Presentation

Financial Results for 1H
Fiscal Year Ending March 31, 2014
October 30, 2013
NEC Corporation
(http://www.nec.com/en/global/ir)
Index
Ⅰ. Financial Results for 1H, FY14/3
Ⅱ. Financial Forecasts for FY14/3
Ⅲ. Progress on Mid-term Management Plan 2015
l Financial Results for 1H, FY14/3 (Appendix)
l Financial Forecasts for FY14/3 (Appendix)
l Reference (Financial data)
※ As stated in the July 9, 2013 announcement, “NEC to Revise Business
Segments,” NEC has revised its business segments from the first quarter of
the fiscal year ending March 31, 2014. Figures for the corresponding period
of the previous fiscal year have been restated to conform with the new
segments
Page 2
© NEC Corporation 2013
Ⅰ. Financial Results for 1H, FY14/3
© NEC Corporation 2013
Summary of Financial Results for 1H
1H Results
l Achieved company plan, though decreased YoY
Net Sales
YoY
-4.5%
(1% decrease excluding deconsolidation impact)
• Increased in Public and Enterprise business
• Decreased in mobile phone and System Platform
business
l Stayed in the Black, though decreased YoY
Operating
Income
YoY
-47.0B Yen
• Larger loss in mobile phone business
• Impact from LCD patent sale in the previous year
• Decreased in Telecom Carrier and System
Platform business
l Net deficit due to operating income decrease
Net Income/Loss
YoY
Page 4
-34.1B Yen
• Extraordinary income by sale of stock of NEC Mobiling,
Ltd.
• Approx. 11.0B yen extraordinary loss in mobile phone
business
© NEC Corporation 2013
1H Results
Summary of Financial Results for 1H
(Billions of Yen)
Q2 <July to September>
FY13/3
FY14/3
Actual
Actual
YoY
1H <April to September>
FY13/3
FY14/3
Actual
Actual
Net Sales
816.3
743.0
- 9.0%
1,447.8
1,383.1
- 4.5%
Operating Income
55.2
22.2
-33.1
47.4
0.4
-47.0
3.3%
0.0%
% to Net Sales
Ordinary Income/Loss
% to Net Sales
Net Income/Loss
% to Net Sales
Free Cash Flow
6.8%
42.0
5.2%
3.0%
13.6
1.8%
25.9
-4.7
3.2%
-0.6%
-58.6
-28.4
-135.9
29.9
-14.5
2.1%
-30.5
8.0
-26.2
0.6%
-77.2
-32.0
© NEC Corporation 2013
-44.4
-1.1%
-34.1
-1.9%
-94.8
Note: Average exchange rates for 1H, FY14/3： 1$= ¥98.11, 1€= ¥128.43
(Assumed exchange rates for FY14/3 as of July 31, 2013: 1$ = ¥90, 1€= ¥115)
Page 5
YoY
-62.9
1H Results
1H Results by Segment
(Billions of Yen)
Net Sales
Public
Operating Income
% to Net Sales
Net Sales
Enterprise
Operating Income
% to Net Sales
Net Sales
Telecom Carrier
Operating Income
% to Net Sales
Net Sales
System Platform
Operating Income
% to Net Sales
Net Sales
Others
Operating Income/Loss
% to Net Sales
Eliminations/
Unclassifiable expenses
Total
8.8%
68.8
4.6
6.7%
187.5
18.2
9.7%
204.1
13.5
6.6%
193.8
21.0
10.8%
8.0%
71.3
3.1
5.2%
3.7%
-1.5
4.4%
180.0
13.8
- 4.0%
-4.5
342.7
30.9
9.0%
- 5.4%
-5.1
367.2
11.7
- 37.2%
-22.9
342.2
17.3
4.3%
121.8
-2.0
118.8
1.9
1.6%
7.7%
193.1
8.4
1H <April to September>
FY13/3
FY14/3
YoY
Actual
Actual
276.9
303.3
9.5%
14.4
14.5
0.1
3.2%
-1.6%
5.1%
4.8%
130.1
0.7
9.5%
-1.2
0.6%
334.0
19.4
- 2.5%
-11.5
5.8%
350.7
1.8
- 4.5%
-9.9
0.5%
264.9
-11.8
- 22.6%
-29.2
-4.5%
Operating Loss
-16.3
-15.3
1.0
-28.9
-24.3
4.7
Net Sales
816.3
55.2
743.0
22.2
- 9.0%
-33.1
1,447.8
47.4
1,383.1
0.4
- 4.5%
-47.0
Operating Income
% to Net Sales
Page 6
Q2 <July to September>
FY13/3
FY14/3
YoY
Actual
Actual
162.0
176.7
9.1%
14.3
14.2
-0.2
6.8%
3.0%
© NEC Corporation 2013
3.3%
0.0%
1H Results
Operating Income/Loss Change (Year on Year)
FY13/3 1H
47.4
(Billions of Yen)
Flat despite sales growth,
due to investment and loss
making projects
Public
+0.1
Decreased due to investment in
SDN/TOMS as well as sales decline
Telecom Carrier
-11.5
SDN : Software-Defined Networking
TOMS : Telecom Operations and Management Solutions
Worsened due to
decreased sales
System Platform
-9.9
Enterprise
-1.2
Others
-29.2
Decreased due to investment in
retail and logistics industries
as well as project lineup changes
Worsened due to
decreased sales
l Larger loss of mobile phone
business
l One-time income of LCD patent
sale in the previous year
l Decrease in Energy utility
solution business
l Deconsolidation of NEC
Mobiling, Ltd.
