Presentation

Financial Results for Q3
Fiscal Year Ending March 31, 2016
January 28, 2016
NEC Corporation
(http://www.nec.com/en/global/ir)
1
© NEC Corporation 2016
Index
Ⅰ. Financial Results for Q3, FY16/3
Ⅱ. Financial Forecasts for FY16/3
Financial Results for Q3, FY16/3 (Appendix)
Financial Forecasts for FY16/3 (Appendix)
Reference (Financial data)
* Net income (actual or forecast) for fiscal year ending March 31, 2016 refers to profit attributable to owners of the parent for the same period
2
© NEC Corporation 2016
Ⅰ. Financial Results for Q3, FY16/3
3
© NEC Corporation 2016
Q3 Results
Summary of Financial Results for Q3
(3/9 months)
(Billions of Yen)
Q3 <October to December>
Net Sales
Operating Income
% to Net Sales
Ordinary Income
% to Net Sales
Net Income
% to Net Sales
Free Cash Flow
Note:
Average Exchange rates
4
© NEC Corporation 2016
FY15/3
FY16/3
Actual
Actual
YoY
9 months <April to December>
FY15/3
FY16/3
Actual
Actual
YoY
677.2
641.0
- 5.4%
2,002.0
1,949.1
- 2.6%
14.1
4.9
-9.2
35.6
18.3
-17.4
2.1%
0.8%
1.8%
0.9%
19.7
3.8
36.4
15.2
2.9%
0.6%
1.8%
0.8%
10.3
0.1
22.8
0.3
1.5%
0.0%
1.1%
0.0%
-62.4
-58.4
-15.8
-10.2
+4.0
-75.7
-49.0
USD
1
110.42
120.96
104.97
121.53
EUR
1
140.08
133.82
139.65
134.14
-21.1
-22.4
+26.7
Q3 Results
Q3 Results by Segment
(3/9 months)
(Billions of Yen)
Net Sales
Public
Enterprise
Operating Income
% to Net Sales
8.7%
6.1%
Net Sales
61.2
0.5
71.1
3.6
Operating Income
% to Net Sales
Net Sales
Telecom Carrier
Operating Income
% to Net Sales
5.1%
159.2
6.1
5.1%
3.9%
170.9
2.4
% to Net Sales
2.6%
1.4%
Net Sales
Operating Income
Others
Operating Income/Loss
93.3
-3.1
78.7
-6.9
% to Net Sales
-3.4%
-8.7%
Adjustment
Operating Income/Loss
-12.3
677.2
14.1
-10.3
641.0
4.9
2.1%
0.8%
Net Sales
Total
Operating Income
% to Net Sales
5
0.9%
170.8
8.8
170.5
4.4
Net Sales
System Platform
Q3 <October to December>
FY15/3
FY16/3
YoY
Actual
Actutal
181.4
161.0
-11.3%
15.8
9.9
-6.0
© NEC Corporation 2016
9 months <April to December>
FY15/3
FY16/3
YoY
Actual
Actual
525.9
495.6
-5.8%
37.7
22.4
-15.3
7.2%
4.5%
+16.2%
+3.1
187.9
2.8
217.7
12.6
1.5%
5.8%
-6.8%
-2.6
503.3
25.4
486.7
16.4
5.0%
3.4%
+0.3%
-2.0
515.9
13.1
518.7
13.1
2.5%
2.5%
269.1
-5.9
230.3
-11.2
-2.2%
-4.9%
-37.5
2,002.0
35.6
-35.1
1,949.1
18.3
1.8%
0.9%
-15.6%
-3.7
+2.0
-5.4%
-9.2
+15.9%
+9.8
-3.3%
-9.0
+0.6%
+0.0
-14.4%
-5.4
+2.4
-2.6%
-17.4
Business Environment
The order trend for IT investment in services and hardware in Japan remains strong
▌ IT services in Japan show stable growth from Q4, FY15/3, particularly in the
retail and services areas, as well as public areas
IT Services Order Trend in Japan
（by Quarter, YoY）
116%
108%
110%
9 months,
FY16/3
Order growth
110％
105%
100％
FY15/3
Q1
6
© NEC Corporation 2016
Q2
Q3
Q4
FY16/3
Q1
Q2
Q3
My Number Related Business Update
Upward revision of targets for orders and sales for FY16/3
▐ Booked orders of 26B Yen, sales of 15B Yen for 9 months, showing stable performance
My Number Related Orders/Sales
(Billions of Yen)
35.0
37.0
9 months
Actual
25.0
10.0
15.0
30.0
9 months
Actual
15.0
FY15/3
FY15/3
FY16/3
FY16/3
FY16/3
FY16/3
Orders
Sales
Orders
Sales
Orders
Sales
（Forecast*）
（Forecast*）
*Forecasts as of April 28, 2015
7
26.0
© NEC Corporation 2016
（Forecast**） （Forecast**）
**Forecasts as of January 28, 2016
Q3 Results
Public Business
(3 months)
(Billions of Yen)
YoY
Sales
▌Sales
161.0
(-11.3%)
 Sales for central government decreased due
