ANNUAL REPORT 2018 CONTENTS This annual report presents the results of Nissan Motor Corporation’s business activities for fiscal 2018. Viewing this Report 01 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 PERFORMANCE 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: Nissan LEAF CONTENTSNISSAN MOTOR CORPORATION ANNUAL REPORT 2018 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. 02 CORPORATE FACE TIMENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 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 earnings per share Diluted earnings per share Net assets as a percentage of total assets Rate of 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 the period Employees*2 ( ) represents the average number of part-time employees not included in the above numbers For the years ended Mar. 31, 2018 Mar. 31, 2017 Mar. 31, 2016 Mar. 31, 2015 Mar. 31, 2014 2017 2016 2015 2014 2013 03 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 11,951,169 11,720,041 12,189,519 11,375,207 10,482,520 750,302 746,892 740,338 864,733 663,499 615,950 862,272 523,841 75,107 694,232 457,574 719,903 527,189 389,034 796,533 5,688,735 5,167,136 5,140,745 5,247,262 4,671,528 18,746,901 18,421,008 17,373,643 17,045,659 14,703,403 1,377.05 1,242.90 1,132.61 1,152.83 1,035.06 190.96 190.96 28.7 14.6 5.78 165.94 165.94 26.4 13.8 6.47 125.00 124.99 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 1,071,250 1,335,473 927,013 692,747 728,123 (1,147,719) (1,377,626) (1,229,280) (1,022,025) (1,080,416) 36,810 320,610 1,206,000 1,241,124 138,910 (19,924) 140,603 (20,290) 137,250 (19,366) 138,917 (19,716) 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) Notes: *1 Net sales are presented exclusive of consumption tax. *2 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. CORPORATE FACE TIMENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 Key figures for fiscal 2017 (China JV Equity Basis) Net sales in fiscal year 2017 increased by 231.2 billion yen to 11.95 trillion yen. Operating profit was 574.8 billion yen, for a profit margin of 4.8%. 04 12,406.3 11,434.8 11,375.2 10,482.5 13,365.6 12,842.3 12,189.5 Net Sales (Billions of yen) 15,000 12,000 9,000 6,000 3,000 0 Operating Profit (Billions of yen) 1,000 13,315.0 11,720.0 11,951.2 718.6 605.7 589.6 498.4 800 600 400 200 0 Net Income (Billions of yen) 746.9 746.9 663.5 663.5 523.8 523.8 457.6 457.6 389.0 389.0 935.5 882.4 793.3 742.2 742.4 574.8 800 600 400 200 0 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (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 (Billions of yen) (Billions of yen) 710.5 677.1 497.6 481.2 482.7 407.0 352.3 365.8 208.1 199.7 800 600 400 200 0 2,500 2,000 1,500 1,000 500 0 2,019.0 1,803.9 1,769.1 1,524.5 1,390.1 1,645.8 1,502.9 1,635.0 1,133.7 1,015.9 53 48 42 30 33 (Yen) 60 50 40 30 20 10 0 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (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 CORPORATE FACE TIMENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 MESSAGE FROM THE CEO 05 issues and make necessary improvements. Furthermore, the company is taking comprehensive, company-wide measures to strengthen compliance for the future. FY2017 Updates In fiscal year 2017, following the capital tie-up with Mitsubishi Motors, Nissan launched Nissan M.O.V.E. to 2022, the new six-year midterm plan. In fiscal year 2017, Nissan’s global sales volume outpaced total industry volume, increasing 2.6% to 5.77 million units. We achieved steady growth while promoting and accelerating Nissan Intelligent Mobility, our key initiative for innovation. As a fundamental pillar for steady growth, Nissan continued to offer new products and technologies in fiscal year 2017. This included the global launch of the new Nissan LEAF. In Japan, we introduced the Serena e-POWER. The X-Trail in Japan and the Rogue in the U.S. are now offered with ProPILOT. We introduced a new model, the Datsun CROSS, and in China, where the local brand market is growing, our local brand Venucia introduced the D60 and M50V. Progress of Nissan M.O.V.E. to 2022 Hiroto Saikawa President and Chief Executive Officer Introduction Nissan M.O.V.E. to 2022 has two missions: one is to achieve steady growth, and the second is to On March 26, Nissan received operational improvement orders from the Japanese Ministry of Land, advance the technology and business evolution sweeping the automotive industry. During the first Infrastructure, Transport and Tourism (MLIT) related to