Nec Corporation · TSE:6701
Nec — Nec Corp Unsp/Adr New — FY2023 Earnings Presentation
40 slides from Nec's earnings presentation, Apr 28, 2023
Slide 1: Financial Results for the Fiscal Year Ended March 31, 2023
6701.T Financial Results for the Fiscal Year Ended March 31, 2023 April 28, 2023 NEC Corporation (https://www.nec.com/en/global/ir/) © NEC Corporation 2023
Slide 2: Orchestrating a brighter world
\ Orchestrating a brighter world NEC creates the social values of safety, securi fairness and efficiency to promote a more sustaii where everyone has the chance to reach
Slide 3: Index
Index Ⅰ. Financial Results for FY23/3 Ⅱ. Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025 Ⅲ. Topics Ⅳ. Financial Results for FY23/3 (Appendix) Ⅴ. Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025 (Appendix) • * Net profit refers to net p
Slide 4: Financial Results for FY23/3
Ⅰ. Financial Results for FY23/3
Slide 5: Summary of Financial Results for FY23/3
FY23/3 Summary of Financial Results for FY23/3 Results Revenue and Adjusted Operating Profit/Net Profit Significantly Outperformed Forecasts as of January 30, 2023 Revenue 〈前年度比〉 3,313.0 +9.9% Increased in All Segments billion Yen <YoY> +9.9% Adjusted Operating Profit 205.5 Increased in All Segments
Slide 6: Summary of Financial Results FY23/3
FY23/3 Summary of Financial Results FY23/3 Results （Billions of Yen） Full year Change Full Year FY22/3 FY23/3 from previous FY22/3 FY23/3 forecasts YoY YoY Results Results Actual Actual (Jan.30) Public Revenue 442.6 456.7 + 3.2% Revenue 3,014.1 3,313.0 + 9.9% +183.0 Adjusted Operating Profit 35.9 42
Slide 7: Adjusted Operating Profit Change (Year on Year)
FY23/3 Adjusted Operating Profit Change (Year on Year) Results （Billions of Yen） Currency fluctuations +16.5 Component shortages +4.0 Marginal profit, Asset sales, etc. Asset sales, profitability stock transfer, etc. Intellectual change, etc. Property +11.0 (IP) income +7.5 Structural Changes in FY2
Slide 8: Public Solutions Business
FY23/3 Public Solutions Business Results (Billions of Yen) Revenue 442.6 456.7 5,000 Revenue 456.7 (+3.2％) 4,000 +3.2％ 3,000 (YoY) Increased in business for SME* and public / 2,000 healthcare 1,000 0 * Small and Medium-sized Enterprises FY22/3 FY23/3 Adjusted 500 Operating 42.7 12.0% 400Profit 35.
Slide 9: Public Infrastructure Business
FY23/3 Public Infrastructure Business Results (Billions of Yen) Revenue 649.7 7,000 608.4 6,000 Revenue 649.7 (+6.8％) 5,000 4,000 +6.8％ Increased in business for satellites / defense 3,000 (YoY) 2,000 1,000 0 FY22/3 FY23/3 Adjusted Operating 800 67.3 12.0% Adjusted Operating Profit 67.3 (+8.1) 700
Slide 10: Enterprise Business
FY23/3 Enterprise Business Results (Billions of Yen) Revenue 7,000 614.4 6,000 574.7 Revenue 614.4 (+6.9％) 5,000 4,000 +6.9％ Increased in all domains including business for 3,000 (YoY) financial, manufacturing and retail / services 2,000 1,000 0 FY22/3 FY23/3 73.4 (+15.9) Adjusted 800 Operating 73
Slide 11: Network Services Business
FY23/3 Network Services Business Results (Billions of Yen) Revenue 6,000 511.5 543.4 Revenue 543.4 (+6.2％) 5,000 4,000 +6.2％ Increased despite investment restraint by telecom 3,000 (YoY) carriers 2,000 1,000 Intellectual property income of 10.0 billion yen in Q3 0 FY22/3 FY23/3 Adjusted Operatin
Slide 12: Network Services Business: Adjusted Operating Profit/Loss: YoY Change Factors
FY23/3 Network Services Business: Adjusted Operating Profit/Loss: YoY Change Factors Results （Billions of Yen） 9 months Q4 Full Year FY22/3 Results 15.8 19.7 35.5 Changes in Macro Economic Environment - 2.0 ＋ 2.0 - Business Operation Related Streamlining assets - 7.0 - 1.4 - 8.4 Strategic Projects -
Slide 13: Global Business
FY23/3 Global Business Results (Billions of Yen) Revenue 586.3 Revenue 586.3 (+20.8％) 7,000 6,000 5,000 485.6 4,000 +20.8％ Increased in major business domains such as 3,000 (YoY) software-related businesses* and submarine 2,000 systems 1,000 0 *OSS/BSS and Digital Government / Digital Finance FY22
