02 15-14 nec results-q3

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02 15-14 nec results-q3

  1. 1. Financial Results for Q3 Fiscal Year Ending March 31, 2014 January 30, 2014 NEC Corporation (http://www.nec.com/en/global/ir)
  2. 2. Index Ⅰ. Financial Results for Q3, FY14/3 Ⅱ. Financial Forecasts for FY14/3 Ⅲ. Business Portfolio Restructuring Measures l Financial Results for Q3, FY14/3 (Appendix) l Financial Forecasts for FY14/3 (Appendix) l Reference (Financial data) ※ As stated in the July 9, 2013 announcement, “NEC to Revise Business Segments,” NEC has revised its business segments from the first quarter of the fiscal year ending March 31, 2014. Figures for the corresponding period of the previous fiscal year have been restated to conform with the new segments. Page 2 © NEC Corporation 2014
  3. 3. Ⅰ. Financial Results for Q3, FY14/3
  4. 4. Q3 Results Summary of Financial Results for Q3 ▐ (3months/9months) Almost in line with company forecast for the 9 months ended December 31, 2013 l Net income increased by 220% in Q3(YoY) (Billions of Yen) Q3 <October to December> FY13/3 FY14/3 Actual Actual YoY 9 months <April to December> FY13/3 FY14/3 Actual Actual YoY Net Sales 722.0 700.4 - 3.0% 2,169.8 2,083.5 - 4.0% Operating Income 24.4 23.4 -1.1 71.8 23.7 -48.1 % to Net Sales Ordinary Income % to Net Sales Net Income/Loss % to Net Sales Free Cash Flow 3.4% 21.9 3.0% 3.5 0.5% -60.8 3.3% 20.0 3.3% -1.9 2.9% 11.1 2.4% 7.6 1.6% 0.8 51.8 11.5 0.5% 61.5 -92.7 1.1% 5.5 -46.3 0.3% -15.1 -26.5 -0.7% -94.1 -1.3 Note: Average exchange rates for Q3 (October to December) of FY14/3 1$= ¥99.04, 1€= ¥133.58 Average exchange rates for 9 months (April to December) of FY14/3 1$= ¥98.42, 1€= ¥130.15 Page 4 © NEC Corporation 2014
  5. 5. Q3 Results Results for Q3 by Segment (3months/9months) (Billions of Yen) Net Sales Public Operating Income % to Net Sales Net Sales Enterprise Operating Income/Loss % to Net Sales Net Sales Telecom Carrier Operating Income % to Net Sales Net Sales System Platform Operating Income % to Net Sales Net Sales Others Operating Income/Loss % to Net Sales Eliminations/ Unclassifiable expenses Q3 <October to December> FY13/3 FY14/3 YoY Actual Actual 149.2 164.0 9.9% 8.9 17.6 8.7 5.9% 59.0 0.2 0.3% 166.3 17.9 10.8% 167.3 4.2 2.5% 180.1 9.7 5.4% 10.7% 60.7 -0.2 5.5% 2.8% -0.4 -0.3% 172.7 12.4 3.8% -5.5 509.0 48.8 9.6% 11.0% 3.8 4.3% 117.3 0.8 177.9 2.1 1.2% 7.2% 185.7 8.0 9 months <April to December> FY13/3 FY14/3 YoY Actual Actual 426.2 467.3 9.7% 23.3 32.1 8.8 534.5 15.9 3.0% -34.9% -8.8 0.7% 522.3 27.0 5.2% 6.9% 190.8 0.5 7.2% -1.6 0.3% 506.7 31.8 -0.4% -17.1 6.3% 536.4 9.8 0.4% -6.1 1.8% 382.2 -11.0 -26.8% -38.0 -2.9% -16.4 -15.2 1.1 -45.3 -39.5 5.8 Net Sales Total Operating Loss 722.0 24.4 700.4 23.4 -3.0% -1.1 2,169.8 71.8 2,083.5 23.7 -4.0% -48.1 Operating Income % to Net Sales Page 5 3.4% 3.3% © NEC Corporation 2014 3.3% 1.1%
  6. 6. Q3 Results Public Business (3months) Billions of Yen (YoY) (Billions of Yen) YoY Sales 164.0 +9.9% Operating Income Ratio 3.6% Operating Income 10.7% 8.9 4.7 FY12/3 Page 6 FY13/3 FY14/3 <Oct-Dec> (+8.7) r Improved due to sales increase 17.6 <Oct-Dec> (+9.9%) r Increased due to the steady sales from government and public areas +12.3% 5.9% 164.0 ▐ Operating Income 17.6 149.2 132.8 ▐ Sales <Oct-Dec> © NEC Corporation 2014
  7. 7. Q3 Results Enterprise Business (3months) Billions of Yen (YoY) (Billions of Yen) YoY Sales 0.3% - 0.3% 0.2 -0.2 Operating Income /Loss FY12/3 Page 7 FY13/3 FY14/3 <Oct-Dec> <Oct-Dec> -0.2 (-0.4) s Decreased due to acceleration of investment in the retail and logistics industries, despite sales increase - 2.9% -1.5 (+2.8%) r Increased due to the steady sales from the retail and services industries ▐ Operating Loss +2.8% +16.1% Operating Income Ratio 60.7 60.7 59.0 50.9 ▐ Sales <Oct-Dec> © NEC Corporation 2014