to decline in large projects in the last fiscal
year
181.4
164.0
Billions of Yen (YoY)
161.0
+10.6％
+9.9％
Operating
Income
17.6
10.7%
Operating
Income Ratio
FY14/3
Q3
8
© NEC Corporation 2016
▌Operating Income 9.9
-11.3％
 Decreased due to a sales decline
15.8
9.9
8.7%
FY15/3
Q3
(-6.0)
6.1%
FY16/3
Q3
Q3 Results
Enterprise Business
(3 months)
(Billions of Yen)
YoY
Sales
▌Sales
71.1
(+16.2%)
 Increased due to large projects in retail and
services, as well as manufacturing
71.1
61.2
60.7
Billions of Yen (YoY)
+16.2％
+2.8％
Operating
Income/Loss
Operating
Income Ratio
- 0.2
- 0.3%
FY14/3
Q3
9
▌Operating Income 3.6
＋0.8％
© NEC Corporation 2016
5.1%
3.6
0.5
0.9%
FY15/3
Q3
FY16/3
Q3
(+3.1)
 Improved due to a sales increase and
higher profitability in system construction
services
Q3 Results
Telecom Carrier Business
(3 months)
(Billions of Yen)
YoY
Sales
172.7
170.8
+3.8％
-1.1％
159.2
▌Operating Income 6.1
© NEC Corporation 2016
(-6.8%)
(-2.6)
 Decreased due to a sales decline
8.8
6.1
5.1%
10
159.2
 Decreased in Japan
 International sales increased in submarine
cable systems
12.4
FY14/3
Q3
▌Sales
-6.8％
Operating
Income
7.2%
Operating
Income Ratio
Billions of Yen (YoY)
FY15/3
Q3
3.9%
FY16/3
Q3
Q3 Results
System Platform Business
(3 months)
(Billions of Yen)
YoY
Sales
185.7
170.5
170.9
-8.2％
+0.3％
170.9
▌Operating Income 2.4
(+0.3%)
4.3%
4.4
Operating
Income Ratio
FY14/3
Q3
© NEC Corporation 2016
(-2.0)
 Decreased due to project lineup changes
8.0
11
▌Sales
 Increased slightly due to solid performance
of hardware
＋11.0％
Operating
Income
Billions of Yen (YoY)
2.4
2.6%
FY15/3
Q3
1.4%
FY16/3
Q3
Q3 Results
Others
(3 months)
(Billions of Yen)
YoY
Sales
93.3
Operating
Income/Loss
Operating
Income Ratio
78.7
(-15.6％)
▌Operating Income/Loss -6.9 (-3.7)
78.7
-20.5％
 Worsened due to a sales decline in energy
business
-15.6％
0.8
-3.4%
0.7%
-3.1
FY14/3
Q3
12
▌Sales
 Decreased due to deconsolidation of logistics
business, a decrease in the energy business
and mobile handsets business
117.3
-34.9％
Billions of Yen (YoY)
© NEC Corporation 2016
FY15/3
Q3
-8.7%
-6.9
FY16/3
Q3
Q3 Results
Variance from Q3 Forecasts by Segment
(3 months)
Enterprise remains strong, while Public and Telecom Carrier missed forecast
(Billions of Yen)
Sales
Operating Income/Loss
Improved due to a sales
increase and higher
profitability
Retail and services
Enterprise
+5.0
Public
-20.0
Others
-10.0
Energy business
Social infrastructure
area
*MBH: Mobile Backhaul equipment
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© NEC Corporation 2016
Enterprise
+3.0
Decreased as demand in
Japan pushed forward to
Q4 and a decline in MBH
Telecom
Carrier
-10.0
Decreased due to
a sales decline
Public
-7.0
Adjustment
+2.0
Telecom
Carrier
-3.0
Decreased due to
a sales decline
Improved due to
cost reduction
Others
-5.0
Decreased due to
a sales decline
*Variance from Q3 forecasts as of October 29, 2015
Q3 Results
Net Income Change（Year on Year）
(3 months)
(Billions of Yen)
Operating Income
-9.2
Public
-6.0
Others
-3.7
Telecom Carrier -2.6
System Platform -2.0
Adjustment
+2.0
Enterprise
+3.1
Gain on sales of investment
securities
+3.8
Income taxes
+1.7
FY15/3
Q3
10.3
Foreign exchange
gains/losses
Equity in earnings of
affiliates
Retirement benefit
expenses
14
© NEC Corporation 2016
Non-operating
Income/Loss
-6.7
-7.3
-2.6
+2.8
Others
+5.7
FY16/3
Q3
0.1
II. Financial Forecasts for FY16/3
15
© NEC Corporation 2016
Forecasts
FY16/3