FY14/3 1H
0.4
Eliminations/
Unclassifiable expenses
Page 7
+4.7
© NEC Corporation 2013
1H Results
Public Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
▐ Sales
(+9.5%)
r Increased due to the steady sales for
government and public areas
303.3
276.9
271.2
Operating
Income +2.1%
Ratio
▐ Operating Income 14.5
Operating
Income
5.2%
4.8%
14.4
14.5
r Flat from previous fiscal year despite
sales growth, due to increased
investment for strengthening
organizations and loss-making
projects
10.6
FY12/3
1H
(+0.1)
+9.5%
3.9%
Page 8
303.3
FY13/3
1H
FY14/3
1H
© NEC Corporation 2013
1H Results
Enterprise Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
130.1
Sales
130.1
(+9.5%)
r Increased due to the steady sales for
the retail and service industries
118.8
102.5
▐ Operating Income
+9.5%
+15.9%
Operating
Income
Ratio
1.6%
0.6%
- 3.3%
Operating
Income
/Loss
-3.4
FY12/3
1H
Page 9
▐ Sales
1.9
FY13/3
1H
0.7
(-1.2)
s Decreased due to increased
investment in retail and logistics
industries as well as project lineup
changes
0.7
FY14/3
1H
© NEC Corporation 2013
1H Results
Telecom Carrier Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
342.7
334.0
Operating
Income
Ratio
-2.5%
Operating
Income
5.8%
30.9
FY12/3
1H
Page 10
s Japan: Decreased from 1H of the
previous year, when there was strong
demand
s Worsened due to the acceleration of
investment in SDN, TOMS as well as
sales decline
19.4
15.9
FY13/3
1H
(-2.5%)
▐ Operating Income 19.4 (-11.5)
9.0%
5.1%
334.0
r International: Increased mainly in
TOMS
308.5
+11.1%
▐ Sales
FY14/3
1H
© NEC Corporation 2013
1H Results
System Platform Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
367.2
+11.2%
s Declined due to large-scale projects in
the previous fiscal year
▐ Operating Income
-4.5%
3.2%
0.5%
- 0.7%
Operating
Income
/Loss
1.8
-2.2
Page 11
FY13/3
1H
1.8
(-9.9)
s Worsened due to decreased sales
as well as deteriorated income of
NEC Fielding, Ltd.
11.7
FY12/3
1H
350.7 (-4.5%)
350.7
330.1
Operating
Income
Ratio
▐ Sales
FY14/3
1H
© NEC Corporation 2013
1H Results
Others
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
430.8
264.9
(-22.6%)
s Decrease of mobile phone shipments
s Deconsolidation of NEC Mobiling, Ltd.
and electronic components business
-20.6%
342.2
Operating
Income
Ratio
▐ Sales
s Impact by one-time income of LCD
patent sale in the previous fiscal year
-22.6%
5.1%
264.9
2.4%
Operating
Income
/Loss
17.3
▐ Operating Loss
-4.5%
10.3
-11.8
FY12/3
1H
Page 12
FY13/3
1H
-11.8 (-29.2)
s Worsened due to decreased sales
s Impact by one-time income of LCD
patent sale in the previous fiscal year
FY14/3
1H
© NEC Corporation 2013
Mobile Phone Business Update
1H Results
▐ Major issues to be settled within FY14/3
l Resource shifting
• Over 60% of staff has been shifted out by October, to be minimized to 150
FTEs
l Conventional mobile phone business
• Deployed in 2013-14 Winter/Spring model (to be shipped at the end of
Nov.)
l NEC Saitama, Ltd.