  8. 8. Q3 Results Telecom Carrier Business (3months) Billions of Yen (YoY) (Billions of Yen) YoY Sales 156.9 +3.8% +6.0% Operating Income Ratio Operating Income 7.2% 17.9 s Japan: Secured same level as the previous fiscal year s Decreased due to temporary profit related to intellectual property in the previous fiscal year TOMS : Telecom Operations and Management Solutions 12.4 9.4 FY12/3 FY13/3 FY14/3 <Oct-Dec> Page 8 (+3.8%) ▐ Operating Income 12.4 (-5.5) 10.8% 6.0% 172.7 r International: Increased mainly in TOMS and mobile backhaul 172.7 166.3 ▐ Sales <Oct-Dec> <Oct-Dec> © NEC Corporation 2014
  9. 9. Q3 Results System Platform Business (3months) Billions of Yen (YoY) (Billions of Yen) YoY 185.7 Sales ▐ Sales r Increased due to high demand for IT investment such as business PCs and servers 167.3 165.2 +11.0% ▐ Operating Income +1.3% Operating Income Ratio 4.3% 2.5% Operating Income /Loss 8.0 4.2 -5.2 FY12/3 FY13/3 FY14/3 <Oct-Dec> <Oct-Dec> 8.0 (+3.8) r Improved profitability associated with the better IT investment environment - 3.2% Page 9 185.7 (+11.0%) <Oct-Dec> © NEC Corporation 2014
  10. 10. Q3 Results Others (3months) Billions of Yen (YoY) (Billions of Yen) YoY +10.4% Sales ▐ Sales 117.3 (-34.9%) s Decrease of mobile phone shipments s Deconsolidation of NEC Mobiling, Ltd. and the electronic components business 180.1 163.2 -34.9% Operating Income Ratio 5.4% ▐ Operating Income 117.3 s Worsened due to decreased sales 0.7% - 1.0% 9.7 Operating Income /Loss -1.6 0.8 FY12/3 FY13/3 FY14/3 <Oct-Dec> Page 10 0.8 (-8.8) <Oct-Dec> <Oct-Dec> © NEC Corporation 2014
  11. 11. Mobile Phone Business Update Q3 Results (3months) ▐ Changed management structure of NEC CASIO Mobile Communications (NCMC) ( Released on December 27th, 2013) l NEC acquired all stock owned by CASIO COMPUTER CO., LTD. and Hitachi, Ltd. (executed) l NEC acquired all stock of NEC Saitama, Ltd. owned by NCMC. (executed) l Reduce capital of NCMC to 400 million yen (Scheduled for February, 2014) Major issues to be resolved within FY2014/3 Page 11 © NEC Corporation 2014
  12. 12. Q3 Results Net Income Change ( October to December / Year on Year) Gain on sales of subsidiaries and affiliates’ stocks +7.4 Provision of allowance for doubtful accounts for subsidiaries and affiliates (in the previous year) +3.8 Business structure improvement expenses (in the previous year) +3.4 Income taxes -3.5 Others Telecom Carrier System Platform Public FY13/3 Q3 <Oct-Dec> 3.5 (3months) (Billions of Yen) Others +9.5 FY14/3 Q3 <Oct-Dec> 11.1 -8.8 -5.5 +3.8 +8.7 Decrease of operating income -1.1 Decrease of non-operating income/loss -0.8 Interest expenses -1.0 Page 12 © NEC Corporation 2014
  13. 13. Ⅱ. Financial Forecasts for FY14/3
  14. 14. Full Year Forecasts Summary of Financial Forecasts for FY14/3 ▐ Achieve 100 billion yen operating income (Sales increase by approximately 2%, excluding the impact of deconsolidation) (Billions of Yen) Q4 <January to March> FY13/3 FY14/3 Actual Forecasts Full Year YoY FY13/3 FY14/3 Actual Forecasts YoY Difference from October 30 Net Sales 901.8 916.5 1.6% 3,071.6 3,000.0 - 2.3% 0.0 Operating Income 42.8 76.3 33.4 114.6 100.0 -14.6 0.0 3.7% 3.3% 92.0 70.0 -22.0 0.0 3.0% 2.3% 30.4 20.0 -10.4 0.0 1.0% 0.7% % to Net Sales Ordinary Income % to Net Sales Net Income % to Net Sales 4.8% 40.3 4.5% 19.0 2.1% 8.3% 64.5 24.2 7.0% 35.1 16.1 3.8% Note: Assumed exchange rates for 2H, FY14/3 1$=¥100, 1€=¥125 * Forecasts as of January 30, 2014 Page 14 © NEC Corporation 2014
