annual report

ANNUAL REPORT 2016 CONTENTS This annual report presents the results of Nissan Motor Corporation’s business activities for fiscal 2015. It also provides an opportunity for investors to deepen their understanding of the Nissan management team. President and CEO Carlos Ghosn and CFO Joseph G. Peter share their vision of Nissan’s philosophy and the direction the Company is heading today. 01 Viewing this Report This Annual Report is an interactive PDF. You can use the navigation tabs and buttons to access the information you need. l Section Tabs CONTENTS CORPORATE FACE TIME TOP MESSAGE Click the tabs to jump to the top page of each section. l Navigation Buttons l Link Buttons Go back one page Jump to information on the web Return to previously viewed page Go forward one page ■ Financial Data To obtain more detailed financial information, please visit our IR website. website ■ This annual report contains forward-looking statements on Nissan’s plans and targets, and related operating investment, product planning and production targets. Please note that there can be no assurance that these targets and plans will actually be achieved. Achieving them will depend on many factors, including Nissan’s activities and development as well as the dynamics of the automobile industry worldwide and the global economy. ■ For further information, please contact: Nissan Motor Co., Ltd. Investor Relations Department 1-1, Takashima 1-chome, Nishi-ku, Yokohama-shi, Kanagawa 220-8686, Japan Tel: +81 (0)45-523-5520 Fax: +81 (0)45-523-5771 E-mail: nissan-ir@mail.nissan.co.jp Global Corporate Communications Department Global Communications Division Tel: +81 (0)45-523-5552 Fax: +81 (0)45-523-5770 Cover photo: Q60 NISSAN MOTOR CORPORATION ANNUAL REPORT 201602 VISION Nissan: Enriching People’s Lives Nissan has a clear vision for the future, and − with our Alliance partner, Renault − we are working with passion to achieve it. Our mission is to enrich people’s lives, building trust with our employees, customers, dealers, partners, shareholders and the world at large. MISSION Nissan provides unique and innovative automotive products and services that deliver superior measurable values to all stakeholders* in alliance with Renault. * Our stakeholders include customers, shareholders, employees, dealers and suppliers, as well as the communities where we work and operate. NISSAN MOTOR CORPORATION ANNUAL REPORT 201603 FINANCIAL HIGHLIGHTS Net sales*1 Ordinary income Net income attributable to owners of parent Comprehensive income Net assets Total assets Net assets per share Basic net income per share Diluted net income per share*3 Net assets as a percentage of total assets Return on equity Price earnings ratio Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of fiscal year Employees*4 ( ) represents the average number of part-time employees not included in the above numbers For the years ended Mar. 31, 2016 Mar. 31, 2015 Mar. 31, 2014 Mar. 31, 2013 Mar. 31, 2012 2015 2014 2013 2012*2 2011 Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Yen Yen Yen % % Times Millions of yen Millions of yen Millions of yen Millions of yen Number 12,189,519 11,375,207 10,482,520 8,737,320 9,409,026 862,272 523,841 75,107 694,232 457,574 719,903 527,189 389,034 796,533 504,421 341,117 721,860 535,090 341,433 290,600 5,140,745 5,247,262 4,671,528 4,036,030 3,449,997 17,373,643 17,045,659 14,703,403 12,442,337 11,072,053 1,132.61 1,152.83 1,035.06 125.00 124.99 27.2 11.0 8.33 109.15 109.14 28.4 10.0 11.21 92.82 92.82 29.5 9.6 9.91 927,013 692,747 728,123 890.38 81.39 - 30.0 9.9 11.08 412,257 (1,229,280) (1,022,025) (1,080,416) (838,047) 530,606 992,095 152,421 (19,007) 154,700 (19,343) 245,896 802,612 149,388 (20,381) 151,710 (20,748) 396,925 832,716 142,925 (21,750) 147,939 (22,642) 433,817 711,901 130,274 (22,442) 136,625 (23,307) 750.77 81.67 - 28.4 11.2 10.79 696,297 (685,053) (308,457) 840,871 157,365 (34,775) 161,513 (35,099) Notes: *1 Net sales are presented exclusive of consumption tax. *2 Effective from fiscal 2013, International Financial Reporting Standards (IFRS) 11 Joint Arrangements, which was released on May 12, 2011, and International Accounting Standards (IAS) 19 Employee Benefits, which was released on June 16, 2011, have been applied in some foreign subsidiaries and affiliates, and key financial data and trends for fiscal 2012 are adjusted. *3 Diluted net income per share for fiscal 2011 and fiscal 2012 is not presented because the Company had no securities with dilutive effects. *4 Staff numbers, which are presented as the lower numbers in the “Employees” line, include those of unconsolidated subsidiaries accounted for by the equity method as reference data. NISSAN MOTOR CORPORATION ANNUAL REPORT 201604 Key figures for fiscal 2015 (China JV Equity Basis) Net sales climbed 814.3 billion yen for the year to reach 12,189.5 billion yen. Operating profit was 793.3 billion yen, for a profit margin of 6.5%. Under the forecast of consolidated operating results after fiscal 2013, the consolidation method for Dongfeng Motor Co., Ltd. has been changed from proportionate consolidation to the equity method in comparison with the results until fiscal 2012 by the adoption of IFRS11. Operating Profit (Billions of yen) 1,000 13,365.6 12,406.3 11,434.8 11,375.2 10,482.5 12,189.5 9,409.0 9,629.6 Net Sales (Billions of yen) 15,000 12,000 9,000 6,000 3,000 0 800 600 400 200 0 935.5 793.3 718.6 545.8 523.5 605.7 589.6 498.4 523.8 523.8 457.6 457.6 341.4 342.4 389.0 389.0 