• Detailed actions in process to contribute to Solutions for Society
l Extraordinary costs
• Recorded approx.11.0B yen as extraordinary loss (restructuring expenses)
in 1H
Taking actions to minimize operations
Page 13
© NEC Corporation 2013
1H Results
Net Income/Loss Change (Year on Year)
(Billions of Yen)
FY13/3 1H
<Apr-Sep>
FY14/3 1H
<Apr-Sep>
8.0
-26.2
Deterioration of
operating Income
-47.0
Others
+10.3
Others
Telecom Carrier
System Platform
-29.2
-11.5
-9.9
Gain on sales of subsidiaries and
affiliates’ stocks
+15.3
Business structure
improvement expenses
-12.3
Improvement of non-operating
income/loss
+2.6
Page 14
© NEC Corporation 2013
Improved foreign exchange loss
+3.6
Ⅱ. Financial Forecasts for FY14/3
© NEC Corporation 2013
Full Year
Forecasts
Summary of Financial Forecasts for FY14/3
▐ Achieve 100 billion yen operating income
(Sales increase by approximately 2%, excluding the impact of deconsolidation)
(Billions of Yen)
Full Year
2H <October to March>
Net Sales
Operating Income
% to Net Sales
Ordinary Income
% to Net Sales
Net Income
% to Net Sales
FY14/3
Actual
Forecasts
1,623.8
1,616.9
- 0.4%
3,071.6
3,000.0
- 2.3%
0.0
67.3
99.6
32.3
114.6
100.0
-14.6
0.0
3.7%
3.3%
92.0
70.0
-22.0
0.0
3.0%
2.3%
30.4
20.0
-10.4
0.0
1.0%
0.7%
4.1%
62.2
3.8%
22.4
1.4%
YoY
FY13/3
FY14/3
Actual
Forecasts
Difference
from July 31
FY13/3
6.2%
84.5
22.4
5.2%
46.2
23.7
2.9%
YoY
Note: Assumed exchange rates for 2H, FY14/3 1$=¥100, 1€=¥125
* Forecasts as of October 30, 2013
Page 16
© NEC Corporation 2013
Full Year
Forecasts
Financial Forecasts for FY14/3 by Segment
▐ Revised sales breakdown by segment
l Expect further growth in businesses with stable demand,
while Others (mobile phone etc.) falls short of previous plan
Net Sales
Public
Operating Income
% to Net Sales
Net Sales
Enterprise
Operating Income
% to Net Sales
Net Sales
Telecom Carrier
Operating Income
% to Net Sales
Net Sales
System Platform
Operating Income
% to Net Sales
Net Sales
Others
Operating Income/Loss
% to Net Sales
Eliminations/
Unclassifiable expenses
Operating Loss
Net Sales
Total
Operating Income
% to Net Sales
2H <October to March>
FY13/3
FY14/3
YoY
Actual
Forecasts
403.7
441.7
9.4%
34.6
42.5
7.8
8.6%
132.7
3.5
2.7%
366.6
40.6
11.1%
377.2
21.0
5.6%
343.5
-0.4
-0.1%
9.6%
134.9
5.3
7.2%
1.6%
1.8
3.9%
381.0
40.6
3.9%
-0.0
709.3
71.6
3.2%
6.2
744.4
32.7
10.1%
7.0%
270.1
13.8
251.6
5.5
2.2%
10.7%
389.3
27.2
FY13/3
Actual
680.7
49.0
4.4%
- 21.4%
14.2
5.1%
685.7
16.9
2.5%
(Billions of Yen)
Full Year
FY14/3
Forecasts
745.0
57.0
YoY
Difference
from July 31
9.5%
8.0
10.0
0.0
5.3%
0.5
10.0
0.0
0.8%
-11.6
0.0
0.0
- 0.6%
-3.7
35.0
0.0
- 22.0%
-14.9
-55.0
0.0
7.7%
265.0
6.0
2.3%
715.0
60.0
8.4%
740.0
29.0
3.9%
535.0
2.0
0.4%
-32.1
-29.7
2.4
-61.0
-54.0
7.0
0.0
1,623.8
67.3
1,616.9
99.6
- 0.4%
32.3
3,071.6
114.6
3,000.0
100.0
- 2.3%
-14.6
0.0
0.0
4.1%
6.2%
3.7%
3.3%
* Forecasts as of October 30, 2013
Page 17
© NEC Corporation 2013
Full Year
Forecasts
Business Environment
▐ Stable demand in domestic IT services and social
infrastructure
l
Order receipt 1H exceeded company plan
•
Public business grew 118% YoY, Enterprise 108%
▐ Strong demand to update WindowsXP
l
Respond to higher demand than estimated, try to offset the impact of
large-scale System Platform project in the previous fiscal year
▐ SDN promotion in international markets
l
Collaborate with more than 10 global telecom carriers for
commercial deployment
Secure business opportunities in expanding markets
Page 18
© NEC Corporation 2013
Key Points of 2H Forecasts by Segment
2H Forecasts
(Year on Year)
Public
l Secure steady growth in the government and public areas
l Improve profitability by sales increase, cost reduction, cut loss-making
projects
Enterprise
l Secure steady growth in the retail and service industries, and restore growth in
the manufacturing industry
l Improve profitability by sales increase, cost reduction, cut loss-making projects,
SGA saving
Telecom
Carrier
l Increase mainly in TOMS
l Secure same level as previous FY, offsetting decline in Japan by
growth in international markets
System
Platform
l Increase from high demand for IT systems investment such as
business PCs
l Improve profitability by sales increase, cost reduction, SGA saving
Others
l Decrease due to deconsolidation of NEC Mobiling, Ltd.