  15. 15. Full Year Forecasts Financial Forecasts for FY14/3 by Segment (Billions of Yen) Net Sales Public Operating Income % to Net Sales Net Sales Enterprise Operating Income % to Net Sales Net Sales Telecom Carrier Operating Income % to Net Sales Net Sales System Platform Operating Income % to Net Sales Net Sales Others Operating Income/Loss % to Net Sales Eliminations/ Q4 <January to March> FY13/3 FY14/3 YoY Actual Forecasts 254.5 277.7 9.1% 25.8 24.9 -0.9 10.1% 73.7 3.3 4.5% 200.3 22.7 11.3% 209.9 16.8 8.0% 163.4 -10.1 -6.2% 9.0% 74.2 5.5 7.2% 0.7% 2.1 7.4% 208.3 28.2 4.0% 5.5 709.3 71.6 -3.0% 2.4 744.4 32.7 10.1% 9.4% 152.8 13.0 251.6 5.5 2.2% 13.6% 203.6 19.2 FY13/3 Actual 680.7 49.0 4.4% -6.5% 23.1 8.5% 685.7 16.9 2.5% Full Year FY14/3 Forecasts 745.0 57.0 YoY Difference from October 30 9.5% 8.0 0.0 0.0 5.3% 0.5 0.0 0.0 0.8% -11.6 0.0 0.0 -0.6% -3.7 0.0 0.0 -22.0% -14.9 0.0 0.0 7.7% 265.0 6.0 2.3% 715.0 60.0 8.4% 740.0 29.0 3.9% 535.0 2.0 0.4% Total Operating Loss -15.7 -14.5 1.2 -61.0 -54.0 7.0 0.0 Net Sales Unclassifiable expenses 901.8 42.8 916.5 76.3 1.6% 33.4 3,071.6 114.6 3,000.0 100.0 -2.3% -14.6 0.0 0.0 Operating Income % to Net Sales 4.8% 8.3% 3.7% 3.3% * Forecasts as of January 30, 2014 Page 15 © NEC Corporation 2014
  16. 16. Full Year Forecasts Public Business Billions of Yen (YoY) (Billions of Yen) YoY Sales 745.0 680.7 649.5 Operating +4.8% Income Ratio 6.7% Operating Income 43.3 FY12/3 49.0 FY13/3 745.0 7.7% (+9.5%) r Increase due to steady sales mainly from government and public areas ▐ Operating Income 57.0 +9.5% 7.2% ▐ Sales (+8.0) r Improve due to sales increase and cost reductions 57.0 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 Page 16 © NEC Corporation 2014
  17. 17. Full Year Forecasts Enterprise Business Billions of Yen (YoY) (Billions of Yen) YoY Sales 265.0 (+5.3%) r Increase due to the steady sales from the retail and services industries 265.0 251.6 222.2 ▐ Operating Income 6.0 +5.3% +13.2% Operating Income Ratio ▐ Sales (+0.5) r Improve due to sales increase 2.2% 2.3% 0.2% 5.5 6.0 Operating Income 0.5 FY12/3 FY13/3 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 Page 17 © NEC Corporation 2014
  18. 18. Full Year Forecasts Telecom Carrier Business Billions of Yen (YoY) (Billions of Yen) YoY Sales 715.0 709.3 659.3 Operating Income +7.6% Ratio 8.3% Operating Income 71.6 54.6 715.0 (+0.8%) s Japan: Decrease from the previous fiscal year, when there was strong demand r International: Increase mainly in TOMS +0.8% 10.1% ▐ Sales 8.4% 60.0 ▐ Operating Income 60.0 (-11.6) s Decrease due to the acceleration of investment in SDN, etc. and temporary increase in profit related to intellectual property in the previous fiscal year SDN : Software-Defined Networking FY12/3 FY13/3 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 Page 18 © NEC Corporation 2014
  19. 19. Full Year Forecasts System Platform Business Billions of Yen (YoY) (Billions of Yen) YoY Sales 744.4 740.0 +4.7% 711.0 ▐ Sales 740.0 (-0.6%) s Maintain same level as previous year due to high demand for business PCs, offsetting impact of large-scale project in the previous fiscal year -0.6% Operating Income Ratio ▐ Operating Income 4.4% 3.9% 1.9% Operating Income 32.7 29.0 (-3.7) s Decrease due to project lineup changes 29.0 13.8 FY12/3 FY13/3 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 Page 19 © NEC Corporation 2014
  20. 20. Full Year Forecasts Others Billions of Yen (YoY) (Billions of Yen) YoY Sales 794.9 685.7 1.3% Operating Income 535.0 (-22.0%) s Mobile phone shipments decrease s Decrease due to deconsolidation of NEC Mobiling, Ltd. and the electronic components business -13.7% Operating Income Ratio ▐ Sales -22.0% 2.5% ▐ Operating Income 2.0 535.0 0.4% (-14.9) s Decrease due to the impact of LCD patent sales in the previous fiscal year 16.9 10.4 2.0 FY12/3 FY13/3 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 Page 20 © NEC Corporation 2014