non-conformities in the final vehicle inspection year of the plan, we made steady progress within each mission. process at our vehicle manufacturing plants in the Japan market. With our customer’s peace of In terms of steady growth, one of the initiatives is a focus on China. To respond to the country’s mind as our top priority, the company is taking this issue seriously and is committed to restoring the growth potential, our joint venture launched its midterm plan, DFL TRIPLE ONE Plan, to establish trust of our customers. a foundation for future business. One objective of the plan is to increase annual sales by 1 million The entire company is focusing its efforts on these countermeasures to prevent any reoccurrence units by 2022. of these issues. We are reviewing and discussing the progress of these measures at our monthly On the product side, we are focusing on growing the sales of our pick-up trucks and frame-based Executive Committee meetings, and giving additional direction whenever necessary to ensure that SUVs, which have been inherent strengths for Nissan. Nissan’s sales growth in the previous year they are effectively implemented. was steady, and we will double the growth, driven by the introduction of the new Terra and by In addition to those countermeasures in the assembly lines related to the final inspection increasing sales of the Titan in the U.S. process and the recently discovered issues, we are enhancing the audit scheme in order to detect TOP MESSAGENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 06 In addition to driving steady growth, we will increase our technology presence through Nissan In fiscal year 2018, Nissan is committed to addressing these issues and advancing our midterm Intelligent Mobility. In the area of electrification, the new Nissan LEAF was launched in Japan and initiatives. We will adhere to the PDCA (plan, do, check and action) cycle and enhance the business deployed globally. The NOTE e-Power and Serena e-Power are accelerating our electrification in Japan. foundations. We will improve quality of sales and brand value, promote digitalization to improve In China, the EV market is rapidly expanding. Our joint venture’s EV sales exceeded 20,000 units customer experience and internal processes, and develop a robust corporate culture with the highest in calendar year 2017, more than three times the previous calendar year. In fiscal year 2018, we ethical standards and compliance awareness. These are fundamental for the successful execution will introduce a top-level version of the new Nissan LEAF with longer range and increased power, of the midterm plan. Through these actions, Nissan will achieve steady growth. along with the Sylphy Zero Emission in China. As a result, our sales volume is expected to double. Further supporting this growth, in fiscal year 2018, our global retail volumes are expected to Alongside electrification, we are expanding our driver assist technology ProPILOT globally with increase by 2.7% to 5.925 million units. Looking across the regions, we forecast a decline in sales the new Nissan LEAF, X-Trail, and Rogue. In fiscal year 2018, ProPILOT will be offered on the new in the U.S. and Europe for this fiscal year, but aim to offset this by sales growth in Japan, China, Altima, Qashqai, Rogue Sport and INFINITI QX50, and we will continue equipping models in the Latin America, ASEAN and other markets. U.S. and Europe with this technology. Nissan will also continue to launch attractive new products and expand new technologies. In the area of mobility services, we began conducting field tests of “EasyRide” autonomous In addition to the global launch of a top-range version of the new Nissan LEAF, the new Altima in driving in Japan with our partner DeNA. These tests are a significant first step to enabling customers North America, and the Sylphy Zero Emission in China will go on sale. We are offering ProPILOT to experience real services and technologies. In addition, through the Renault-Nissan-Mitsubishi technology on Qashqai and Rogue Sport. INFINITI QX50 will be equipped with ProPILOT and the alliance, we signed a memorandum of understanding with DiDi to explore the possibility of cooperating new variable compression ratio engine, VC-Turbo unit. We will also launch a new frame-based SUV on a new electric vehicle car-sharing program in China. Terra and the Kicks in the U.S. Nissan continues to leverage the benefits of the Renault-Nissan-Mitsubishi alliance, which is