l Improve profitability of mobile phone business
*Each segment’s top line refers to sales､ lower lines are for income, Forecasts as of October 30, 2013
Page 19
© NEC Corporation 2013
Ⅲ. Progress on Mid-term Management Plan 2015
© NEC Corporation 2013
Mid-term Management Policy
Mid-term Plan
2015
(1) Focus on Solutions for Society
Transformation into a social value innovator
• Focusing of management resources on businesses that advance social infrastructure through ICT
• Create new business models with the understanding that social problems provide an opportunity
for growth
(2) Focus on Asia, promotion of “locally-led” business
Creation of a foundation for growth as a company able to
compete globally
•Focus on emerging and developing countries, particularly in Asia
•Realization of increased sensitivity to local needs, increased business speed
(3) Stabilize our financial foundation
• Enhanced cost competitiveness
• Creation of an earnings structure that produces operating income of 150 billion yen and free cash
flow of 100 billion yen
• Hybrid finance to ensure financial reserve
These initiatives will represent 5% of operating income and 25% of
international sales
* Forecasts as of April 26, 2013
Page 21
© NEC Corporation 2013
Achievements and Next Steps
Mid-term Plan
2015
l Strengthened foundations to start Mid-term Plan
• Started new customer focused organization structure (April)
Achievements
• Revised mobile phone business strategy (July)
–
Ended new development of smartphones
• Enhanced organizations and sales activities in strategic
businesses/regions
l Materialize growth plan / Eliminate loss making business
• Establish new pillars for global expansion: SDN, Safety, etc.
Next Steps
• Arouse and secure demand for infrastructure:
Growth plan of Japan, Tokyo Olympic games, etc.
• Improve profitability of international business, determining
direction of less profitable businesses
• Accelerate measures to enhance cost competitiveness
Page 22
© NEC Corporation 2013
Mid-term Plan
2015
Mid-term Plan by Segment （new segment base)
(Billions of Yen)
Net Sales
Operating Income/Loss
150.0
3,071.6
Public
Enterprise
Telecom
Carrier
System
Platform
Others
680.7
251.6
709.3
744.4
685.7
FY13/3
3,200.0
3,000.0
745.0
265.0
715.0
100.0
780.0
Public
49.0
Enterprise
5.5
300.0
Telecom
Carrier
800.0
740.0
800.0
535.0
520.0
FY14/3
71.6
<8%>
<4%>
57.0
6.0
<10%>
60.0
System
Platform
(Forecasts)
<Operating Income ratio>
114.6
Others
Eliminations/
Unclassifiable
expenses
FY16/3
16.9
29.0
2.0
- 61.0
- 54.0
FY13/3
(Mid-Term
Growth Plan)
<5%>
32.7
FY14/3
(Forecasts)
<4%>
FY16/3
(Mid-Term
Growth Plan)
* Forecasts as of October 30, 2013
Page 23
© NEC Corporation 2013
Mid-term Management Policy by Segment
Public
Enterprise
Mid-term Plan
2015
l Business development by integrated IT/NW, Expand global business
l Win large-scale projects (infrastructure such as the national
identification number system, public safety projects, etc.)
l Focus on specialty areas of existing business. Shift to high
value-added business
l Expand new/global business (SDN, Big Data, C&C Cloud)
Telecom
Carrier
l Global expansion with TOMS/SDN
l Enhance solution business by strengthening delivery capability
System
Platform
l Conversion to a solution provider of vertically integrated
products/services
l Enhance cost competitiveness and maintain high quality
Others
l Develop “Energy Service business” by integrating energy
storage technology with ICT
l Enhance solutions and sales channels through alliances
(Smart Energy)
Page 24
© NEC Corporation 2013
Mid-term Plan
2015
Focus on Solutions for Society
Space
l Start construction of the Japan Trench undersea
earthquake tsunami observation network
Seafloor
l Contribute to JAXA’s “Hisaki
(SPRINT-A*)” launch
* Spectroscopic Planet Observatory for
Recognition of Interaction of Atmosphere
Important
facilities
l Develop failure sign monitoring
system for large-scale plants
BIG
DATA
l Start energy service for
households through a battery
rental model Energy
Enhanced
n Released TOMS9.0
l Build ICT systems for stadiums in Brazil
Important
facilities
l Provide urban surveillance solution for
the province of Santa Fe, Argentina
Important
facilities
n Launched ‘Cyber Security Strategy Office’
Companies
n Released NEC SDN Solutions
Enhanced
Communications
Companies
l Integrate fire emergency digital radio
and common fire command
systems in Chiba, Japan
Enhanced
Page 25
SDN
Communications
© NEC Corporation 2013
Fire
Departments
Mid-term Plan
2015
Focus on Asia: Promotion of “Locally-led” Business
Government
l Strategic partnership with Chongqing City
for smart city and cloud development
CLOUD
l Integrated mission-critical systems for
Hotel New Otani Chang Fu Gong,
Beijing, China
Companies
SDN
l Order receipt for communication
infrastructure in Myanmar Communications
CLOUD
