11 06-12 nec results-q2

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11 06-12 nec results-q2

  1. 1. Financial Results for 1HFiscal Year Ending March 31, 2013 October 26, 2012 NEC Corporation (http://www.nec.com/en/global/ir)
  2. 2. Index I. Financial Results for 1H, FY13/3 II. Progress on Restructuring III. Summary of Financial Forecasts for FY13/3 IV. Formulating mid-term management plan  Financial Results for 1H, FY13/3 (Appendix)  Financial Forecasts for FY13/3 (Appendix)  Reference (Financial data) ※ As stated in the July 6, 2012 announcement, “NEC Revises Business Segments,” NEC has revised its business segments from the first quarter of the fiscal year ending March 31, 2013. Figures for the corresponding period of the previous fiscal year have been adjusted in accordance with the new segments Page 2 © NEC Corporation 2012
  3. 3. I. Financial Results for 1H, FY13/3
  4. 4. 1H ResultsSummary of Financial Results for 1H  Increased year on year and achieved forecast *increase by approximately 3% excluding the impact of deconsolidation of Sales consumer PC and LCD module businesses • Expanded mainly in IT Solutions and Carrier Network YoY +0.3% • Sold LCD patents to Hon Hai Precision Industry Co., Ltd Difference from Jul 31 for approximately 9.5B Yen (figures included in Others) +47.8B Yen  Secured operating income in all segments Operating • Improved in IT Solutions and Carrier Network Income significantly YoY +40.6B Yen • 13.0B Yen effect of restructuring (in line with original plan) Difference from Jul 31 +46.4B Yen • Invested approximately 4.0B Yen for future growth  Turned to the black due to improvement in Net Income/Loss operating income YoY +19.0B Yen Difference from Jul 31 • Improved in equity in earnings/losses of affiliates +32.0B Yen • Sold Lenovo stakesPage 4 © NEC Corporation 2012
  5. 5. 1H ResultsSummary of Financial Results for 1H (Billions of Yen) Q2 <Jul-Sep> 1H <Apr-Sep> Difference FY12/3 FY13/3 FY12/3 FY13/3 from Jul 31 YoY YoY Actual Actual Actual Actual Net Sales 774.1 816.3 5.4% 1,443.2 1,447.8 0.3% 47.8 Operating Income 26.2 55.2 29.0 6.8 47.4 40.6 46.4 % to Net Sales 3.4% 6.8% 0.5% 3.3% Ordinary Income/Loss 19.2 42.0 22.8 -10.4 29.9 40.3 45.9 % to Net Sales 2.5% 5.2% - 2.1% Net Income/ Loss 18.7 25.9 7.1 -11.0 8.0 19.0 32.0 % to Net Sales 2.4% 3.2% - 0.6% Free Cash Flow -7.3 -58.6 -51.3 9.2 -32.0 -41.2 Note: Average exchange rates for 1H, FY13/3: 1$= ¥80.13, 1€= ¥102.06 (Assumed exchange rates for FY13/3 as of July 31, 2012: 1$ = ¥75, 1€= ¥100) Page 5 © NEC Corporation 2012
  6. 6. 1H Results1H Results by Segment (Billions of Yen) Q2 <Jul-Sep> 1H <Apr-Sep> FY12/3 FY13/3 FY12/3 FY13/3 YoY YoY Actual Actual Actual Actual Net Sales 299.3 329.2 10.0% 536.7 578.3 7.8% IT Solutions Operating Income 13.6 28.6 15.1 0.8 22.8 22.1 % to Net Sales 4.5% 8.7% 0.1% 3.9% Net Sales 156.0 170.7 9.4% 283.5 312.0 10.1% Carrier Operating Income 12.9 15.7 2.9 15.3 27.0 11.7 Network % to Net Sales 8.3% 9.2% 5.4% 8.6% Net Sales 81.5 82.7 1.4% 140.3 141.9 1.1% Social Operating Income 5.7 6.8 1.1 6.1 8.2 2.1 Infrastructure % to Net Sales 6.9% 8.2% 4.3% 5.7% Net Sales 170.8 170.0 - 0.4% 354.3 302.5 - 14.6% Personal Operating Income 2.1 4.2 2.1 3.4 1.2 -2.2 Solutions % to Net Sales 1.2% 2.4% 1.0% 0.4% Net Sales 66.5 63.7 - 4.2% 128.5 113.0 - 12.0% Others Operating Income 4.3 14.4 10.0 3.0 13.0 10.0 % to Net Sales 6.5% 22.5% 2.4% 11.5% Elim inations/ Unclassifiable expenses Operating Loss -12.3 -14.4 -2.1 -21.8 -24.7 -2.9 Net Sales 774.1 816.3 5.4% 1,443.2 1,447.8 0.3% Total Operating Income 26.2 55.2 29.0 6.8 47.4 40.6 % to Net Sales 3.4% 6.8% 0.5% 3.3% Page 6 © NEC Corporation 2012