Summary of Financial Forecasts for FY16/3
(Billions of Yen)
(Billions of Yen)
Full Year
Net Sales
FY15/3
FY16/3
Actual
Forecasts
2,935.5
3,100.0
YoY
Net Sales
+ 5.6%
Public
Operating Income
% to Net Sales
Net Sales
Operating Income
% to Net Sales
Ordinary Income
% to Net Sales
128.1
135.0
4.4%
4.4%
112.1
120.0
3.8%
3.9%
+ 6.9
Enterprise
Operating Income
% to Net Sales
Net Sales
Telecom Carrier
Operating Income
% to Net Sales
+ 7.9
Net Sales
System Platform
Operating Income
% to Net Sales
Net Income
% to Net Sales
57.3
2.0%
65.0
+ 7.7
Net Sales
Others
Operating Income
Adjustment
Operating Income/Loss
2.1%
% to Net Sales
Net Sales
Free Cash Flows
40.4
80.0
+ 39.6
Total
Operating Income
% to Net Sales
Note: Assumed exchange rates for Q4 16/3
Full Year
FY15/3
FY16/3
Actual
Forecasts
821.9
865.0
74.8
86.0
9.1%
9.9%
270.5
8.3
290.0
11.0
3.1%
3.8%
740.2
62.0
780.0
64.0
8.4%
8.2%
728.9
31.4
760.0
33.0
4.3%
4.3%
374.1
4.0
405.0
4.0
1.1%
1.0%
- 52.4
2,935.5
128.1
- 63.0
3,100.0
135.0
4.4%
4.4%
YoY
+ 5.2%
+ 11.2
+ 7.2%
+ 2.7
+ 5.4%
+ 2.0
+ 4.3%
+ 1.6
+ 8.2%
+0.0
- 10.6
+ 5.6%
+ 6.9
$1=¥115, €1=¥130
*Forecasts as of January 28, 2016 (no difference from forecasts as of October 29, 2015)
16
© NEC Corporation 2016
Forecasts
FY16/3
Public Business
(Billions of Yen)
YoY
Sales
821.9
738.4
+11.3％
+8.5％
Operating
Income
74.8
865.0
+5.2％
86.0
Billions of Yen (YoY)
▌Sales
865.0（+5.2％）
 Increase mainly in the public areas
▌Operating Income 86.0（+11.2）
 Improve due to sales increase, cost
reduction and a decrease in loss making
projects
58.6
Operating
Income Ratio
7.9%
9.1%
9.9%
FY14/3
FY15/3
FY16/3
Forecasts*
*Forecasts as of January 28, 2016
17
© NEC Corporation 2016
Forecasts
FY16/3
Enterprise Business
(Billions of Yen)
YoY
Sales
272.3
270.5
290.0
+7.2％
+8.2％
-0.7％
11.0
Operating
Income
Operating
Income Ratio
8.3
Billions of Yen (YoY)
▌Sales
290.0
(+7.2％）
 Increase in manufacturing industries, as
well as retail and service industries
▌Operating Income 11.0（+2.7）
 Improve due to a sales increase and higher
profitability in system construction services
6.5
2.4%
FY14/3
3.1%
FY15/3
3.8%
FY16/3
Forecasts*
*Forecasts as of January 28, 2016
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© NEC Corporation 2016
Forecasts
FY16/3
Telecom Carrier Business
(Billions of Yen)
YoY
Sales
725.8
+2.3％
Operating
Income
740.2
+5.4％
+2.0％
60.3
780.0
62.0
64.0
Operating
Income Ratio
8.3%
8.4%
8.2%
Billions of Yen (YoY)
▌Sales
780.0（+5.4％）
 Japan: Slightly decrease
 International: Increase in submarine cable
systems, mobile backhaul and TOMS
▌Operating Income 64.0（+2.0）
 Improve due to sales increase mainly in
international businesses
*TOMS: Telecom Operations & Management Solutions
FY14/3
FY15/3
FY16/3
Forecasts*
*Forecasts as of January 28, 2016
19
© NEC Corporation 2016
Forecasts
FY16/3
System Platform Business
(Billions of Yen)
YoY
Sales
780.8
728.9
+4.9％
Operating
Income
760.0
+4.3％
-6.6％
30.7
Operating
Income Ratio
3.9%
FY14/3
31.4
33.0
4.3%
4.3%
FY15/3
FY16/3
Forecasts*
▌Sales
Billions of Yen (YoY)
760.0（+4.3％）
 Increase in solution platform including
servers, network and software
▌Operating Income 33.0（+1.6）
 Improve due to sales increase and cost
reduction
*Forecasts as of January 28, 2016
20
© NEC Corporation 2016
Forecasts
FY16/3
Others
(Billions of Yen)
YoY
Sales
374.1
- 0.3%
Operating
Income/
Loss
405.0
405.0
▌Operating Income 4.0
+8.2％
-28.9％
Operating
Income Ratio
▌Sales
（+8.2％）
 International sales increase while mobile
