Nec Corporation · TSE:6701

Nec — Nec Corp Unsp/Adr New — Q1 2024 Earnings Presentation

30 slides from Nec's earnings presentation, Jul 28, 2023

  1. Slide 1: Financial Results for Q1 Fiscal Year Ending March 31, 2024

    6701.T Financial Results for Q1 Fiscal Year Ending March 31, 2024 July 28, 2023 NEC Corporation (https://www.nec.com/en/global/ir/) © NEC Corporation 2023

  2. Slide 2: Index

    Index I. Financial Results for Q1, FY24/3 II. Financial Forecasts for FY24/3 III. Topics IV. Financial Results (Appendix) V. Historical Data (Appendix) • Net profit refers to net profit attributable to owners of the parent for the same period. • As stated in the July 19, 2023 announcement, “NEC Revi

  3. Slide 3: I. Financial Results for Q1, FY24/3

    I. Financial Results for Q1, FY24/3 © NEC Corporation 2023

  4. Slide 4: Summary of Financial Results Q1, FY24/3

    Q1 Results Summary of Financial Results Q1, FY24/3 Both Revenue and Profit increased. Good progress for FY24/3 Annual Forecasts Q1 (Billions of Yen) FY23/3 Results FY24/3 Results YoY Revenue 659.7 706.5 +7.1% Adjusted Operating Profit -7.0 0.5 +7.4 % of Revenue -1.1% 0.1% +1.1% Non-GAAP Operating Pr

  5. Slide 5: Financial Results Q1, FY24/3 (By Segment)

    Q1 Financial Results Q1, FY24/3 (By Segment) Results Q1 (Billions of Yen) FY23/3 Results FY24/3 Results YoY Revenue 355.3 385.8 +8.6% IT Services Adjusted Operating Profit 0.7 17.8 +17.1 % of Revenue 0.2% 4.6% +4.4% Revenue 197.4 215.0 +8.9% Social Infrastructure Adjusted Operating Profit -5.2 -2.1

  6. Slide 6: IT Services

    Q1 Results IT Services Revenue and Adjusted Operating Profit Revenue Adj. OP Adj. OP Margin （Billions of Yen） 385.8 • Revenue increased steadily for the enterprise 354.6 355.3 and the government / public sector • Adj. OP increased due to increased revenue and improvement of profitability in system i

  7. Slide 7: IT Services Booking Status (YoY)

    Q1 Results IT Services Booking Status (YoY) Enterprise and Public sectors remain strong with brisk demand Q1 YoY Notes Portion IT Services 100% +3% Domestic 87% +2% Public 27% +6% Favorable for government Enterprise* 33% +16% Finance +37% Increased significantly due to recording large projects Manuf

  8. Slide 8: Social Infrastructure

    Q1 Results Social Infrastructure Revenue and Adjusted Operating Profit Revenue Adj. OP Adj. OP Margin （Billions of Yen） • Revenue increased due to increase in 215.0 191.3 197.4 international businesses mainly for submarine systems and OSS/BSS in Telecom Services • Adj. OP increased due to increased

  9. Slide 9: II. Financial Forecasts for FY24/3

    II. Financial Forecasts for FY24/3 © NEC Corporation 2023

  10. Slide 10: FY24/3 Financial Forecasts

    FY24/3 Forecasts FY24/3 Financial Forecasts No changes to FY24/3 forecasts from April 28, 2023 FY23/3 FY24/3 Change (Billions of Yen) YoY from previous Results Forecasts forecasts (Apr.28) Revenue 3,313.0 3,380.0 +2.0% ±0.0% Operating Profit 205.5 220.0 +14.5 ±0.0 % of revenue 6.2% 6.5% +0.3% ±0.0%

  11. Slide 11: FY24/3 Financial Forecasts by Segment

    FY24/3 Forecasts FY24/3 Financial Forecasts by Segment Full Year FY23/3 FY24/3 (Billions of Yen) YoY Results Forecasts Revenue 1,755.0 1,800.0 +2.6% IT Services Adjusted Operating Profit 168.0 177.0 +9.0 % of revenue 9.6% 9.8% +0.3% Revenue 1,062.2 1,085.0 +2.1% Social Adjusted Operating Profit 73.8

  12. Slide 12: IT Services

    FY24/3 Forecasts IT Services Revenue and Adjusted Operating Profit Revenue YoY 1,800.0 +2.6 % Revenue Adj. OP Adj. OP Margin （Billions of Yen） 1,755.0 1,800.0 1,617.9 Adjusted YoY Operating Profit 8.5% 9.6% 9.8% 177.0 +9.0 168.0 177.0 137.2 -Revenue expected to increase in anticipation of strong dom

  13. Slide 13: Social Infrastructure

    FY24/3 Forecasts Social Infrastructure Revenue and Adjusted Operating Profit Revenue YoY 1,085.0 +2.1 % Revenue Adj. OP Adj. OP Margin （Billions of Yen） 1,062.2 1,085.0 929.3 Adjusted YoY Operating Profit 95.0 +21.2 8.8% 7.5% 6.9% -Revenue expected to increase both in Telecom 95.0 69.4 73.8 Services

  14. Slide 14: III. Topics

    III. Topics © NEC Corporation 2023

  15. Slide 15: Commenced development and provision of generative AI for the Japanese market

    Generative AI Commenced development and provision of generative AI for the Japanese market -Developed lightweight LLM* whose performance is the world-class in the Japanese language -Providing dedicated hardware, software and consulting services -Launched a partnership program that supports approxima