Net Income (Billions of yen) 600 450 300 150 0 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) ■ Management pro forma basis* ■ China JV Equity basis ■ Management pro forma basis* ■ China JV Equity basis ■ Management pro forma basis* ■ China JV Equity basis Free Cash Flow (Auto Business) Net Cash (Auto Business) Dividend per Share 497.6 481.2 379.5 365.8 352.3 248.6 208.1 199.7 (Billions of yen) 500 400 300 200 100 0 (Billions of yen) 1,800 1,350 900 450 0 1,645.8 1,524.5 1,390.1 1,502.9 1,133.7 1,015.9 915.9 619.8 (Yen) 50 40 30 20 10 0 42 33 30 25 20 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) 2011 2012 2013 2014 2015 (FY) ■ Management pro forma basis* ■ China JV Equity basis ■ Management pro forma basis* ■ China JV Equity basis * Based on continuation of proportionate consolidation of China JV NISSAN MOTOR CORPORATION ANNUAL REPORT 2016DEAR FELLOW SHAREHOLDERS Carlos Ghosn President and Chief Executive Officer 05 and a satisfactory performance in Europe, excluding the significant market contraction in Russia. Together with continued cost efficiencies and Alliance synergies, this helped offset the negative impact of adverse currency movements and volatile conditions in some of the other markets. This, in turn, has produced robust shareholder returns. Over the past five years, our annual dividend payment has more than doubled: rising from 20 yen per share in fiscal 2011 to a proposed payout of 48 yen per share for fiscal 2016. This represents a 14.3% increase on the fiscal 2015 dividend payment. In February 2016, we further underlined our commitment to total shareholder returns by announcing a share buy-back worth up to 400 billion yen. As set out in the detailed financial statements in this Annual Report, the Company increased revenues by 7.2% to 12.2 trillion yen in the 12 months to March 31, 2016, and generated sharply increased operating profits of 793.3 billion yen. Net income rose by 14.5% to 523.8 billion. Pathway to Power 88 Our confidence reflects the progress that Nissan has achieved since launching the Power 88 plan five years ago. Since then, our annual unit sales have increased by more than 1.2 million units to 5.4 million. In spite of several challenges in recent years – from emerging market and currency volatility to geo-political tensions – our continued focus on cost efficiencies and our ongoing product offensive Fiscal 2015 was a year of continued progress at Nissan Motor Corporation (NMC). Once again we have helped lift operating margins towards the 7% level reported for the latest fiscal year. This signals delivered solid financial results for our shareholders by launching innovative vehicles, pioneering new that we are on the right path toward the goal of a sustainable 8% operating profit margin. technologies and disciplined focus on cost-efficiency. I would like to thank all of our employees, our suppliers, dealers, Alliance partners and my Products & Efficiency management colleagues for their contribution to our strong financial performance this year. Our We are far from complacent. We must continue to launch strong new products and relentlessly improve results reflect Nissan’s underlying quality and resilience, and I look ahead with bright optimism–for efficiency and quality. our customers, for our employees, and of course, for our shareholders. This is particularly important in Japan where we are refreshing some core models, notably with the Driving Shareholder Returns This new electric vehicle will meet consumer demand for greater autonomy and fuel efficiency, As a global team, we have worked together to design, develop, assemble, market, sell and service a utilizing a new “e-Power” system that matches the agility, quietness, strong acceleration and efficiency range of vehicles with strong customer appeal. This helped to drive strong demand in North America of the Nissan LEAF. launch of a new compact car featuring our latest electric vehicle powertrain. NISSAN MOTOR CORPORATION ANNUAL REPORT 201606 During the current fiscal year, we will launch our latest generation autonomous drive technology in The 2016 LEAF model has been enhanced by a new 30-kilowatt battery that extended its driving Japan, known as Pro Pilot. This system will build on our existing forward emergency braking technologies range by more than 20%. This extended range and the growing availability of fast-charging locations in by offering automated single-lane controls in highway, making driving safer and more efficient. leading markets will enable more zero-emission journeys. We also anticipate that our presence in Japan – and beyond – will be strengthened by our By the end of the decade, Nissan plans to offer more connected cars, introducing systems and proposed strategic alliance with Mitsubishi Motors (MMC), in which Nissan is planning to take a 34% features that will make driving safer, more productive and enjoyable. By 2020, the Renault-Nissan stake for 237 billion yen. Alliance plans to launch more than 10 models with autonomous drive technologies. Pending regulatory approvals for this transaction, we will be able to work together in areas including purchasing, common platforms, the shared development of new technologies, joint plant Conclusion utilization and growth markets. As the automotive world evolves, Nissan is making positive changes everywhere: for every consumer, for Our interest in MMC reflects our long-term confidence in alliances to deliver synergies in areas every market, and in every part of our business. We