  7. 7. 1H ResultsIT Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 578.3 (+7.8%) YoY +7.8%  IT Services Sales -2.0% Solid sales in telecom, 578.3 547.7 536.7 manufacturing and retail sectors Consolidation of CSG Limiteds +8.0% Technology Solutions business -2.2% Operating income  PlatformIT Services 391.8 3.9% ratio Increase in IT hardware and 371.0 362.7 software due to large-scale projects 0.4% 0.1% 22.8 ▐ Operating Income 22.8 (+22.1) Operating -1.6% +7.2%  Improve by sales increase and cost Income Platform 176.8 174.0 186.6 reductions <Effect of Restructuring> 2.0 0.8 +5.0 FY11/3 FY12/3 FY13/3 1H 1H 1H Page 7 © NEC Corporation 2012
  8. 8. 1H ResultsCarrier Network Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 312.0 (+10.1%)  Japan: Healthy sales YoY  Overseas: Almost flat by consolidation 312.0 of Convergys BSS business and sales Sales 283.5 expansion in submarine cable systems 261.4 +10.1% despite decrease in mobile backhaul in +8.4% sluggish market 8.6% Operating income 5.4% ratio 2.9% 27.0 ▐ Operating Income 27.0 (+11.7)  Increase from sales expansion in Operating 15.3 Japan and cost reduction despite Income making an investment for future growth 7.5 <Effect of Restructuring> +2.0 FY11/3 FY12/3 FY13/3 1H 1H 1H Page 8 © NEC Corporation 2012
  9. 9. 1H ResultsSocial Infrastructure Business Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales 141.9 (+1.1%) Sales Increase by stable sales in aerospace and defense systems 140.3 141.9 137.9 +1.1% ▐ Operating Income 8.2 (+2.1) +1.8% 5.7% Increase by sales expansion and Operating income 4.3% cost reductions ratio 2.9% 8.2 Operating Income 6.1 4.0 <Effect of Restructuring> +1.0 FY11/3 FY12/3 FY13/3 1H 1H 1H Page 9 © NEC Corporation 2012
  10. 10. 1H ResultsPersonal Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 302.5 (-14.6%) Sales Mobile Terminals: YoY 392.1 -9.6% Decline due to decrease in 354.3 -14.6% Approx. -5% excluding shipment of mobile handset the impact of the deconsolidation 155.4 +7.0% 302.5 PCs and Others: Mobile Operating Decline due to deconsolidation Terminals income 166.3 Approx. +9% excluding of consumer PC business, -19.2% ratio 1.0% 134.4 0.7% the impact of the 0.4% deconsolidation despite the rise of tablet devices and increase in business PCs -20.6% ▐ Operating Income 1.2 (-2.2) -10.6% 236.7 PCs and Operating 188.0 Decrease due to sales decrease in Others Income 168.1 <Effect of Restructuring> 3.4 +4.0 mobile terminals 2.9 1.2 FY11/3 FY12/3 FY13/3 1H 1H 1H Page 10 © NEC Corporation 2012
  11. 11. 1H ResultsOthers Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales 113.0 (-12.0%)  Decrease due to deconsolidation of Sales LCD module business and decrease in energy business and electronic 130.1 component business 128.5 113.0  Sale of LCD patents to Hon Hai -1.3% 11.5% Precision Industry Co., Ltd -12.0% Operating income ratio ▐ Operating Income 13.0 (+10.0) 1.7% 2.4% 13.0  Improve due to the sale of LCD patents despite sales decrease Operating Income 2.2 3.0 <Effect of Restructuring> +1.0 * *include Effect of Restructuring in Eliminations/Unclassifiable FY11/3 FY12/3 FY13/3 expenses 1H 1H 1H Page 11 © NEC Corporation 2012
  12. 12. 1H ResultsNet Income Change (Year on Year) Worsening non- (Billions of Yen) -0.5 Difference from Jul 31 operating income Equity in earnings / losses of affiliates +4.2 and expenses -0.3 IT Solutions +22.1 Income taxes -18.6 Extraordinary income/loss -5.1 Carrier Network +11.7 Others +10.0 +46.4 Others -21.3 Improvement in operating income -13.9 FY13/3 1H +40.6 8.0 +32.0 FY12/3 1H -11.0 <Effect of Restructuring> +13.0 Page 12 © NEC Corporation 2012
  13. 13. II. Progress on Restructuring© NEC Corporation 2012