Overall, we are determined to address the remaining challenges and solidify our strong position essential for Nissan’s future growth and mid-term activities. To create more synergies, the alliance for steady growth. We will adapt to changes in the business climate, while expanding our business announced accelerated convergence beginning in fiscal year 2018 in several key functions including in growing markets and enhancing profitability in mature markets. At the same time, Nissan will engineering, manufacturing, purchasing quality/total customer satisfaction (TCS), aftersales and continue to increase its readiness for further technological innovation and business evolution. business development. As an equal partner, Nissan will be proactively involved in the delivery of synergies and convergence, in order to maximize the benefits of the alliance, respecting each Thank you for your continued support. members’ independence and autonomy. FY2018 Actions In fiscal year 2017, Nissan introduced a number of initiatives under the new midterm plan Nissan M.O.V.E. to 2022. At the same time, we faced unexpected challenges, including the recall and suspension of production and shipments following the final vehicle inspection issue in Japan, as well as inventory adjustments due to the decline in the U.S. market. As a result, we reported a reduced operating profit for the fiscal year. TOP MESSAGEHiroto SaikawaPresident and Chief Executive OfficerNissan Motor Co., Ltd.NISSAN MOTOR CORPORATION ANNUAL REPORT 2018 MESSAGE FROM THE CFO Hiroshi Karube Chief Financial Officer 07 growth in China, where sales increased a significant 12.2% to 1.52 million units, representing a market share of 5.6%. In Japan, Nissan’s sales increased 4.8% over the previous year, despite a temporary suspension of production and shipments caused by the vehicle inspection issue. This tells us that our Nissan Intelligent Mobility offensive, led by Note e-POWER, Serena with ProPILOT, and the new Nissan LEAF, is well accepted by customers. In the U.S., we saw a continuing high demand in Rogue and Rogue Sports. As we look to the year ahead, we expect our unit sales to outperform total industry volumes, increasing by 2.7% to 5.925 million units. We forecast sales growth in Japan, China and other markets such as Latin America and ASEAN. We are expecting net revenues of 12.0 trillion yen for fiscal year 2018. Operating profit is forecast at 540.0 billion yen, for an operating profit margin of 4.5%. We expect to report a net income of 500.0 billion yen. This is based on exchange rate forecasts of 105 yen to the dollar, and 130 yen to the euro. Meanwhile, Nissan intends to maintain a progressive dividend policy that reflects its underlying profitability and healthy free cash flow. In fiscal year 2017, the company lifted the full year dividend to 53 yen per share, a 10.4% increase versus the prior year level. For fiscal year 2018, we intend to continue with our progressive returns to shareholders. We are forecasting a 7.5% increase in the full year dividend to 57 yen per share. I was appointed as chief financial officer of Nissan Motor Company in fiscal year 2018. In this role, In conclusion, we will continue to deliver sustainable growth with profitability, drive advancements, I am committed to continuing Nissan’s financial performance and cost controls as we progress with and provide significant value for shareholders in fiscal year 2018 and for the remainder of the our Nissan M.O.V.E. to 2022 midterm strategy. midterm plan. As CFO, I look forward to moving the company forward. In fiscal year 2017, the first year of the plan, Nissan generated an operating profit of 574.8 billion yen after special items, under the equity accounting basis of our joint venture in China. The Sincerely, special items included the recent final vehicle inspection issue in Japan and the settlement of the U.S. class action lawsuits related to Takata airbags, which amounted to a total of 100 billion yen. As a result, final operating profit was 574.8 billion yen. Net income increased compared to the previous year, reaching at a record high of 746.9 billion yen due to the increase in non-operating income, mainly the improvements of the Chinese joint venture and the impact from the U.S. tax reform. Free cash flow maintained at a healthy level, and net cash has increased. In terms of sales, our global sales rose 2.6 percent to 5.77 million units, outperforming total industry volume, which increased more than 1.9 percent. Nissan’s increase was driven by our TOP MESSAGEHiroshi KarubeChief Financial OfficerNISSAN MOTOR CORPORATION ANNUAL REPORT 2018 NISSAN M.O.V.E. TO 2022: BUILDING THE FOUNDATION FOR GROWTH AND EVOLUTION Nissan M.O.V.E. to 2022 Mission At the beginning of fiscal year 2017, Nissan began a new six-year midterm plan, Nissan M.O.V.E. to 2022. Over the course of the plan, Nissan aims to build on the solid business foundation that was established under the previous midterm plan, Nissan Power 88, while leveraging the benefits of the company’s alliance with Renault and Mitsubishi. 