IR Presentation (Financial Results for FY2016/03)

Financial Results for the
Fiscal Year Ended March 31, 2016
April 28, 2016
NEC Corporation
(http://www.nec.com/en/global/ir)
1
© NEC Corporation 2016
Index
Ⅰ. Financial Results for FY16/3 (J-GAAP)
Ⅱ. Financial Forecasts for FY17/3 (IFRS)
Financial Results for FY16/3 (Appendix)
Financial Forecasts for FY17/3 (Appendix)
Reference (Financial data)
* Net income/loss or profit/loss for FY16/3 (actual) or FY17/3 (forecast) refers to profit/loss attributable to owners of the parent for
the same period.
* FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
2
© NEC Corporation 2016
Ⅰ. Financial Results for FY16/3 (J-GAAP)
3
© NEC Corporation 2016
Results
FY16/3
Summary of Financial Results for FY16/3
Net Sales
YoY -3.9%
Variance from forecast
-78.8
Operating
Income
YoY -20.8
Variance from forecast
+7.3
Net Income
YoY +11.4
Variance from forecast
+3.7
(J-GAAP)
(Billions of Yen)
▐ Decreased year on year
•
Decrease in Public business, Telecom Carrier business
and Others, despite a significant increase in Enterprise
business
▐ Decreased year on year, topped 100
billion yen
•
Decrease in Public and Telecom Carrier business, despite
an increase in Enterprise and System Platform business
▐ Increased year on year, outperformed company
forecast and mid-term target
•
Improvement mainly due to a decrease in tax expense
through the dissolution of a consolidated subsidiary
▐ Decided on a 6 yen year-end dividend per share
*Variance from forecast as of February 29, 2016
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© NEC Corporation 2016
Results
FY16/3
Summary of Financial Results for FY16/3
(J-GAAP)
Q4 <January to March>
Net Sales
FY16/3
Actual
Actual
YoY
FY15/3
FY16/3
Actual
Actual
872.1
-6.6%
2,935.5
2,821.2
-3.9%
-78.8
92.4
89.0
-3.4
128.1
107.3
-20.8
+7.3
9.9%
10.2%
4.4%
3.8%
75.7
67.5
112.1
82.7
-29.4
-2.3
8.1%
7.7%
3.8%
2.9%
34.5
68.4
57.3
68.7
+11.4
+3.7
3.7%
7.8%
2.0%
2.4%
116.1
114.6
40.4
65.6
+25.2
+5.6
USD 1
118.78
118.42
108.42
120.75
EUR 1
139.75
129.54
139.68
132.99
% to Net Sales
Ordinary Income
% to Net Sales
Net Income
% to Net Sales
Free Cash Flows
-8.2
+33.9
-1.5
Note: Assumed exchange rates for Q4 of FY16/3 $1=¥115, €1=¥130
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© NEC Corporation 2016
YoY
933.5
Operating Income
Note:
Average Exchange Rates
(yen)
FY15/3
Full Year
(Billions of Yen)
Variance
from
Forecast
as of Feb 29
Results
FY16/3
Results by Segment for FY16/3
(J-GAAP)
(Billions of Yen)
Net Sales
Public
Enterprise
Operating Income
% to Net Sales
12.5%
12.9%
Net Sales
Operating Income
82.6
5.5
83.0
9.6
% to Net Sales
6.7%
11.5%
236.9
36.6
212.2
29.2
Net Sales
Telecom Carrier
System Platform
Operating Income
% to Net Sales
15.4%
13.7%
Net Sales
213.0
18.3
209.8
24.4
8.6%
11.6%
105.1
9.9
96.0
2.4
Operating Income
% to Net Sales
Net Sales
Others
Operating Income/Loss
Adjustment
Operating Income/Loss
% to Net Sales
Net Sales
Total
Operating Income
% to Net Sales
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© NEC Corporation 2016
Q4 <January to March>
FY15/3
FY16/3
YoY
Actual
Actual
295.9
271.1
-8.4%
37.1
35.1
-2.0
9.4%
2.5%
-14.9
933.5
92.4
-11.6
872.1
89.0
9.9%
10.2%
Full Year
FY15/3
FY16/3
Actual
Actual
821.9
766.8
74.8
57.5
9.1%
7.5%
270.5
8.3
300.7
22.2
3.1%
7.4%
-10.4%
-7.4
740.2
62.0
698.9
45.6
8.4%
6.5%
-1.5%
+6.1
728.9
31.4
728.5
37.5
4.3%
5.2%
-8.7%
-7.5
374.1
4.0
326.2
-8.9
1.1%
-2.7%
+3.3
-6.6%
-3.4
-52.4
2,935.5
128.1
-46.7
2,821.2
107.3
4.4%
3.8%
+0.4%
+4.1
YoY
Variance
from
Forecast
as of Feb 29
-6.7%
-17.2
-33.2
-4.5
+11.2%
+13.9
-6.3