  14. 14. RestructuringProgress on Expenses Restructuring▐ Expect to secure 40.0B Yen from restructuring and reduce headcount as planned  Employees applying for early retirement program: Business 2,393 in administrative staff, mobile terminal and Restructuring platform businesses etc. + • Additional 2.9B Yen posted in non-operating expenses Streamline - Reduced employees in NEC TOKIN (early Corporate staff retirement program in Japan / establishment of new plant in Thailand), Nippon Avionics Co., Ltd. Effect in FY13/3: +20.0B Yen (early retirement program ) Reduction of External Resources  Expect to secure results as planned Effect in FY13/3 : +4.0B Yen Immediate Cost  Expect to reduce monthly salary at all levels of Reductions Effect in FY13/3: +16.0B Yen staff in Japan as planned *Forecasts (results for FY13/3) as of Oct 26, 2012 Page 14 © NEC Corporation 2012
  15. 15. RestructuringProgress on Business Restructuring▐ Executing drastic restructuring in Mobile Terminal Business  Streamlined resources for development and manufacturing operations in NEC CASIO Mobile Mobile Terminal Communications Ltd, and NEC Saitama Ltd (reduced headcount by approx. 500) Effect in FY13/3: +11.0B Yen  Started to utilize offshore JDM (Joint Design Manufacturer) Platform  Streamlined administrative staff, hardware development and manufacturing Effect in FY13/3 : +6.0B Yen  Restructured capacitor business • Established new plant in Thailand NEC TOKIN Reduced headcount by approx. 3,000 (Electronic component)  Capital and business alliance with KEMET Corporation of the U.S. (announced in March) *Forecasts (results for FY13/3) as of Oct 26, 2012 Page 15 © NEC Corporation 2012
  16. 16. III. Summary of Financial Forecasts for FY13/3
  17. 17. Full Year ForecastsToward Achievement of Financial ForecastsAchieve financial forecasts(*) to resumedividend payments under good businessmomentum in IT Solutions and CarrierNetworks despite economic uncertaintyForecasts(*) : 100.0B Yen operating income 20.0B Yen net income 4 Yen year-end dividend *Forecasts as of Oct 26, 2012 Page 17 © NEC Corporation 2012
  18. 18. Full Year ForecastsSummary of Financial Forecasts for FY13/3 (Billions of Yen) 2H <Oct-Mar> Full Year Difference FY12/3 FY13/3 FY12/3 FY13/3 from Jul 31 YoY YoY Actual Forecasts Actual Forecasts Net Sales 1,593.6 1,702.2 6.8% 3,036.8 3,150.0 3.7% 0.0 Operating Income 67.0 52.6 -14.3 73.7 100.0 26.3 0.0 % to Net Sales 4.2% 3.1% 2.4% 3.2% Ordinary Income 52.5 40.1 -12.3 42.1 70.0 28.0 0.0 % to Net Sales 3.3% 2.4% 1.4% 2.2% Net Income/ Loss -99.3 12.0 111.3 -110.3 20.0 130.3 0.0 % to Net Sales - 0.7% - 0.6% Free Cash Flow 24.9 32.0 7.0 34.2 0.0 -34.2 Note: Assumed exchange rates for 2H, FY13/3 1$=¥75, 1€=¥100 *Forecasts as of Oct 26, 2012 Page 18 © NEC Corporation 2012
  19. 19. Full Year ForecastsFinancial Forecasts for FY13/3 by Segment (Billions of Yen) 2H <Oct-Mar> Full Year Difference FY12/3 FY13/3 FY12/3 FY13/3 from YoY YoY Actual Forecasts Actual Forecasts Jul 31 Net Sales 652.5 676.7 3.7% 1,189.2 1,255.0 5.5% 0.0 IT Solutions Operating Income 44.0 49.2 5.2 44.8 72.0 27.2 0.0 % to Net Sales 6.7% 7.3% 3.8% 5.7% Net Sales 319.3 383.0 20.0% 602.7 695.0 15.3% 0.0 Carrier Operating Income 35.4 26.0 -9.3 50.6 53.0 2.4 0.0 Network % to Net Sales 11.1% 6.8% 8.4% 7.6% Net Sales 190.1 233.1 22.6% 330.4 375.0 13.5% 0.0 Social Operating Income 10.1 10.8 0.8 16.2 19.0 2.8 0.0 Infrastructure % to Net Sales 5.3% 4.7% 4.9% 5.1% Net Sales 306.7 307.5 0.3% 661.0 610.0 - 7.7% 0.0 Personal Operating Income/Loss -2.4 8.8 11.2 1.0 10.0 9.0 0.0 Solutions % to Net Sales - 2.9% 0.2% 1.6% Net Sales 125.0 102.0 - 18.4% 253.5 215.0 - 15.2% 0.0 Others Operating Income 8.1 3.0 -5.1 11.1 16.0 4.9 0.0 % to Net Sales 6.5% 3.0% 4.4% 7.4% Elim inations/ Unclassifiable expenses Operating Loss -28.2 -45.3 -17.1 -50.0 -70.0 -20.0 0.0 Net Sales 1,593.6 1,702.2 6.8% 3,036.8 3,150.0 3.7% 0.0 Total Operating Income 67.0 52.6 -14.3 73.7 100.0 26.3 0.0 % to Net Sales 4.2% 3.1% 2.4% 3.2% *Forecasts as of Oct 26, 2012 Page 19 © NEC Corporation 2012