08 Mobility Operational excellence Value to customers Electrification 1 2 Achieve sustainable growth, while delivering healthy profitability and strong free cash flow Lead the technology and business evolution of the automotive industry, backed by our technology DNA The name, Nissan M.O.V.E. to 2022, expresses the company’s forward momentum, drawing on its strengths in Mobility, Operational excellence, Value to customers, and Electrification. PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 09 Path to 2022: Sustainable Growth In terms of sustainable growth, the plan shows Nissan’s aim to maintain a sustainable 8 percent operating margin while growing revenues from 12.8 trillion yen to 16.5 trillion yen – a growth of 30%. There are three pillars that will support this growth. The first is a focus on steady growth with above average profitability in the markets that sustain our business, including China, Japan, and Mexico. The second is a focus on seeing a return on our investments in markets and brands where the full benefits are yet to be realized, including Brazil, Argentina, India, Russia. The final pillar is to capture the full potential of our brands and close the gap with market leaders in markets such as Europe, the Middle East, and ASEAN. This third area also includes efforts to boost our business through maximizing our strengths in frame-based SUVs and pick-up trucks. In addition to these market strategies, we will also continue to work on revenue optimization, total delivered cost improvements, and fixed cost controls, while ensuring appropriate allocations of investments for growth. Net Revenue Growth* 12.8T 16.5T JPY Over 6-Year Period Sustainable COP%* 8% Under “reasonable” economic conditions Cumulative Auto Free Cash Flow 2.5T JPY * Management pro forma basis Steady Growth with Above Average Profitability US, China, Japan, Mexico Aftersales, Sales Finance Harvest Previous Investment Brazil, Argentina, India, Russia Infiniti / Datsun Capture Full Potential in markets & segments Europe, Middle East, ASEAN Frame SUV / Pick-ups Continuous improvement on operational efficiencies Net Revenue Optimization, TdC Management, Fixed Cost Control PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 10 Path to 2022: Lead the evolution In addition to sustainable growth, the company also intends to take the lead in new technologies and businesses. Harnessing the evolution of technologies such as electric vehicles, autonomous driving and connectivity, as well as the acceleration of new mobility services, Nissan is introducing new technologies and products through its Nissan Intelligent Mobility strategy. By the end of the plan, Nissan aims to maintain its EV leadership with a million electrified vehicles sold per year, including both EV and e-POWER; introduce cutting-edge autonomous driving technologies, including 20 models with ProPILOT technology in 20 markets; and provide mobility services delivered by autonomous vehicles, ahead of the rest of the industry. To develop these technologies, Nissan will fully leverage the benefits of the Renault-Nissan-Mitsubishi alliance, and deliver advanced products through the Nissan, INFINITI, and Datsun brands. The plan also includes clear strategies to enhance the business foundations, including further developing the company’s diversity as a competitive advantage, ensuring quality assurance with a customer-centric mindset, a renewed focus on compliance, an acceleration of digitization, and the securing of necessary production capacity to support our growth, especially in China. By the end of Nissan M.O.V.E. to 2022, Nissan will be in a strong position to address challenges, harness opportunities and deliver on the mission of sustainable growth and leadership in the business and technology evolution ahead. Solid EV leadership Autonomous drive vehicle expansion Early provider of robo-vehicle