+2.2
-5.6%
-16.4
-11.1
+4.6
-0.0%
+6.1
-14.5
+1.5
-12.8%
-12.9
-13.8
-2.9
+5.7
-3.9%
-20.8
+6.3
-78.8
+7.3
Results
FY16/3
Public Business
(J-GAAP)
(Billions of Yen)
YoY
Sales
821.9
738.4
+11.3%
+8.5%
Operating
Income
FY14/3
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© NEC Corporation 2016
-6.7%
57.5
9.1%
FY15/3
▌Sales
766.8
7.5%
FY16/3
(-6.7%)
 Sales for the central government decreased
due to a decline in large-scale projects in
the previous fiscal year
▌Operating Income 57.5
74.8
58.6
7.9%
Operating
Income Ratio
766.8
Billions of Yen (YoY)
(-17.2)
 Decreased due to a sales decline and an
increase in loss-making projects
Results
FY16/3
Enterprise Business
(J-GAAP)
(Billions of Yen)
YoY
Sales
272.3
300.7
270.5
+11.2%
+8.2%
Operating
Income
Operating
Income Ratio
2.4%
6.5
8.3
7.4%
© NEC Corporation 2016
FY15/3
▌Sales
300.7
(+11.2%)
 Increased due to large-scale projects in
retail and services, as well as
manufacturing
▌Operating Income 22.2
(+13.9)
 Improved due to a sales increase and
higher profitability in system construction
services
3.1%
FY14/3
8
22.2
-0.7%
Billions of Yen (YoY)
FY16/3
Results
FY16/3
Telecom Carrier Business
(J-GAAP)
(Billions of Yen)
YoY
Sales
740.2
725.8
+2.3%
Operating
Income
+2.0%
60.3
8.3%
8.4%
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© NEC Corporation 2016
698.9
(-5.6%)
 Decreased in Japan
 International sales increased in submarine
cable systems
▌Operating Income 45.6
45.6
6.5%
FY15/3
▌Sales
-5.6%
62.0
Operating
Income Ratio
FY14/3
698.9
Billions of Yen (YoY)
FY16/3
(-16.4)
 Decreased due to a sales decline and a lossmaking international project
Results
FY16/3
System Platform Business
(J-GAAP)
(Billions of Yen)
YoY
Sales
780.8
+4.9%
Operating
Income
728.9
728.5
-6.6%
-0.0%
30.7
3.9%
Operating
Income Ratio
FY14/3
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© NEC Corporation 2016
37.5
31.4
5.2%
4.3%
FY15/3
FY16/3
Billions of Yen (YoY)
▌Sales
728.5
(-0.0%)
 Remained flat due to a decrease in
maintenance services, despite an increase
in hardware
▌Operating Income 37.5
(+6.1)
 Increased due to higher profitability in
hardware
Results
FY16/3
Others
(J-GAAP)
(Billions of Yen)
YoY
Sales
525.9
-23.3%
374.1
Operating
Income Ratio
-0.3%
Operating
Income/Loss
-1.4
4.0
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© NEC Corporation 2016
FY15/3
(-12.8%)
 Worsened due to a sales decline and
deterioration of profitability in the energy
business
-2.7%
-8.9
FY14/3
326.2
▌Operating Income/Loss -8.9 (-12.9)
-12.8%
1.1%
▌Sales
 Decreased due to deconsolidation of logistics
business, a decrease in the energy business
and mobile handsets business
326.2
-28.9%
Billions of Yen (YoY)
FY16/3
Results
FY16/3
Net Income Change(Year on Year)
(J-GAAP)
(Billions of Yen)
Public
-17.2
Telecom Carrier -16.4
Others
-12.9
Adjustment
+5.7
System Platform +6.1
Enterprise
+13.9
Foreign exchange
gains/losses
-13.0
Settlement package and
Compensation for damage -4.7
Retirement benefit
expenses
+10.4
+6.0
Others
+40.8
Non-operating
Income/Loss
-8.6 -9.6
FY15/3
57.3
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© NEC Corporation 2016
Operating Income
-20.8
+7.3
Income taxes
+36.9
Business structure
improvement expenses +11.8
Profit/Loss attributable to
non-controlling interests
-6.7
Variance
from Forecast
as of Feb 29
FY16/3
68.7
+3.7
II. Financial Forecasts for FY17/3 (IFRS)
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© NEC Corporation 2016
Forecasts
FY17/3
Voluntary Adoption of IFRS
Accounting
Standards
Timing of
Disclosure
April 2016
(IFRS)
J-GAAP
IFRS
Earnings Releases for FY16/3