are driving a transformation in the way vehicles are such as engine development and shared vehicle architectures. designed, developed, produced and sold in markets around the world. We are harnessing the power that’s Alliances inside Nissan to prepare solutions that our customers will want and value, now and in the years to come. The future is bright for our company. Our efforts in cost-efficiency, new products and technologies, The bedrock of our Alliance strategy is our 17-year partnership with Renault. Alliances, market focus and greater focus on revenue optimization and customer satisfaction will, we Renault-Nissan synergies exceeded 4 billion euros in fiscal 2015 and will continue to increase believe, underpin a solid performance in the current year and beyond. as we implement convergence in purchasing, manufacturing and logistics, engineering and human Thank you again for your support. resources. We are targeting 5.5 billion euros by fiscal 2018. These synergies will be achieved through efficiencies on the cost side and shared revenue opportunities from assets such as the Common Module Family with Renault and our partnership with Daimler in shared powertrains and vehicle architecture. The Renault-Nissan Alliance will also be an important platform for our expansion in autonomous drive technologies and connected vehicles. New Technology Nissan is driving change throughout the auto industry. We are changing the driving experience with our “Intelligent Mobility” vision, which will streamline our efforts to deliver Electric Vehicles, Autonomous Drive, Connected Vehicles, and many other cutting-edge products. In electric vehicles, we created the zero-emission segment five years ago with the launch of the all-electric Nissan LEAF, of which we have now sold more than 200,000 units worldwide. Carlos GhosnPresident and Chief Executive OfficerNissan Motor Co., Ltd.NISSAN MOTOR CORPORATION ANNUAL REPORT 2016MESSAGE FROM THE CFO Joseph G. Peter Chief Financial Officer Nissan Motor Corporation delivered another solid year of improvement in business and financial results in fiscal 2015 despite negative foreign exchange rate movements and slowing sales in some regions, particularly emerging markets. 07 On a management pro-forma basis, which includes the proportional consolidation of our Chinese joint venture, and is consistent with the methodology used in developing the Nissan Power 88 Mid-term Plan objectives – net revenues increased by 7.7% to 13.4 trillion yen. Pro-forma operating profit rose by 30.2% to 935.5 billion yen representing a 7.0% operating profit margin. On this measure, we ended the fiscal period with net cash from our automotive operations of 1.65 trillion yen. With cumulative free cash flow totaling 1.7 trillion yen at the end of the year, we exceeded the Power 88 target of 1.5 trillion yen a full 12 months ahead of the mid-term plan. This positive performance provides a solid base as we follow the path toward our Power 88 goals. Looking toward fiscal year 2016, we anticipate total industry volumes will increase slightly to 89.4 million units. Of that total, we project that Nissan’s global retail volumes will rise by 3.3% to 5.6 million units, driven primarily by growth in China and North America. We expect net revenues to be 11.8 trillion yen for the 12 months ending March 31, 2017, calculated under the equity accounting method for our joint venture in China. Operating profit is expected to reach 710 billion yen, representing a margin of 6.0%. Net income is forecast to reach 525 billion yen. These figures reflect challenging assumptions on foreign exchange rates, particularly on yen-dollar currency translation. On the “management pro-forma” basis including the proportional consolidation of our Chinese joint venture, we anticipate net revenues will be 13 trillion yen. Operating profit is forecast to reach 860 billion yen, resulting in an operating profit margin of 6.6%. Net income is estimated to be 525 billion yen. Our financial priorities remain focused on ensuring sustainable profitable business growth, generating positive automotive free cash flow and maintaining a strong balance sheet with sufficient levels of liquidity. Under our mid-term plan, Nissan is committed to maintaining a progressive dividend policy, which reflects our profitability and solid free cash-flow generation. Given our solid financial performance in the period covered by this Annual Report, we have proposed a 14.3% increase in the full-year dividend to 48 yen per share for FY16. This distribution remains in line with our commitment to a minimum payout ratio of 30%. Total shareholder returns will be further enhanced through the stock buy-back, announced in February, The improvement in the 12 months to March 31, 2016 was driven by the combination of growing unit of 300 million shares valued at up to 400 billion yen throughout this year. sales and continued efficiencies on the cost side of the business. On the sales front, our global unit sales reached 5.4 million units, an all-time record. The Company enjoyed strong growth in North America and solid demand in Western Europe, where sales of popular models including the Altima, Rogue, Sentra, Qashqai and other core products offset difficult conditions in several parts of the world. In summary, Nissan has delivered another fiscal year of solid financial results despite challenging conditions in several markets and recent unfavorable currency movements. We remain confident that Nissan has the