ride-hailing services Full deployment as Nissan, INFINITI and Datsun Common technologies & new mobility services, business development Electrification, autonomous driving, connectivity PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 FISCAL YEAR 2017 SALES PERFORMANCE AND FISCAL YEAR 2018 SALES OUTLOOK 11 Global demand in fiscal 2017 reached 93.52 million vehicles, up 1.9% from fiscal 2016. Nissan’s global sales volume climbed 2.6% to 5.77 million vehicles and global market share was 6.2%. Fiscal 2017 Sales Volume by Regions For fiscal 2018, Nissan expects to grow faster than the industry as a whole. We anticipate that total industry volume will increase by 2.0% to 95.40 million units. Our global retail volumes are expected to rise by 2.7% to 5.925 million units. This would equate to a global market share of 6.2%. Japan Sales Performance and Sales Outlook by Regions (Units: thousands) 6,000 5,188 5,318 5,423 5,626 5,770 5,925 5,000 4,000 3,000 2,000 1,000 0 6.2 % 6.2 % 6.2% 6.2% 6.2% 6.1% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 (Forecast) Japan China North America Europe Other Markets Market Share Serena e-POWER Note e-POWER China Total Sales Volume: 584 thousand units X-TRAIL Total Sales Volume: 1,520 thousand units North America Europe Rogue Total Sales Volume: 2,091 thousand units Qashqai Total Sales Volume: 756 thousand units Other Markets Datsun redi-GO KICKS Total Sales Volume: 819 thousand units PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 FISCAL YEAR 2017 FINANCIAL REVIEW AND FISCAL YEAR 2018 OUTLOOK 12 Fiscal Year 2017 Financial Performance (China JV Equity Basis) Net revenue For the year ended March 31, 2018, consolidated net revenues increased 2.0%, to 11.95 trillion yen. Net Sales (Billions of yen) 15,000 10,482.5 11,375.2 12,189.5 11,720.0 11,951.2 12,406.3 13,365.6 12,842.3 13,315.0 12,000.0 11,434.8 l Foreign exchange rates had a negative impact of 4.7 billion yen. l Cost items including monozukuri-related cost reduction efforts contributed 196.2 billion yen. l Raw materials had a negative impact of 100.6 billion yen. l Volume and mix had a negative impact of 105.8 billion yen. l Increase in marketing and selling expenses resulted in a negative impact of 40.9 billion yen. l R&D and manufacturing expenses increased by 32.2 billion yen. l Other items had a positive impact of 63.5 billion yen. l Special items, including the final vehicle inspection issue in Japan and the settlement of the U.S. class action lawsuits related to Takata air bags, had a negative impact of 100.4 billion yen. 10,000 5,000 0 Impact on Operating Profit (Billions of yen) 2013 2014 2015 2016 2017 (Forecast) 2018 (FY) 742.2 –42.5 699.7 –4.7 Management pro forma basis* China JV equity basis Operating Profit +196.2 –100.6 –105.8 –40.9 –32.2 +63.5 675.2 –100.4 574.8 (Billions of yen) 1,000 935.5 882.4 742.4 793.3 742.2 718.6 *1: Calsonic Kansei *2: Including purchase cost reduction and product enrichment. *3: Including inspection impacts and class action settlement. FY16 O.P. CK*1 SCOPE CHANGE FY16 O.P. (w/o CK *1) FOREX Cost items*2 Raw material Volume/ mix Marketing & selling exp. R&D exp. Other items FY17 O.P. (w/o Special items *3) Special items*3 FY17 O.P. 800 600 400 200 0 605.7 589.6 498.4 574.8 540.0 2013 2014 2015 2016 2017 (Forecast) 2018 (FY) Net income Consolidated net income increased 12.6% from fiscal year 2016 to 746.9 billion yen for the fiscal year. Net Income (Billions of yen) 800 600 400 200 0 746.9 663.5 500.0 523.8 457.6 389.0 2013 2014 2015 2016 2017 (Forecast) 2018 (FY) Operating profit Consolidated operating profit totaled 574.8 billion yen, resulting in an operating profit margin of 4.8%. Management pro forma basis* China JV equity basis In comparison to the previous fiscal year’s consolidated operating profit, after adjusting the divestiture of Calsonic Kansei, the variance was due to the following factors: PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 13 Financial Position (China JV Equity Basis) Balance sheet At March 31, 2018, current assets have increased by 1.9% to 11,682.8 billion yen compared to March 31, 2017. This was mainly attributable to an increase in sales finance receivables by 294.1 billion yen. Long-term credit rating Nissan’s long-term credit rating with Rating & Investment Information, Inc. (R&I) is A+ with a positive outlook. The Standard & Poor’s (S&P) long-term credit rating for Nissan is A with a stable outlook. Nissan’s credit rating with Moody’s is A2 