Presentation

Financial Results for 1H
Fiscal Year Ending March 31, 2015
October 30, 2014
NEC Corporation
(http://www.nec.com/en/global/ir)
Index
Ⅰ. Financial Results for 1H, FY15/3
Ⅱ. Financial Forecasts for FY15/3
Ⅲ. Progress on Mid-term Management Plan 2015
<Supplementary information>
l Financial Results for 1H, FY15/3 (Appendix)
l Financial Forecasts for FY15/3 (Appendix)
l Reference (Financial data)
Page 2
© NEC Corporation 2014
Ⅰ. Financial Results for 1H, FY15/3
Summary of Financial Results for 1H
1H Results
l Decreased year on year.
Net Sales
YoY
-4.2%
Operating
Income
YoY
+21.1B Yen
Net Income/Loss
Sales of existing core businesses increased by approx. 3%
• Significant increase in Public business
• Decreased in Others due to deconsolidation of
businesses
l Attained substantial increase year on year
• Mobile phone business turned to the black
• Improved profitability in Public and System Platform
business
l Improved due to larger operating income and smaller
extraordinary loss
• A decrease in business structure improvement expenses
YoY
Page 4
+38.6B Yen
(Recorded extraordinary loss of approx.11.0 billion yen for mobile phone
business in the previous year)
© NEC Corporation 2014
1H Results
Summary of Financial Results for 1H
(Billions of Yen)
Q2 <July to September>
FY14/3
FY15/3
Actual
Actual
YoY
1H <April to September>
FY14/3
FY15/3
Actual
Actual
Net Sales
743.0
726.1
- 2.3%
1,383.1
1,324.8
- 4.2%
Operating Income
22.2
28.6
+ 6.4
0.4
21.5
+ 21.1
% to Net Sales
Ordinary Income/Loss
% to Net Sales
Net Income/Loss
% to Net Sales
Free Cash Flow
3.0%
13.6
1.8%
-4.7
-0.6%
-135.9
3.9%
26.7
0.0%
+ 13.1
3.7%
22.6
-1.1%
+ 27.2
3.1%
-66.7
-14.5
-26.2
-1.9%
+ 69.2
-94.8
Note: Average exchange rates for 1H, FY15/3： $1= ¥102.24, €1= ¥139.44
(Assumed exchange rates for FY15/3 as of July 30, 2014: $1 = ¥100, €1= ¥130)
Average exchange rates for 1H, FY14/3： $1= ¥98.11, €1= ¥128.43
Page 5
YoY
© NEC Corporation 2014
1.6%
16.7
+ 31.2
1.3%
12.5
+ 38.6
0.9%
-13.4
+ 81.5
1H Results
1H Results by Segment
(Billions of Yen)
Net Sales
Public
Enterprise
Operating Income
% to Net Sales
8.0%
10.2%
Net Sales
Operating Income
71.3
3.1
72.3
4.0
% to Net Sales
4.4%
5.6%
180.0
13.8
181.5
12.3
7.7%
6.8%
193.1
8.4
178.5
6.2
4.3%
3.5%
121.8
-2.0
95.8
2.2
% to Net Sales
-1.6%
2.3%
Operating Loss
-15.3
-16.3
Net Sales
743.0
22.2
726.1
28.6
3.0%
3.9%
Net Sales
Telecom Carrier
Operating Income
% to Net Sales
Net Sales
System Platform
Operating Income
% to Net Sales
Net Sales
Others
Adjustment
Total
Operating Income/Loss
Operating Income
% to Net Sales
Page 6
Q2 <July to September>
FY14/3
FY15/3
YoY
Actual
Actual
176.7
198.1
+ 12.1%
14.2
20.3
+6.1
© NEC Corporation 2014
1H <April to September>
FY14/3
FY15/3
YoY
Actual
Actual
303.3
344.5
+ 13.6%
14.5
21.9
+7.3
4.8%
6.3%
130.1
0.7
126.7
2.3
0.6%
1.8%
334.0
19.4
332.5
16.6
5.8%
5.0%
350.7
1.8
345.4
8.7
0.5%
2.5%
264.9
-11.8
175.8
-2.7
-4.5%
-1.5%
-1.0
-24.3
-25.2
-0.9
- 2.3%
+6.4
1,383.1
0.4
1,324.8
21.5
- 4.2%
+21.1
0.0%
1.6%
+ 1.3%
+0.9
+ 0.8%
-1.5
- 7.5%
-2.2
- 21.3%
+4.1
- 2.6%
+1.5
- 0.5%
-2.8
- 1.5%
+6.9
- 33.6%
+9.1
1H Results
Public Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
344.5
Sales
344.5
(+13.6%)
r Increased from solid sales for
government and public areas
303.3
+13.6%
276.9
Operating
Income +9.5%
Ratio
5.2%
Operating
Income
14.4
FY13/3
1H
Page 7
▐ Sales
▐ Operating Income 21.9
6.3%
r Increased due to sales increase
4.8%
21.9
14.5
FY14/3
1H
(+7.3)