l Won order for cloud-based disaster
and emergency information system
Fire
in Taiwan
Departments
l Integrate common back-up system
for bank accounting systems in Banks
Taiwan
l Order receipt for supply of
n Launched “Global Safety
airport/aviation security infrastructure
Division” in Singapore Enhanced
in Myanmar
Airports
Enhanced
n Launched
NEC Laboratories Singapore
l Support HALALINK’s expansion throughout l Joined “Singapore Safe City
Malaysia by providing headquarter systems
Test Bed”
and convenience store systems
l Won country-wide cable
Retail
system in Indonesia
Seafloor
Page 26
© NEC Corporation 2013
Mid-term Plan
2015
Stabilize Our Financial Foundation /Review Business Portfolio
▐ Fund procurement through hybrid financing (May)
l
Plan to help repay existing interest-bearing liabilities and to finance business
▐ Revised mobile phone business strategy(July)
▐ Sold share of NEC Mobiling, Ltd. (June)
l
Joined public tender offer by MX Holdings
▐ Deconsolidation of Renesas Electronics (September)
l
Innovation Network Corporation of Japan completed capital injection
▐ Completed share transfer of
NEC Toppan Circuit Solutions, Inc. (October)
l
Transferred all shares to Kyocera
▐ Agreed to transfer NEC's magneto-resistance sensor
business to Murata (June)
Page 27
© NEC Corporation 2013
Summary
Achieve financial forecasts
and continue dividend payments
to shareholders
Transform into a “Social Value Innovator”
through growth strategies and the
elimination of loss making businesses
* Forecasts as of October 30, 2013
Page 28
© NEC Corporation 2013
Page 2011
29
© NEC Corporation
© NEC Corporation 2013
Financial Results for 1H, FY14/3 (Appendix)
© NEC Corporation 2013
1H Results
Results for 1H by Segment
(Billions of Yen)
Net Sales
Operating Income/Loss
47.4
1,443.2
1,447.8
Public
271.2
276.9
Enterprise
102.5
118.8
Telecom
Carrier
System
Platform
Others
308.5
330.1
430.8
FY12/3
1H
Page 31
14.4
1.9
1,383.1
303.3
6.8
130.1
Public
10.6
334.0
Telecom
Carrier
15.9
342.7
Others
367.2
Enterprise
350.7
System
Platform
342.2
264.9
FY13/3
1H
FY14/3
1H
10.3
- 3.4
- 2.2
- 24.4
30.9
11.7
17.3
© NEC Corporation 2013
System
Platform
0.4
14.5
0.7
19.4
1.8
- 11.8
- 28.9
- 24.3
Eliminations/
Unclassifiable
expenses
FY12/3
1H
Enterprise
FY13/3
1H
FY14/3
1H
Others
1H Results
Summary of Financial Results for 1H by Segment
(Billions of Yen)
Net Sales
Operating Income/Loss
Operating Income
for 1H,FY14/3
Public
0.4
22%
Others
19%
Telecom
Carrier
Enterprise
Sales for 1H
FY14/3
10%
14.5
1,383.1
System Platform
25%
Telecom Carrier
24%
Page 32
19.4
Public
© NEC Corporation 2013
Enterprise
System
Platform
0.7
1.8
Others
-11.8
1H Results
Sales Change (Year on Year)
(Billions of Yen)
Steady sales for the retail
and service industries
Japan: Decrease from the previous fiscal year
when there was strong demand
International: Increase in TOMS
Enterprise
+11.2 (+9.5%)
FY13/3 1H
<Apr-Sep>
Telecom Carrier
Impact of large-scale project in the
previous fiscal year
-8.6 (-2.5%)
System Platform
-16.4 (-4.5%)
1,447.8
Others
-77.2
Public
+26.4 (+9.5%)
Steady sales for government
and public areas
Declined in mobile phone shipments and
deconsolidation of NEC Mobiling, Ltd. and
the electronic components business.
Impact of LCD patent sale in the previous
fiscal year
Page 33
© NEC Corporation 2013
FY14/3 1H
<Apr-Sep>
1,383.1
1H Results
International Sales
(Billions of Yen)
YoY
The
Americas
7.4%
EMEA
Japan
4.2%
80.3%
47.1
58.5
Greater
China,
APAC
102.2
83.8
8.1%
+22.0%
+24.4%
FY13/3
1H
FY14/3
1H
102.8
112.4
FY13/3
1H
FY14/3
1H
+9.4%
1H <April to September>
FY13/3
FY14/3
YoY
Actual
Actual
International sales
FY13/3
1H
FY14/3
1H
％ to Net Sales
233.6
273.1
16.1%
19.7%
16.9%
* Sales are classified by country or region based on customer locations
Page 34
© NEC Corporation 2013
1H Results
Financial Position Data
(Billions of Yen)
End of Mar End of Sep
2013
2013
End of Sep
2012
Total Assets
2,581.0
2,478.3
-102.7
2,432.2
Net Assets
836.1
787.8
-48.3
766.3
Interest-bearing debt
603.5
688.7
85.3
683.3
Shareholders' Equity
710.7
684.1
-26.5
647.1
Equity ratio(%)
27.5%
27.6%
0.1pt
26.6%
D/E ratio (times)
0.85
1.01
-0.16pt
1.06
Net D/E ratio (times)
0.57
0.75
-0.18pt
0.74
197.1
174.0
Balance of cash and
cash equivalents
Page 35
Difference
from Mar
2013
© NEC Corporation 2013
-23.2
204.4
1H Results
<Ref.> Balance Sheets (At the end of September, 2013)
(Billions of Yen)
Total Assets 2,478.3
<Compared to end of March 2013>
(-102.7)
Compared to
end of March
2013
Current Assets
1,386.8
Liabilities
-127.0
Collection of accounts
receivable-trade
Noncurrent Assets
1,091.5
+24.3
-54.4
Decrease in notes and
accounts payable-trade and
bonds, despite an increase
in long-term debt due to
financing through hybrid
finance （subordinated loan）
Net Assets
787.8
-48.3
Acquisition of trust beneficiary rights
set to land and buildings
Page 36
1,690.5