with a stable outlook. Fixed assets have increased by 1.5% to 7,064.1 billion yen compared to March 31, 2017. This Corporate Ratings was mainly attributable to an increase in investment securities by 105.9 billion yen. As a result, total assets have increased by 1.8% to 18,746.9 billion yen compared to March 31, 2017. Current liabilities have decreased by 4.4% to 6,744.4 billion yen compared to March 31, 2017. This was mainly attributable to decreases in current portion of long-term borrowings by 187.3 billion yen and short-term borrowings by 177.7 billion yen. Long-term liabilities have increased by 1.8% to 6,313.8 billion yen compared to March 31, 2017. This was mainly due to an increase in bonds by 394.2 billion yen despite a decrease in deferred tax liabilities by 206.4 billion yen. As a result, total liabilities have decreased by 1.5% to 13,058.2 billion yen compared to March 31, 2017. Net assets have increased by 10.1% to 5,688.7 billion yen compared to 5,167.1 billion yen as of March 31, 2017. This was mainly attributable to an increase in retained earnings by 559.6 billion yen. Free cash flow and net cash (auto business) For fiscal year 2017, automotive free cash flow was a positive 407.0 billion yen. As a result, automotive net cash was 1.769 trillion yen at the end of the period. Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 R&I Moody’s S&P AA– A+ A A– BBB+ BBB BBB– BB+ 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 Sales finance Total financial assets for the sales finance segment increased 3.2% to 10.912 trillion yen in fiscal year 2017 from 10.571 trillion yen in fiscal year 2016. The sales finance segment generated 215.3 billion yen in operating profit in fiscal 2017 and 183.9 billion yen in fiscal year 2016. Investment policy Capital expenditures ensure the Company’s future competitiveness. In fiscal year 2017, capital expenditures totaled 485.4 billion yen, which was 4.1% of net revenues. R&D expenditures totaled 495.8 billion yen. R&D Expenditures (Billions of yen) 500.6 506.1 531.9 490.4 495.8 4.8% 4.8% 4.4% 4.4% 4.4% 4.4% 4.2% 4.2% 4.1% 4.1% 540.0 4.5% 4.5% 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. As a result, the total dividend for fiscal year 2017 was 53 yen per share. The dividend payment plan for fiscal year 2018 is 57 yen per share, given the business outlook, risks and opportunities for the year. Dividend per share (Yen) 60 45 30 15 0 57 53 48 42 30 33 2013 2014 2015 2016 2017 (Outlook) 2018 (FY) 2013 2014 2015 2016 2017 (Forecast) 2018 (FY) Fiscal Year 2018 Outlook (China JV Equity Basis) Capital Expenditures (Billions of yen) 600 536.3 463.1 479.0 469.3 485.4 5.1% 5.1% 4.1% 4.1% 3.9% 3.9% 4.0% 4.0% 4.1% 4.1% For fiscal year 2018, Nissan expects its global sales to increase 2.7% from the prior fiscal year to 5.925 million units. Based on this sales forecast, the Company’s financial forecast, using a foreign exchange rate assumption of 105 yen to the dollar, is as follows: 540.0 4.5% 4.5% Nissan’s Fiscal 2018 Outlook n Net sales n Operating profit n Net income 12.00 trillion yen 540.0 billion yen 500.0 billion yen 2013 2014 2015 2016 2017 (Forecast) 2018 (FY) China JV equity basis % of net sales (China JV equity basis) 600 450 300 150 0 450 300 150 0 PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 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 15 FY2016 As of March 31, 2017 FY2017 As of March 31, 2018 (Millions of yen) FY2016 As of March 31, 2017 FY2017 As of March 31, 2018 (Millions of yen) 1,122,484 808,981 7,340,636 121,524 911,553 73,409 288,199 156,457 746,650 (107,344) 11,462,549 609,769 3,342,305 599,626 177,394 546,127 5,275,221 127,807 1,158,676 16,036 8,456 176,354 197,757 (1,848) 1,555,431 6,958,459 18,421,008 1,134,838 739,851 7,634,756 71,200 880,518 91,813 318,218 152,452 775,771 (116,572) 11,682,845 600,675 3,392,134 598,780 209,237 464,808 5,265,634 128,782 1,264,532 12,654 10,552 175,940 207,764 (1,802) 1,669,640 7,064,056 18,746,901 Liabilities Current liabilities Trade notes and accounts payable Short-term borrowings Current portion of long-term borrowings Commercial papers 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 Shareholdersʼ 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 1,578,594 980,654 1,339,982 430,019 368,101 31,565 1,112,591 2 110,086 1,102,626 7,054,220 1,493,159 3,103,803 20,398 601,398 128,394 369,346 483,154 6,199,652 13,253,872 605,814 817,464 4,349,136 (140,697) 5,631,717 57,778 7,154 (13,945) (687,841) (133,016) (769,870) 391 304,898 5,167,136 18,421,008 1,646,638 802,952 1,152,719 402,918 396,637 25,766 1,114,053 2 115,568 1,087,133 6,744,386 1,887,404 3,053,712 16,248 395,026 120,210 352,861 488,319 6,313,780 13,058,166 605,814 815,913 4,908,747 (139,970) 6,190,504 68,179 9,537 (13,945) (733,571) (135,967) (805,767) 84 303,914 5,688,735 18,746,901 PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 16 FY2016 (From April 1, 2016 to March 31, 2017) (Millions of yen) FY2017 (From April 1, 2017 to March 31, 2018) 7,114 111,502 9,788 8,663 137,067 9,256 11,253 3,865 5,532 ― 6,737 36,643 965,157 275,818 (11,179) 264,639 700,518 37,019 663,499 10,408 ― ― 2,184 12,592 4,149 10,644 259 16,166 13,612 7,321 52,151 710,743 140,571 (193,485) (52,914) 763,657 16,765 746,892 Special gains Gain on sales of fixed assets Gain on sales of shares of subsidiaries and affiliates Gain on transfer of business Other Total special gains Special losses Loss on sales of fixed assets Loss on disposal of fixed assets Loss on sales of investment securities Impairment loss Compensation for supplier investment 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 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 gain Miscellaneous income Total non-operating income Non-operating expenses Interest expense Derivative loss Exchange loss Credit liquidation costs Miscellaneous expenses Total non-operating expenses Ordinary income FY2016 (From April 1, 2016 to March 31, 2017) 11,720,041 9,422,551 2,297,490 (Millions of yen) FY2017 (From April 1, 2017 to March 31, 2018) 11,951,169 9,814,001 2,137,168 313,406 79,125 131,059 251,378 402,202 20,809 4,083 50,773 88,550 1,818 212,059 1,555,262 742,228 15,868 9,416 148,178 33,419 20,914 227,795 14,128 ― 65,289 10,906 14,967 105,290 864,733 304,328 74,569 122,135 251,593 410,156 17,883 4,413 53,928 90,461 1,057 231,885 1,562,408 574,760 21,092 6,663 205,645 ― 15,938 249,338 12,670 5,001 26,772 13,854 15,499 73,796 750,302 PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 Consolidated statement of cash flows (China JV Equity basis) Cash flows from operating activities Income before income taxes 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 Increase (decrease) in allowance for doubtful receivables Provision for residual value risk of leased vehicles (net changes) Interest and dividends 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 Loss (gain) on sales of shares of subsidiaries and affiliates Loss (gain) on transfer of business 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 Retirement benefit expenses Payments related to net defined benefit assets and liability 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 FY2016 (From April 1, 2016 to March 31, 2017) (Millions of yen) FY2017 (From April 1, 2017 to March 31, 2018) 965,157 391,798 22,910 426,349 5,532 22,959 63,049 (25,284) 119,310 (148,178) 2,142 11,253 3,865 (111,502) (9,788) (42,584) (765,894) (32,660) 296,060 26,707 (24,517) 190,498 1,387,182 24,467 127,772 (117,213) (86,735) 1,335,473 710,743 388,427 31,264 469,540 16,166 12,558 40,716 (27,755) 168,206 (205,645) (6,259) 10,644 (53) ― ― 73,149 (530,842) 9,612 108,330 11,028 (24,025) 76,234 1,332,038 28,203 134,300 (159,578) (263,713) 1,071,250 17 FY2016 (From April 1, 2016 to March 31, 2017) (Millions of yen) FY2017 (From April 1, 2017 to March 31, 2018) (2,119) (503,745) 72,814 (1,293,840) 512,375 (1,581) 2,096 (270,228) ― 97,055 4,779 9,582 (4,814) (1,377,626) 16,119 1,724,688 878,641 (1,369,795) (344,009) 1,275 (277,419) 128 (26,265) (182,803) (99,950) ― 320,610 (34,875) 243,582 992,095 5,447 1,241,124 3,868 (398,797) 39,742 (1,430,561) 645,167 (555) 732 (26,207) 10,168 ― 9,124 ― (400) (1,147,719) (147,508) 1,413,908 858,002 (1,463,828) (362,911) ― (6) 1,357 (34,633) (197,541) (15,757) (14,273) 36,810 4,535 (35,124) 1,241,124 ― 1,206,000 Cash flows from investing activities 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 subsidiariesʼ shares resulting in changes in the scope of consolidation Net decrease (increase) in restricted cash Proceeds from transfer of business 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 shareholders Purchase of treasury stock Proceeds from sales of treasury stock Repayments of lease obligations Cash dividends paid Cash dividends paid to non-controlling interests Purchase of treasury stock of subsidiaries 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 the end of the period PERFORMANCENISSAN MOTOR CORPORATION ANNUAL