FY15/3
1H
© NEC Corporation 2014
1H Results
Enterprise Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
130.1
126.7
+9.5%
-2.6%
118.8
FY13/3
1H
Page 8
(-2.6%)
2.3
(+1.5)
r Improved due to higher cost efficiency,
despite sales decrease
0.6%
1.8%
Operating
Income
1.9
126.7
s Decreased in the retail and services
industries
▐ Operating Income
Operating
Income
Ratio
1.6%
▐ Sales
0.7
FY14/3
1H
2.3
FY15/3
1H
© NEC Corporation 2014
1H Results
Telecom Carrier Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
342.7
▐ Sales
Operating
Income
-2.5%
Ratio
s Decreased in Japan, despite an
increase in international business
mainly in mobile backhaul and TOMS
▐ Operating Income
-0.5%
9.0%
5.8%
Operating
Income
5.0%
16.6
(-2.8)
s Decreased due to accelerated
investment in SDN
TOMS: Telecom Operations and Management Solutions
SDN: Software-Defined Networking
30.9
19.4
Page 9
(-0.5%)
332.5
334.0
FY13/3
1H
332.5
FY14/3
1H
16.6
FY15/3
1H
© NEC Corporation 2014
1H Results
System Platform Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
367.2
350.7
▐ Sales
s Decreased due to a decline
in enterprise network
345.4
Operating
Income
-4.5%
Ratio
▐ Operating Income
-1.5%
3.2%
2.5%
0.5%
11.7
8.7
1.8
Page 10
FY14/3
1H
8.7 (+6.9)
r Increased due to improved profitability
and higher cost efficiency,
despite sales decrease
Operating
Income
FY13/3
1H
345.4 (-1.5%)
FY15/3
1H
© NEC Corporation 2014
1H Results
Others
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
342.2
-22.6%
Operating
Income
Ratio 264.9
5.1%
175.8
- 1.5%
17.3
- 4.5%
-11.8
FY13/3
1H
Page 11
FY14/3
1H
175.8 (-33.6%)
s Decreased due to deconsolidation of
NEC BIGLOBE, Ltd. and
NEC Mobiling, Ltd. as well as a
decline in mobile phone shipments
▐ Operating Loss
-33.6%
Operating
Income
/Loss
▐ Sales
-2.7 (+9.1)
r Improved due to better profitability
in mobile phone business, despite
impact of deconsolidation of
businesses
-2.7
FY15/3
1H
© NEC Corporation 2014
1H Results
Net Income/Loss Change (Year on Year)
(Billions of Yen)
Business structure improvement expenses
Minority shareholder interests in income
Income taxes
Gain on sales of subsidiaries and affiliates’ stocks
FY15/3 1H
<Apr-Sep>
+12.5
+9.4
+4.1
-16.3
FY14/3 1H
<Apr-Sep>
12.5
Others
+7.4
-26.2
Improvement in non-operating
income/loss
+10.1
Improvement in
operating income
Others
+21.1
Equity in earnings of affiliates +2.0
Subsidy income
+1.9
Public
System Platform
Enterprise
Adjustment
Telecom Carrier
Page 12
© NEC Corporation 2014
+9.1
+7.3
+6.9
+1.5
-0.9
-2.8
Ⅱ. Financial Forecasts for FY15/3
Full Year
Forecasts
Summary of Financial Forecasts for FY15/3
▐ Attain 120 billion yen in operating income
(Sales increase by approx. 4% based on existing core businesses)
(Billions of Yen)
Full Year
FY14/3
Actual
FY15/3
Forecasts
YoY
Net Sales
Public
Operating Income
% to Net Sales
Net Sales
Net Sales
3,043.1
3,000.0
- 1.4%
Enterprise
Operating Income
% to Net Sales
Net Sales
Operating Income
% to Net Sales
Ordinary Income
% to Net Sales
Net Income
% to Net Sales
106.2
120.0
3.5%
4.0%
69.2
90.0
2.3%
+13.8
+20.8
35.0
1.1%
1.2%
Operating Income
% to Net Sales
Net Sales
System Platform
3.0%
33.7
Telecom Carrier
Operating Income
% to Net Sales
Net Sales
Others
Operating Incom e/Los s
Adjustment
Operating Loss
% to Net Sales
+1.3
Net Sales
Total
Operating Income
% to Net Sales
FY14/3
Actual
738.4
58.6
7.9%
272.3
6.5
2.4%
725.8
60.3
8.3%
780.8
30.7
3.9%
525.9
-1.4
-0.3%
-48.6
3,043.1
106.2
3.5%
Full Year