underlying strength, the right products, the strategic focus and the discipline to continue to drive the Company forward, while facing the challenges ahead. We also maintained our intense focus on cost-efficiency, which contributed 223.6 billion yen in In this regard, while we have adopted a challenging forecast for likely currency movements – particularly year-over-year operating profit improvement, mainly through our purchasing material cost-reduction efforts. In terms of financial performance (based on the equity accounting method for our Chinese joint in the yen-dollar exchange rate – we expect Nissan to deliver further solid earnings and attractive shareholder returns in fiscal 2016. venture), consolidated net revenues increased by 814.3 billion yen to 12.2 trillion yen. Operating profit rose by 34.6% to 793.3 billion yen, which represented an operating profit margin of 6.5%. Net income grew by 14.5% to 523.8 billion yen for the year, also reaching an all-time record. Nissan generated automotive free cash flow of 481.2 billion yen and we continued to strengthen the balance sheet, ending the period with net cash of 1.5 trillion yen for our automotive business. Joseph G. PeterChief Financial OfficerNISSAN MOTOR CORPORATION ANNUAL REPORT 2016THE MID-TERM PLAN “NISSAN POWER 88” 08 SIX STRATEGIES UNDER NISSAN POWER 88 1 2 3 Strengthening brand power Enhancing sales power Enhancing quality 4 5 6 Zero-emission leadership Business expansion Cost leadership Nissan is operating its business based on the mid-term plan, Nissan Power 88, for the fiscal years 2011 to 2016. “Power” derives its significance from the strengths and efforts we will apply to our brands and sales. Our commitment is to renew our focus on the overall customer experience, elevating Nissan’s brand power and ensuring quality excellence for every person who buys a Nissan car. “88” denotes the measurable rewards from achieving our plan. We aim to achieve a global market share of 8% from 5.8% in 2010 and to increase our corporate operating profit to a sustainable 8%* from 6.1% in 2010. Nissan is implementing six strategies under Nissan Power 88. Together with a stronger brand, investments in products, technologies and global capacity, we aim to achieve Nissan Power 88 and grow further. * Management pro forma basis based on continuation of proportionate consolidation of China JV NISSAN MOTOR CORPORATION ANNUAL REPORT 201609 Nissan’s “Double Zero” Target As the industry leader in zero-emission mobility, Nissan is committed to the penetration of electric vehicles (EVs) in the market. It is also striving to achieve virtually zero fatalities and serious injuries in accidents involving its vehicles. Zero Emissions The Nissan LEAF is the best-selling EV in the world. This year, the Company achieved cumulative global sales of more than 200,000 vehicles. The 2016 LEAF model is enhanced by a new 30-kilowatt battery that extends its driving range by more than 20%. Zero Fatalities Autonomous Drive technologies will provide a platform for Nissan to pursue its ultimate vision of achieving virtually zero fatalities. In 2016, Nissan will introduce an automated system intended to allow the car to drive autonomously in heavy, stop-and-go traffic. By 2018, we will introduce new technologies that enable cars to autonomously negotiate hazards and change lanes. By 2020, the Company aims to be ready to introduce automated technology allowing vehicles to navigate without driver intervention in a variety of situations, including complex city driving. Meanwhile, Nissan’s Safety Shield technologies are fundamental to autonomous driving. As of fiscal 2015, Forward Emergency Braking is available on nearly all vehicles categories sold in Japan. ero emission &Zero fatalityNISSAN MOTOR CORPORATION ANNUAL REPORT 201610 FISCAL 2015 SALES PERFORMANCE AND FISCAL 2016 SALES OUTLOOK Global demand in fiscal 2015 reached 87.15 million vehicles, up 2.1% from fiscal 2014. Nissan’s global sales volume climbed 2.0 % to 5.423 million vehicles and global market share was 6.2%, equal to fiscal 2014. For fiscal 2016, Nissan expects to grow faster than the industry as a whole. We anticipate that total industry volumes will increase by 2.6% to 89.40 million units. Our global retail volumes are expected to rise by 3.3% to 5.60 million units. This would equate to a global market share of 6.3%, an increase of 0.1 percentage points compared to 2015. Global Retail Sales Performance / Market Share and Global Sales Outlook (Units: thousands) （ ％） Sales Performance and Sales Outlook by Regions (FY) (Forecast) (Units: thousands) FY2015 FY2016 (Forecast) Other Markets +5.3% Europe +2.2% North America +2.9% (U.S.+3.5%) China +4.0% Japan +1.3% 3,0001,0002,0004,0006,0005,00006.02.04.08.012.010.0020062007200820092010201120122013201420155,6006.3%3,4835.4%3,7705.4%3,4115.5%3,5155.5%4,5185.8%4,8456.4%4,9146.2%5,1885,31820165,4236.2%6.2%6.2%6,0005,0004,0003,0002,0001,00005,4235,600+3.3%　8357542,011 (1,517)1,2505738807702,070 (1,570)1,300580NISSAN MOTOR CORPORATION ANNUAL REPORT 2016SALES VOLUME AND SALES OUTLOOK BY REGIONS Japan Total Sales Volume: 573 thousand units China Total Sales Volume: 1,250 thousand units United States Total Sales Volume: 1,517 thousand units Europe Total Sales Volume: 754 thousand units Other Markets Total Sales Volume: 835 thousand units NP300 Navara 11 X-Trail Sylphy Altima Qashqai DatsunGO+Panca Sales in Japan (Units: thousands) 2,000 1,500 1,000 500 Sales in China Sales in United States Sales in Europe (Including