  21. 21. Full Year Forecasts Net Income Change (Year on Year) Others Telecom Carrier System Platform Elimination/ Unclassifiable expenses Public FY13/3 30.4 Deterioration of operating income -14.6 -14.9 -11.6 -3.7 (Billions of Yen) +7.0 +8.0 Gain on sales of subsidiaries and affiliates’ stocks Others +11.6 FY14/3 Forecast(*) 20.0 Deterioration of non-operating income/loss -7.4 Increase of interest expenses * Forecasts as of January 30, 2014 Page 21 © NEC Corporation 2014
  22. 22. Ⅲ.Business Portfolio Restructuring Measures © NEC Corporation 2014
  23. 23. 1. Change in ownership of NEC BIGLOBE, Ltd. (announced today) ▐ NEC agreed to transfer all of its approx. 78% stake in NEC BIGLOBE, Ltd. to Japan Industrial Partners, Inc. in support of NEC BIGLOBE’s further growth ▐ Transfer planned to be completed by the end of March 2014. NEC BIGLOBE will be operated under a new organizational structure from April 2014 l NEC BIGLOBE will continue to deliver its services l NEC’s enterprise system integration and service business will continue to collaborate with NEC BIGLOBE’s knowhow and services in support of current and future customers *as of January 30, 2014 Page 23 © NEC Corporation 2014
  24. 24. 2. Tender Offer for the Shares of NEC Fielding, Ltd. (announced today) ▐ NEC commences tender offer to acquire 100% stake in NEC Fielding, Ltd. (current stake 67.11%*) * including 29.89% owned by NEC’s Employee Retirement Benefit Trust • • Tender offer price: 1,580JPY • Number of shares to be acquired: 17,939,307 shares (except employee benefit trust) • l Tender offer period: January 31 – March 17, 2014 (31 business days) Total amount of purchase: 28.3B JPY NEC Fielding will play a leading role in the NEC Group’s platform service delivery. Related functions to be consolidated accordingly • Data center operations, On-site support of cloud systems • Efficient maintenance services • One-stop services for small/medium-sized businesses supporting the whole life cycle of information systems - sales, installation, configuration and disposal Enhance the services delivering “Solutions for Society” *as of January 30, 2014 Page 24 © NEC Corporation 2014
  25. 25. Expected Results (NEC Fielding, Ltd. becomes a wholly owned subsidiary) ▐ Direct benefit l Acquire minority shareholder interests Net Income Approx. +2.0B JPY ▐ Cost reduction (3 year period) l Integrate cloud service delivery functions l Optimize inventory by centralizing the maintenance of properties l Consolidate call centers and related functions Operating Income Approx. +20.0B JPY ▐ Sales and gross profit expansion l Expand platform products and cloud services *Forecasts as of January 30, 2014 Page 25 © NEC Corporation 2014
  26. 26. Summary Achieve financial forecasts and continue dividend payments to shareholders Implement growth strategies through accelerated management to become a “Social Value Innovator” * Forecasts as of January 30, 2014 Page 26 © NEC Corporation 2014
  27. 27. Page 27 © NEC Corporation 2011 © NEC Corporation 2014
  28. 28. <Ref.> About NEC BIGLOBE Ltd./NEC Fielding, Ltd. ▐ NEC BIGLOBE, Ltd. l Established: July 2006 (unlisted) l Sales: 84.1B JPY (FY2013/3) Number of Employees: Approx. 600 (as of March 31, 2013) l Business description: Information services using networks such as the Internet ▐ NEC Fielding, Ltd. l Initial public offering: September 2002 (1st Tokyo Stock Exchange) l Sales: 185.9B JPY, Operating Income: 8.1B JPY (FY2013/3) Number of Employees: 6,125 (as of March 31, 2013) l Business description: (1) Operation & Maintenance of IT systems (2) System Installation & Configuration (3) Equipment sales Page 28 © NEC Corporation 2014