FY15/3
Forecasts
800.0
73.0
YoY
+8.3%
+14.4
9.1%
275.0
9.0
+1.0%
+2.5
3.3%
770.0
66.0
+6.1%
+5.7
8.6%
775.0
35.0
-0.7%
+4.3
4.5%
380.0
1.0
-27.7%
+2.4
0.3%
-64.0
3,000.0
120.0
-15.4
-1.4%
+13.8
4.0%
Note: Assumed exchange rates for 2H, FY15/3 $1=¥105, €1=¥135
* Forecasts as of October 30, 2014
Page 14
© NEC Corporation 2014
Ⅲ. Progress on Mid-term Management Plan 2015
Mid-term Plan
2015
Mid-term Management Policy
(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
Achieve 5% in operating margin and 25% in international sales ratio
* Forecasts as of April 26, 2013
Page 16
© NEC Corporation 2014
Achievements in 1H of FY15/3 and Next Steps
Mid-term Plan
2015
l Developed new growth drivers
•
Focused on TOMS／SDN, Big data, Cloud, Safety
l Established infrastructure for global growth
Achievements
•
Established global business frameworks for energy business
•
Secured large-scale projects
l Improved financial structure
•
Completed procedures to make NEC Fielding, Ltd. a wholly owned
subsidiary
•
Improved free cash flows through “CCC (Cash Conversion Cycle)
initiatives”
l Accelerate growth plans
•
Next Steps
Page 17
Materialize “shrink-to-grow scenario” for the next 100 years
l Further improve profitability
•
Minimize loss-making projects
•
Transform into a globally competitive company
© NEC Corporation 2014
Advancing SDN Business
Mid-term Plan
2015
▐ For Telecom Carriers
l
Expanding proposals and verification tests by partnering with global carriers
for the full-scale commercialization of SDN (approx. 20 projects)
•
l
Advancing vCPE project with Telefónica
•
l
Successfully tested mobile core network virtualization in a multivendor environment
with NTT DOCOMO, INC. and conducted testing with all of the participating companies
Joint demo shown at SDN & OpenFlow World Congress 2014
Integrating TOMS with SDN by leveraging NetCracker’s advanced
technologies
▐ For Enterprises / Public Sector and Data Centers
l
Expanding number of projects by capturing growing demand
(approx. 200 systems)
•
Next Step
Page 18
Recently awarded: West Nippon Expressway Company Limited, Nagoya City University Hospital
Accelerate measures to commercialize SDN for Telecom Carriers
© NEC Corporation 2014
Mid-term Plan
2015
Progressing Public / Enterprise Business
▐ Undertook verification tests and expanded NEC’s track
record of “Solutions for Society”
l
l
Big data
•
Delivered a system for monitoring signs of malfunction in large-scale plants for Chugoku Electric Power CO., Inc.
•
Launched “Water Leakage Detection Solution” to quickly and accurately detect leaks in water supply systems
Cloud
•
l
Next Step
Page 19
Commenced delivery of “NEC Cloud IaaS,” a cloud platform service
–
Remote monitoring and maintenance system platform for multi-story parking
garages operated by IHI Transport Machinery Co., Ltd.
–
“Common IT platform” for Sumitomo Life Insurance Company
–
Operation system platform for Meiji Fresh Network Co., Ltd.
NEC Kanagawa data center
Safety
•
Launched “Cyber Security Factory” in support of measures against cyber attacks
•
Awarded No.1 results in the face recognition and fingerprint matching technology benchmark test organized by
the U.S. National Institute of Standards and Technology
Focus on advanced ICT-based social infrastructure
© NEC Corporation 2014
Launching Energy Business
Mid-term Plan
2015
▐ Established global business frameworks for smart energy
business
l
Launched NEC Energy Solutions, Inc.