(FY16/3 Actual)
Earnings Releases for FY16/3
(FY17/3 Forecast)
Consolidated Financial Statements
Summary of
Consolidated Statements of Operations
Sales and Operating Income/Loss
by Segment for FY16/3 Actual
Sales and Operating Income/Loss
by Segment for FY16/3 Actual
and FY17/3 Forecast
Annual Securities Report
-
June 2016
From
July 2016
-
Quarterly Earnings Releases
Quarterly Securities Reports
* FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Summary of Financial Forecasts
(IFRS)
Achieve 50.0 billion yen in profit, continue an annual dividend of 6 yen per share
(Billions of Yen)
Full Year
FY16/3
FY17/3
Actual Forecasts
Net Sales
2,824.8 2,880.0
Operating Income
% to Net Sales
Profit
% to Net Sales
91.4
100.0
3.2%
3.5%
75.9
50.0
2.7%
1.7%
YoY
+2.0%
+8.6
Public
% to Net Sales
Enterprise
Note:
Average Exchange Rates (yen)
6.00
6.00
USD
1
120.75
115.00
EUR
1
132.99
125.00
Net Sales
Operating Income
% to Net Sales
-25.9
Telecom Carrier
Net Sales
Operating Income
% to Net Sales
System Platform
Dividends per Share (yen)
Net Sales
Operating Income
Net Sales
Operating Income
% to Net Sales
0.00
Net Sales
Others
Operating Income/Loss
Adjustment
Operating Income/Loss
% to Net Sales
Total
Net Sales
Operating Income
% to Net Sales
Full Year
FY16/3
FY17/3
Actual Forecasts
771.6
735.0
57.3
69.0
7.4%
9.4%
300.3
23.9
305.0
19.0
8.0%
6.2%
697.5
46.5
705.0
48.0
6.7%
6.8%
728.6
31.7
755.0
32.0
4.4%
4.2%
326.8
-18.2
380.0
1.0
-5.6%
0.3%
-49.8
2,824.8
91.4
-69.0
2,880.0
100.0
3.2%
3.5%
YoY
-4.7%
+11.7
+1.6%
-4.9
+1.1%
+1.5
+3.6%
+0.3
+16.3%
+19.2
-19.2
+2.0%
+8.6
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Summary of Financial Forecasts (J-GAAP->IFRS)
(IFRS)
(Billions of Yen)
Full Year
FY16/3
FY17/3
Actual
(J-GAAP) Goodwill
Net Sales
Pension
Costs
Reclassification
2,821.2
Operating Income/Loss
107.3
% to Net Sales
3.8%
Non-operating Income/Expenses
-24.6
Financial Income/Expenses (*1)
Others
3.7
10.6
-1.3
-25.6
0.4
24.6
0.8
-0.1
-3.8
Total
Actual
Forecasts
(IFRS)
(IFRS)
3.7 2,824.8 2,880.0
-15.9
91.4
100.0
3.2%
3.5%
-1.8
+8.6
-4.9
Profit/Loss before Income Tax
77.9
11.4
-1.4
-1.4
8.6
86.6
Profit/Loss
68.7
11.4
-1.0
-3.2
7.2
75.9
50.0
2.7%
1.7%
*1
4.8
-4.9
-4.8
2.4%
+2.0%
24.6
Extraordinary Income/Loss
% to Net Sales
YoY
4.8
-25.9
Financial income, Financial expenses and Equity in earnings of affiliates
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Public Business
(IFRS)
(Billions of Yen)
YoY
Sales
766.8
771.6
-6.7%
▌Sales
735.0
(-4.7%)
 Decrease* due to a decline in the public
areas, despite an increase of sales for the
central government
* Including transfer of certain business (Approx. -40 billion yen)
-4.7%
Operating
Income
Operating
Income Ratio
735.0
Billions of Yen (YoY)
57.5
57.3
7.5%
7.4%
FY16/3
(J-GAAP)
FY16/3
(IFRS)
69.0
9.4%
FY17/3
Forecasts
(IFRS)
▌Operating Income
69.0
(+11.7)
 Improve due to a decrease in loss-making
projects and cost reduction
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Enterprise Business
(IFRS)
(Billions of Yen)
YoY
Sales
300.7
+11.2%
300.3
Operating
Income
22.2
23.9
305.0
+1.6%
19.0
Operating
Income Ratio
7.4%
8.0%
FY16/3
(J-GAAP)
FY16/3
(IFRS)
Billions of Yen (YoY)
▌Sales
305.0
(+1.6%)
 Increase in manufacturing industries
▌Operating Income
19.0
(-4.9)
 Decrease due to project lineup changes and
an investment increase in the IT services
business for retail industries
6.2%
FY17/3
Forecasts
(IFRS)
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Telecom Carrier Business
(IFRS)
(Billions of Yen)
YoY
Sales
698.9
697.5
-5.6%
705.0
+1.1%
Operating
Income
45.6
6.5%
46.5
6.7%
48.0