Decrease due to net loss for
the first half and a decrease
in minority interests
© NEC Corporation 2013
Financial Forecasts for FY14/3 (Appendix)
© NEC Corporation 2013
Full Year
Forecasts
Financial Forecasts for FY14/3 by Segment
(Billions of Yen)
Net Sales
Operating Income/Loss
114.6
100.0
3,036.8
3,071.6
Public
649.5
680.7
Enterprise
222.2
251.6
659.3
709.3
Telecom
Carrier
System
Platform
Others
711.0
744.4
3,000.0
73.7
5.5
Public
745.0
49.0
43.3
Enterprise
265.0
Telecom
Carrier
715.0
740.0
794.9
685.7
535.0
FY12/3
FY13/3
FY14/3
Forecasts(*)
0.5
71.6
57.0
6.0
60.0
54.6
32.7
System
Platform
Others
13.8
10.4
Eliminations/
Unclassifiable
expenses
- 48.8
FY12/3
16.9
29.0
2.0
- 61.0
- 54.0
FY13/3
FY14/3
Forecasts(*)
* Forecasts as of October 30, 2013
Page 38
© NEC Corporation 2013
Summary of Financial Forecasts for FY14/3 by Segment
Full Year
Forecasts
(Billions of Yen)
Net Sales
Operating Income
Public
Others
25%
18%
Telecom
Carrier
Public
60.0
57.0
Operating Income
Forecast for FY14/3
100.0
Enterprise
Sales Forecast
for FY14/3
9%
System
Platform
29.0
3,000.0
Enterprise
System Platform
6.0
24%
Others
2.0
Telecom Carrier
24%
* Forecasts as of October 30, 2013
Page 39
© NEC Corporation 2013
Full Year
Forecasts
Sales Change (Year on Year)
(Billions of Yen)
Japan: Decrease from the previous fiscal year,
when there was strong demand
International: Increase in TOMS
Maintain same level as previous year due to high
demand for business PCs, offsetting impact of
large-scale project in the previous fiscal year
Telecom Carrier
+5.7(+0.8%)
System Platform
Steady sales for the retail and
services industries
Enterprise
+13.4 (+5.3%)
-4.4 (-0.6%)
FY13/3
3,071.6
FY14/3
Forecast*
Public +64.3 (+9.5%)
Stable demand mainly from
government and public areas
3,000.0
Others
-150.7
Mobile phone shipments decrease,
Deconsolidation of NEC Mobiling, Ltd. and
the electronic components business
* Forecasts as of October 30, 2013
Page 40
© NEC Corporation 2013
Full Year
Forecasts
Operating Income Change (Year on Year)
(Billions of Yen)
Decrease due to the acceleration of investment in
SDN, etc. and one-time profit related to intellectual
property in the previous fiscal year
Improve due to sales
growth and cost reductions
FY13/3
Public
+8.0
114.6
Telecom Carrier
-11.6
Decrease due to project lineup changes
System Platform
-3.7
FY14/3
Forecast*
Enterprise
+0.5
Improve by
sales growth
100.0
Others
-14.9
Decrease in strategic
investment
Decrease by the impact of the LCD
patents sale in the previous fiscal year
Eliminations/
Unclassifiable
expenses
+7.0
* Forecasts as of October 30, 2013
Page 41
© NEC Corporation 2013
Full Year
Forecasts
Public Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
745.0
680.7
649.5
Operating +4.8%
Income
Ratio
6.7%
Operating
Income
43.3
FY12/3
49.0
FY13/3
745.0
7.7%
(+9.5%)
r Increase due to stable demand mainly
from government and public areas
▐ Operating Income 57.0
+9.5%
7.2%
▐ Sales
(+8.0)
r Improve due to sales growth
and cost reductions
57.0
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013
Page 42
© NEC Corporation 2013
Full Year
Forecasts
Enterprise Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
265.0
(+5.3%)
r Increase due to the steady sales for
the retail and services industries
265.0
251.6
222.2
▐ Operating Income 6.0
+5.3%
+13.2%
Operating
Income
Ratio
▐ Sales
(+0.5)
r Improve by sales growth
2.2%
2.3%
0.2%
5.5
6.0
Operating
Income
0.5
FY12/3
FY13/3
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013
Page 43
© NEC Corporation 2013
Full Year
Forecasts
Telecom Carrier Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
715.0
709.3
659.3
Operating
Income +7.6%
Ratio
8.3%
Operating
Income
71.6
54.6
FY12/3
FY13/3
715.0 (+0.8%)
s Japan: Decrease from the previous
fiscal year, when there was strong
demand
r International: Increase in TOMS
+0.8%
10.1%
▐ Sales
▐ Operating Income
8.4%
60.0
60.0 (-11.6)
s Decrease due to the acceleration of
investment in SDN, etc. and one-time
profit related to intellectual property in
the previous fiscal year
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013
Page 44
© NEC Corporation 2013
Full Year
Forecasts
System Platform Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
711.0
744.4
740.0
+4.7%
-0.6%
Operating
Income
Ratio
740.0 (-0.6%)
s Maintain same level as previous year
due to high demand for business PCs,
offsetting impact of large-scale project
in the previous fiscal year
▐ Operating Income
4.4%
3.9%
1.9%
Operating
Income
▐ Sales
32.7
29.0 (-3.7)
s Decrease due to project lineup
changes
29.0
13.8
FY12/3
FY13/3
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013
Page 45
© NEC Corporation 2013
Full Year
Forecasts
Others
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
794.9
685.7
1.3%
Operating
Income
535.0
(-22.0%)
s Mobile phone shipments decrease
s Deconsolidation of NEC Mobiling, Ltd.