(Headquartered in the United States (Massachusetts) as a wholly owned subsidiary)
Next Step
Page 20
•
Delivered lithium-ion battery storage system to ENEL Distribuzione, the largest
power supply company in Italy
•
Delivered lithium-ion battery storage system to Northern Powergrid, a prominent
electric utility company in the U.K.
•
Began verification tests to introduce energy management systems for mobile base
stations in India
Accelerate global market development
© NEC Corporation 2014
Expanding Global Business
Mid-term Plan
2015
▐ Telecom Carrier
l Awarded large-scale projects in submarine cable systems
•
Trans-Pacific cable system “FASTER” connecting Japan
and the United States
•
“SEA-US” cable system connecting Southeast Asia and the United
States
•
A submarine cable system connecting
Thailand and Hong Kong
l Order receipt for microwave backbone and access
projects from Zamtel in Zambia
Page 21
© NEC Corporation 2014
Mid-term Plan
2015
Expanding Global Business
▐ New business areas
l Water leakage detection
solution
l Smart city
• Conduct verification tests in
North America
• Develop a smart waste collection solution
for the city of Santander in Spain
l Satellite
• Cooperate with the Mexican Space
Agency in satellite development
l Transportation and logistics
• Implement transportation fare systems for the
city of Dhaka in Bangladesh
l Face recognition
l Managed services
• Support centralized processing for Australian
Department of Defence
• Introduce face recognition
technology to urban monitoring systems
for City of Tigre in Argentina
• Deliver network managed services
for the government of South Australia
Page 22
© NEC Corporation 2014
Rebuilding a New Corporate Culture
Mid-term Plan
2015
▐ Announced a corporate key message to promote “Solutions
for Society”
▐ Establish a process for “One to Many” businesses
Page 23
© NEC Corporation 2014
Summary
Achieving the goals for FY15/3 is
a necessary step to achieve
the Mid-term Management Plan 2015
NEC aims to achieve its full-year
forecasts for the third consecutive
year and assure stable dividends
* Forecasts as of October 30, 2014
Page 24
© NEC Corporation 2014
© NEC Corporation 2014
Page2011
26
© NEC Corporation
© NEC Corporation 2014
Financial Results for 1H, FY15/3 (Appendix)
1H Results
Results for 1H by Segment ( three-year transition )
(Billions of Yen)
Net Sales
Operating Income/Loss
47.4
1,447.8
Public
Enterprise
276.9
1,383.1
303.3
118.8
Public
1,324.8
Enterprise
344.5
Telecom
Carrier
14.4
1.9
21.5
30.9
0.4
System
Platform
11.7
14.5
0.7
Others
17.3
130.1
Telecom
Carrier
126.7
342.7
334.0
System
Platform
Others
Page 28
367.2
350.7
342.2
264.9
FY13/3
1H
FY14/3
1H
332.5
19.4
Others
345.4
Adjustment
1.8
- 11.8
- 28.9
21.9
2.3
16.6
8.7
- 2.7
- 25.2
- 24.3
175.8
FY15/3
1H
© NEC Corporation 2014
FY13/3
1H
FY14/3
1H
FY15/3
1H
Others
Summary of Financial Results for 1H by Segment
1H Results
(Billions of Yen)
Net Sales
Operating Income/Loss
Operating Income
for 1H,FY15/3
Others
13%
Public
26%
Enterprise
Sales for 1H
FY15/3
10%
21.5
Public
Telecom
Carrier
21.9
16.6
1,324.8
System
Platform
Enterprise
System Platform
2.3
26%
Telecom Carrier
25%
Page 29
© NEC Corporation 2014
8.7
Others
-2.7
1H Results
Sales Change (Year on Year)
(Billions of Yen)
Decrease in the retail and
services industries
Steady sales from government
and public areas
Decrease in enterprise network
