Lavanya Wadgaonkar: Good afternoon, everyone. Welcome to Nissan's First Quarter Financial Results for Fiscal Year 2026. I'm Lavanya, and I'm from Nissan Global Communications. Today's session will run for 1 hour. We're meeting here and the session is also being live streamed. Let me start by introducing our speakers for today, Ivan Espinosa, Chief Executive Officer; George Leondis, Chief Financial Officer. I will hand over to Ivan to begin the session. Ivan?

Ivan Espinosa: Thank you, Lavanya. Good afternoon, everyone, and thank you all for joining us today here in our global headquarters. Before we begin, I would like to express my heartfelt sympathies to all of those affected by the earthquake in Kumamoto Prefecture. Our thoughts are with the impacted communities, and we sincerely hope for everyone's safety and swift recovery. I would also like to thank our colleagues and our partners for their resilience, dedication and support during this challenging time. I will now begin with an update on Re:Nissan before I turn it over to George to review our first quarter results. Re:Nissan is gaining traction with tangible cost improvements and momentum building in key markets. At the same time, we are navigating significant industry challenges and are taking decisive actions to strengthen the resilience, agility and competitiveness of our business. When we share our full year results for fiscal year 2025, we demonstrated the impact that our actions have delivered. We made measurable progress in our cost management efforts to build a new foundation for Nissan's future. Our strategy is now translating into momentum in key markets around the world. However, global industry challenges, particularly in China and the Middle East, have affected parts of our business. This reinforces our focus on building agility and speed into the business to mitigate the impact of shifts and respond to opportunities. Now first, let's talk about market momentum. The actions we have taken to strengthen our brands and connect with customers is shown in key markets like the United States and Japan. Our business in the U.S. continues to deliver strong retail performance with sales growing more than 9% year-on-year. This growth is supported by the vehicles produced in the market. Pathfinder sales have increased 32% as the model delivered its best quarter ever, a significant achievement given the 40-year history of the nameplate in the U.S. Total deliveries of the Frontier pickup grew 35%. Nissan Rogue grew nearly 39% as we approach the launch of the all-new model with hybrid e-Power technology later this year. Rogue also earned the top spot in J.D. Power initial quality study, which was just released last month. We also see Infiniti making good progress as QX80 delivered its best Q1 sales performance in the model's history. Our all-new QX65 SUV is now on sale, bringing new buyers into Infinity showrooms. Importantly, our results were supported by incentive effectiveness, ensuring that spending remains targeted and aligned with growth. In Japan, we are seeing our strong product lineup and enhanced marketing efforts beginning to pay off after a challenging period. Sales in the quarter grew 1%. Deliveries of the Roox increased by 52%. We also have 2 important new models, and we are seeing very strong demand building up. Since the reveal of the all-new Kicks with e-POWER technology, we have collected more than 11,000 customer orders. Our Elgrand premium van is off to a good start with more than 8,000 orders and deliveries starting last month. These are very strong indications that our plan is working, driving sales momentum in Nissan. And we have seen that continue with July sales pacing ahead of the prior year totals. We are sincerely grateful to our customers for the renewed trust they are placing in our brand. That said, China remains a significant challenge for Nissan and the broader industry. In the first half of China's fiscal year, the total industry volume declined 22% year-on-year, reflecting a rapidly evolving and increasingly competitive market. Against that backdrop, Nissan's performance has been relatively resilient. In Q1, retail sales increased 7.2% year-on-year, supported by strong momentum from our recent N-Series launches. Nissan's total first half sales declined 15%, outperforming the broader industry decline and resulting in a modest gain in market share. The market transition to new energy vehicles is accelerating rapidly. We have strengthened our position through several recent model launches, and our focus is now to accelerate the shift to NEVs and capture the opportunities created by this transition. Encouragingly, our NEV lineup is already gaining traction with Chinese customers, led by the N6, the N7, the NX8 and our Frontier Pro. We are also expanding our export business with shipments starting from July, creating additional opportunities beyond the domestic market. The uncertainty in the Middle East is another major challenge. While customer demand for Nissan's vehicles remains resilient, we have seen disruptions to logistics and supply chains. We have identified alternative shipping lanes into markets in the region, mitigating some of the impact. However, elevated logistics costs associated with these alternative routes and the ongoing geopolitical uncertainty are expected to moderate profitability until supply chains normalize. Now let's shift to an update on Re:Nissan cost management actions. In Q1, we saw the impact of our efforts grow further with a combined total of JPY 60 billion in fixed and variable cost savings recognized. Our 20% reduction target in engineering cost per hour has been achieved 3 quarters ahead of schedule. We have seen strong expense control, deliver fixed cost improvements. On variable costs, we are driving greater implementation of ideas generated by our Obeya activities, working in partnership with teams across the company and with our suppliers. Combined with the JPY 255 billion in total fixed and variable reductions that we achieved in FY '25, this brings the running impact linked to Re:Nissan actions to around JPY 315 billion. But the work is not done. Our actions ensure that we remain on track to deliver JPY 500 billion cost reduction by the end of this fiscal year, and we will continue forward. Now I would like to hand over to George to take you through the Q1 results. George?