  20. 20. Full Year ForecastsIT Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 1,255.0 (+5.5%) YoY  IT Services +5.5% Sales +0.8% Increase in telecom sector 1,255.0 with continuing healthy market 1,180.0 1,189.2 demand and IT investment +4.7% recovery in manufacturing and +1.6% retail services sectors Operating income 5.7% ratio  PlatformIT Services 804.2 855.0 816.9 3.8% Increase due to large-scale projects 2.6% Operating 72.0 ▐ Operating Income 72.0 (+27.2) Income 44.8 -0.9% +7.4%  Increase due to sales expansion and Platform 30.3 400.0 the effect of restructuring 375.8 372.4 <Effect of Restructuring> +14.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 20 © NEC Corporation 2012
  21. 21. Full Year ForecastsCarrier Network Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 695.0 (+15.3%) YoY  Japan: Expect healthy sales growth  Overseas: Increase due to sales 695.0 expansion in services & management Sales 602.7 and submarine cable systems 577.2 +15.3% +4.4% Operating income ▐ Operating Income 53.0 (+2.4) 8.4% ratio 6.6% 7.6%  Expect an increase from sales expansion and cost reduction despite Operating Income 53.0 making an investment for future growth 50.6 37.9 <Effect of Restructuring> +5.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 21 © NEC Corporation 2012
  22. 22. Full Year ForecastsSocial Infrastructure Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 375.0 (+13.5%) YoY  Aiming to increase in aerospace and defense systems Sales 375.0  Social systems will be the same level 330.4 as the previous year due to the sales 318.8 +13.5% increase in fire and disaster prevention +3.6% systems offset by a decrease in 5.1% demand for broadcasting systems Operating income 4.9% ratio 4.6% ▐ Operating Income 19.0 (+2.8) Operating  Improve due to sales increase, cost Income 19.0 reduction and the effect of restructuring 14.6 16.2 despite making an investment for future growth <Effect of Restructuring> +3.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 22 © NEC Corporation 2012
  23. 23. Full Year ForecastsPersonal Solutions Business Billions of Yen (YoY) (Billions of Yen) ▐ Sales 610.0 (-7.7%) YoY  Mobile Terminals: Sales Aim to accumulate greater shipments 766.5 -13.8% in Japan with new models despite -7.7% sales decrease 661.0 Mobile 610.0  PCs and Others: Terminals 303.5 -0.8% -1.7% Decrease due to the deconsolidation Operating income 301.0 of consumer PCs ratio 296.0 1.6% - 0.2% 0.2% ▐ Operating Income/Loss 10.0 (+9.0) -22.2% -12.8%  Improve due to the effect of PCs and 463.0 restructuring in the mobile terminal Operating Others Income/ 360.0 business despite sales decrease Loss 314.0 10.0 -1.9 1.0 <Effect of Restructuring> +13.0 FY11/3 FY12/3 FY13/3 Forecasts(*) *Forecasts as of Oct 26, 2012 Page 23 © NEC Corporation 2012
  24. 24. Full Year ForecastsOthers Billions of Yen (YoY) (Billions of Yen) YoY ▐ Sales 215.0 (-15.2%)  Decrease due to deconsolidation of Sales LCD module business and decrease in electronic component business and 273.0 energy business 253.5  Sale of LCD patents to Hon Hai 215.0 -7.1% Precision Industry Co., Ltd Operating income ratio -15.2% 7.4% ▐ Operating Income 16.0 (+4.9) 4.4% 3.4%  Improve due to the effect of restructuring and sale of LCD patents Operating 16.0 Income 11.1 9.2 <Effect of Restructuring> +5.0 ** **include effect of restructuring in Eliminations/Unclassifiable FY11/3 FY12/3 FY13/3 expenses Forecasts(*) *Forecasts as of Oct 26, 2012 Page 24 © NEC Corporation 2012
  25. 25. IV.Formulating mid-term management plan © NEC Corporation 2012
  26. 26. NEC’s Challenges▐ NEC’s current challenges: “Need to generate more profit and cash flow” “Need to strengthen financial structure”  Not enough increase in operating income although improving for 3 consecutive fiscal Generate years (FY10/3-FY12/3) profit and  Lack of competitiveness in Mobile handset and cash flow Platform Businesses (Executing business restructuring to improve profitability)  Capital reduction due to the implementation of Strengthen structural reforms financial  Our pension deficit will be shown on our balance structure sheet at the end of FY14/3. Page 26 © NEC Corporation 2012