Billions of Yen (YoY)
▌Sales
705.0
(+1.1%)
 Increase in TOMS and SDN/NFV in the
international market
 Decrease in Japan
▌Operating Income
48.0
(+1.5)
 Improve due to a sales increase
6.8%
Operating
Income Ratio
FY16/3
(J-GAAP)
FY16/3
(IFRS)
FY17/3
Forecasts
(IFRS)
* TOMS:Telecom Operations &
Management Solutions
SDN:Software-Defined Networking
NFV:Network Functions Virtualization
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
System Platform Business
(IFRS)
(Billions of Yen)
YoY
Sales
728.6
728.5
-0.0%
Operating
Income
31.7
5.2%
FY16/3
(J-GAAP)
▌Sales
755.0
(+3.6%)
 Increase* in services and enterprise
networks
* Including transfer of certain business (Approx. +10 billion yen)
+3.6%
37.5
Operating
Income Ratio
755.0
Billions of Yen (YoY)
32.0
4.4%
4.2%
FY16/3
(IFRS)
FY17/3
Forecasts
(IFRS)
▌Operating Income
32.0
(+0.3)
 Remain flat due to project lineup changes,
despite a sales increase
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Others
(IFRS)
(Billions of Yen)
YoY
Sales
326.2
326.8
Billions of Yen (YoY)
▌Sales
380.0
(+16.3%)
 Increase due to expansion of international
business while the energy business remains
flat
380.0
* Including transfer of certain business (Approx. +30 billion yen)
+16.3%
-12.8%
▌Operating Income
Operating
Income Ratio
Operating
Income/
Loss
1.0
1.0
(+19.2)
 Move it into the black due to profit
improvement in the energy business
0.3%
-2.7%
-8.9
-5.6%
-18.2
FY16/3
(J-GAAP)
FY16/3
(IFRS)
FY17/3
Forecasts
(IFRS)
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
Forecasts
FY17/3
Profit Change (Year on Year)
(IFRS)
(Billions of Yen)
Operating
Income
+8.6
Gain on sales of securities
(the previous fiscal year), etc.
Decrease in tax expense
through dissolution of a
consolidated subsidiary (the
previous fiscal year), etc.
Financial
Income/Expenses
Tax Expense
FY16/3
75.9
Others
Public
Telecom Carrier
System Platform
Enterprise
Adjustment
+19.2
+11.7
+1.5
+0.3
-4.9
-19.2
FY17/3
Forecast
50.0
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
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© NEC Corporation 2016
24
© NEC Corporation 2016
Financial Results for FY16/3 (Appendix)
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© NEC Corporation 2016
Results
FY16/3
Results for FY16/3 by Segment (three-year transition)
(J-GAAP)
(Billions of Yen)
Net Sales
3,043.1
738.4
Public
Enterprise
Telecom
Carrier
System
Platform
Others
26
272.3
725.8
780.8
2,935.5
821.9
270.5
740.2
728.9
Operating Income/Loss
128.1
2,821.2
766.8
300.7
728.5
374.1
326.2
FY14/3
FY15/3
FY16/3
74.8
107.3
57.5
Public
58.6
Enterprise
6.5
8.3
22.2
Telecom
Carrier
60.3
62.0
45.6
System
Platform
Others
30.7
-1.4
31.4
4.0
37.5
-8.9
Adjustment
-48.6
-52.4
-46.7
FY14/3
FY15/3
FY16/3
698.9
525.9
© NEC Corporation 2016
106.2
Results
FY16/3
Financial Results for FY16/3 by Segment
(Billions of Yen)
Net Sales
Operating Income/Loss
Others
11%
Public
57.5
Public
27%
System
Platform
26%
Sales for
FY16/3
2,821.2
Enterprise
11%
Telecom
Carrier
25%
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© NEC Corporation 2016
(J-GAAP)
Telecom
Carrier
45.6 System
Platform
37.5
Operating
Income for
FY16/3
107.3
Enterprise
22.2
Others
-8.9
Results
FY16/3
Sales Change (Year on Year)
(J-GAAP)
Increased in manufacturing, as
well as retail and services
Variance
from Forecast
as of Feb 29
Enterprise
+30.2 -6.3
FY15/3
2,935.5
Public
-55.1
-33.2
System
Platform
-0.3 -14.5
Telecom
Carrier
-41.2
-11.1
Decreased due to a decline in
large-scale projects in the
previous fiscal year
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© NEC Corporation 2016