handsets sales decrease
525.9
-23.3％
Billions of Yen (YoY)
4.0
4.0
（+/-0.0)
 Remain flat with improvements through
sales increase and cost reduction, offsetting
one-time patents-related income for FY15/3
1.1%
1.0%
-1.4
FY14/3
FY15/3
FY16/3
Forecasts*
*Forecasts as of January 28, 2016
21
© NEC Corporation 2016
Forecasts
FY16/3
Net Income Change (Year on Year)
(Billions of Yen)
Operating
Income
+6.9
Non-operating
Income/Loss
+1.0
Decrease in profit/loss
attributable to noncontrolling interests
and improvement in
extraordinary income/loss
Others
-0.2
Decrease in retirement benefit
expenses (+10.4), and
decrease in foreign exchange gains
FY15/3
57.3
Public
Enterprise
Telecom Carrier
System Platform
Adjustment
+11.2
+2.7
+2.0
+1.6
-10.6
FY16/3
Forecast*
65.0
*Forecast as of January 28, 2016
22
© NEC Corporation 2016
Business Update on Focus Areas
Sales from focus areas* grew 1.2x in 9 months YoY
- now consists of nearly 15% of total sales, up from 10% last year Sales growth from focus areas in 9 months
(YoY)
▌ SDN
 Expanding the number of verification tests for
global carriers
Big data
 Deployed SDN-based common station
network across all 36 stations in the
Yamanote train line area in greater Tokyo
Cloud
▌ Cloud
 AOKI Inc. renewed a large-scale core system
Cyber Security
▌ Safety/Cyber Security
SDN
 Launched Cyber Security Factory in Singapore
0
0.5
1
* Focus areas also include TOMS and Safety business
23
© NEC Corporation 2016
1.5
2x
** SDN: Software-Defined Networking
NEC aims to achieve full-year forecasts for a
fourth consecutive year and intends
to increase its dividend.
We demonstrate the NEC Group’s capability to
make solid contributions to society
in the final year of our three-year
Mid-term Management Plan 2015
*Forecasts as of January 28, 2016
24
© NEC Corporation 2016
25
© NEC Corporation 2016
26
© NEC Corporation 2016
Financial Results for Q3, FY16/3 (Appendix)
27
© NEC Corporation 2016
Q3 Results
Results for Q3 by Segment ( three-year transition )
（Billions of Yen）
Net Sales
700.4
164.0
Public
Enterprise
Telecom
Carrier
System
Platform
Others
28
60.7
172.7
185.7
677.2
Operating Income/Loss
61.2
641.0
170.8
159.2
170.5
170.9
117.3
93.3
78.7
FY14/3
Q3
FY15/3
Q3
FY16/3
Q3
© NEC Corporation 2016
17.6
161.0
71.1
Enterprise
23.4
Public
181.4
(3 months)
14.1
4.9
15.8
Telecom
Carrier
System
Platform
Others
Enterprise
Adjustment
12.4
9.9
0.5
8.8
8.0
0.8
-0.2
4.4
-3.1
-15.2
-12.3
FY14/3
Q3
FY15/3
Q3
Others
3.6
6.1
2.4
-6.9
-10.3
FY16/3
Q3
Q3 Results
Financial Results for Q3 by Segment
(3 months)
(Billions of Yen)
Net Sales
Operating Income/Loss
Operating
Income for
Q3, FY16/3
4.9
Others
12%
Public
25%
System
Platform
27%
Sales for Q3
FY16/3
641.0
Enterprise
11%
Public
9.9
Telecom
Carrier
6.1
Enterprise
3.6
System
Platform
2.4
Telecom
Carrier
25%
Others
-6.9
29
© NEC Corporation 2016
Q3 Results
Sales Change (Year on Year)
(3 months)
Decreased in Japan, while
international sales increased
in submarine cable systems
Increased due to large
projects in manufacturing,
as well as retail and
services
Public
-20.4
FY15/3
Q3
677.2
30
© NEC Corporation 2016
Enterprise
+9.9
Telecom
Carrier
-11.6
Sales for central government
decreased due to decline in large
projects in the last fiscal year
(Billions of Yen)
Increased due to solid
performance of hardware
System
Platform
+0.5
Decreased due to
deconsolidation of
logistics business, a
decrease in the energy
business and the mobile