  29. 29. Financial Results for Q3, FY14/3 (Appendix)
  30. 30. Q3 Results Results for Q3 by Segment ( three-year transition ) (3months) (Billions of Yen) Net Sales Operating Income/Loss Enterprise 669.0 Public 132.8 Enterprise 50.9 Telecom Carrier 156.9 722.0 149.2 59.0 166.3 700.4 System Platform 164.0 165.2 -8.2 60.7 Public 4.7 172.7 Telecom Carrier 9.4 167.3 System Platform 185.7 163.2 180.1 4.2 Others - 1.5 - 5.2 - 1.6 Others Others 8.9 0.2 23.4 17.6 17.9 Enterprise System Platform 24.4 12.4 9.7 8.0 - 0.2 0.8 - 16.4 - 15.2 - 14.1 Eliminations/ Unclassifiable expenses 117.3 FY12/3 Page 30 FY13/3 FY14/3 FY12/3 FY13/3 FY14/3 <Oct-Dec> <Oct-Dec> <Oct-Dec> <Oct-Dec> <Oct-Dec> <Oct-Dec> © NEC Corporation 2014 Enterprise
  31. 31. Q3 Results Financial Results for Q3 by Segment (3months) (Billions of Yen) Net Sales Operating Income/Loss Operating Income for Q3, FY14/3 Public 23.4 23% Others 17% Enterprise Sales for Q3 FY14/3 9% Public 17.6 Telecom Carrier 12.4 700.4 System Platform 8.0 System Platform 26% Enterprise Telecom Carrier 25% Page 31 © NEC Corporation 2014 -0.2 Others 0.8
  32. 32. Q3 Results Sales Change ( October to December / Year on Year) (3months) (Billions of Yen) Japan: Secured same level as the previous fiscal year International: Increased mainly in TOMS and mobile backhaul System Platform +18.4 (+11.0%) Telecom Carrier +6.4 (+3.8%) FY13/3 Q3 <Oct-Dec> 722.0 Public +14.8 (+9.9%) Enterprise +1.6 (+2.8%) Steady sales from government and public areas Page 32 Increased due to high demand for IT investment such as business PCs and servers Decrease of mobile phone shipments. Deconsolidation of NEC Mobiling, Ltd. and the electronic components business. Others -62.8 Steady sales from the retail and services industries © NEC Corporation 2014 FY14/3 Q3 <Oct-Dec> 700.4
  33. 33. Q3 Results Operating Income Change ( October to December /Year on Year) Impact of temporary profit related to intellectual property in the previous fiscal year Increased investment in the retail and logistics industries Enterprise -0.4 (3months) (Billions of Yen) Telecom Carrier Profitability improvement associated with the better environment for IT investment -5.5 System Platform +3.8 Sales decrease FY13/3 Q3 <Oct-Dec> Others -8.8 24.4 23.4 Public +8.7 Sales increase Eliminations/ Unclassifiable expenses Page 33 FY14/3 Q3 <Oct-Dec> © NEC Corporation 2014 +1.1
  34. 34. Results for 9 Months by Segment ( three-year transition ) Q3 Results (9months) (Billions of Yen) Net Sales Operating Income/Loss 71.8 2,112.2 2,169.8 2,083.5 System Platform Public Enterprise Telecom Carrier System Platform Others 404.0 426.2 153.4 177.9 465.5 495.3 509.0 467.3 -1.4 190.8 Public Telecom Carrier 506.7 534.5 522.3 25.3 Others Enterprise 536.4 594.0 15.3 System Platform 8.7 - 4.9 - 7.4 - 38.5 Eliminations/ Unclassifiable expenses 382.2 23.3 2.1 48.8 15.9 27.0 - 45.3 Enterprise 23.7 32.1 0.5 31.8 9.8 - 11.0 - 39.5 FY12/3 Page 34 FY13/3 FY14/3 FY12/3 FY13/3 FY14/3 <Apr-Dec> <Apr-Dec> <Apr-Dec> <Apr-Dec> <Apr-Dec> <Apr-Dec> © NEC Corporation 2014 Others
  35. 35. Q3 Results (9months) Financial Results for 9 Months by Segment (Billions of Yen) Net Sales Operating Income/Loss Operating Income for 9 months, FY14/3 Public 23% Others 18% Telecom Carrier Public Sales for 9 months, FY14/3 Enterprise 32.1 31.8 9% System Platform 2,083.5 Enterprise System Platform 0.5 26% Telecom Carrier 24% Page 35 23.7 © NEC Corporation 2014 9.8 Others -11.0