Russia) Sales in Other Markets (Units: thousands) 2,000 1,500 1,247 1,216 1,222 1,080 1,300＊ +4.0% 1,250＊ (Units: thousands) (Units: thousands) (Units: thousands) 1,570 +3.5% 1,517 1,400 1,285 1,079 1,138 2,000 1,500 1,000 500 2,000 1,500 1,000 500 2,000 1,500 676 660 676 755 754 770 +2.2% 1,000 825 960 879 889 835 880 +5.3% 500 655 646 719 623 573 580 +1.3% 1,000 500 0 2011 2012 2013 2014 2015 2016 (FY) 0 2011 2012 2013 2014 2015 2016 (FY) 0 2011 2012 2013 2014 2015 2016 (FY) 0 2011 2012 2013 2014 2015 2016 (FY) 0 2011 2012 2013 2014 2015 2016 (FY) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) * PV: Retail sales base, LCV: Wholesale base Sales by Region (Units: thousands) Asia and Oceania Latin America Middle East Africa 357 171 207 99 NISSAN MOTOR CORPORATION ANNUAL REPORT 2016 FISCAL 2015 FINANCIAL REVIEW AND FISCAL 2016 OUTLOOK 12 Fiscal 2015 Financial Performance (China JV Equity Basis) Net sales For fiscal 2015, consolidated net sales increased 7.2%, to 12.19 trillion yen. Net Sales (Billions of yen) 15,000 10,482.5 Impact on Operating Profit (Billions of yen) 589.6 11,375.2 12,189.5 11,800.0 –13.3 +223.6 +113.3 –72.4 –24.4 –19.7 –3.4 793.3 13,365.6 13,000.0 12,406.3 11,434.8 9,409.0 9,629.6 10,000 5,000 0 2011 2012 2013 2014 2015 (Forecast) 2016 (FY) ■ Management pro forma basis* ■ China JV equity basis FY14 O.P. FOREX Cost items* Volume/mix Marketing & selling exp. R&D exp. Mfg exp. Other items FY15 O.P. Net income Consolidated net income increased by 66.2 billion yen from 457.6 billion yen for the previous fiscal year to 523.8 billion yen for the fiscal year under review. * Including purchasing cost reduction, raw material and product enrichment. Operating profit Consolidated operating profit totaled 793.3 billion yen, an increase of 34.6% from the previous fiscal year. In comparison to the previous fiscal year’s consolidated operating profit, the variance was due to the following factors: l Foreign exchange rates had a negative impact of 13.3 billion yen. l Cost items including purchasing cost reduction efforts, lower raw material costs and product enrichment resulted in savings of 223.6 billion yen. Operating Profit l Volume and mix produced a positive impact of 113.3 billion yen. l The increase in marketing and selling expenses resulted in a 72.4 billion yen negative movement. l R&D expenses increased by 24.4 billion yen. l Manufacturing expenses increased by 19.7 billion yen. l Other items had a negative impact of 3.4 billion yen. (Billions of yen) 1,000 800 600 400 200 0 ■ Management pro forma basis* ■ China JV equity basis 935.5 860.0 793.3 718.6 710.0 Net Income (Billions of yen) 600 450 300 150 0 523.8 525.0 457.6 389.0 341.4 342.4 2011 2012 2013 2014 2015 (Forecast) 2016 (FY) 545.8 523.5 605.7 589.6 498.4 ■ Management pro forma basis* ■ China JV equity basis 2011 2012 2013 2014 2015 (Forecast) 2016 (FY) * Based on continuation of proportionate consolidation of China JV NISSAN MOTOR CORPORATION ANNUAL REPORT 201613 Long-term credit rating Nissan’s long-term credit rating with Rating & Investment Information, Inc. (R&I) is A+ with a stable outlook. The Standard & Poor’s (S&P) long-term credit rating for Nissan is A– with a positive outlook. Nissan’s credit rating with Moody’s is A3 with a stable outlook. Corporate Ratings R&I S&P Moody’s Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 AA– A+ A A– BBB+ BBB BBB– BB+ 4/05 10/05 4/06 10/06 4/07 10/07 4/08 10/08 4/09 10/09 4/10 10/10 4/11 7/11 7/12 1/13 9/14 4/15 10/15 4/16 Financial Position (China JV Equity Basis) Balance sheet Total assets increased by 1.9% to 17,373.6 billion yen compared to March 31, 2015. Current assets increased by 4.2% to 10,747.6 billion yen compared to March 31, 2015. This was mainly attributable to increases in sales finance receivables by 340.4 billion yen and cash on hand and in banks by 157.7 billion yen. Fixed assets decreased by 1.5% to 6,626.1 billion yen compared to March 31, 2015. Current liabilities increased by 5.4% to 6,764.2 billion yen compared to March 31, 2015. This was mainly due to increases in commercial paper by 299.2 billion yen and current portion of bonds by 141.1 billion yen. Long-term liabilities increased by 1.6% to 5,468.7 billion yen compared to March 31, 2015. This was mainly due to increases in net defined benefit liability by 87.9 billion yen, long-term borrowings by 38.4 billion yen and deferred tax liabilities by 18.3 billion yen despite a decrease in bonds by 125.5 billion yen. Net assets decreased by 2.0% to 5,140.7 billion yen compared to 5,247.3 billion yen as of March 31, 2015. This was mainly due to increases in translation adjustments (loss) by 335.6 billion yen and remeasurements of defined benefit plans (loss) by 73.8 billion yen and a decrease in unrealized holding gain and loss on securities by 31.6 billion yen despite an increase in retained earnings by 338.9 billion yen. Free cash flow and net cash (auto business) For fiscal 2015, Nissan achieved a positive free cash flow of 481.2 billion yen. At the end of fiscal 2015, our net automotive cash improved from the previous fiscal year to 1,502.9 billion yen. The Company continues to maintain a close focus on its inventory of new vehicles. Inventory stood at 790,000 units at the end of fiscal 2015. Nissan continues to manage inventory carefully in order to limit its impact on free cash flow. NISSAN MOTOR CORPORATION ANNUAL REPORT 2016Sales finance Due to the increase in retail sales, total financial assets of the sales finance segment