Enterprise
-3.4
(-2.6%)
FY14/3 1H Public
<Apr-Sep> +41.2 (+13.6%)
System Platform
-5.3 (-1.5%)
1,383.1
FY15/3 1H
<Apr-Sep>
Telecom Carrier
-1.6 (-0.5%)
Others
-89.1
Decrease in Japan, despite increase
of international business mainly
in mobile backhaul and TOMS
Deconsolidation of NEC BIGLOBE,
Ltd. and NEC Mobiling, Ltd. as
well as a decline in mobile phone
shipments
Page 30
1,324.8
© NEC Corporation 2014
1H Results
Operating Income Change (Year on Year)
(Billions of Yen)
Improved in mobile
phone business
FY15/3 1H
Others
+9.1
Improved profitability and
higher cost efficiency
Higher cost efficiency
Sales increase
Public
+7.3
FY14/3 1H
0.4
Page 31
21.5
Adjustment
-0.9
System
Platform
+6.9
Strategic investment
increase
Enterprise
+1.5
Telecom
Carrier
-2.8
Increase of SDN
related investment
© NEC Corporation 2014
1H Results
International Sales
(Billions of Yen)
YoY
EMEA
4.8%
Greater
China,
APAC
The
Americas
8.7%
7.3%
Japan
79.1%
112.4
115.6
102.2
96.9
+2.8%
58.5
63.9
-5.2%
+9.2%
FY14/3
1H
FY15/3
1H
FY14/3
1H
FY15/3
1H
FY14/3
1H
FY15/3
1H
1H <April to September>
FY14/3
FY15/3
YoY
Actual
Actual
International sales
％ to Net Sales
273.1
276.4
19.7%
20.9%
+1.2%
* Sales are classified by country or region based on customer locations
Page 32
© NEC Corporation 2014
1H Results
Financial Position Data
(Billions of Yen)
End of Mar End of Sep
2014
2014
End of Sep
2013
2,505.3
2,447.7
- 57.6
2,478.3
Net Assets
767.7
757.9
- 9.8
787.8
Interest-bearing debt
575.2
570.6
- 4.6
688.7
Shareholders' Equity
695.9
695.8
- 0.2
684.1
Equity ratio(%)
27.8%
28.4%
+ 0.6pt
27.6%
D/E ratio (times)
0.83
0.82
+ 0.01pt
1.01
Net D/E ratio (times)
0.53
0.57
- 0.04pt
0.75
206.6
176.0
- 30.6
174.0
Total Assets
Balance of cash and
cash equivalents
Page 33
Difference
from Mar
2014
© NEC Corporation 2014
1H Results
<Ref.> Balance Sheets (At the end of September, 2014)
(Billions of Yen)
Total Assets 2,447.7
<Compared to end of March 2014>
(-57.6)
Compared to
end of March
2014
Current Assets
1,418.9
Liabilities
-84.0
-47.8
Collection of accounts
receivable-trade
1,689.8
Decrease in notes and accounts
payable-trade
Noncurrent Assets
1,028.8
+26.4
-9.8
Net Assets
757.9
Decrease in retained earnings from the
application of new accounting standards
for retirement benefits
Page 34
© NEC Corporation 2014
Financial Forecasts for FY15/3 (Appendix)
Financial Forecasts for FY15/3 by Segment
(three-year transition)
Full Year
Forecasts
(Billions of Yen)
Net Sales
3,071.6
Public
680.7
Enterprise
251.6
Telecom
Carrier
System
Platform
Others
709.3
744.4
Operating Income/Loss
120.0
114.6
3,043.1
738.4
272.3
725.8
780.8
3,000.0
800.0
106.2
Public
49.0
Enterprise
5.5
Telecom
Carrier
275.0
71.6
73.0
58.6
6.5
60.3
770.0
System
Platform
32.7
Others
16.9
Adjustment
- 61.0
30.7
- 1.4
- 48.6
FY13/3
FY14/3
775.0
685.7
525.9
380.0
FY13/3
FY14/3
FY15/3
Forecasts(*)
9.0
66.0
35.0
1.0
- 64.0
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 36
© NEC Corporation 2014
Full Year
Forecasts
Financial Forecasts for FY15/3 by Segment
(Billions of Yen)
Net Sales
Operating Income
Others
Public
12%
27%
Telecom
Carrier
Public
73.0
66.0
Operating Income
Forecast for FY15/3
120.0
Enterprise
9%
Sales Forecast
for FY15/3
System
Platform
35.0
3,000.0
Enterprise
System Platform
9.0
26%
Others
1.0
Telecom Carrier
26%
* Forecasts as of October 30, 2014
Page 37
© NEC Corporation 2014
Full Year
Forecasts