George Leondis: Thank you, Ivan, and good afternoon, everyone. As Ivan outlined, our first quarter results reflect both the momentum we are building and the realities of a challenging operating environment. For the 3 months to June 30, Nissan sold over 700,000 units. Unit sales were almost flat year-on-year, which is a solid result given the competitive global environment and continued volatility in the Middle East. Turning to our key markets. First, China. Unit sales rose by 7.2% as demand for Nissan's new energy vehicles enabled us to withstand increasingly challenging market conditions in the period from January to March. From April to June, the market conditions weakened further and Nissan sales declined by 15%, but this was versus a 22% decline in total industry volume in the first half. In Japan, we saw early signs of recovery with unit sales rising by 1.3% and strong customer demand for new models such as Kicks. In North America, sales were up by 4.2% and increased by 9.6% in the U.S. market, thanks to contributions from the Rogue, Pathfinder and the Frontier. In Europe, sales declined by 14.6% amid intense competition and portfolio optimization. In the Rest of the World, sales declined by 16.8%, driven primarily by disruption in the Middle East that Ivan outlined earlier. Overall, unit sales fell by 2.5% year-on-year, excluding China, and production fell by 4% as we adjusted output to meet demand. Q1 financial performance. Turning to our financial performance. Consolidated net revenues rose by 9.5% year-on-year, primarily driven by favorable foreign exchange rate with additional support from improved revenue quality through pricing and improved product mix. Operating profit reached JPY 77.9 billion, an increase of JPY 157 billion from the prior year. Net income was JPY 3.8 billion, reversing losses in the previous year quarter. CapEx was approximately JPY 114 billion. While this is an overall reduction, we actually increased CapEx spend in support of new product programs. R&D spending was JPY 120 billion, demonstrating our continued investment discipline as part of the Re:Nissan plan. In the automotive business, including eliminations, net revenue was JPY 2.6 trillion. Automotive operating loss was JPY 8.3 billion, near breakeven, including the impact of the cost of tariffs. Automotive free cash flow improved to JPY 324 billion, an increase of nearly JPY 67 billion year-on-year. However, excluding onetime impacts in the first quarter, the improvement in our free cash flow was actually JPY 100 billion. At the end of the prior period, net cash stood at a healthy JPY 970 billion. We retain solid liquidity with more than JPY 2.1 trillion of automotive cash and cash equivalents on hand. I will now explain the operating profit bridge. Foreign exchange contributed a positive impact of JPY 35 billion, largely driven by the depreciation of the yen against the U.S. dollar. Higher raw material costs, primarily for aluminum and copper had a negative impact of JPY 24 billion. Tariffs had a positive impact of JPY 18.3 billion. Sales performance improved by JPY 23.7 billion due to favorable pricing and selling expenses, particularly offsetting the raw material headwinds I just mentioned. Monozukuri savings contributed around JPY 82 billion, reflecting Re:Nissan driven variable cost reductions. Inflation remained a headwind with a negative impact of JPY 14 billion. One Time gains contributed JPY 32 billion, including JPY 61 billion related to FY '25 U.S. tariffs clawbacks. Other items contributed a positive JPY 4 billion. Taking all these factors together, operating profit reached JPY 77.9 billion. I will now turn to our outlook for the current fiscal year. Although sales volumes were broadly flat in the first quarter, we are indeed revising our full year sales volume outlook to 3.15 million units. This reflects the impact of the deterioration of industry sales in China and the continued uncertainty in the Middle East. As a result, we are also revising our production outlook to 2.8 million units for the fiscal year. The outlook for fiscal 2026, we reaffirm our outlook for revenue of JPY 13 trillion and we reaffirm our operating profit of JPY 200 billion. This represents revenue growth of 8.3% year-on-year and an operating margin of 1.5%. Net income is expected to be JPY 20 billion. The variance analysis. I will now explain the key factors behind our maintained profit outlook. We expect continued pressure from raw material costs, particularly for aluminum, copper and oil-related materials, especially as purchase prices still remain elevated. In the Middle East, geopolitical tensions and shipping constraints are expected to persist, resulting in higher logistics costs and pressure on volumes despite the resilient customer demand. Given the evolving situation, we continue to monitor the impact closely and we'll update our assessment as visibility improves. There may also be some upside from foreign exchange if the yen remains at current levels. In addition, onetime gains recognized in the first quarter, together with offsetting factors are expected to help mitigate some of these headwinds. Taking these factors all into account, we remain confident in our ability to balance those risks and opportunities, and therefore, we reaffirm our operating profit outlook of JPY 200 billion. That concludes my remarks. I will now hand back to Ivan to summarize the quarter.