increased by 4.7% to 9,719.9 billion yen from 9,281.3 billion yen in fiscal 2014. The sales finance segment generated 232.1 billion yen in operating profits in fiscal 2015 from 195.5 billion yen in fiscal 2014. Investment policy The company used capital expenditures in order to ensure Nissan’s future competitiveness. In fiscal 2015, capital expenditures totaled 479.0 billion yen, which was 3.9% of net sales. R&D expenditures totaled 531.9 billion yen. These funds were used to develop new technologies and products. One of the Company’s strengths is its extensive collaboration and development structure with Renault’s R&D team, resulting from the Alliance. R&D Expenditures (Billions of yen) 457.8 5.2% 5.2% 428.0 4.5% 4.5% 500.6 506.1 531.9 560.0 4.8% 4.8% 4.4% 4.4% 4.4% 4.4% 4.7% 4.7% 14 Dividend Nissan’s strategic actions reflect not only its long-term vision as a global company to create sustainable value but also the Company’s commitment to maximizing total shareholder returns. We paid year-end cash dividends of 21 yen per share for fiscal 2015. As a result, the total dividend payment for fiscal 2015, combined with the 21 yen dividend for the interim period, was 42 yen per share. The dividend payment plan for fiscal 2016 is to be 48 yen per share, considering the business condition, risks and opportunities for the year. Dividend per share (Yen) 50 40 30 20 10 0 48 42 30 33 25 20 2011 2012 2013 2014 2015 (Outlook) 2016 (FY) 2011 2012 2013 2014 2015 (Forecast) 2016 (FY) Fiscal 2016 Outlook (China JV Equity Basis) Capital Expenditures (Billions of yen) 536.3 5.1% 5.1% 468.7 5.4% 5.4% 463.1 479.0 4.1% 4.1% 3.9% 3.9% 540.0 4.6% 4.6% 406.4 4.3% 4.3% In our outlook for fiscal 2016, we expect our global sales to reach 5.60 million units, an increase of 3.3% compared to fiscal 2015. With a total industry volume assumption of 89.40 million units, a 2.6% increase year on year, our global market share is expected to grow from 6.2% to 6.3%. In consequence of our plan, the financial forecast is as follows. We have used a foreign exchange rate assumption of 105 yen to the dollar: 2011 2012 2013 2014 2015 (Forecast) 2016 (FY) Nissan’s Fiscal 2016 Outlook n Net sales n Operating profit n Net income 11.80 trillion yen 710.0 billion yen 525.0 billion yen ■ Management pro forma basis* ■ China JV equity basis ● % of net sales (Management pro forma basis*) ● % of net sales (China JV equity basis) * Based on continuation of proportionate consolidation of China JV 600 450 300 150 0 600 450 300 150 0 NISSAN MOTOR CORPORATION ANNUAL REPORT 201615 FINANCIAL STATEMENTS Consolidated balance sheets (China JV Equity basis) Assets Current assets Cash on hand and in banks Trade notes and accounts receivable Sales finance receivables Securities Merchandise and finished goods Work in process Raw materials and supplies Deferred tax assets Other Allowance for doubtful accounts Total current assets Fixed assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Construction in progress Other, net Total property, plant and equipment Intangible fixed assets Investments and other assets Investment securities Long-term loans receivable Net defined benefit assets Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total fixed assets Total assets FY2014 As of March 31, 2015 FY2015 As of March 31, 2016 (Millions of yen) FY2014 As of March 31, 2015 FY2015 As of March 31, 2016 (Millions of yen) 761,074 888,814 6,312,874 41,651 853,962 90,811 365,224 226,891 851,168 (75,124) 10,317,345 661,979 3,121,627 643,940 265,119 573,574 5,266,239 114,456 988,733 14,569 10,078 140,669 195,927 (2,357) 1,347,619 6,728,314 17,045,659 918,771 837,704 6,653,237 73,384 857,818 86,313 330,435 251,689 825,080 (86,858) 10,747,573 645,945 3,182,514 625,152 196,718 566,573 5,216,902 130,877 893,688 7,747 4,691 187,106 186,962 (1,903) 1,278,291 6,626,070 17,373,643 Liabilities Current liabilities Trade notes and accounts payable Short-term borrowings Current portion of long-term borrowings Commercial paper Current portion of bonds Lease obligations Accrued expenses Deferred tax liabilities Accrued warranty costs Other Total current liabilities Long-term liabilities Bonds Long-term borrowings Lease obligations Deferred tax liabilities Accrued warranty costs Net defined benefit liability Other Total long-term liabilities Total liabilities Net assets Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholdersʼ equity Accumulated other comprehensive income Unrealized holding gain and loss on securities Unrealized gain and loss from hedging instruments Adjustment for revaluation of the accounts of the consolidated subsidiaries based on general price level accounting Translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Share subscription rights Non-controlling interests Total net assets Total liabilities and net assets 1,554,399 1,022,613 1,376,780 200,692 216,942 23,043 908,909 64 112,989 1,001,064 6,417,495 1,095,518 2,717,478 18,167 673,521 129,365 336,261 410,592 5,380,902 11,798,397 605,814 804,567 3,811,848 (148,239) 5,073,990 95,600 7,185 (13,945) (246,776) (81,638) (239,574) 2,294 410,552 5,247,262 17,045,659 1,479,689 1,037,271 1,350,894 499,875 357,998 14,916 981,989 51 106,536 934,968 6,764,187 969,987 2,755,896 14,460 691,809 138,107 424,123 474,329 5,468,711 12,232,898 605,814 805,646 4,150,740 (148,684) 5,413,516 64,030 (4,486) (13,945) (582,363) (155,487) (692,251) 502 418,978 5,140,745 17,373,643 NISSAN MOTOR CORPORATION ANNUAL REPORT 201616 FY2014 (From April 1, 2014 to March 31, 