  27. 27. Basic Policy▐ Key measures for next 3 years: “Growth strategy” and “Reinforcement of our business base”  Focus on delivering social infrastructure platforms for governments and Growth corporations worldwide to realize a safe, Strategy secure, fair, efficient and affluent society • Strengthen existing businesses • Expand new business for future growth  Improve profitability through expense Reinforcement of restructuring our business base  Streamline assets to generate cash flow ⇒ Strengthen Balance Sheet Page 27 © NEC Corporation 2012
  28. 28. Focus on Four Key Businesses▐ Strengthen Global Services Businesses  Expand TOMS* and SDN* Businesses in response to data traffic hikes • Expand global business in Carrier Network *TOMS : Telecom Operations Management Systems *SDN : Software Defined Network ∼Acquired U.S. based Convergys BSS business∼ – Started integrated operations with NetCracker OSS business for telecom carriers  Reinforce Global IT Solutions leveraging our competitive safety, distribution and logistics infrastructure • Strengthen global business in IT Services ∼Acquired Australia based CSG Technology Solutions business∼ NEC Australia and NEC ITS (ex CSG Technology Solutions Business) MD, Alan Hyde – Took over competitive services, solutions and customer bases such as governments and major companies  Expand Social infrastructure business worldwide such as satellite business for emerging countries, railway communication systems and monitoring of important facilities Page 28 © NEC Corporation 2012
  29. 29. Focus on Four Key Businesses▐ Strengthen “Energy services” leveraging our competitive electrodes  Expand electrode and energy storage system businesses ∼Reached agreement on supplying lithium-ion battery components to GS Yuasa∼  Start consideration of joint energy service business renting residential storage batteries with ORIX and EPCO • Newly established company with joint investment aims to provide battery design, construction, repair and maintenance in addition to a service that supports electricity reductions “visually” through the long-term rental of NEC’s grid connected lithium ion storage batteries.  Awarded contract from Enel (power company in Italy) for providing one of the largest lithium-ion energy storage systems in Europe • A first step to providing large-capacity energy storage systems in Europe supporting power systems and electrical distribution networks of utilities Page 29 © NEC Corporation 2012
  30. 30. Toward Creation of New Values / Maximization of Values “CS NO.1” “Global First” “One NEC” Page 30 © NEC Corporation 2012
  31. 31. Next Mid-Term Management PlanOur target in the next 3 years (FY14/3 - FY16/3):“Reconstructing management and generatingconstant cash flow”“Securing competitiveness through execution ofstrategies for future growth” Page 31 © NEC Corporation 2012
  32. 32. NEC Group Vision 2017 To be a leading global companyleveraging the power of innovation to realize an information society friendly to humans and the earth © NEC Corporation 2012
  33. 33. © NEC Corporation 2011 Page 33 © NEC Corporation 2012
  34. 34. Financial Results for 1H,FY13/3 (Appendix)
  35. 35. 1H Results1H Results by Segment (Billions of Yen) Net Sales Operating Income/Loss 47.4 22.8 1,469.2 1,443.2 1,447.8 1,400.0 1.0 6.8 14.0 27.0IT Solutions 547.7 536.7 578.3 570.0 IT Solutions 1.1 0.8 Carrier 2.0 15.3 17.0 8.2 Network 7.5 1.2 Carrier 261.4 Social 4.0 6.1 6.0 Network 283.5 3.4 13.0 312.0 Infrastructure Personal 2.92.2 3.0 4.0 315.0 Solutions - 2.0 SocialInfrastructure 137.9 140.3 141.9 Others - 17.5 - 21.8 145.0 - 24.7 Eliminations/ Personal Solutions 392.1 354.3 Unclassifiable - 38.0 265.0 302.5 expenses Personal Others Solutions 130.1 128.5 105.0 113.0 FY11/3 FY12/3 Forecasts FY13/3 FY11/3 FY12/3 Forecasts FY13/3 as of Jul 31 as of Jul 31 1H 1H 1H 1H 1H 1H Page 35 © NEC Corporation 2012