(Billions of Yen)
Decreased in Japan
Decreased due to
deconsolidation of
logistics business, a
decrease in the energy
business and mobile
handsets business
Others
-47.9
-13.8
Decreased in maintenance
services while increased
in hardware
FY16/3
2,821.2
-78.8
Results
FY16/3
Operating Income Change (Year on Year)
Decreased due to a
sales decline and an
increase in lossmaking projects
Decreased due to a sales
decline and a loss-making
international project
+2.2
Enterprise
+13.9
FY15/3
128.1
Public
-17.2
-4.5
Improved due to a sales
increase and higher
profitability in system
construction services
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© NEC Corporation 2016
+1.5
(J-GAAP)
(Billions of Yen)
Worsened due to a sales
decline and deterioration
of profitability in the
energy business
System
Platform
+6.1
Variance
from Forecast
as of Feb 29
+6.3
Adjustment
+5.7
Telecom
Carrier
-16.4
Others
-12.9
+4.6
-2.9
Increased due to higher
profitability in hardware
Improved due
to higher cost
efficiency
FY16/3
107.3
+7.3
Results
FY16/3
International Sales
(J-GAAP)
Sales by Region
International
Sales Ratio
18.7%
20.0%
Greater
21.4%
China,
APAC
(Billions of Yen)
EMEA
4.9%
9.4%
603.2
569.2
586.8
The
Americas
202.3
203.9
Greater
China,
APAC
239.5
246.4
264.2
EMEA
127.4
136.6
138.4
FY14/3
FY15/3
FY16/3
The
Americas
200.5
7.1%
Sales for
FY16/3
2,821.2
Japan
78.6%
*Sales are classified by country or region based on customer locations.
30
© NEC Corporation 2016
Results
FY16/3
Free Cash Flows
(J-GAAP)
(Billions of Yen)
150.0
+Improvement
of working capital
-Deterioration
of working capital
100.0
55.2
50.0
87.9
94.1
97.8
40.4
0.0
-38.9
-Increase in cash
outflows for M&A
-100.0
FY14/3
Cash flows from operating activities
31
© NEC Corporation 2016
-32.2
-47.5
-50.0
65.6
+Decrease in cash
outflows for M&A
FY15/3
Cash flows from investing activities
FY16/3
Free cash flows
Results
FY16/3
Financial Position Data
(J-GAAP)
(Billions of Yen)
End of March
2015
Variance from
end of March
2015
2,620.7
2,493.4
-127.2
Net assets
884.2
852.5
-31.7
Interest-bearing debt
520.8
481.0
-39.8
Shareholders' equity
823.7
792.1
-31.6
31.4%
31.8%
+0.4pt
D/E ratio (times)
0.63
0.61
+ 0.02pt
Net D/E ratio (times)
0.41
0.36
+ 0.05pt
181.1
192.3
+11.2
Total assets
Equity ratio (%)
Cash and cash equivalents
32
End of March
2016
© NEC Corporation 2016
Results
FY16/3
<Ref.> Balance Sheets (At the end of March 2016)
(J-GAAP)
(Billions of Yen)
Liabilities
Current Assets
1,527.3
1,640.9
Decrease in net
defined benefit
asset and goodwill
Noncurrent Assets
33
© NEC Corporation 2016
-95.5
-49.5
Collection of
accounts
receivable-trade
966.2
Compared to
end of March
2015
Total Assets
2,493.4
(-127.2 compared to
end of March 2015)
-77.7
-31.7
Decrease in notes and
accounts payable-trade, and
interest-bearing debt
Decrease in remeasurements
of defined benefit plans and
foreign currency translation
adjustments, despite booked
profit attributable to owners of
the parent for the period
Net Assets
852.5
Business Environment
The order trend for IT investment in services and hardware in Japan remains high level
▌ IT services in Japan for FY16/3 grew, particularly in the retail and services
areas, as well as public areas
IT Services Order Trend in Japan
(by Quarter, YoY)
FY16/3
Order
106%
116%
108%
105%
110%
100%
95%
FY15/3
Q1
34
© NEC Corporation 2016
Q2
Q3
Q4
FY16/3
Q1
Q2
Q3
Q4
Financial Forecasts for FY17/3 (Appendix)
35
© NEC Corporation 2016
Forecasts
FY17/3
Financial Forecasts by Segment (two-year transition)
Net Sales
2,821.2
766.8
Public
Enterprise
300.7
2,824.8
Operating Income/Loss