  36. 36. Q3 Results Sales Change ( April to December / Year on Year) Steady sales from the retail and services industries FY13/3 9 months <Apr-Dec> (Billions of Yen) Japan: Decrease from the previous fiscal year when there was strong demand International: Increase in TOMS and mobile backhaul Increase mainly in hardware Telecom Carrier such as business PCs Enterprise -2.3 (-0.4%) System Platform +12.9 (+7.2%) +1.9 (+0.4%) 2,169.8 Others -140.1 Public +41.2 (+9.7%) Steady sales from government and public areas Declined in mobile phone shipments. Deconsolidation of NEC Mobiling, Ltd. and the electronic components business. The impact of LCD patent sales in the previous fiscal year Page 36 (9months) © NEC Corporation 2014 FY14/3 9 months <Apr-Dec> 2,083.5
  37. 37. Q3 Results Operating Income Change ( April to December / Year on Year) (9months) (Billions of Yen) Sales increase Decrease due to investment in SDN/TOMS and impact of temporary profit related to intellectual property in the previous fiscal year FY13/3 9 months Public <Apr-Dec> +8.8 Telecom Carrier -17.1 71.8 Project lineup changes System Platform -6.1 Enterprise -1.6 Others FY14/3 9 months -38.0 increased investment in retail and logistics industries Eliminations/ Unclassifiable expenses Page 37 © NEC Corporation 2014 Decreased due to sales decrease and the impact of LCD patent sales in the previous fiscal year <Apr-Dec> 23.7 +5.8
  38. 38. Q3 Results Net Income/Loss Change ( April to December / Year on Year) (9months) (Billions of Yen) FY13/3 9 months <Apr-Dec> FY14/3 9 months <Apr-Dec> 11.5 -15.1 Deterioration of operating income -48.1 Others Telecom Carrier Public Equity in earnings of affiliates Foreign exchange gains/losses Interest expenses Page 38 Others +19.7 -38.0 -17.1 +8.8 +5.5 +3.6 -2.9 Improvement of non-operating income/loss +1.8 © NEC Corporation 2014 Gain on sales of subsidiaries and affiliates’ stocks +22.7 Business structure improvement expenses -8.9 Gain on sales of investment securities -6.9
  39. 39. Q3 Results International Sales (3months/9months) (Billions of Yen) YoY Greater China, APAC The Americas 8.0% EMEA 7.3% 4.4% Japan 80.3% 167.0 147.9 134.6 54.5 72.2 Q3 1H 33.4 FY13/3 9 months 102.8 +20.8% 45.1 1H 91.9 25.2 47.1 Q3 152.5 -1.0% 50.3 Q3 50.8 1H 83.8 +32.7% 112.4 58.5 FY14/3 9 months FY13/3 9 months FY14/3 9 months FY13/3 9 months Q3 <October to December> FY13/3 FY14/3 YoY Actual Actual % to Net Sales 121.1 138.2 16.8% International sales 19.7% 14.1% 102.2 FY14/3 9 months 9 months <April to December> FY13/3 FY14/3 YoY Actual Actual 354.7 411.3 16.3% 16.0% 19.7% * Sales are classified by country or region based on customer locations. The rates of circle graphs are calculated by 9 months. Page 39 © NEC Corporation 2014
  40. 40. Q3 Results Financial Position Data (Billions of Yen) End of March 2013 End of December 2013 Difference from March 2013 End of December 2012 2,581.0 2,541.9 -39.0 2,545.8 Net Assets 836.1 817.1 -19.1 790.2 Interest-bearing debt 603.5 686.2 82.7 741.3 Shareholders' Equity 710.7 712.3 1.6 669.8 Equity ratio(%) 27.5% 28.0% 0.5pt 26.3% D/E ratio (times) 0.85 0.96 -0.11pt 1.11 Net D/E ratio (times) 0.57 0.72 -0.15pt 0.81 197.1 170.2 -27.0 201.5 Total Assets Balance of cash and cash equivalents Page 40 © NEC Corporation 2014
  41. 41. Q3 Results <Ref.> Balance Sheets (At the end of December , 2013) (Billions of Yen) Total Assets 2,541.9 <Compared to end of March 2013> (-39.0) Compared to end of March 2013 Liabilities 1,724.9 Current Assets 1,463.6 -50.2 -20.0 Collection of accounts receivable-trade Noncurrent Assets 1,078.4 +11.2 Net Assets 817.1 -19.1 Acquisition of trust beneficiary rights set to land and buildings Page 41 Decrease in notes and accounts payable-trade and bonds, despite an increase in long-term debt due to financing through hybrid finance (subordinated loan) Decrease due to net loss for the 9 months © NEC Corporation 2014