and the electronic components
business
-13.7%
Operating
Income
Ratio
▐ Sales
-22.0%
2.5%
▐ Operating Income 2.0
535.0
0.4%
(-14.9)
s Decrease by the impact of the LCD
patents sale in the previous fiscal year
16.9
10.4
2.0
FY12/3
FY13/3
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013
Page 46
© NEC Corporation 2013
Full Year
Forecasts
Net Income Change (Year on Year)
Others
Telecom Carrier
System Platform
Elimination/
Unclassifiable expenses
Public
FY13/3
30.4
Deterioration of
operating income
-14.6
-14.9
-11.6
-3.7
(Billions of Yen)
+7.0
+8.0
Decrease of impairment loss
Others
+11.6
FY14/3
Forecast(*)
20.0
Deterioration of
non-operating
income/loss
-7.4
Increase of interest expenses
* Forecasts as of October 30, 2013
Page 47
© NEC Corporation 2013
Full Year
Forecasts
Capital Expenditure, Depreciation and R&D expenses
(Billions of Yen)
YoY
FY12/3
FY13/3
FY14/3
Actual
Actual
Forecasts
YoY
Capital Expenditure
42.0
45.6 *
50.0
9.6%
Depreciation
53.3
51.2 *
50.0
- 2.3%
160.0
5.5%
162.0
R&D expenses
% to Net Sales
151.7
5.3%
4.9%
5.3%
* Not including acquisition of trust beneficiary rights
Capital Expenditure
42.0
45.6
50.0
Depreciation
53.3
51.2
+9.6%
R&D expenses
162.0
50.0
151.7
160.0
+5.5%
-2.3%
％ to Net
Sales
5.3%
5.3%
4.9%
FY12/3
FY13/3
FY14/3
Forecast(*)
FY12/3
FY13/3
FY14/3
Forecast(*)
FY12/3
FY13/3
FY14/3
Forecast(*)
* Forecasts as of October 30, 2013 (Note: Unchanged from forecasts announced on July 31)
Page 48
© NEC Corporation 2013
Reference (Financial data)
© NEC Corporation 2013
Net Sales, Operating Income/Loss
8.1%
(Billions of Yen)
6.8%
4.8%
3.4%
3.0%
Operating Income Ratio
3.4%
- 1.2%
- 2.9%
- 1.2%
- 3.4%
924.6
Net Sales
774.1
901.8
816.3
-0.1%
722.0
669.0
669.1
-9.0%
+7.9%
-5.6%
Operating
Income/
Loss
+1.4%
75.2
55.2
42.8
26.2
24.4
-19.4
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
22.2
-7.9
-8.2
FY12/3
Page 50
640.1
-7.2%
+0.2%
743.0
+5.4%
631.5
-3.4%
-2.5%
-21.8
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
Q2
<Jul-Sep>
FY14/3
YoY
International Sales
20.5%
International Sales Ratio
18.9%
17.9%
YoY
16.8%
16.7%
16.3%
15.4%
17.2%
International Sales
115.1
138.8
+7.7%
136.2
12.8%
108.9
121.1
118.7
128.4
120.8
+11.8%
-1.9%
-0.1%
+0.8%
152.3
14.2%
+8.1%
97.4
+24.0%
+11.2%
-7.4%
-15.4%
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 51
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
(Billions of Yen)
Q2
<Jul-Sep>
FY14/3
Sales, Operating Income/Loss (Public)
(Billions of Yen)
11.4%
10.1%
8.8%
7.9%
5.9%
3.6%
0.3%
0.1%
- 1.7%
254.5
245.4
Operating Income Ratio
8.0%
+3.7%
162.0
158.2
Net Sales
176.7
149.2
132.8
114.9
113.0
+12.3%
28.0
25.8
+10.1%
+1.7%
Operating
Income/
Loss
14.3
12.5
14.2
8.9
4.7
0.1
-1.9
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 52
+9.1%
126.6
+2.4%
0.4
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
Q2
<Jul-Sep>
FY14/3
YoY
Sales, Operating Income/Loss (Enterprise)
7.8%
(Billions of Yen)
6.7%
4.5%
4.4%
- 1.2%
Operating Income Ratio
0.3%
- 2.9%
- 4.1%
- 5.3%
- 6.0%
73.7
68.8
68.7
59.0
57.9
Net Sales
71.3
58.7
+7.2%
+18.9%
50.9
+3.7%
50.0
44.7
+17.4%
+16.1%
+12.1%
Operating
Income/
Loss
-2.7
5.4
-0.7
Q1
Q2
Q3
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 53
3.3
-2.7
-1.5
<Apr-Jun>
4.6
0.2
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
3.1
-2.4
Q2
<Jul-Sep>
FY14/3
YoY
Sales, Operating Income (Telecom Carrier)
(Billions of Yen)
15.1%
8.3%
YoY
11.3%
9.7%
7.7%
10.8%
8.2%
6.0%
3.6%
1.3%
Operating Income Ratio
193.8
Net Sales
169.6
156.9
200.3
187.5
155.1
138.9
166.3
+10.6%
180.0
+3.3%
154.0
-4.0%
+6.0%
29.3
Operating
Income
+11.7%
-0.7%
22.7
18.2
14.1
17.9
13.8
12.7
9.4
5.6
1.8
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 54
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
Q2
<Jul-Sep>
FY14/3
Sales, Operating Income/Loss (System Platform)
(Billions of Yen)
9.8%
8.0%
6.6%
Operating Income Ratio
4.3%
1.9%
2.5%
- 1.1%
- 3.2%
- 3.8%
- 4.2%
215.7
Net Sales
209.9
204.1
193.1
182.9
165.2
163.1
167.3
+11.6%
-2.7%
157.7
147.2
+1.3%
+10.8%
16.8
13.5
8.4
4.2
3.4
-5.2
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 55