  36. 36. 1H Results Summary of Financial Results for 1H by Segment (Billions of Yen) Net Sales Operating Income IT Solutions Others 40% Operating Income 8% Carrier for 1H, FY13/3 Network Personal Solutions IT Solutions 27.0 47.4 21% 22.8 Sales for 1H Others FY13/3 Social Infrastructure 13.0 1,447.8 8.2 Social PersonalInfrastructure Solutions 10% 1.2 Carrier Network 21% Page 36 © NEC Corporation 2012
  37. 37. 1H ResultsKey Points of Results for 1H by Segment (Year on Year) IT  Increase due to solid sales in IT services and Platform Solutions  Improve by sales increase and cost reductions  Increase due to solid sales in Japan and consolidation of Convergys BSS Business Carrier  Increase from sales expansion and cost reductions despite making an investment Network for future growth Social  Increase due to solid sales in aerospace and defense systems Infrastructure  Improve by sales increase and cost reductions  Decline due to deconsolidation of consumer PC business and decrease in shipment Personal of mobile terminals Solutions  Decrease due to sales decrease in mobile terminal business  Decline due to deconsolidation of LCD module business and decrease in electronic Others component business  Improve due to sale of LCD patents Note: First bullet refer to changes in sales, second bullet refer to changes in operating income/loss Page 37 © NEC Corporation 2012
  38. 38. 1H ResultsSales Change (Year on Year) (Billions of Yen)Difference from Increase in aerospace and defense systems Jul 31 -3.1 Deconsolidation of consumer PC +37.5 Decrease in shipment of mobile terminals Increase sales in Japan and Social Infrastructure consolidation of Convergys BSS Business +1.6 (+1.1%) Personal Solutions -51.8 (-14.6%) Decrease due to deconsolidation -3.0 Carrier Network of LCD module business and decreasing of electronic +28.6 (+10.1%) +8.0 component business FY12/3 1H Others FY13/3 1H <Apr-Sep> -15.4 <Apr-Sep> 1,443.2 1,447.8 +47.8 IT Solutions +8.3 +41.7 (+7.8%) Stable business in IT Services and Platform Page 38 © NEC Corporation 2012
  39. 39. 1H ResultsOperating Income/Loss Change (Year on Year) (Billions of Yen)Difference from <Effect of Restructuring> +1.0 Jul 31 Sale of LCD patents +9.0 Sales Increase and cost reduction<Effect of Restructuring> Others <Effect of Restructuring> FY13/3 1H +2.0Increase from sales expansion Social Infrastructure +10.0 +1.0 <Apr-Sep>and cost reduction despite making +2.2 +2.1an investment for future growth 47.4 +46.4 Carrier Network Eliminations/ <Effect of Restructuring> +10.0 +11.7 Unclassifiable +5.0 Sales increase +13.3 expenses Cost reductions Personal -2.9 IT Solutions Solutions Increase in +8.8 +22.1 -2.2 investment costs +3.2 FY12/3 1H <Effect of Restructuring> <Apr-Sep> +13.0 6.8 Sales decrease in mobile terminals <Effect of Restructuring> +4.0 Page 39 © NEC Corporation 2012
  40. 40. RestructuringProgress on Restructuring▐ Effect in 1H Result 13.0B Yen (almost in line with forecasts) (Billions of Yen) Effect in Effect in Effect in Effect in Item FY13/3 Segment FY13/3 1H Result 1H Result (forecasts) (forecasts) Business IT Solutions 5.0 14.0 Restructuring 3.0 20.0 Carrier Network 2.0 5.0 Streamline Corporate staffs Social 1.0 3.0 Infrastructure Reduction of External 1.0 4.0 Personal Resources 4.0 13.0 Solutions Immediate Cost Others/Eliminations 9.0 16.0 Unclassifiable exp 1.0 5.0 Reductions Total 13.0 40.0 Total 13.0 40.0 *Forecasts (effect in FY13/3) as of Oct 26, 2012 Page 40 © NEC Corporation 2012
