Nissan 2006 Annual Report Download - page 6

Nissan Annual Report 2005
4
In terms of brand value, the overall value and
strength of our brand is increasing. Measuring
economic worth from 2003 to 2005, the
BusinessWeek Global Brand Scoreboard shows
Nissan as the fastest-growing automotive brand.
In order to succeed in the auto industry, a
company must have strong products and a strong
brand. Although improvement in those leading
indicators is not fully reflected in our current
profit, we believe that they are the drivers of our
future growth.
Outlook
Fiscal 2006 will be a year of two distinct halves.
Growth will be hard to achieve in the first half.
Volumes will be down and our operating profit will be
lower. In the second half, however, volume growth
will increase and we expect our operating profit to
accelerate as we launch eight all-new vehicles
around the world.
The most important of these introductions will be
in the U.S. We will launch all-new versions of the
Altima, Sentra and the Infiniti G35 sedan, key models
that will spearhead a product blitz that continues
beyond Nissan Value-Up. During fiscal 2006, we will
have 23 regional product-launch events around
the world.
Evolving VBM for the future
Although we have created shareholder value since
1999, in the past three years, our total return to
shareholders has been lower than the overall market.
Interestingly, our financial performances have
improved over the same period. We interpret this to
mean that we could not meet higher market
expectations raised by the success of our revival.
Even in our new phase, however, the measures we
take to create shareholder value remain the same:
further progress on key value drivers. Given our
improvement in non-financial leading indicators, we
believe that we are moving in the right direction.
By contrast, our approach to investor
communications must change to meet the needs of
a new era. When we were in our recovery phase,
investors naturally focused on our short-term health.
As long as we talked in detail about our short-term
goals and results, investors were satisfied.
As we enter a new era, investors’ needs for
transparency have changed significantly and our past
level of transparency has become insufficient. Given
that the majority of our current share price comes
from expected future free cash flow beyond three
years, it is reasonable for investors to want to
understand our future vision and strategy. This
change in focus has meant that investor
communications has become a much more important
task for the senior leadership team.
In recent years, we have seen an increasingly
volatile and challenging business environment
around the world. In this environment, only
companies that create long-term shareholder value
can survive. Therefore, value creation is no longer a
mere expression of goodwill but must be the sole
objective function of a public company. We will
continue to pursue this objective based on our VBM:
maximizing our intrinsic value and managing market
expectations. Shareholder value creation is a never-
ending quest at Nissan.
Carlos Ghosn
President and Chief Executive Officer