771.6
735.0
300.3
305.0
698.9
697.5
705.0
System
Platform
728.5
728.6
755.0
326.2
326.8
380.0
FY16/3
(J-GAAP)
FY16/3
(IFRS)
FY17/3
Forecasts
(IFRS)
(Billions of Yen)
100.0
107.3
91.4
Public
57.5
57.3
69.0
Enterprise
22.2
23.9
19.0
Telecom
Carrier
45.6
46.5
48.0
System
Platform
31.7
Others
37.5
-8.9
32.0
1.0
Adjustment
-46.7
2,880.0
Telecom
Carrier
Others
(IFRS)
FY16/3
(J-GAAP)
-18.2
-49.8
FY16/3
(IFRS)
-69.0
FY17/3
Forecasts
(IFRS)
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
36
© NEC Corporation 2016
Forecasts
FY17/3
Financial Forecasts by Segment
(IFRS)
Net Sales
Operating Income
Public
69.0
Others
13%
System
Platform
26%
Sales Forecast
for FY17/3
2,880.0
Telecom
Carrier
24%
Operating
Income
Forecast for
FY17/3
Telecom
Carrier
48.0
Public
26%
(Billions of Yen)
100.0
System
Platform
32.0
Enterprise
11%
Enterprise
19.0
Others
1.0
*Forecasts as of April 28, 2016
37
© NEC Corporation 2016
Forecasts
FY17/3
Sales Change (Year on Year)
Increase in TOMS and
SDN/NFV in the
international market
Decrease in Japan
Decrease due to a
decline in the public
areas, despite an
increase of sales for
the central government
Enterprise
+4.7
(IFRS)
(Billions of Yen)
Increase due to expansion
of international business
while the energy business
remains flat
Others
+53.2
Telecom
Carrier
+7.5
System
Platform
+26.4
Forecast
2,880.0
FY16/3
2,824.8
Public
-36.6
Increase in
manufacturing industries
FY17/3
Increase in services and
enterprise networks
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
38
© NEC Corporation 2016
Forecasts
FY17/3
Operating Income Change (Year on Year)
Improve due to a
sales increase
(IFRS)
(Billions of Yen)
Move it into the black due
to profit improvement in
the energy business
Increase in costs
Decrease due to project lineup
changes and an investment
increase in the IT services
business for retail industries
Telecom
Carrier
+1.5
Public
+11.7
Enterprise
-4.9
FY16/3
91.4
Improve due to a
decrease in lossmaking projects and
cost reduction
System
Platform
+0.3
Others
+19.2
Adjustment
-19.2
Remain flat due to project
lineup changes, despite a
sales increase
FY17/3
Forecast
100.0
*Forecasts as of April 28, 2016
*FY16/3 IFRS figures are currently not audited and subject to change upon audit completion during FY17/3.
39
© NEC Corporation 2016
Forecasts
FY17/3
Capital Expenditure, Depreciation and R&D expenses
(IFRS)
(Billions of Yen)
Capital Expenditure
45.0
37.4
Depreciation
48.5
R&D Expenses
50.0
% to Sales
Enterprise
36.3
134.2
Enterprise
16.1
18.0
1.2
Telecom
Carrier
52.6
Telecom
Carrier
0.3
5.9
System
Platform
7.6
System
Platform
39.8
Others
7.5
Others
22.5
FY15/3
FY16/3
FY17/3
(J-GAAP) (J-GAAP) Forecast
(IFRS)
4.4%
4.3%
44.9
Public
Public
4.6%
FY15/3
FY16/3
FY17/3
(J-GAAP)
(J-GAAP)
Forecast
(IFRS)
FY15/3
124.0
FY16/3
125.0
FY17/3
(J-GAAP) (J-GAAP) Forecast
(IFRS)
*Forecasts as of April 28, 2016
40
© NEC Corporation 2016
Reference (Financial data)
41
© NEC Corporation 2016
Net Sales, Operating Income/Loss
J-GAAP
(Billions of Yen)
3.0%
3.9%
3.3%
959.6
-3.4%
Net Sales
743.0
640.1
700.4
-1.2%
726.1
+6.4%
-2.3%
-3.0%
+1.4%
3.2%
2.1%
933.5
598.7
-9.0%
677.2
721.5
586.6
641.0
28.6
-6.6%
-5.4%
92.4
23.4
10.2%
-0.6%
-2.0%
-7.1
-21.8
0.8%
872.1
-3.3%
82.5
22.2
-1.7%
-2.7%
-6.5%
Operating
Income/
Loss
YoY
9.9%
8.6%
Operating Income Ratio
89.0
23.4
14.1
4.9
-10.1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
42
© NEC Corporation 2016
FY15/3
FY16/3
International Sales
J-GAAP
(Billions of Yen)
23.1%
International Sales Ratio
20.5%
18.9%
20.9%
19.7%
20.8%
21.1%
152.3
120.8
157.8
138.2
+22.9%
+11.8%
+14.1%
+24.0%