  41. 41. 1H ResultsOverseas Sales (Billions of Yen) Q2 <Jul - Sep> 1H <Apr - Sep> FY12/3 FY13/3 FY12/3 FY13/3 Major countries and regions YoY YoY Actual Actual Actual Actual China,Chinese Net Sales 48.7 43.1 - 11.6% 79.7 79.1 - 0.8% Asia Taipei,India, To consolidated total sales (%) 6.3% 5.3% 5.5% 5.5% Singapore and Indonesia Net Sales 31.5 23.0 - 26.9% 55.8 40.8 - 26.9% UK,France,Netherlands, Europe Germany,Italy and Spain To consolidated total sales (%) 4.1% 2.8% 3.9% 2.8% Net Sales 58.6 70.2 19.8% 118.4 113.8 - 3.9% U.S.A Others To consolidated total sales (%) 7.6% 8.6% 8.2% 7.9% Net Sales 138.8 136.2 - 1.9% 253.9 233.6 - 8.0% Total To consolidated total sales (%) 17.9% 16.7% 17.6% 16.1% * Sales are classified into country or region based on the locations of customersPage 41 © NEC Corporation 2012
  42. 42. 1H ResultsFinancial Positions (Billions of Yen) Difference End of Mar End of Sep End of Sep from Mar 2012 2012 2012 2011 Total Assets 2,557.6 2,432.2 -125.3 2,450.6 Net Assets 777.6 766.3 -11.3 853.9 Interest-bearing debt 692.7 683.3 -9.4 647.0 Shareholders Equity 657.0 647.1 -9.8 734.2 Equity ratio(%) 25.7% 26.6% 0.9pt 30.0% D/E ratio 1.05 1.06 - 0.01pt 0.88 (times) Net D/E ratio 0.67 0.74 - 0.07pt 0.64 (times) Balance of cash and cash equivalents 251.8 204.4 -47.4 178.6Page 42 © NEC Corporation 2012
  43. 43. 1H Results<Ref.> Balance Sheets (At the end of Sep, 2012) (Billions of Yen) <Compared to end of March, 2012> Total Assets 2,432.2 (-125.3) Compared to end of March, 2012Current Assets Liabilities 1,390.6 1,665.9 -123.8 Decrease in notes and accounts Collection of notes and payable-trade and Provision for accounts receivable -114.0 business structure improvementNon-current Assets Net Assets 1,041.7 -1.5 766.3 Decrease in valuation on -11.3 available-for-sale securities due to the decline in the market value of equity despite recording of net income Page 43 © NEC Corporation 2012
  44. 44. Financial Forecasts for FY13/3 (Appendix)
  45. 45. Forecasts FY13/3 Financial Forecasts for FY13/3 by Segment (Billions of yen) Net Sales Operating Income/Loss 100.0 3,115.4 3,036.8 3,150.0 73.7 72.0 57.8 44.8IT Solutions 1,180.0 1,189.2 1,255.0 IT Solutions 30.3 53.0 Carrier 50.6 Carrier 577.2 Network 37.9 Network 602.7 695.0 19.0 Social Infrastructure 14.6 16.2 10.0 Social 318.8 1.0 11.1 16.0Infrastructure 330.4 Others 9.2 - 1.9 375.0 Personal Solutions - 32.2 Personal 766.5 - 50.0 Solutions 661.0 610.0 Eliminations/ - 70.0 Unclassifiable expenses Others 273.0 253.5 215.0 FY11/3 FY12/3 FY13/3 FY11/3 FY12/3 FY13/3 Forecasts(*) Forecasts(*) *Forecasts as of Oct 26, 2012 Page 45 © NEC Corporation 2012
  46. 46. Forecasts FY13/3Summary of Financial Forecasts for FY13/3 by Segment (Billions of Yen) Net Sales Operating Income IT Solutions Others Operating Income 7% 40% Forecast for FY13/3 IT Solutions Personal Solutions 72.0 100.0 Carrier 19% Network Sales Forecast 53.0 for FY13/3 Social 3,150.0 Infrastructure Others Personal 19.0 Solutions 16.0 SocialInfrastructure 10.0 12% Carrier Network 22% *Forecasts as of Oct 26, 2012 Page 46 © NEC Corporation 2012
  47. 47. Forecasts FY13/3Key Points of FY13/3 Forecasts by Segment (Year on Year) IT  Increase steadily both in IT services and Platform Solutions  Improve by sales expansion and the effect of restructuring  Increase mainly in global business such as services & management, submarine cable Carrier systems Network  Expect to increase from sales expansion and cost reductions despite making an investment for future growth  Increase in aerospace and defense systems Social  Improve due to sales increase, cost reduction and effect of restructuring despite making Infrastructure an investment for future growth Personal  Decrease due to deconsolidation of consumer PC business Solutions  Improve due to the effect of restructuring mainly in mobile terminal business  Decrease due to deconsolidation of LCD module business and decreasing of electronic Others component business  Improve due to the effect of restructuring and sale of LCD patents Note: Top bullet refers to changes in sales, Bottom bullet refers to changes in operating income/loss Page 47 © NEC Corporation 2012