Ivan Espinosa: Thank you. Thank you, George. To sum up, we see signs of progress in our first quarter. We grew sales in the important U.S. and Japan markets. Our operating profit improved by JPY 157 billion with automotive operating profit nearly breaking even, including tariff and positive net income is achieved. Cost reduction activities delivered more than JPY 60 billion, keeping us on track to reach JPY 500 billion by the end of the fiscal year. And we maintained automotive net cash at around JPY 1 trillion level. We are taking actions to manage our inventory and leverage our NEV lineup to combat the industry declines in China. And in the Middle East, cost increases to overcome logistics and supply chain challenges will continue to have an impact on profit, even though demand for Nissan in the region remains robust. With the progress we are seeing, combined with onetime impacts, we expect to offset these significant challenges. All our financial targets such as JPY 200 billion operating profit and net income of JPY 20 billion are reaffirmed. Our revised volume outlook primarily reflects the changed market conditions in China. Delivering this outlook will take focused market-specific strategies in each region. In the U.S., we will continue to leverage our locally produced vehicles to grow our sales and prepare for the launch of very important new models like the new Nissan Rogue Hybrid e-POWER in the second half. In Japan, we will build on our recovery actions and leverage interest in exciting new models like Kicks and Elgrand to return to a sustainable double-digit market share. In China, together with our JV partner, we will manage inventories in line with the market and rebalance our sales mix to grow our NEV sales with models like the new NX8 joining N6, N7 and the Nissan Frontier Pro. This better positions us for growth in 2027. One of the biggest shifts under Re:Nissan is how quickly we are responding to challenges and adapting to changing market conditions. I'm truly energized by the commitment I see from the Nissan teams around the world. Whether supporting growth in our key markets, responding to customer demand in the Middle East or strengthening competitiveness across our business, we are taking the actions needed to deliver our outlook. Thank you very much for your attention.

Lavanya Wadgaonkar: Thank you, Ivan. We'll now open the floor for Q&A. [Operator Instructions]

Hans Greimel: Hans Greimel from Automotive News. Thank you for calling. I'm wondering if you can tell us a little bit more about how important North America will be for offsetting the sales decline you're going to see or you're predicting globally. You still kept the outlook unchanged for North America. What makes you think that you can hold that? And maybe you can give us an outlook for the U.S. in particular, for this fiscal year, a U.S.-specific fiscal year target maybe. How important is that U.S. stronghold now to offsetting China and the Middle East in particular?

Ivan Espinosa: Yes. Thank you, Hans. And you've heard me before, I'm not in a race for volume. I'm recovering the fundamentals of the company. And as such, of course, we need to keep performing in North America. The traction is very good, very strong, as you heard, 9% growth year-over-year, and we have very strong performance in the different vehicle lines. It means the strategy is working, and we will continue focusing our efforts in the same strategy, building cars in North America, cars that are tariff-free, cars that are profitable, and we will continue with this sharp focus on the strategy. Specifics, I think you saw our outlook for volume. This is what we have announced, and we are going to continue pushing on that direction, Hans. Yes. This is the -- as for the importance, of course, every market is important. There is no one market more important than the other when you're running a business like ours. So every single market has to deliver, and this is what we are focusing on.

Hans Greimel: Can you give a breakdown of the U.S. versus North America?

Ivan Espinosa: No, I don't think we're giving a breakdown with the U.S. and the total North America markets today, Hans.

Hans Greimel: Can you give us maybe a percentage range of increase?

Ivan Espinosa: Again, we are not giving a breakdown. Thank you for the question.

Lavanya Wadgaonkar: If I go to the person -- third person from the right, please.

Unknown Analyst: [Interpreted] [indiscernible] speaking. Talking about outlook in China, which was revised. And it has been 3 months you are changing the number. I think there was a sharp change in China. What was different from your assumption? What didn't you foresee? Is it a change in the policy or regulation? Or is it about macro economy? In the past 3 months, there was a reason why you had to make a revision. And what was the particular reason behind this?

Ivan Espinosa: Thank you. Yes, we see a couple of things. One is the economy itself has slowed down at the beginning of the year, particularly the second quarter. Second is the Iran war had an impact on the fuel costs, and this further accelerated the shift to NEV -- and this is basically what is driving this behavior change in the market. And as such, what we're doing is -- the good thing is we have a product ready. So we have NEVs that are ready and are performing well. What we have to do is to shift quickly our inventory into more NEV product, together with a strong commercial policy around NEVs that we are putting in place. We have a regionalized approach versus a year ago, we were operating in China with one nationwide commercial policy. We are moving away from that into a more regional-oriented commercial policy because depending on the part of the country that you're looking at, some provinces are a lot more NEV heavy and some provinces are still a bit more heavy on ICE. So you cannot have one commercial policy for the whole country. And what we're doing is running the business on a more regionalized approach. So this is what we're doing. And as I said, this is what made the change, both the impact on the TIV as well as the shift on the mix to more NEV product demand. I hope that answers the question.