handsets business
Others
-14.6
FY16/3
Q3
641.0
Q3 Results
Operating Income Change (Year on Year)
(3 months)
(Billions of Yen)
Decreased due to
a sales decline
Decreased due to
project lineup changes
Improved due to a sales
increase and higher profitability
in system construction services
Enterprise
+3.1
FY15/3
Q3
14.1
Public
-6.0
Decreased due to
a sales decline
31
© NEC Corporation 2016
Telecom
Carrier
-2.6
Worsened due to a sales
decline in energy business
System
Platform
-2.0
Improved due to
cost reductions
Others
-3.7
Adjustment
+2.0
FY16/3
Q3
4.9
Q3 Results
International Sales
(3 months)
Sales by Region
23.2%
International
Sales Ratio
19.7%
China,
APAC
138.2
The
Americas
Greater
21.1%
50.3
142.6
52.4
148.6
49.2
62.9
54.5
56.2
EMEA
33.4
34.0
36.5
FY14/3
Q3
FY15/3
Q3
FY16/3
Q3
EMEA
5.7%
9.8%
The
Americas
7.7%
Greater
China,
APAC
(Billions of Yen)
Sales for Q3
FY16/3
641.0
Japan
76.8%
*Sales are classified by country or region based on customer locations.
32
© NEC Corporation 2016
Q3 Results
Free Cash Flows
(3 months)
(Billions of Yen)
20.0
0.8
0.0
10.8
-10.0
-1.2
-3.5
-20.0
-61.1
-54.9
-40.0
-58.4
-60.0
-62.4
-80.0
FY14/3
Q3
Cash flows from operating activities
33
© NEC Corporation 2016
FY15/3
Q3
Cash flows from investing activities
FY16/3
Q3
Free cash flows
Financial Position Data
Q3 Results
(Billions of Yen)
End of March
2015
Difference
from end of
March 2015
End of Dec
2014
2,620.7
2,497.4
- 123.2
2,534.9
Net assets
884.2
867.7
- 16.5
783.0
Interest-bearing debt
520.8
574.2
+ 53.4
636.4
Shareholders' equity
823.7
807.2
- 16.4
722.0
31.4%
32.3%
+ 0.9pt
28.5%
D/E ratio (times)
0.63
0.71
-0.08pt
0.88
Net D/E ratio (times)
0.41
0.50
-0.09pt
0.63
181.1
171.7
- 9.4
180.5
Total assets
Equity ratio (%)
Cash and cash equivalents
34
End of Dec
2015
© NEC Corporation 2016
<Ref.> Balance Sheets (At the end of December 2015)
Q3 Results
(Billions of Yen)
Current Assets
1,472.4
Liabilities
-106.7
-104.3
Collection of
accounts
receivable-trade
Total Assets
2,497.4
Noncurrent Assets
1,025.0
35
© NEC Corporation 2016
1,629.7
Decrease in trade notes and
accounts payable-trade, and
accrued expenses
（-123.2 compared to
end of March 2015）
-18.9
Compared to
end of March
2015
-16.5
Dividends paid, and
a decrease in foreign currency
translation adjustments
Net Assets
867.7
Results for 9 months by Segment ( three-year transition )
467.3
Public
Enterprise
Telecom
Carrier
System
Platform
Others
190.8
506.7
536.4
382.2
2,002.0
525.9
Operating Income/Loss
© NEC Corporation 2016
23.7
1,949.1
495.6
37.7
Enterprise
0.5
2.8
31.8
25.4
Others
9.8
-11.0
13.1
-5.9
13.1
-11.2
Adjustment
-39.5
-37.5
-35.1
FY15/3
<Apr-Dec>
FY16/3
<Apr-Dec>
217.7
503.3
486.7
System
Platform
518.7
269.1
230.3
18.3
32.1
187.9
515.9
35.6
Public
Telecom
Carrier
FY14/3
FY15/3
FY16/3
<Apr-Dec> <Apr-Dec> <Apr-Dec>
36
(9 months)
（Billions of Yen）
Net Sales
2,083.5
Q3 Results
FY14/3
<Apr-Dec>
22.4
12.6
16.4
Q3 Results
Financial Results for 9 months by Segment
(Billions of Yen)
Net Sales
Operating Income/Loss
Public
22.4
Others
12%
Public
25%
System
Platform
27%
Sales for
9 months,
FY16/3
1,949.1
(9 months)
Enterprise
12.6
Operating
Income
Telecom
for
9 months,
Carrier
FY16/3
16.4
System
18.3
Platform
13.1
Enterprise
11%
Telecom
Carrier
25%
Others
-11.2
37
© NEC Corporation 2016
Q3 Results
Sales Change (Year on Year)
(9 months)
(Billions of Yen)
Increased due to solid
performance of hardware
Increased due to large