  48. 48. Forecasts FY13/3Sales Change (Year on Year) Increase in aerospace and defense systems (Billions of Yen) Deconsolidation of consumer PC business Social Infrastructure Increase mainly in global business +44.6 (+13.5%) Personal Solutions such as services & management, submarine cable systems -51.0 (-7.7%) FY13/3 Carrier Network +92.3 (+15.3%) Forecast (*) 3,150.0 Others FY12/3 -38.5 3,036.8 IT Solutions Decrease due to deconsolidation of LCD module business and decrease in +65.8 (+5.5%) electronic component business Increase both IT services and Platform *Forecasts as of Oct 26, 2012 Page 48 © NEC Corporation 2012
  49. 49. Forecasts FY13/3Operating Income/Loss Change (Year on Year) <Effect of Restructuring> (Billions of Yen) +13.0 Effect of restructuring in Improve due to the effect of mobile terminal business restructuring and sale of LCD patents <Effect of Restructuring> +5.0 Personal <Effect of Restructuring>Expect to increase from sales expansion Others +5.0despite making an investment for future growth Solutions +4.9 +9.0 FY13/3 Carrier Forecast (*) Network +2.4 100.0 Eliminations/ Social Unclassifiable Infrastructure FY12/3 expenses -20.0 +2.8 73.7 Increase in investment costs IT Solutions <Effect of Restructuring> +40.0 +27.2 <Effect of Restructuring> +3.0 <Effect of Restructuring> Sales increase, cost reduction +14.0 and effect of restructuring Sales expansion despite making an investment and the effect of restructuring for future growth *Forecasts as of Oct 26, 2012 Page 49 © NEC Corporation 2012
  50. 50. Forecasts FY13/3Net Income/Loss Change (Year on Year) (Billions of Yen) Restructuring expenses (FY12/3) +40.5 Revision of deferred tax assets (FY12/3) +70.0 FY13/3 Others Forecast(*) FY12/3 +102.3 20.0 -110.3 Improvement in non-operating income/loss Improvement in +1.7 operating income +26.3 IT Solutions +27.2 Personal Solutions +9.0 Eliminations/unclassifiable expenses -20.0 *Forecasts as of Oct 26, 2012 Page 50 © NEC Corporation 2012
  51. 51. Full Year ForecastsCapital Expenditure, Depreciation and R&D expenses (Billions of Yen) FY12/3 FY13/3 YoY Actual Forecasts Capial Expenditure 42.0 50.0 19.1% Depreciation 53.3 55.0 3.2% R&D expenses 162.0 170.0 5.0% To consolidated total sales (%) 5.3% 5.4% * Forecasts as of Oct 26, 2012 (Note: Unchanged from forecasts announced on Jul 31) Page 51 © NEC Corporation 2012
  52. 52. Reference (Financial data)
  53. 53. Net Sales, Operating Income/Loss (Billions of yen) 7.6% 8.1% 6.8% Operating income ratio YoY 3.0% 3.4% - 1.9% - 1.2% - 1.2% - 3.5% - 2.9% -16.2% -0.1% Net Sales -8.4% -3.4% +5.4% -12.7% 925.5 924.6 -14.2% +0.2% -7.2% 801.6 -5.6% 118.8 774.1 118.7 816.3 (12.8%) (12.8%) 720.7 667.5 128.8 669.1 669.0 136.2 (16.1%) 117.5 138.8 631.5 (16.7%) (17.9%) Overseas Sales 114.2 (16.3%) 115.1 108.9 97.4(Overseas Sales Ratio) (17.1%) (17.2%) (16.3%) (15.4%) 70.2 75.2 Operating 55.2 Sales in Japan Income/ Loss 24.3 26.2 -23.2 -13.5 -19.4 -7.9 -8.2 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> FY11/3 FY12/3 FY13/3 Page 53 © NEC Corporation 2012
  54. 54. Sales, Operating Income/Loss (IT Solutions) (Billions of yen) 12.0% 9.7% 8.7% YoY Operating income ratio 4.0% 4.5% - 1.4% - 2.3% - 4.2% - 3.4% +4.6% - 5.4% 396.3 +10.0% 378.7 -2.3% +1.1% +5.0% 329.2 306.5 299.3 Net Sales -1.6% 253.5 256.3 249.2 241.3 237.4 278.4 262.2 225.9 209.7 205.2 47.6 IT 161.2 171.0 36.9 157.5 175.8 165.9 Services Operating 28.6 Income/ Loss 13.6 12.1 116.5 117.9 103.3 96.7 94.1 Platform 80.0 -10.1 82.5 -8.6 79.9 -12.8 80.5 -3.6 83.3 -5.8 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> FY11/3 FY12/3 FY13/3 Page 54 © NEC Corporation 2012

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