Unknown Analyst: [Interpreted] Okay. In relation to this earlier question, in Re:Nissan, 1 million units is the number that you are pursuing. In order to attain this number, Chinese circumstances should be better than what we see today. In order to make things better, what do you need? What is visible until when will the circumstances remain? Is there any visibility that will help you increase and attain 1 million units?

Ivan Espinosa: One clarification. We don't have a 1 million target for Re:Nissan in China. We gave a long-term ambition of 1 million, combining domestic sales plus some exports. So this is what we aspire to achieve. Now how to get there? Of course, we need to push more on the quick shift to NEV, and we need to consistently deliver products that are hitting the market the way our NEVs are doing. We had also -- we presented a couple of SUVs in the motor show in Beijing in Shanghai Motor Show, we presented these 2 products that are coming quite soon, later this year, and the reception of those products was quite strong. So we expect to continue building on the back of new product with this regionalized approach. And we will start also the exports quite soon around end of second half of this year, we will start the deliveries of products outside of China, starting with the N7 to some markets as well as the Frontier Pro and the NX8 will follow. So with these combined actions, we expect that the volume will gradually continue growing in the midterm. Thank you. Thank you for the question.

Lavanya Wadgaonkar: Thank you. If we go to the first person on the third row.

Unknown Analyst: [Interpreted] NHK Taruno speaking. Kumamoto earthquake impact, what was it? In Fukuoka Prefecture, there are 2 production you have announced to suspend operation. Will this result in the suspension of operation in other plants elsewhere? Will this be lasting? And what is the visibility and projection with regards to the impact of the earthquake in Kumamoto?

Ivan Espinosa: Thank you for the question. We are monitoring the situation very closely. It's evolving. At the moment, the visibility we have is that we will have some partial stops this week and the visibility is around 5,000 units that we are still checking and scheduling to see how quick can we recover them. But again, the situation is quite fluid, and we will continue sharing information with you as we get more clarity. Thank you.

Lavanya Wadgaonkar: Thank you very much. If we can come to the right, second row.

Unknown Analyst: [Interpreted] I -- my name is Takamura. I have 2 questions. First of all... Performance outlook was maintained. What's the reason? Volume target was reduced. But despite the reduction in volume outlook, you maintained the performance. And I'm focusing on Page 13. You said multiple positive factors. Can you elaborate? That's my first question.

Ivan Espinosa: Yes. The volume from China has a small impact in our operating performance or operating profit because the way we consolidate the business. Maybe George can give more detail if needed. But this is why you don't see a decrease in our operating profit. On top, in China, we expect the volume to start recovering in the second half of the year as well. We see that the TIV might start recovering according to some of the forecasts that we are reading. So we expect that the volume will help stabilizing a bit in the second half of the year. And we have already started, of course, cost controlling measures in China as well. So on the operating side of operating profit, we won't see an impact. That's why we are confident to continue with our outlook. and also because we see strong performance in some markets as we explained earlier during the presentation. Thank you for the question. I don't know, George, if you want to complement.

Hans Greimel: If I may add, Ivan, thanks for the question. Yes, we are reaffirming our outlook of JPY 200 billion. In the first quarter, we generated JPY 78 billion almost with some onetime impacts in there. If you take out those onetime impacts, the core business is delivering somewhere around JPY 30 billion or JPY 40 billion. And so that's despite the headwinds we're facing from the Middle East as well as the raw materials. And we're, in fact, able to price some of the raw material impact that hit us in the first quarter already. And a lot of that pricing is indeed in the U.S.A. So that goes to show we're improving the situation in the U.S.A. and we're offsetting raw material, plus we've got the U.S. tariffs. There's a program to continue to find opportunities in U.S. content. And we took some of those as onetime impacts in this quarter in relation to last year's U.S. content, but we've got more to come. So notwithstanding the issues we're facing in the Middle East, notwithstanding the issues we're facing with raw materials, we've got those opportunities plus FX -- Forex at the current rates, anything above the JPY 150 is going to reap rewards for us. And even with the intervention that we've seen in the last couple of days, we're hovering at around JPY 156 to the dollar. So we feel confident that, that's a reaffirmation of our outlook. Thank you.

Unknown Analyst: [Interpreted] okay. The second question, may I -- U.S., you were talking about that then. U.S. and Japan made a coordinated intervention to buy Japanese yen. While there are uncertainties in the rate. How will this impact your performance or projection? And how -- what is your assumption on Japanese and U.S. dollars? And if possible, this JPY 150 after buying before -- this was determined before the coordinated intervention or did you adjust it after the intervention was made?

George Leondis: No, our outlook -- I mean, we're constantly reviewing our outlook. We take it at a point in time. Obviously, we've been monitoring the Forex. We saw the news like you did that there could have been an intervention. In fact, we have done some partial hedging. We did early in the year for this financial year. And we're confident that, that hedging protects us on the downside, and we're able to make sure we're mitigating our risk if it falls below certain levels. So that's one of the actions we took well prior to this intervention. But at these current rates, we see opportunity into the outlook. And on top, as I said, I reiterate, we've been taking pricing, and we believe that the market itself and our competitors will not stand still. The -- and they've shown already around the world the propensity to increase prices for the raw materials impact. So that's how we're managing this, and we feel confident the balance will give us that outlook. Thank you.