projects in retail and services,
as well as manufacturing
Enterprise
+29.9
FY15/3
9 months
<Apr-Dec>
2,002.0
38
Public
-30.3
© NEC Corporation 2016
Telecom
Carrier
-16.6
System
Platform
+2.9
Decreased in Japan, while
international sales increased
in submarine cable systems
and TOMS
Sales for central government
decreased due to decline in large
projects in the last fiscal year
Decreased due to
deconsolidation of
logistics business, a
decrease in the energy
business and the mobile
handsets business
Others
-38.8
FY16/3
9 months
<Apr-Dec>
1,949.1
Q3 Results
Operating Income Change (Year on Year)
Improved due to a sales
increase and higher profitability
in system construction services
Enterprise
+9.8
FY15/3
9 months
<Apr-Dec>
35.6
(9 months)
Telecom
Carrier
-9.0
System
Platform
+0.0
Worsened due to a sales
decline in energy business
Others
-5.4
Public
-15.3
Improved due to
cost reductions
Decreased due to a sales
decline, increase in costs to
reinforce operations
39
© NEC Corporation 2016
(Billions of Yen)
Decreased due to
a sales decline
Adjustment
+2.4
FY16/3
9 months
<Apr-Dec>
18.3
Q3 Results
Net Income Change (Year on Year)
Operating
income
-17.4
Public
Telecom Carrier
Others
System Platform
Adjustment
Enterprise
(3 months)
(Billions of Yen)
-15.3
-9.0
-5.4
+0.0
+2.4
+9.8
Foreign exchange gains/losses -9.5
Retirement benefit expenses +8.5
FY15/3
9 months
<Apr-Dec>
22.8
40
© NEC Corporation 2016
Non-operating
income/loss
-3.8
Profit/Loss attributable to
non-controlling interests -7.1
Business structure
improvement expenses +2.9
Gain on sales of investment
securities
+2.7
Others
-1.3
FY16/3
9 months
<Apr-Dec>
0.3
Q3 Results
International Sales
(9 months)
Sales by Region
22.9%
International
Sales Ratio
19.7%
Greater
20.9%
China,
APAC
411.3
419.1
446.6
152.7
The
Americas
152.5
Greater
China,
APAC
167.0
171.8
192.1
EMEA
91.9
97.9
101.8
149.4
(Billions of Yen)
EMEA
5.2%
9.9%
The
Americas
7.8%
Sales for
9 months,
FY16/3
1,949.1
Japan
77.1%
FY14/3
FY15/3
FY16/3
<Apr-Dec> <Apr-Dec> <Apr-Dec>
*Sales are classified by country or region based on customer locations.
41
© NEC Corporation 2016
Q3 Results
Free Cash Flows
20.0
(9 months)
(Billions of Yen)
+Improvement
of working capital
+Improvement in income/loss
before income taxes
0.0
-20.0
-33.4
-37.3
-56.8
-42.3
+Decrease in cash
outflows for M&A
-40.0
-Acquisition of trust
beneficiary rights in
the last fiscal year, etc.
-60.0
-80.0
-100.0
-49.0
-75.7
-94.1
FY14/3
<Apr-Dec>
Cash flows from operating activities
42
-22.1 -26.9
© NEC Corporation 2016
FY15/3
<Apr-Dec>
Cash flows from investing activities
FY16/3
<Apr-Dec>
Free cash flows
Financial Forecasts for FY16/3 (Appendix)
43
© NEC Corporation 2016
Forecasts
FY16/3
Financial Forecasts by Segment (three-year transition)
(Billions of Yen)
Net Sales
3,043.1
Public
738.4
Enterprise
272.3
Telecom
Carrier
725.8
System
Platform
Others
780.8
2,935.5
821.9
270.5
740.2
Operating Income/Loss
128.1
3,100.0
865.0
290.0
780.0
728.9
760.0
525.9
374.1
405.0
FY14/3
FY15/3
FY16/3
Forecast*
135.0
106.2
74.8
86.0
Public
58.6
Enterprise
6.5
8.3
11.0
Telecom
Carrier
60.3
62.0
64.0
System
Platform
Others
30.7
-1.4
31.4
4.0
33.0
4.0
Adjustment
-48.6
-52.4
-63.0
FY14/3
FY15/3
FY16/3
Forecast*
* Forecasts as of January 28, 2016
44
© NEC Corporation 2016
Forecasts
FY16/3
Financial Forecasts for FY16/3 by Segment
Net Sales
Operating Income
Operating
Income
Forecast for
FY16/3
Public
86.0
Others
13%
Sales Forecast