Public Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
800.0
Sales
738.4
680.7
Operating
Income +8.5%
Ratio
+8.3%
49.0
FY13/3
FY14/3
r Increase due to steady sales mainly
from the government and public areas
such as fire prevention systems and
the national ID number system
▐ Operating Income
7.9%
58.6
800.0 (+8.3%)
9.1%
7.2%
Operating
Income
▐ Sales
73.0
73.0
(+14.4)
r Improve due to sales increase,
cost reductions and a decrease in
loss making projects
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 38
© NEC Corporation 2014
Full Year
Forecasts
Enterprise Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
275.0
272.3
▐ Sales
275.0 (+1.0%)
r Increase in the retail and services
industries
251.6
Operating
Income
Ratio
2.2%
Operating
Income
5.5
FY13/3
▐ Operating Income
+1.0%
+8.2%
3.3%
2.4%
9.0
(+2.5)
r Improve due to sales increase
and higher cost efficiency
9.0
6.5
FY14/3
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 39
© NEC Corporation 2014
Full Year
Forecasts
Telecom Carrier Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
Operating
Income +2.3%
Ratio
+6.1%
8.3%
8.6%
Operating
Income
FY13/3
60.3
FY14/3
(+6.1%)
r Japan: Remain flat
▐ Operating Income
10.1%
71.6
770.0
r International: Increase mainly in focus
areas such as TOMS / SDN,
in addition to mobile backhaul
770.0
725.8
709.3
▐ Sales
66.0
(+5.7)
r Improve due to sales increase mainly
in international business
66.0
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 40
© NEC Corporation 2014
Full Year
Forecasts
System Platform Business
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
780.8
775.0
744.4
Operating
Income
Ratio
4.4%
FY13/3
775.0
(-0.7%)
s Decrease due to declining business
PCs, despite continuation of IT
demand, such as servers and software
-0.7%
+4.9%
▐ Operating Income
3.9%
Operating
Income
32.7
▐ Sales
4.5%
35.0
35.0
(+4.3)
r Improve from integration with
NEC Fielding, Ltd. and sales increase
in servers and software
30.7
FY14/3
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 41
© NEC Corporation 2014
Full Year
Forecasts
Others
Billions of Yen (YoY)
(Billions of Yen)
YoY
Sales
685.7
▐ Sales
380.0
(-27.7%)
s Decrease due to deconsolidation
following sale of stock of NEC
BIGLOBE, Ltd. , etc.
-23.3%
Operating 525.9
Income
Ratio
380.0
2.5%
Operating
Income
/Loss
▐ Operating Income
-27.7%
- 0.3%
0.3%
-1.4
1.0
1.0
(+2.4)
r Improve due to improvement of the
mobile phone business and energy
business, despite impact from
deconsolidating businesses
16.9
FY13/3
FY14/3
FY15/3
Forecasts(*)
* Forecasts as of October 30, 2014
Page 42
© NEC Corporation 2014
Full Year
Forecasts
Sales Change (Year on Year)
(Billions of Yen)
Japan: Remain same level
International: Increase mainly in TOMS／
SDN, mobile backhaul
Increase in the retail and
services industries
Decrease from a decline in business PCs,
despite an increase in IT demand such as servers
Telecom Carrier System Platform
+44.2 (+6.1%)
-5.8 （-0.7%）
Decrease in mobile phone shipments
Enterprise
+2.7 (+1.0%)
Deconsolidation of
NEC BIGLOBE, Ltd. and
NEC Mobiling, Ltd.
Others
-145.9
FY14/3
3,043.1
Public
+61.6 (+8.3%)
FY15/3
Forecast(*)
3,000.0
Steady sales from government
and public areas
* Forecasts as of October 30, 2014
Page 43
© NEC Corporation 2014
Full Year
Forecasts
Operating Income Change (Year on Year)
Deconsolidation of NEC BIGLOBE, Ltd. and NEC Mobiling, Ltd.