Lavanya Wadgaonkar: Thank you. If you come to the middle row, first person in the second row.

Unknown Analyst: [Interpreted] [indiscernible] speaking. I have 2 questions as well. Today, you talk about Re:Nissan progress. And this Re:Nissan, you consolidated 7 plants. Will there be further restructuring of the production footprint, especially Yokohama plant. This attracted a lot of attention in the past. What is your approach here?

Ivan Espinosa: Thank you. Yes, as we have said before, we don't have any restructuring additional actions in view at the moment. Regarding powertrain, as I have answered before, we are looking at our strategy for the future. It's very fluid because of what we see happening in different markets around the world. We just spoke about China with all the NEV shift. In the U.S., we see heavy hybridization coming. And in Europe, we see acceleration of EV. So it's very hard to define one single lane at the moment. So we are looking at our strategy in detail, and we will share more details when we are ready to do so. Thank you. Thank you for the question.

Unknown Analyst: [Interpreted] I have another question. Honda with Honda, you are talking about collaboration, SDV collaboration SDV will be announced soon, at least that's what we understand or at least Honda said or [indiscernible] Said so. Where are you today with regards to this front?

Ivan Espinosa: We are discussing a lot with Honda. As we have said before, it's different layers, starting with hardware, but also looking at what layers of the different software areas we can collaborate on. And we don't have any further detail to announce today. We will come to you as soon as we are ready. Thank you for the question.

Lavanya Wadgaonkar: Thank you. If I go to the second row on the last.

Unknown Analyst: [Interpreted] [indiscernible] Speaking. I have 2 questions, too. Talking about Middle East impact, what is the latest update on the impact on Middle East? In May, you said that JPY 15 billion will be a hit on operating profit because of logistics cost increase, raw material cost increase. What was the real impact in Q1? And is there any revision on the full year forecast of the impact of Middle East?

Ivan Espinosa: Do you want to take that one?

George Leondis: Yes, I can take that one. Thanks for the question. It's very important for us, this situation, and we have a task force that monitors it, and we are taking all sorts of mitigating actions trying to ameliorate the impact on our business. Now if you may recall, in the May announcement, we had projected at that time despite the uncertainty that we believe the impact on our business would be around 19,000 units deficit relating to the Middle East market alone. In the first half and also an impact of around JPY 15 billion in the first half. And we were always projecting out first half because of also a lot of actions we were taking to rightsize production and in an attempt to reallocate vehicles as much as we could to other markets. Now I will talk first half again. So you have that yardstick. And in the first half this year, we're expecting an impact of around JPY 20 billion and on vehicle sales around 18,000 units. So if you look back 3 or 4 months, we were pretty close to the forecast. And why the profit impact was a little bit higher or is projected to be a little bit higher is because of -- mostly because of logistics costs that have shown inflation to get cars into that region as we're competing with others. And on top, we have lost some aftersales business, again, due to logistics. In fact, on a positive note, we see the demand for Nissan vehicles is actually quite healthy and holding up in the market. So the more cars we can get there, we can try to reduce the impact that I just mentioned. So thanks a lot. Thank you for the question.

Unknown Analyst: [Interpreted] There's another thing, another concern, which is Chinese business. Chinese business, profitability of Chinese business in the past, one of the -- this was used to be a cash cows, but because we have been seeing a loss-making in the past, maybe the TIV is falling with intensified competition and price, and I'm sure it's very difficult to boost volume in these circumstances. Chinese market, is there any visibility to make it profitable again? Or in order to improve the profitability in China, is there any additional action that you are taking such as restructuring our production footprint or fixed cost reduction?

George Leondis: Yes. Thanks for the question on China. I think Ivan mentioned it before, but I just want to emphasize and reiterate the reduction of the China volumes and the impact that's going on in China due to the uncertain conditions, that does not necessarily impact in a material sense the operating profit of Nissan on a consolidated basis, okay? That's the first thing I will tell you. The second thing is that in the first half, under China GAAP, our business, our joint venture in China was actually breakeven, okay? So we were not losing money in the first half, January to June. And in the first quarter, we actually made a little bit of money on the operating profit. Now where the business impacts Nissan consolidation is in the net income because we equity account our JV, a 50% JV interest in DFL. And on that, up to the end of the first quarter and indeed first half, we're not expecting a deviation to our original expectations on that. And we're monitoring closely now how this adjustment of volume, as we've announced, is going to impact the second half of the net income of the China JV. And it's within our projection of net income that I mentioned before, JPY 20 billion is including that adjustment regarding the equity interest that we have in the joint venture. Why are we still confident we can do that? Because as Ivan mentioned, there's a lot of countermeasures in place. I won't reiterate because I'll end up requoting them, but there's a lot going on where our teams are leading initiatives to ensure that we try and ameliorate as much as we can that adverse impact, not only on the Chinese profitability, but on the net income of Nissan Motor consolidated. Is that okay? That answers your question? Yes. Thank you.