  42. 42. Financial Forecasts for FY14/3 (Appendix) © NEC Corporation 2014
  43. 43. Financial Forecasts for FY14/3 by Segment (three-year transition) Full Year Forecasts (Billions of Yen) Net Sales Operating Income/Loss 114.6 100.0 3,036.8 3,071.6 Public 649.5 680.7 Enterprise 222.2 251.6 659.3 709.3 Telecom Carrier System Platform 711.0 744.4 3,000.0 5.5 Public 745.0 43.3 Enterprise 265.0 Telecom Carrier 715.0 0.5 794.9 685.7 535.0 FY13/3 13.8 10.4 - 48.8 FY14/3 Forecasts(*) 57.0 6.0 60.0 32.7 Eliminations/ Unclassifiable expenses 740.0 71.6 54.6 System Platform Others FY12/3 Others 73.7 49.0 FY12/3 16.9 29.0 2.0 - 61.0 - 54.0 FY13/3 FY14/3 Forecasts(*) * Forecasts as of January 30, 2014 Page 43 © NEC Corporation 2014
  44. 44. Full Year Forecasts Financial Forecasts for FY14/3 by Segment (Billions of Yen) Net Sales Operating Income Public Others 25% 18% Telecom Carrier Public 60.0 57.0 Operating Income Forecast for FY14/3 100.0 Enterprise Sales Forecast for FY14/3 9% System Platform 29.0 3,000.0 Enterprise System Platform 6.0 24% Others 2.0 Telecom Carrier 24% * Forecasts as of January 30, 2014 Page 44 © NEC Corporation 2014
  45. 45. Full Year Forecasts Sales Change (Year on Year) (Billions of Yen) Japan: Decrease from the previous fiscal year, when there was strong demand International: Increase in TOMS Maintain same level as previous year due to high demand for business PCs, offsetting impact of large-scale project in the previous fiscal year Telecom Carrier +5.7(+0.8%) System Platform Steady sales from the retail and services industries Enterprise +13.4 (+5.3%) -4.4 (-0.6%) FY13/3 3,071.6 FY14/3 Forecast* Public +64.3 (+9.5%) Steady sales mainly from government and public areas 3,000.0 Others -150.7 Mobile phone shipments decrease, deconsolidation of NEC Mobiling, Ltd. and the electronic components business * Forecasts as of January 30, 2014 Page 45 © NEC Corporation 2014
  46. 46. Full Year Forecasts Operating Income Change (Year on Year) (Billions of Yen) Improve due to sales increase and cost reductions FY13/3 Decrease due to the acceleration of investment in SDN, etc. and temporary profit related to intellectual property in the previous fiscal year Public +8.0 114.6 Telecom Carrier -11.6 Decrease due to project lineup changes System Platform -3.7 FY14/3 Forecast* Enterprise +0.5 Improve by sales increase 100.0 Others -14.9 Decrease in strategic investment Decrease from the impact of LCD patent sales in the previous fiscal year Eliminations/ Unclassifiable expenses +7.0 * Forecasts as of January 30, 2014 Page 46 © NEC Corporation 2014
  47. 47. Full Year Forecasts Capital Expenditure, Depreciation and R&D expenses (Billions of Yen) YoY FY12/3 FY13/3 FY14/3 Actual Actual Forecasts YoY Capital Expenditure 42.0 45.6 * 50.0 9.6% Depreciation 53.3 51.2 * 50.0 - 2.3% 160.0 5.5% 162.0 R&D expenses % to Net Sales 5.3% 151.7 4.9% 5.3% * Not including acquisition of trust beneficiary rights Capital Expenditure 42.0 45.6 50.0 Depreciation 53.3 51.2 +9.6% R&D expenses 162.0 50.0 151.7 160.0 +5.5% -2.3% % to Net Sales 5.3% 5.3% 4.9% FY12/3 FY13/3 FY14/3 Forecast(*) FY12/3 FY13/3 FY14/3 Forecast(*) FY12/3 FY13/3 FY14/3 Forecast(*) * Forecasts as of January 30, 2014 (Note: Unchanged from forecasts announced on October 30) Page 47 © NEC Corporation 2014
  48. 48. Reference (Financial data)
  49. 49. Net Sales, Operating Income/Loss 8.1% (Billions of Yen) 6.8% 4.8% 3.4% YoY 3.0% Operating Income Ratio 3.3% 3.4% - 1.2% - 2.9% - 1.2% - 3.4% 924.6 Net Sales 774.1 669.1 901.8 816.3 -0.1% 722.0 669.0 631.5 -3.4% 743.0 -2.5% +5.4% -9.0% +7.9% -7.2% +0.2% 700.4 640.1 -3.0% -5.6% +1.4% 75.2 Operating Income/ Loss 26.2 55.2 42.8 24.4 -19.4 22.2 -21.8 -7.9 -8.2 23.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 49 FY13/3 © NEC Corporation 2014 FY14/3