Improve from mobile phone business and Energy business
Improve from integration
with NEC Fielding, Ltd.
and sales increase in servers
Improve from sales increase
and higher cost efficiency
Strategic investment
increase
Adjustment
-15.4
System Platform
+4.3
Others
+2.4
Enterprise
+2.5
(Billions of Yen)
FY15/3
Forecast(*)
120.0
Telecom Carrier
+5.7
FY14/3
106.2
Public
+14.4
Improve due to sales
increase mainly in
international business
Improve due to sales increase,
cost reduction and fewer
loss-making projects
* Forecasts as of October 30, 2014
Page 44
© NEC Corporation 2014
Full Year
Forecasts
Net Income Change ( Year on Year)
Public
Telecom Carrier
System Platform
Enterprise
Others
Adjustment
+14.4
+5.7
+4.3
+2.5
+2.4
-15.4
(Billions of Yen)
Decrease in provision for contingent loss,
and decrease in interest expenses
Improvement in
non-operating
Increase in income/loss
+7.0
operating income
+13.8
FY14/3
Decrease in gain on sales of
subsidiaries and affiliates’ stocks
Others
-19.6
FY15/3
Forecast(*)
35.0
33.7
* Forecasts as of October 30, 2014
Page 45
© NEC Corporation 2014
Full Year
Forecasts
Capital Expenditure, Depreciation and R&D Expenses
(Billions of Yen)
FY13/3
FY14/3
FY15/3
Actual
Actual
Forecasts
Capital Expenditure
45.6
Depreciation
R&D expenses
% to Net Sales
YoY
YoY
40.8
50.0
+22.5%
51.2
45.2
50.0
+10.7%
151.7
142.7
150.0
+5.1%
4.9%
*
4.7%
5.0%
* Not including acquisition of trust beneficiary rights
Capital Expenditure
50.0
45.6
40.8
Depreciation
51.2
45.2
R&D expenses
50.0
151.7
150.0
142.7
+5.1%
+10.7%
＋22.5％
％ to Net
Sales
4.9%
FY13/3
FY14/3
FY15/3
Forecast(*)
FY13/3
FY14/3
FY15/3
Forecast(*)
FY13/3
4.7%
FY14/3
5.0%
FY15/3
Forecast(*)
* Forecasts as of October 30, 2014
Page 46
© NEC Corporation 2014
Full Year
Forecasts
<Ref.> Major differences between IFRS and J-GAAP
Released at Q1 Financial Announcement
(Note)
The following figures are calculated to estimate differences in the amounts for pension expenses and
goodwill, the two major items which differ in IFRS and J-GAAP, for the FY15/3 financial outlook if
IFRS is applied. These differences in the amounts are calculated based on assumptions as of the
date on which they were made. Furthermore, the differences in the two accounting methods are not
limited to these two major items. Notably, they are not audited by the accounting auditors and NEC
does not undertake any obligation to update or revise the figures as the circumstances change.
These estimated figures are disclosed voluntarily as references for investors only.
NEC has NOT made a decision to adopt IFRS at the present, and continues to disclose materials
required by the regulations in J-GAAP.
(Billions of Yen)
FY15/3 Full Year
Amortization of
Amortization
unrecognized obligation
of Goodwill
for pension
Operating Income
14.0
Non-Operating
Income / Loss
10.4
Net Income
19.0
18.0
© NEC Corporation 2014
-
18.0
＊ In calculating pension cost by IFRS, actuarial gains or losses in pension
expenses are not amortized nor is goodwill amortized annually.
Page 47
Total
37.0
* Forecasts as of July 30, 2014
Reference (Financial data)
Net Sales, Operating Income/Loss
(Billions of Yen)
8.6%
6.8%
4.8%
3.9%
3.0%
Operating Income Ratio
3.4%
3.3%
- 1.2%
- 1.2%
- 3.4%
959.6
901.8
Net Sales
816.3
722.0
631.5
+6.4%
743.0
-2.5%
+5.4%
726.1
700.4
640.1
598.7
-9.0%
+7.9%
-2.3%
-3.0%
-5.6%
+1.4%
-6.5%
82.5
Operating
Income/
Loss