Lavanya Wadgaonkar: Thank you. Can you come to the middle row, third row, please?

Unknown Attendee: [Interpreted] Akita-san Newspaper. European business is the subject of my question. Operating gain and losses. Operating losses continue to be booked. What's the backdrop of losses in Europe? Structural reform is not making progress. Is that the reason? Or Sunderland production system has been reviewed and -- is that going to have a positive impact to the outlook of profitability?

George Leondis: You can hear me, right? -- the mics. So yes, I guess you might have seen -- thank you. You might have seen the Tanshin document, and you're referencing that question to the Tianjin document. And the losses, in fact, that you see in that document are pretty flat from 1 year to the next. And the European business is obviously facing competitive pressure at the moment and the influx of, in particular, Chinese competition. The bright sparks for our business are that we are launching and progressively ramping up the production of leaf. It's the same leaf that is available in Japan. That's being launched in Europe this year. We've launched the Micra, and it's going very well in the marketplace. And these 2 cars are hitting the sweet spot in terms of the TIV, which is growing. That's the first thing. The second thing is we have announced restructuring in Europe and some -- there's 2 initiatives going on. We are rightsizing the footprint of the business to ensure that we can reduce the breakeven point of the business to a lower level than it is today. And on top, we are discussing that we publicly announced we're discussing with another OEM in fact Chery. We're discussing a contract manufacturing opportunity in Sunderland to absorb some of the capacity that we have there. It's a very efficient plant. It's very efficient compared to other European players. It has a highly motivated and highly skilled workforce. -- and that's the attraction that obviously other third parties have. That particular initiative can continue to drive down cost per unit and increase the utilization ratio of that plant. And combined with the new models we're launching and the restructuring, we're aiming to deliver in the future a better performance and return to profitability in the European market. I'm not sure, Ivan if I...

Ivan Espinosa: No, I think it was clear. Maybe I don't know if that answered your question, [indiscernible]

Unknown Attendee: [Interpreted] I have a related follow-up question. What about the competition against Chinese manufacturers in Europe? From Nissan's Chinese plants, are you planning to export from your Chinese plants to Europe? Is that an option? And what about your co-working with Renault? Are you planning to use that in order to strengthen your product lineup?

Ivan Espinosa: And the 2 answers are yes. So we are looking at every single opportunity, Akita-san . We have product built in China that could be marketed in Europe in the future. So yes, this is one opportunity. And of course, we will continue working with our partner, Renault. The products that we are getting from them are proving to be successful. We started the Micra a few months ago, and it's gaining a lot of good traction. It's very well received. Conversely, we also launched Tekton in India, and it's also getting very good reviews. So we will continue working with them. And at the same time, as I said, we have products built in China that we could utilize. As I've said before, the objective of exporting cars from China is to defend ourselves from the Chinese in the short term. And in the short term, this is something that we could potentially do. In the mid-, long term, of course, there's a heavier transformation that has to happen in order for us to be defending ourselves in front of Chinese players. And this is what we're working in parallel as well. So this is what I can tell you about that one, Akita-san. Thank you for the question.

Lavanya Wadgaonkar: Thank you. Let me go to the gentleman over there.

Unknown Analyst: [Interpreted] My name is Nakamura. I have a couple of questions. First one is for Ivan-san. Re:Nissan, how do you assess Re:Nissan as of today? And what is the projection going forward? So far, JPY 355 billion of improvements in costs were made. Having said that, JPY 500 billion is full year objective. So you need to do more. So what is the -- how do you assess the current status in order to reach JPY 500 billion, is there any challenges that you need to overcome? This is my first question for Ivan-san.

Ivan Espinosa: Thank you. So yes, I think the performance is showing the resilience and the dedication of our teams. We are ahead of plan in several areas of cost transformation. One example is our engineering average cost per hour. We gave ourselves a target of achieving a 20% reduction by the end of the program, and we have achieved that already, 3 quarters ahead. So this is showing you the determination and the focus that the teams have on the program. So we will continue because we should not stop. If there's further opportunities, we will continue pushing to have a lower breakeven point. And then the work is on the top line. So continue to deliver good revenue. And so as long as we do the 2 things, the company's profitability will be structurally healthy and sustainable. This is what we are working on, Nakamura-san.

Lavanya Wadgaonkar: [Interpreted] Okay. There's another one in relation to what I said the other day, when you talk about long-term vision, you didn't talk about specific financial objectives, and you said that you're going to announce it at a later date. When are you going to announce the concrete numbers -- what will be the timing? What kind of target will be announced about long-term vision? You didn't give any financials last time.