  50. 50. International Sales 20.5% (Billions of Yen) YoY 18.9% International Sales Ratio 17.9% 16.7% 16.3% 19.7% 16.8% 15.4% 17.2% International Sales 115.1 138.8 +7.7% 136.2 12.8% 108.9 121.1 118.7 128.4 138.2 120.8 +11.8% -1.9% +14.1% +8.1% -0.1% +0.8% 152.3 14.2% 97.4 +11.2% +24.0% -7.4% -15.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 50 FY13/3 © NEC Corporation 2014 FY14/3
  51. 51. Sales, Operating Income/Loss (Public) (Billions of Yen) 11.4% 10.1% 8.8% 7.9% YoY 8.0% 10.7% 5.9% 3.6% 0.3% 0.1% - 1.7% 254.5 245.4 Operating Income Ratio +3.7% 176.7 162.0 158.2 Net Sales 132.8 114.9 113.0 126.6 +2.4% +9.1% +9.9% +12.3% 28.0 25.8 +10.1% +1.7% 14.3 Operating 12.5 Income/ Loss 164.0 149.2 14.2 17.6 8.9 4.7 0.1 -1.9 0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 51 FY13/3 © NEC Corporation 2014 FY14/3
  52. 52. Sales, Operating Income/Loss (Enterprise) 7.8% (Billions of Yen) 6.7% 4.5% YoY 4.4% - 1.2% Operating Income Ratio 0.3% - 0.3% - 2.9% 68.7 73.7 68.8 57.9 Net Sales - 4.1% - 5.3% - 6.0% +18.9% 50.9 59.0 71.3 50.0 44.7 60.7 58.7 +7.2% +3.7% +2.8% +17.4% +16.1% +12.1% Operating Income/ Loss -2.7 5.4 -0.7 4.6 3.3 0.2 -2.7 -1.5 3.1 -2.4 -0.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 52 FY13/3 © NEC Corporation 2014 FY14/3
  53. 53. Sales, Operating Income (Telecom Carrier) (Billions of Yen) 15.1% 9.7% 8.3% YoY 11.3% 7.7% 10.8% 8.2% 6.0% 7.2% 3.6% 1.3% Operating Income Ratio 193.8 Net Sales 169.6 156.9 155.1 138.9 29.3 200.3 187.5 180.0 166.3 +10.6% 154.0 -4.0% +3.8% +6.0% +11.7% -0.7% 22.7 18.2 Operating Income 14.1 +3.3% 17.9 13.8 12.7 9.4 172.7 12.4 5.6 1.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 53 FY13/3 © NEC Corporation 2014 FY14/3
  54. 54. Sales, Operating Income/Loss (System Platform) (Billions of Yen) 9.8% 8.0% 6.6% YoY 4.3% 4.3% 1.9% 2.5% - 1.1% - 3.2% - 3.8% - 4.2% Operating Income Ratio 215.7 209.9 204.1 193.1 182.9 Net Sales 165.2 163.1 +11.6% 167.3 -2.7% 157.7 147.2 +1.3% +10.8% -5.4% 185.7 +11.0% -3.3% 21.2 Operating Income/ Loss 16.8 13.5 8.4 4.2 3.4 -1.8 -5.2 -5.6 8.0 -6.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 54 FY13/3 © NEC Corporation 2014 FY14/3
  55. 55. Sales, Operating Income/Loss (Others) (Billions of Yen) 10.8% YoY 5.4% 4.9% Operating Income Ratio 0.8% 0.1% - 1.0% 0.7% - 1.6% - 2.4% Net Sales - 6.2% 225.4 205.4 200.9 - 6.9% 193.8 180.1 163.2 148.4 -5.7% 163.4 143.1 +10.4% 121.8 -18.7% -34.2% 117.3 -3.5% -37.2% Operating Income/ Loss -34.9% 21.0 10.2 -1.6 0.2 1.6 9.7 -3.6 -10.1 -9.9 -2.0 0.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> <Jan-Mar> <Apr-Jun> <Jul-Sep> <Oct-Dec> FY12/3 Page 55 FY13/3 © NEC Corporation 2014 FY14/3
  56. 56. Exchange Rate (Yen) 145 Euro/Yen Exchange Rate (Actual) 140 Assumed Exchange Rate 135 130 125 Average Exchange Rate ¥130.15 120 115 110 Dollar/Yen Exchange Rate (Actual) 105 Assumed Exchange Rate 100 95 Average Exchange Rate ¥98.42 90 85 4/1 Page 56 4/30 5/31 6/28 7/31 8/30 © NEC Corporation 2014 9/30 10/31 11/29 12/31
  57. 57. Stock Price (Yen) April 26:FY13/3 Earnings Release 17,000 300 NEC 16,500 290 the Nikkei Stock 16,000 July 31: Q1 Earnings Release 15,500 280 October 22: Telecom Carrier Business Briefing 270 15,000 260 14,500 250 14,000 October 30: Q2 Earnings Release 13,500 13,000 240 230 12,500 220 12,000 11,500 210 June 24:Ordinary General Meeting of Shareholders December 3: R&D Briefing July 10: SDN Briefing 11,000 4/1 Page 57 4/30 5/31 6/28 7/31 8/30 © NEC Corporation 2014 9/30 10/31 11/29 200 12/30
  58. 58. 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.

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