55.2
42.8
24.4
-7.1
-21.8
-7.9
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 49
28.6
23.4
22.2
FY14/3
© NEC Corporation 2014
FY15/3
YoY
International Sales
20.5%
19.7%
18.9%
International Sales Ratio 16.7%
YoY
20.8%
16.8%
16.4%
15.4%
14.2%
157.8
152.3
151.1
138.2
136.2
International Sales
(Billions of Yen)
20.9%
121.1
128.4
120.8
+11.8%
+22.9%
+8.1%
+11.2%
-0.8%
+14.1%
-1.9%
97.4
125.3
+3.7%
+24.0%
-15.4%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 50
FY14/3
© NEC Corporation 2014
FY15/3
Sales, Operating Income (Public)
(Billions of Yen)
10.7%
10.1%
8.8%
8.0%
10.2%
9.8%
5.9%
0.3%
0.1%
271.0
1.1%
254.5
Operating Income Ratio
+6.5%
+3.7%
Sales
162.0
164.0
149.2
146.4
126.6
+2.4%
114.9
+12.3%
+9.9%
26.5
+10.1%
Operating
Income
+15.7%
20.3
17.6
14.2
14.3
+12.1%
+9.1%
25.8
+1.7%
8.9
0.1
1.6
0.4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 51
198.1
176.7
FY14/3
© NEC Corporation 2014
FY15/3
YoY
Sales, Operating Income/Loss (Enterprise)
4.5%
5.6%
4.4%
YoY
0.3%
- 0.3%
- 3.3%
- 4.1%
- 5.3%
81.5
Operating Income Ratio
73.7
68.8
Sales
(Billions of Yen)
7.4%
6.7%
59.0
+18.9%
72.3
71.3
58.7
+7.2%
+10.7%
60.7
+3.7%
50.0
+2.8%
+17.4%
+16.1%
+1.3%
54.4
-7.4%
+12.1%
Operating
Income/
Loss
4.6
-2.7
0.2
3.1
-2.4
4.0
-1.8
-0.2
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 52
6.0
3.3
FY14/3
© NEC Corporation 2014
FY15/3
Sales, Operating Income (Telecom Carrier)
(Billions of Yen)
YoY
13.0%
11.3%
9.7%
7.7%
6.8%
10.8%
8.2%
7.2%
3.6%
Operating Income Ratio
2.9%
219.0
200.3
187.5
Sales
155.1
180.0
166.3
+10.6%
172.7
154.0
+3.3%
151.0
+0.8%
-4.0%
+3.8%
+6.0%
+11.7%
-0.7%
Operating
Income
181.5
+9.4%
28.5
22.7
18.2
17.9
13.8
12.7
12.4
12.3
5.6
4.3
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 53
-2.0%
FY14/3
© NEC Corporation 2014
FY15/3
Sales, Operating Income/Loss (System Platform)
(Billions of Yen)
8.6%
8.0%
6.6%
YoY
4.3%
3.5%
4.3%
2.5%
1.5%
- 1.1%
209.9
204.1
+11.6%
167.3
-2.7%
Operating
Income/
Loss
-5.4%
-7.5%
+5.9%
20.9
16.8
13.5
178.5
+11.0%
-3.3%
8.4
4.2
-1.8
8.0
6.2
2.5
-6.6
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 54
185.7
166.9
157.7
+1.3%
+10.8%
+16.4%
193.1
Sales
163.1
244.3
- 4.2%
Operating Income Ratio
FY14/3
© NEC Corporation 2014
FY15/3
Sales, Operating Income/Loss (Others)
(Billions of Yen)
10.8%
6.7%
5.4%
Operating Income Ratio
2.3%
0.7%
- 1.6%
- 2.4%
- 6.2%
- 6.1%
- 6.9%
193.8
Sales
180.1
163.4
-5.7%
148.4
143.1
+10.4%
143.7
121.8
-18.7%
-34.2%
117.3
-3.5%
-12.1%
-37.2%
Operating
Income/
Loss
95.8
80.0
-34.9%
-21.3%
21.0
-44.1%
9.6
9.7
-3.6
-10.1
-9.9
0.8
-2.0
2.2
-4.9
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
<Oct-Dec>
<Jan-Mar>
<Apr-Jun>
<Jul-Sep>
FY13/3
Page 55
YoY
FY14/3
© NEC Corporation 2014
FY15/3
Exchange Rate
(Yen)
150
Euro/Yen Exchange Rate (Actual)
Assumed Exchange Rate
145
Average Exchange Rate ¥139.44
140
135
130
125
110
Dollar/Yen Exchange Rate (Actual)
Assumed Exchange Rate
105
Average Exchange Rate ¥102.24
100
95
4/1
Page 56
4/30
5/30
6/30
© NEC Corporation 2014
7/31
8/29
9/30
Stock Price
(Yen)
16,500
420
July 30: Q1 Earnings Release
ＮＥＣ
16,000
400
the Nikkei Stock
380
15,500
April 28:
Earnings Release
360
15,000
340
July 2: Introduction of
NEC Space Business
14,500
320
14,000
300
June 23: Ordinary General Meeting
Of Shareholders
13,500
4/1
Page 57
4/30
5/30
6/30
© NEC Corporation 2014
7/31
8/29
280
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.