Ivan Espinosa: Yes, we are working on that. And as I said before, we are expecting to come out in the second half of this fiscal year. We will let you know as soon the date is confirmed, but they will be in the second half of this fiscal year at Nakamura-san.

Lavanya Wadgaonkar: Thank you. If I go to the gentleman on the third row, first person...

Unknown Attendee: I'm [indiscernible] From Bloomberg News. I have 2 questions. Regarding the foreign exchange hedging you mentioned earlier, what specific measures have been taken? Could you share the details to the extent possible? Second question is regarding the risks and the opportunity chart on Page 13. I'd like to know the detailed figures for each item, including the Middle East impact. That's it.

Ivan Espinosa: Thank you. So as for the details on the R&Os the situation is quite fluid. What we can tell you today is that we see this balancing off. So we see the risks coming more closely to the size of opportunities that we have at hand. We are not giving details because the situation is very fluid, both in terms of Forex, raw material and the Middle East situation. And we are rather focusing on bringing as many opportunities as possible to offset those risks that are beyond our control. So this is what we are working on. So unfortunately, no detail to give you other than what we see today, the assessment is that they are very, very balanced. As for hedging on Forex, I'm sorry, but we would not disclose the details of that. You can -- I'm assuming you can easily understand. But the -- maybe George can make some comments to the extent possible, but it's complicated to give that sort of information. What we can tell you is we are in a good position with this. It's going to help us protect to further risks on the eventuality of further strengthening of the Yen. It was timely, and it's working in the way we expected it to work. So that's what we can tell.

Lavanya Wadgaonkar: If you come to the gentleman in the first row, please.

Unknown Analyst: [Interpreted] My name is Yamamoto. I have 2 questions as well. The first question is about Chinese business projection. I want details earlier, as Espinosa-san, you said that in the letter, this -- the second half of the year, things will be better. Specifically, what makes you think that it will be better in the second half of the year? Because between April and June, looking at the volume, NX8 was introduced and yet, it declined by 30%, which was very challenging indeed. So for what reason do you think things will be better in the second half of the year? First question, please.

Ivan Espinosa: We said earlier, there's 2 phenomenon happening, Yamamoto-san. One is the economy slowed down. So there was a natural contraction on the TIV. But the second one is there was a big shift from ICE to NEV. And there's not enough product on the ground to satisfy this demand. So the reason why we believe there will be a growth, and I would say a prudent growth on the TIV in the second half and more specifically probably around quarter 4 is because that's the timing at which we see the supply chain shifting into NEV. This is the normal timing that it takes in between you start producing a car, it gets distributed and you get the ability to have it on the ground. So that's what we see. So it's 2 things. One, probably there will be still a contraction in terms of TIV versus the previous market sizes. But we see that the contraction that we see today will be less so because we will have more NEV in the market to satisfy the requirements of the Chinese customers, which is what they are demanding. There's a lot of demand for NEV product as we speak. So that's the reasoning behind Yamamoto-san.

Unknown Analyst: [Interpreted] Okay. Thank you very much. Second question, which is about free cash flow, FCF. Automotive free cash flow in Re:Nissan, along with operating profit, you are focusing a lot on free cash flow. In first quarter, you came to JPY 324 billion of negative, which is almost even against the prior year. For this fiscal year, what will happen to the automotive free cash flow? What will be the level that you are projecting?

George Leondis: Yes. Thanks. That's a good question. And obviously, free cash flow for us is a top priority. And for the full year, again, I will cast back to the May announcement, where I believe I said that our automotive free cash flow we're aiming for this year, and we believe we can achieve is going to be positive, excluding the cash impact of tariffs, okay? So that's what I believe I said back in May, and I'm holding to that position. That's the first thing. I also think that based on our profile of our business, where we have a -- we are expecting a quarter-over-quarter improvement in our business, and we have a seasonal, let's say, dip in the first quarter, and we tend to generate higher cash flows in the back end of the year. I think that's going to be giving us that tailwind that will then give me the backup for my assertion that we will be positive free cash flow, excluding tariffs for the full fiscal year. And I also said, and I'm sticking to it, that based on everything we are doing, including the cost reduction initiatives that a lot of these will come in the second half of the year, the growth of our business in the second half of the year, including with the introduction of e-POWER hybrid in the U.S., the profile of our free cash flow will be much stronger in that second half. And we're tending to rely less on asset sales, but we do have opportunities in asset sales that we're working on as well, which will help to underpin that free cash flow. I reiterate also that our net cash is a very healthy position, almost JPY 1 trillion. And our gross cash facilities are in excess of JPY 2 trillion at the end of June.

Ivan Espinosa: And maybe one precision, Yamamoto-san, because you said that our cash -- free cash flow was almost even versus last year. George was explaining during his presentation that we had onetime last year, onetime gains of around JPY 50 billion. So the actual comparable number is JPY 440 billion to JPY 320 billion. So there is an improvement of over JPY 100 billion year-over-year for the quarter.

Lavanya Wadgaonkar: Thank you. If you come to the lady in the first row.