23.2%
151.1
125.3
167.8
142.6
+6.3%
-0.8%
162.3
135.6
148.6
+7.4%
+4.2%
+3.2%
+3.7%
YoY
18.0%
18.0%
16.4%
International Sales
22.5%
156.6
-6.7%
+8.2%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
43
© NEC Corporation 2016
FY15/3
FY16/3
Sales, Operating Income/Loss (Public)
J-GAAP
(Billions of Yen)
Operating
Income Ratio
8.0%
10.7%
10.2%
9.8%
8.7%
1.1%
0.3%
YoY
12.5%
6.9%
295.9
271.0
6.1%
-0.4%
12.9%
271.1
+9.2%
+6.5%
176.7
Sales
126.6
+9.1%
+10.1%
164.0
+9.9%
14.2
17.6
198.1
146.4
26.5
+15.7%
189.2
181.4
+12.1%
37.1 145.5
+10.6%
20.3
15.8
-8.4%
161.0
-4.5%
35.1
-11.3%
-0.6%
13.1
9.9
1.6
0.4
Operating
Income
/Loss
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
44
© NEC Corporation 2016
FY15/3
FY16/3
Sales, Operating Income/Loss (Enterprise)
J-GAAP
(Billions of Yen)
Operating
Income Ratio
-4.1%
4.4%
7.4%
-0.3%
5.6%
-3.3%
6.7%
0.9%
82.6
81.5
72.3
71.3
Sales
60.7
58.7
+10.7%
+3.7%
54.4
61.2
+1.3%
+1.3%
YoY
5.1%
11.5%
83.0
78.4
71.1
68.3
+0.4%
+8.4%
+16.2%
+25.5%
+0.8%
+2.8%
+17.4%
4.1%
7.9%
-7.4%
Operating
Income/
Loss
6.0
3.1
-0.2
-2.4
4.0
0.5
5.5
2.8
6.2
3.6
9.6
-1.8
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
45
© NEC Corporation 2016
FY15/3
FY16/3
Sales, Operating Income/Loss (Telecom Carrier)
J-GAAP
(Billions of Yen)
Operating
Income Ratio 7.7%
3.6%
7.2%
219.0
Sales
180.0
154.0
-4.0%
Operating
Income/
Loss
172.7
+9.4%
28.5
13.8
5.6
2.9%
6.8%
181.5
+3.8%
-0.7%
15.4%
13.0%
151.0
-2.0%
5.1%
170.8
YoY
7.3%
236.9
-2.3%
-1.1%
212.2
184.9
+8.2%
142.6
+0.8%
13.7%
3.9%
36.6
159.2
+1.9%
-6.8%
-5.6%
12.3
12.4
4.3
-10.4%
29.2
13.6
8.8
6.1
-3.3
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
46
© NEC Corporation 2016
FY15/3
FY16/3
Sales, Operating Income/Loss (System Platform)
J-GAAP
(Billions of Yen)
Operating
Income Ratio
- 4.2%
4.3%
157.7
1.5%
3.5%
YoY
8.6%
3.0%
2.6%
3.1%
1.4%
11.6%
244.3
193.1
Sales
4.3%
8.6%
-5.4%
213.0
185.7
+16.4%
166.9
+11.0%
+5.9%
-3.3%
178.5
-7.5%
170.5
8.4
8.0
-12.8%
160.2
209.8
170.9
-1.5%
+5.1%
-8.2%
20.9
Operating
Income/
Loss
187.6
+0.3%
-4.0%
24.4
18.3
2.5
6.2
4.4
4.9
5.8
2.4
-6.6
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
47
© NEC Corporation 2016
FY15/3
FY16/3
Sales, Operating Income/Loss (Others)
J-GAAP
(Billions of Yen)
Operating
Income Ratio -1.6%
-6.9%
9.4%
6.7%
YoY
3.2%
2.3%
0.7%
2.5%
-3.4%
-6.1%
-9.9%
-8.7%
Sales
143.1
121.8
143.7
117.3
-3.5%
-12.1%
-37.2%
-34.9%
80.0
95.8
93.3
-21.3%
Operating
Income/
Loss
-9.9
0.8
-2.0
9.6
-44.1%
-20.5%
-26.9%
70.1
9.9 -12.4%
2.2
-3.1
-4.9
105.1
81.5
78.7
-14.9%
-15.6%
2.6
96.0
-8.7%
2.4
-6.9
-7.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
<Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar>
FY14/3
48
© NEC Corporation 2016
FY15/3
FY16/3
Exchange Rate
(Yen)
145
132.99
135
130
125
120.75
115
115
105
49
4/1
4/30
5/29
6/30
7/31
8/31
9/30
10/30
11/30
12/31
1/29
2/29
Dollar/Yen Exchange Rate (Actual)
Dollar/Yen Assumed Exchange Rate
Dollar/Yen Average Exchange Rate
Euro/Yen Exchange Rate (Actual)
Euro/Yen Assumed Exchange Rate
Euro/Yen Average Exchage Rate
© NEC Corporation 2016
3/31
Stock Price
April 28: Full Year
Earnings Release
21,000
(Yen)
September 29: Public
Business Briefing
440
January 28: Q3
Earnings Release
420
20,000
400
19,000
380
360
18,000
340
17,000
320
16,000
October 29: Q2
Earnings Release
June 22: Ordinary General
Meeting of Shareholders
15,000
14,000
December 10:
R&D Briefing
July 30: Q1
Earnings Release
4/1
4/30
5/29
6/30
7/31
8/28
9/30
The Nikkei Stock Average
50
300
© NEC Corporation 2016
10/30
11/30
NEC
12/30
280
260
1/29
February 29: Revision
of Financial Forecasts
2/29
3/31
240