REPORT 2018 EXECUTIVES DIRECTORS OF THE BOARD AND AUDITORS CORPORATE OFFICERS 18 Representative Directors Directors Carlos Ghosn Chairman of the Board Hiroto Saikawa Greg Kelly Hideyuki Sakamoto Toshiyuki Shiga Bernard Rey Keiko Ihara* Auditors Hidetoshi Imazu Motoo Nagai Jean-Baptiste Duzan* Masakazu Toyoda* Tetsunobu Ikeda * Outside Director Shigetoshi Andoh (As of June 30, 2018) CHAIRMAN OF THE BOARD EXECUTIVE COMMITTEE MEMBERS Carlos Ghosn Hiroto Saikawa Philippe Klein Jose Munoz Yasuhiro Yamauchi Christian Vandenhende Hiroshi Karube Hideyuki Sakamoto Chairman of the Board Carlos Ghosn President and Chief Executive Officer Hiroto Saikawa* Chief Planning Officer (CPLO) Philippe Klein* Global Product Planning Global Program Management Global Market Intelligence Vehicle Information Technology Chief Performance Officer (CPO) Jose Munoz* Seven management committees Chairman of Management Committee for China Business Units Chief Competitive Officer (CCO) Yasuhiro Yamauchi* Chief Quality Officer (CQO) Christian Vandenhende* Quality and Total Customer Satisfaction Senior Vice Presidents Hitoshi Kawaguchi Corporate Vice Presidents Joji Tagawa Takao Asami Yusuke Takahashi Chief Financial Officer (CFO) Hiroshi Karube* Finance Control IR M&A Support Executive Vice President Hideyuki Sakamoto* Manufacturing & SCM Operations Executive Vice President Tsuyoshi Yamaguchi Alliance Technology Development Executive Vice President Daniele Schillaci* Global Marketing & Sales Global Dealer Network Global Product Marketing Zero Emission Vehicle & Battery Business Chairman of Management Committee for Japan/A&O (Japan, Asia, Oceania Business) Jun Seki Roel De Vries Jose Luis Valls Tony Laydon Takashi Hata Mitsuro Antoku Roland Krueger Toshihiro Hirai Arun Bajaj Hiroshi Nagaoka Asako Hoshino Akihiro Otomo Rakesh Kochhar Kent O’Hara Hari Nada Leon Dorssers Noboru Tateishi Atsuhiko Hayakawa Alfonso Albaisa Yoshikazu Nakai Peyman Kargar Denis Le Vot Kinichi Tanuma Haruhiko Yoshimura Gianluca De Ficchy Yukio Ito Kunio Nakaguro* Atul Pasricha Makoto Uchida Catherine Perez Jose Roman Carlos Servin Tony Thomas Seiji Honda Eiichi Akashi Ivan Espinosa Shohei Yamazaki Fellows Haruyoshi Kumura Shunichi Toyomasu (As of June 30, 2018) Daniele Schillaci Kunio Nakaguro * Executive Committee Members NISSAN MOTOR CORPORATION ANNUAL REPORT 2018MANAGEMENT NISSAN SUSTAINABILITY 2022 Nissan launched Nissan Sustainability 2022, a plan to reduce the company’s environmental impact, strengthen diversity and inclusion, and enhance governance, in line with the company’s midterm plan, Nissan M.O.V.E. to 2022. The company is working to achieve a world with zero emissions and zero fatalities by strengthening its environmental, social and governance initiatives. Corporate vision Nissan : Enriching people’s lives website Click here for more information on the 2018 Sustainability Report. Realizing a zero-emission, zero-fatality society Environmental Initiatives Nissan is on the fourth generation of its Nissan Green Program, a series of midterm environmental action plans first launched in fiscal 2001, implementing its environmental initiatives to create a zero emission society. With an overarching vision set for 2050, the plan focuses on providing value to society by addressing climate change, resource dependency, air quality and water scarcity towards 2022. Social Initiatives Nissan has long considered driving safety and corporate philanthropy to be the hallmarks of its social initiatives. As part of its Nissan Intelligent Mobility strategy, Nissan is introducing advanced safety technologies and autonomous driving technologies such as ProPILOT, to advance the ultimate goal of reducing fatalities involving Nissan vehicles to zero. Nissan is also focused on promoting diversity to become a truly inclusive company where its diverse employees can achieve their potential. 19 Click here for more information about each of these three fields. website website website Governance Initiatives Nissan is improving its governance through an enhanced compliance system. As part of this effort, the company appointed two new indepen- dent directors at the beginning of the current fiscal year. By reinforcing governance, Nissan is contributing to the growth of the company while increasing its stakeholder value. website Click here for more information about Nissan’s risk management. Nissan Sustainability 2022 E Environmental S Social G Governance NISSAN MOTOR CORPORATION ANNUAL REPORT 2018MANAGEMENT