2015) (Millions of yen) FY2015 (From April 1, 2015 to March 31, 2016) 20,008 2,022 17,725 ― 4,147 43,902 3,299 17,069 16,103 ― 14,242 50,713 687,421 224,010 (26,686) 197,324 490,097 32,523 457,574 9,011 23,338 ― 5,287 4,762 42,398 4,937 13,274 42,087 90,700 20,738 171,736 732,934 149,920 30,221 180,141 552,793 28,952 523,841 Special gains Gain on sales of fixed assets Gain on sales of investment securities Gain on contribution of securities to retirement benefit trust Insurance income Other Total special gains Special losses Loss on sales of fixed assets Loss on disposal of fixed assets Impairment loss Quality-related costs Other Total special losses Income before income taxes Income taxes–current Income taxes–deferred Total income taxes Net income Net income attributable to non-controlling interests Net income attributable to owners of the parent Consolidated statement of income (China JV Equity basis) Net sales Cost of sales Gross profit Selling, general and administrative expenses Advertising expenses Service costs Provision for warranty costs Other selling expenses Salaries and wages Retirement benefit expenses Supplies Depreciation and amortization Provision for doubtful accounts Amortization of goodwill Other Total selling, general and administrative expenses Operating income Non-operating income Interest income Dividends income Equity in earnings of affiliates Derivative income Exchange gain Miscellaneous income Total non-operating income Non-operating expenses Interest expense Derivative loss Exchange loss Amortization of net retirement benefit obligation at transition Miscellaneous expenses Total non-operating expenses Ordinary income FY2014 (From April 1, 2014 to March 31, 2015) 11,375,207 (Millions of yen) FY2015 (From April 1, 2015 to March 31, 2016) 12,189,519 9,241,341 2,133,866 336,792 93,606 133,567 255,044 392,969 17,511 4,222 44,826 52,079 1,837 211,852 1,544,305 589,561 25,323 6,425 106,513 ― 66,185 17,813 222,259 29,167 58,379 ― 9,098 20,944 117,588 694,232 9,796,998 2,392,521 342,213 130,530 137,941 234,456 393,739 16,137 3,901 45,056 63,586 5,111 226,573 1,599,243 793,278 26,467 5,966 122,524 37,683 ― 11,726 204,366 24,806 ― 96,452 ― 14,114 135,372 862,272 NISSAN MOTOR CORPORATION ANNUAL REPORT 201617 Consolidated statement of cash flows (China JV Equity basis) Cash flows from operating activities Cash flows from investing activities FY2014 (From April 1, 2014 to March 31, 2015) (Millions of yen) FY2015 (From April 1, 2015 to March 31, 2016) FY2014 (From April 1, 2014 to March 31, 2015) (Millions of yen) FY2015 (From April 1, 2015 to March 31, 2016) Income before income taxes and minority interests Depreciation and amortization (for fixed assets excluding leased vehicles) Depreciation and amortization (for long term prepaid expenses) Depreciation and amortization (for leased vehicles) Impairment loss Gain on contribution of securities to retirement benefit trust Increase (decrease) in allowance for doubtful receivables Loss (gain) for residual value risk of leased vehicles Quality-related costs Interest and dividend income Interest expense Equity in losses (earnings) of affiliates Loss (gain) on sales of fixed assets Loss on disposal of fixed assets Loss (gain) on sales of investment securities Decrease (increase) in trade notes and accounts receivable Decrease (increase) in sales finance receivables Decrease (increase) in inventories Increase (decrease) in trade notes and accounts payable Amortization of net retirement benefit obligation at transition Retirement benefit expenses Payments related to net defined benefit assets and liabilities Other Subtotal Interest and dividends received Proceeds from dividends income from affiliates accounted for by equity method Interest paid Income taxes paid Net cash provided by operating activities 687,421 398,982 28,003 355,292 16,103 (17,725) 13,471 41,911 ― (31,748) 112,823 (106,513) (16,709) 17,069 (2,022) (64,118) (707,321) (82,435) 125,840 9,098 26,789 (25,815) 55,372 833,768 25,793 145,780 (114,659) (197,899) 692,747 732,934 424,881 18,666 389,339 42,087 ― 16,669 53,737 90,700 (32,433) 111,906 (122,524) (4,074) 13,274 (23,338) 15,171 (830,209) (17,244) 217,587 ― 13,581 (29,854) 55,978 1,136,834 33,222 144,961 (110,439) (277,565) 927,013 Net decrease (increase) in short-term investments Purchase of fixed assets Proceeds from sales of fixed assets Purchase of leased vehicles Proceeds from sales of leased vehicles Payments of long-term loans receivable Collection of long-term loans receivable Purchase of investment securities Proceeds from sales of investment securities Proceeds from (payments for) sales of subsidiaries' shares resulting in changes in the scope of consolidation Proceeds from (payments for) purchase of subsidiaries' shares resulting in changes in the scope of consolidation Net decrease (increase) in restricted cash Other Net cash used in investing activities Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Proceeds from issuance of bonds Repayments of long-term borrowings Redemption of bonds Proceeds from non-controlling interests Purchase of treasury stock Proceeds from sales of treasury stock Repayments of lease obligations Cash dividends paid Cash dividends paid to non-controlling interests Net cash provided by financing activities Effects of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Increase due to inclusion in consolidation Cash and cash equivalents at end of the period 3,405 (513,268) 88,318 (1,070,654) 537,721 (534) 310 (25,591) 6,104 (156) ― (36,258) (11,422) (1,022,025) 445,170 981,970 325,513 (1,094,942) (238,124) 6,242 (61) 618 (34,047) (132,054) (14,389) 245,896 50,660 (32,722) 832,716 2,618 802,612 4,855 (531,251) 80,320 (1,385,990) 560,861 (3,018) 8,285 (24,869) 25,192 ― (6,354) 44,839 (2,150) (1,229,280) 420,085 1,824,367 270,592 (1,545,177) (212,033) 4,914 (28,325) 303 (23,093) (157,239) (23,788) 530,606 (45,107) 183,232 802,612 6,251 992,095 NISSAN MOTOR CORPORATION ANNUAL REPORT 2016 18 EXECUTIVES DIRECTORS OF THE BOARD AND AUDITORS CORPORATE OFFICERS Representative Directors Directors Auditors Carlos Ghosn President and Chairman Hiroto Saikawa Greg Kelly Hideyuki Sakamoto Toshiyuki Shiga Hidetoshi Imazu Fumiaki Matsumoto Jean-Baptiste-Duzan Toshiyuki Nakamura Kimiyasu Nakamura Bernard Rey Motoo Nagai Shigetoshi Andoh (As of June 22, 2016) EXECUTIVE COMMITTEE MEMBERS エグゼクティブ・コミッティ・メンバー Carlos Ghosn Hiroto Saikawa Joseph G. Peter Trevor Mann Philippe Klein Jose Munoz Kimiyasu Nakamura Hideyuki Sakamoto Chief Executive Officer Chairman and President Carlos Ghosn* Chief Competitive Officer Vice Chairman Hiroto Saikawa* Chief Financial Officer Joseph G. Peter* Finance Control IR M&A Support Executive Vice President Jose Munoz* Region : North America Executive Vice President Kimiyasu Nakamura* Region : Japan, Asia, Oceania TCSX (Total Customer Satisfaction Function) Executive Vice President Hideyuki Sakamoto* Product Engineering Global Sales Finance Business Unit Administration for Affiliated Companies, Global IS/IT Executive Vice President Fumiaki Matsumoto* Manufacturing & SCM Operations Chief Performance Officer Trevor Mann* Responsible for 6 management committees Global Aftersales Global Datsun Business Unit Chief Planning Officer Philippe Klein* Global Product Planning Global Program Management Global Market Intelligence Vehicle Information Technology Executive Vice President Daniele Schillaci* Global Marketing & Sales Global Dealer Network Global Product Marketing Zero Emission Vehicle & Battery Business Executive Vice President Tsuyoshi Yamaguchi Alliance Technology Development Executive Vice President Yasuhiro Yamauchi Alliance Purchasing Senior Vice Presidents Shiro Nakamura Hitoshi Kawaguchi Takao Asami Jun Seki Corporate Vice Presidents Celso Guiotoko Joji Tagawa Vincent Cobee Yusuke Takahashi Jose Luis Valls Hiroshi Karube Takashi Hata Paul Willcox Roland Krueger Arun Bajaj Asako Hoshino Rakesh Kochhar Hari Nada Keno Kato Roel De Vries Tony Laydon Kunio Nakaguro Mitsuro Antoku Naoya Fujimoto Toshihiro Hirai Christian Mardrus Hiroshi Nagaoka Noboru Tateishi Akihiro Otomo Atul Pasricha Nobuya Uranishi Philippe Guerin-Boutaud Allan Rushforth Kent O'Hara Leon Dorssers Alfonso Albaisa Atsuhiko Hayakawa Yoshikazu Nakai Kinichi Tanuma Haruhiko Yoshimura Fellow Haruyoshi Kumura Shunichi Toyomasu Vice Chairman Toshiyuki Shiga Fumiaki Matsumoto Daniele Schillaci * Executive Committee Members (As of end of July 2016) NISSAN MOTOR CORPORATION ANNUAL REPORT 2016CORPORATE GOVERNANCE & INTERNAL CONTROL Details of this section are reported on the Company’s website, “Blue Citizenship: Nissan’s CSR.” Please see the Sustainability Report and the Current State of Nissan’s Risk Management. CORPORATE GOVERNANCE SYSTEM Nissan believes that enhancing its corporate governance is one of its most important business issues. Ensuring clear management responsibility is a key way to achieve this. Nissan announces clear management targets and policies to all its stakeholders and discloses its performance promptly with a high degree of transparency. Information regarding the following is provided in the Company’s Sustainability Report. l Corporate Governance System in Detail l Internal Control Systems l Independent Internal Audits 19 COMPLIANCE In promoting corporate social responsibility (CSR), it is essential that each employee practices compliance with high ethical standards. In order to raise compliance awareness throughout the Company, Nissan has established a Global Compliance Office, as well as specialized departments, and appointed officers to promote compliance policy in each region where it operates. Information regarding the following is provided in the Company’s Sustainability Report. l Employees and Compliance l Security-Related Export Controls l Promoting Thorough Compliance l Nissan’s Stance Against Discrimination and Harassment l Internal Reporting System for Corporate Soundness RISK MANAGEMENT Nissan defines risks as anything that might prevent it from achieving its business goals. By detecting risks as early as possible, examining them, planning the necessary measures to address them and implementing those measures, the Company works to minimize the materialization of risks as well as the impact they cause. Information regarding the following is provided in the Company’s Sustainability Report. l Principles for and Approach to Corporate Risk Management l Protecting Personal Data and Reinforcing Information Security Information regarding the following is provided in the Current State of Nissan’s Risk Management l Risks Related to Financial Market l Risks Related to Business Strategies and Maintenance of Competitiveness l Business Continuity website Please see the 2016 Sustainability Report, p. 100, for more information on Corporate Governance & Internal Control. website Please see the Current State of Nissan’s Risk Management for more information on risk management. NISSAN MOTOR CORPORATION ANNUAL REPORT 2016

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