-3.3%
21.2
Operating
Income/
Loss
-5.6
-5.4%
-1.8
-6.6
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
Q2
<Jul-Sep>
FY14/3
YoY
Sales, Operating Income/Loss (Others)
(Billions of Yen)
10.8%
Operating Income Ratio
YoY
5.4%
4.9%
0.8%
-1.6%
0.1%
- 1.0%
- 2.4%
Net Sales
- 6.2%
225.4
205.4
200.9
- 6.9%
193.8
180.1
163.2
148.4
163.4
-5.7%
143.1
+10.4%
121.8
-18.7%
-34.2%
-3.5%
-37.2%
Operating
Income/
Loss
21.0
10.2
-1.6
0.2
Q1
Q2
Q3
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
FY12/3
Page 56
1.6
9.7
-3.6
-10.1
-9.9
Q4
Q1
Q2
Q3
Q4
Q1
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
FY13/3
© NEC Corporation 2013
-2.0
Q2
<Jul-Sep>
FY14/3
Exchange Rate
(Yen)
140
Euro/Yen Exchange Rate (Actual)
Assumed Exchange Rate
135
130
125
Average Exchange Rate ¥128.43
120
115
110
110
Dollar/Yen Exchange Rate (Actual)
Assumed Exchange Rate
105
100
95
Average Exchange Rate ¥98.11
90
85
4/1
Page 57
4/30
5/31
6/28
© NEC Corporation 2013
7/31
8/30
9/30
Stock Price
(Yen)
16,000
300
Apr 26:FY13/3
Earnings Release
NEC
15,500
290
the Nikkei Stock
15,000
280
14,500
270
14,000
260
13,500
250
Jul 31: Q1 Earnings Release
13,000
240
12,500
230
12,000
220
11,500
210
Jun 24:Ordinary General Meeting
of Shareholders
Jul 10: SDN Initiatives
11,000
4/1
Page 58
4/30
5/31
6/28
© NEC Corporation 2013
7/31
8/30
200
9/30
CAUTIONARY STATEMENTS:
This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services,
and business performance of NEC Corporation and its consolidated subsidiaries (collectively "NEC"). Written forward-looking
statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the Director
of the Kanto Finance Bureau, and in reports to shareholders and other communications. NEC is relying on certain safeharbors for forward-looking statements in making these disclosures. Some of the forward-looking statements can be identified
by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans,"
"estimates," "targets," "aims," or "anticipates," or the negative of those words, or other comparable words or phrases. You can
also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking
statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and
NEC may not be able to realize the results expected by them. You should not place undue reliance on forward-looking
statements, which reflect NEC’s analysis and expectations only. Forward-looking statements are not guarantees of future
performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ
materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially
from such statements include (i) global economic conditions and general economic conditions in NEC’s markets, (ii)
fluctuating demand for, and competitive pricing pressure on, NEC’s products and services, (iii) NEC’s ability to continue to
win acceptance of NEC’s products and services in highly competitive markets, (iv) NEC’s ability to expand into foreign
markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC’s business and
operations, (vi) NEC’s ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, (vii)
movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar, (viii) the impact of
unfavorable conditions or developments, including share price declines, in the equity markets which may result in losses from
devaluation of listed securities held by NEC, and (iv) impact of any regulatory action or legal proceeding against NEC. Any
forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time
to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any
obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or
otherwise.
The management targets included in this material are not projections, and do not represent management’s current estimates
of future performance. Rather, they represent targets that management will strive to achieve through the successful
implementation of NEC’s business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. Securities may not
be offered or sold in any jurisdiction in which required registration is absent or an exemption from registration under the
applicable securities laws is not granted.