for FY16/3
3,100.0
Telecom
Carrier
25%
135.0
Telecom
Carrier
64.0
Public
28%
System
Platform
25%
(Billions of Yen)
System
Platform
33.0
Enterprise
9%
Enterprise
11.0
Others
4.0
* Forecasts as of January 28, 2016
45
© NEC Corporation 2016
Forecasts
FY16/3
Sales Change (Year on Year)
(Billions of Yen)
A slight decrease in sales in Japan
Increase in submarine cable systems,
MBH and TOMS in international markets
Increase in retail and service,
as well as manufacturing
Public
+43.1
Enterprise
+19.5
International sales increase while
mobile handsets sales decrease
Telecom
Carrier
+39.9
System
Platform
+31.1
Others
+30.9
FY16/3
Increase in solution platform
(servers, network and software)
FY15/3
Forecast*
3,100.0
Increase in public
2,935.5
*Forecast as of January 28, 2016
46
© NEC Corporation 2016
Forecasts
FY16/3
Operating Income Change (Year on Year)
Improve due to sales increase
in the international business
Improve due to a sales
increase and higher profitability
in system construction services
Public
+11.2
FY15/3
128.1
Enterprise
+2.7
(Billions of Yen)
Remain flat with improvements
through sales increase and cost
reduction, offsetting one-time
patents-related income for FY15/3
Telecom
Carrier
+2.0
Improve due to sales increase,
cost efficiency and a decrease in
loss making projects
System
Platform
+1.6
Increase in costs
Others
+/-0.0
Adjustment
-10.6
Improve due to a sales
increase and more cost
efficiency
FY16/3
Forecast*
135.0
*Forecast as of January 28, 2016
47
© NEC Corporation 2016
Forecasts
FY16/3
Capital Expenditure, Depreciation and R&D expenses
(Billions of Yen)
Capital Expenditure
R&D Expenses
Depreciation
% to Sales 4.7%
50.0
45.2
48.5
142.7
Public
16.0
Enterprise
Telecom
Carrier
1.8
6.8
System
Platform
5.3
Others
*
Public
37.4
16.1
0.3
5.9
Enterprise
20.0
0.5
9.0
9.0
16.1
0.6
Telecom
Carrier
54.0
System
Platform
40.1
Others
32.0
7.6
10.8
7.5
FY14/3
FY15/3
11.5
FY16/3
Forecast**
*Not including acquisition of trust beneficiary rights
4.7%
50.0
*
40.8
4.6%
FY14/3 FY15/3 FY16/3
Forecast**
134.2
145.0
18.0
1.2
52.6
39.8
22.5
FY14/3 FY15/3 FY16/3
Forecast**
**Forecasts as of January 28, 2016
48
© NEC Corporation 2016
Reference (Financial data)
49
© NEC Corporation 2016
Net Sales, Operating Income/Loss
(Billions of Yen)
3.9%
3.3%
3.0%
959.6
- 3.4%
Net Sales
743.0
640.1
700.4
- 1.2%
726.1
+6.4％
677.2
-2.3％
-3.0％
+1.4％
586.6
Q1
<Apr-Jun>
28.6
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
© NEC Corporation 2016
641.0
-0.6%
-5.4%
-2.0%
23.4
14.1
-7.1
Q2
<Jul-Sep>
0.8%
92.4
23.4
-21.8
721.5
-3.3％
82.5
22.2
- 1.7%
-2.7％
-6.5％
Operating
Income/
Loss
YoY
3.2%
2.1%
933.5
598.7
-9.0％
50
9.9%
8.6%
Operating Income Ratio
4.9
-10.1
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
Q3
<Oct-Dec>
International Sales
(Billions of Yen)
23.1%
International Sales Ratio
18.9%
20.5%
20.9%
19.7%
20.8%
21.1%
157.8
152.3
138.2
120.8
+22.9％
+11.8％
+14.1％
+24.0％
Q1
<Apr-Jun>
Q2
<Jul-Sep>
51
151.1
125.3
© NEC Corporation 2016
167.8
142.6
+6.3％
-0.8％
162.3
135.6
+7.4％
+3.2％
+3.7％
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
23.2%
18.0%
16.4%
International Sales
22.5%
148.6
+4.2％
+8.2％
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
Q3
<Oct-Dec>
YoY
Sales, Operating Income/Loss (Public)
(Billions of Yen)
10.7%
Operating 8.0%
Income Ratio
0.3%
10.2%
9.8%
12.5%
YoY
8.7%
1.1%
6.9%
295.9
271.0
6.1%
-0.4%
+9.2％
+6.5％
176.7
Sales
126.6
+10.1％
+9.1％
164.0
+9.9％
17.6