Cautionary Statement with Respect to Forward-Looking Statements
This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial
conditions and other overall management of the NEC Group (the “forward-looking statements”). The forward-looking statements are made based on
information currently available to NEC and certain assumptions considered reasonable as of the date of this material. These determinations and assumptions
are inherently subjective and uncertain. These forward-looking statements are not guarantees of future performance, and actual operating results may differ
substantially due to a number of factors.
The factors that may influence the operating results include, but are not limited to, the following:
• Effects of economic conditions, volatility in the markets generally, and fluctuations in foreign currency exchange and interest rate
• Trends and factors beyond the NEC Group’s control and fluctuations in financial conditions and profits of the NEC Group that are caused by external factors
• Risks arising from acquisitions, business combinations and reorganizations, including the possibility that the expected benefits cannot be realized or that
the transactions may result in unanticipated adverse consequences
• Developments in the NEC Group’s alliances with strategic partners
• Effects of expanding the NEC Group’s global business
• Risk that the NEC Group may fail to keep pace with rapid technological developments and changes in customer preferences
• Risk that the NEC Group may lose sales due to problems with the production process or due to its failure to adapt to demand fluctuations
• Defects in products and services
• Shortcomings in material procurement and increases in delivery cost
• Acquisition and protection of intellectual property rights necessary for the operation of business
• Risk that intellectual property licenses owned by third parties cannot be obtained and/or are discontinued
• Risk that the NEC Group may be exposed to unfavorable pricing environment due to intensified competition
• Risk that a major customer changes investment targets, reduces capital investment and/or reduces the value of transactions with the NEC Group
• Risk that the NEC Group may be unable to provide or facilitate payment arrangements (such as vendor financing) to its customers on terms acceptable to
them or at all, or risk that the NEC Group’s customers are unable to make payments on time, due to the customers’ financial difficulties or otherwise
• Risk that the NEC Group may experience a substantial loss of, or an inability to attract, talented personnel
• Risk that the NEC Group’s ability to access the commercial paper market or other debt markets are adversely affected due to a downgrade in its credit
rating
• Risk that the NEC Group may incur large costs and/or liabilities in relation to internal control, legal proceedings, laws and governmental policies,
environmental laws and regulations, tax practice, information management, and human rights and working environment
• Consequences of natural and fire disasters
• Changes in methods, estimates and judgments that the NEC Group uses in applying its accounting policies
• Risk that the NEC Group may incur liabilities and losses in relation to its retirement benefit obligations
The forward-looking statements contained in this material are based on information that NEC possesses as of the date hereof. 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 the NEC Group. NEC does not intend to update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise.
51
© NEC Corporation 2016