  16. Slide 16: Offering Integrated Solutions for Wealth Managers and Private Banks

    DGDF：Strategic Partnership of Avaloq and BlackRock Offering Integrated Solutions for Wealth Managers and Private Banks -Offers an integrated service consisting of Avaloq’s core banking system and Blackrock’s wealth management solution -Strengthens market competitiveness and expands business through

  17. Slide 17: Renovated the Core-System as a Flagship model for Enhancing Management Infrastructure

    Enhancing Management Infrastructure Renovated the Core-System as a Flagship model for Reinforcing / Enhancing Management Infrastructure -Thoroughly standardize and advance management foundations, such as IT, business processes / organizations, systems, data / people, etc., to achieve the Mid-term Ma

  18. Slide 18: NEC IR Day 2023

    NEC Managements from each business domain explain strategies for achieving the Mid-term IR Day 2023 Management Plan 2025 • The last week of November NEC Explanation of NEC’s R&D strategy / New business creation and exhibition of the latest Innovation Day technologies 2023 • Friday, December 15th 18

  19. Slide 19: Orchestrating a brighter world

    \ Orchestrating a brighter world NEC

  20. Slide 20: IV. Financial Results (Appendix)

    IV. Financial Results (Appendix) © NEC Corporation 2023

  21. Slide 21: Breakdown of IT Services and Social Infrastructure

    Q1 Results Breakdown of IT Services and Social Infrastructure (Billions of Yen) Q1 Q1 FY22/3 FY23/3 FY22/3 FY23/3 YoY YoY Results Results Results Results Revenue 287.5 320.3 +11.4% Revenue 153.2 171.5 +11.9% Telecom Domestic Adjusted OP -0.1 16.8 +16.9 Adjusted OP -5.4 -3.2 +2.2 Services % of revenu

  22. Slide 22: IT Services: Revenue Breakdown

    Q1 Results IT Services: Revenue Breakdown Q1 FY23/3 FY24/3 (Billions of Yen) YoY Portion Results Results Public 66.1 73.0 +10.4% 18.9% Enterprise 140.4 159.3 +13.5% 41.3% Cross-Industry 20.2 20.7 +2.5% 5.4% DPF* and others 60.9 67.3 +10.6% 17.4% Domestic 287.5 320.3 +11.4% 83.0% International (DGDF)

  23. Slide 23: Non-GAAP Operating Profit Adjustment Items

    Q1 Results Non-GAAP Operating Profit Adjustment Items Q1 FY23/3 FY24/3 (Billions of Yen) YoY Results Results Operating Profit -15.3 -8.1 + 7.2 Adjusted M&A Related Amortization of Intangible Assets 8.1 8.5 + 0.4 Items M&A Related Expenses 0.3 0.1 - 0.2 Adjusted Operating Profit -7.0 0.5 + 7.4 Struct

  24. Slide 24: Non-GAAP Net Profit Adjustment Items

    Q1 Results Non-GAAP Net Profit Adjustment Items Q1 FY23/3 FY24/3 (Billions of Yen) YoY Q1 Results Q1 Results Net Profit -13.9 -7.4 +6.5 M&A Related Amortization of Intangible Assets 5.4 5.9 +0.4 M&A Related Expenses 0.2 0.1 -0.1 Adjusted Structural Reform Expenses and Impairment Losses - - ±0.0 Net

  25. Slide 25: Financial Position Data

    Q1 Results Financial Position Data Q1 As of As of Change from (Billions of Yen) March 31, June 30, March 31, 2023 2023 2023 Total Assets 3,984.1 4,016.1 +32.0 Total Equity 1,912.7 1,960.6 +47.9 Interest-bearing Debt 608.5 626.5 +18.0 Equity Attributable to Owners of the Parent 1,623.8 1,666.8 +42.9

  26. Slide 26: V. Historical Data (Appendix)

    V. Historical Data (Appendix) © NEC Corporation 2023

  27. Slide 27: (Ref.) New Segment Overview

    (Ref.) New Segment Overview Main Businesses, Markets, Customers Public Central and Local Government Enterprise Enterprise (Finance, Manufacturing, Retail / Services), NEC Facilities Domestic Fire-fighting / Disaster prevention Systems, Smart City (Transportation, IT Services Cross-Industry Energy ma

  28. Slide 28: Revenue Breakdown

    Revenue Breakdown (Billions of Yen) 28 © NEC Corporation 2023

  29. Slide 29: Adjusted OP Breakdown

    Adjusted OP Breakdown FY22/3 Results FY23/3 Results (Billions of Yen) Q1 1H Q3 2H Full Year Q1 1H Q3 2H Full Year Domestic Adj. OP 6.9 30.8 24.3 90.5 121.2 -0.1 38.7 32.4 110.0 149.6 % of revenue 2.3% 4.9% 7.8% 12.2% 8.9% -0.0% 6.1% 9.6% 13.4% 10.2% DGDF Adj. OP 2.4 5.7 4.4 10.3 16.0 0.7 3.8 3.0 14.

  30. Slide 30: Cautionary Statement with Respect to Forward-Looking Statements

    Cautionary Statement with Respect to Forward-Looking Statements This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial conditions and other overall management of the NEC Group (the "forward-looking sta

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