Operating
14.2
Income
/Loss
198.1
146.4
26.5
189.2
181.4
37.1 145.5
+12.1％
+10.6％
+15.7％
20.3
15.8
161.0
-4.5％
-11.3%
-0.6％
13.1
9.9
1.6
0.4
-0.5
Q1
<Apr-Jun>
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
52
© NEC Corporation 2016
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
3Q
<Oct-Dec>
Sales, Operating Income/Loss (Enterprise)
(Billions of Yen)
7.4%
Operating 4.4%
Income Ratio
-4.1%
6.7%
5.6%
0.9%
-0.3%
82.6
72.3
71.3
60.7
58.7
+10.7％
+3.7％
5.1%
61.2
+1.3％
+1.3％
78.4
68.3
+8.4％
+25.5％
+0.8％
71.1
+16.2％
-7.4％
Operating
Income/
Loss
6.0
3.1
-0.2
-2.4
Q1
<Apr-Jun>
Q2
<Jul-Sep>
4.0
© NEC Corporation 2016
0.5
5.5
2.8
6.2
3.6
-1.8
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
53
54.4
+2.8％
+17.4％
7.9%
-3.3%
81.5
Sales
4.1%
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
Q3
<Oct-Dec>
YoY
Sales, Operating Income/Loss (Telecom Carrier)
(Billions of Yen)
7.2%
219.0
Sales
180.0
154.0
-4.0％
172.7
+9.4％
2.9%
28.5
13.8
151.0
+0.8％
5.1%
170.8
-1.1％
-2.0％
12.4
5.6
6.8%
181.5
+3.8％
-0.7％
Operating
Income/
Loss
15.4%
13.0%
Operating
Income Ratio 7.7%
3.6%
YoY
7.3%
236.9
-2.3%
184.9
+8.2％
142.6
36.6
159.2
+1.9％
-6.8％
-5.6％
12.3
13.6
8.8
4.3
3.9%
6.1
-3.3
Q1
<Apr-Jun>
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
54
© NEC Corporation 2016
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
3Q
<Oct-Dec>
Sales, Operating Income/Loss (System Platform)
(Billions of Yen)
8.6%
4.3%
Operating
Income Ratio
4.3%
193.1
157.7
1.5%
3.5%
YoY
3.0%
2.6%
3.1%
1.4%
244.3
- 4.2%
Sales
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
+5.1%
-8.2％
20.9
Operating
Income/
Loss
187.6
-4.0%
170.9
+0.3%
18.3
2.5
6.2
4.4
4.9
5.8
2.4
-6.6
Q1
<Apr-Jun>
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY14/3
55
© NEC Corporation 2016
Q2
<Jul-Sep>
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
Q2
<Jul-Sep>
FY16/3
Q3
<Oct-Dec>
Sales, Operating Income/Loss (Others)
(Billions of Yen)
9.4%
6.7%
Operating
Income Ratio -1.6%
-6.9%
YoY
3.2%
2.3%
0.7%
-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
Q1
<Apr-Jun>
0.8
-2.0
Q2
<Jul-Sep>
-20.5％
2.2
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
-3.1
© NEC Corporation 2016
Q2
<Jul-Sep>
-26.9％
9.9
-4.9
FY14/3
56
9.6
-44.1％
105.1
70.1
-12.4％
78.7
-14.9％
-15.6％
2.6
-6.9
-7.0
Q3
Q4
Q1
<Oct-Dec> <Jan-Mar> <Apr-Jun>
FY15/3
81.5
Q2
<Jul-Sep>
FY16/3
Q3
<Oct-Dec>
Exchange Rate
（Yen）
140
134.14
130
130
120
110
57
121.53
115
4/1
4/30
5/29
6/30
7/31
8/31
9/30
10/30
11/30
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
12/31
Stock Price
July 30: Q1
Earnings Release
April 28: Full Year
Earnings Release
21,000
October 29: Q2
Earnings Release
(Yen)
430
20,500
420
20,000
410
19,500
400
19,000
390
18,500
380
18,000
370
17,500
June 22: Ordinary General
Meeting of Shareholders
17,000
4/1
4/30
5/29
6/30
7/31
The Nikkei Stock
58
350
September 29:
Public Business Briefing
16,500
16,000
360
December 10:
R&D Briefing
© NEC Corporation 2016
340
8/28
9/30
NEC
10/30
11/30
12/30
330
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 safe-harbors 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.
Note: The consolidated financial statements in this presentation have been prepared in conformity with the Japanese GAAP. In this
presentation, the accounting periods of the fiscal years for March 31, 2014 and 15 were referred as FY14/3 and FY15/3 respectively.
Any other fiscal years would be referred similarly.
59
© NEC Corporation 2016