Unknown Analyst: [Interpreted] My name is Khushika. Kumamoto earthquake impact is what I would like to ask you about. Nissan subsidiaries plant, this wasn't damaged. That's what I heard. But partially, you are suspending the production operation. So I think there is a supply chain issue that was revealed. 10 years ago, there was one earthquake in Kumamoto. At that time, what kind of action did you take to prevent yourself? And these actions are still effective today. Once again, what are the new challenges that are revealed and what are the necessary action to address them?

Ivan Espinosa: Question. So thankfully, as you said, there were, first of all, no human losses, both for Nissan or our distributor partners there. So this is, first of all, the most important thing for us as we are caring about people first and foremost. So that's the best news of everything that has happened. Secondly, we see, of course, some impact, not in our facilities. We didn't have any disruption in our own facilities, neither on those of our distributor partners. But we do have some impacts in the supply chain. That's why as I was saying earlier, we have partial stops in some of the lines. Not all of the lines will be stopped, but some of the lines will be stopped partially this week. And so far, the impact we see is around 5,000 units that we're still checking how and when we can recover. As for the learnings, of course, we have unfortunately gained a lot of experience through this crisis in the past, and we are putting the same protocols in place. We have a very strong manufacturing Monozukuri team and supply chain team together with our purchasing teams, visiting the suppliers and making sure that we're providing the right support and again, taking care of people first, then, of course, trying to normalize the operations as soon as possible. This is what I can tell you today, Khushika-san.

Unknown Analyst: [Interpreted] Another one, may I ask you another question just to make sure about what you said just now. Originally, until 5th of August, you are going to suspend the production for some of the lines. It is -- this will be extended until August 7 of this week. This is my first part of question. And 5,000 units of impact that you gave from last year up to 7th of August, if you suspend the operation until August, 7, 5,000 units will be the impact that you are foreseeing?

Ivan Espinosa: What we are confirming is that we have these disruptions until the August -- 5th of August. And as I said, the partial -- all lines are stopping. And we will provide further information as soon as it becomes available, Khushika-san. Thank you.

Lavanya Wadgaonkar: Thank you. We have time for one last question, if I go to the gentleman behind.

Unknown Analyst: [Interpreted] I'm with NHK Radio. First question, I have a related question to the previous one, impact of the supply chain. Specifically, what kind of components are in short? That's my first question.

Ivan Espinosa: We are not sharing the detail today. As I said, the impact is 5,000 units, and we have this disruption until August 5. We will continue sharing information as it becomes available.

Unknown Analyst: [Interpreted] I have another question. Last month, Chinese manufacturer announced K-Car in the EV market and the K domestic market, what kind of impact will there be from this Chinese manufacturer? And does Nissan planning to take any specific countermeasures against such challenges?

Ivan Espinosa: Of course, the Chinese OEMs are a serious threat everywhere in the world. And as I was saying earlier, it will require a strong transformation. This is why we are doing what we're doing today. So today, with Re:Nissan, we're laying the foundation to be a more resilient and competitive company. And we will continue building on that in order to make a strong foundation to fight the very aggressive Chinese OEMs. This is what I can tell you. So it's very important in every single market around the world that we transform ourselves and we become more resilient and stronger in order to fight with the aggressive Chinese OEMs. Thank you for the question.

Lavanya Wadgaonkar: I can accommodate one short question, short...

Unknown Analyst: Daniel Leussink From Reuters. I just want to take it back a little bit to the U.S. market because you're preparing for the launch of the e-POWER Rogue. How important is that launch going to be for the company this year, especially financially? And say the launch would be a success. Would that be a reason for potentially upgrading the operating profit forecast for the whole year?

Ivan Espinosa: Well, whether it's important or not, of course, it's important. I think it's the most important launch of this year because of a few reasons. So one is in one of the most important markets of where Nissan operates. Second is in the largest segment in the U.S. And third, it will give us access to a market that we didn't have access before. So it will serve 2 purposes, Daniel. One, it will give us incrementality because today, there's a part of the market that we are unable to tap into because some of our competitors are already marketing at around 50% or 60% of their mix on hybrid, and we don't have that. So this will give us access to that. And second, it can help also reducing the level of spending that we have on incentives because we have many customers coming back from a lease that they want a hybrid. We don't have a hybrid. And in order for us to keep them with us, we need to sweeten the deal a little bit. So this we expect to change once we have the Rogue e-POWER in the market. And we're confident because we have received very strong feedback from media. So those that have tested it, the very specialized strong media have been very, very supportive of the product. They recognize the strengths on the quietness and the acceleration, the smooth performance. And also, of course, it has a very competitive fuel economy. So we believe we have the right product, a winning product for the U.S., and that's why we are confident that we can overcome these challenges that we have with the outgoing model. Thank you for the question.

Lavanya Wadgaonkar: With that, we will close the session for today. Thank you for joining us. If you have any further questions, we'll be happy to help As Nissan Communications team. Have a good evening. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]