Slide 14: Free Cash Flows
FY23/3 Free Cash Flows Results (Billions of Yen) 274.9 Cash flow from operating activities 204.4 YoY +4.6 (Excluding special factors) -Increase in adjusted operating profit +34.5 -Changes in strategic inventories approx. +85.0 152.1 147.5 -Increase in working capital balance due to revenue increase,
Slide 15: CCC (Cash Conversion Cycle) Promotion Activities
FY23/3 CCC (Cash Conversion Cycle) Promotion Activities Results At the end of FY23/3, CCC days excluding specific factors increased by 6 days YoY, due to increased long-term/large projects (Billions of Yen) Working Capital Balance 630.9 Strategic Inventories/ One-off revenue increase, etc. 543.6 546
Slide 16: Status on the Sale of Investment Securities
FY23/3 Status on the Sale of Investment Securities Results Promoting the reduction of the investment securities based on an essential zero policy from April 2020 Cumulative sales amounted to 135.4 billion Yen, greatly contributing to free cash flows The number of shares held (listed shares) re
Slide 17: NEC Order Trends YoY
FY23/3 NEC Order Trends YoY Results IT Services: Increased by 9% due to steady corporate demand YoY Q1 Q2 Q3 Q4 Full Year Description for FY23/3 Favorable trend continued for urban Public Solutions +15% +13% +16% -3% +10% infrastructure and SME* Public Infrastructure *Excluding Japan Aviation +16%
Slide 18: Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025
Ⅱ. Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025
Slide 19: Financial Forecasts Summary FY24/3
Forecasts Financial Forecasts Summary FY24/3 （Billions of Yen） Full year （Billions of Yen） Full year FY23/3 FY24/3 FY23/3 FY24/3 Results Forecasts YoY YoY Actual Forecasts Revenue 456.7 480.0 + 5.1% Public Adjusted Operating Profit 42.7 45.0 + 2.4 Revenue 3,313.0 3,380.0 + 2.0% Solutions % to Revenu
Slide 20: Adjusted Operating Profit Change (Year on Year)
Forecasts Adjusted Operating Profit Change（Year on Year） FY24/3 （Billions of Yen） Network Services +24.6 Global +7.1 Enterprise +6.6 Public Infrastructure +3.7 Marginal profit, Public Solutions +1.6 profitability change, etc. Asset sales, +34.5 stock transfer, etc. FY23/3 Structural reform, FY24/3 O
Slide 21: Progress of the Mid-term Management Plan 2025 (Main Indicators)
Progress of the Mid-term Management plan 2025 Mid-term Management Plan 2025 (Main Indicators) （Billions of Yen） FY21/3 FY22/3 FY23/3 FY24/3 FY26/3 Results Results Results Forecasts Targets Revenue 2,994.0 3,014.1 3,313.0 3,380.0 3,500.0 Adjusted Operating Profit 178.2 171.0 205.5 220.0 300.0 % to Re
Slide 22: Progress of the Mid-term Management Plan 2025 (by Segment)
Progress of the Mid-term Management Plan 2025 Mid-term Management Plan 2025 (by Segment) Making Good Progress with the Mid-term Management Plan 2025 （Billions of Yen） FY26/3 FY22/3 FY23/3 FY24/3 Targets Results Results Forecasts (Base-case*) Revenue 442.6 456.7 480.0 500.0 Public Adjusted Operating
Slide 23: Growth Businesses
Growth Businesses Mid-term Management Plan 2025 （Billions of Yen） DG/DF 280.6 288.0 300.0 Revenue 252.7 Improve profitability by expanding synergies and 193.1 36.0 managing costs 26.0 (12.0%) 15.9 16.6 • Increase sales in APAC, Japan and EMEA Adjusted 9.0 (6.3%) (5.9%) (9.0%) Operating profit (4.7
Slide 24: Underperforming Businesses
Underperforming Businesses Mid-term Management Plan 2025 Adjusted OP margin improved by 2.4% in FY23/3 contributing Adjusted OP margin approximately half of business improvement 10% FY23/3 Measures to maximize business value Results 8% FY26/3 4 businesses have moved out from Target low-profit dom
Slide 25: Culture (1/2)
Mid-term Culture (1/2) Management Plan 2025 Engagement score* rose from 25% in FY21/3 to 36% in FY23/3 Transformation of People and Culture Job-based Management Ensure the “right person in the right place at the right time” linked with business strategies • Introduce for general managers and above
Slide 26: Culture (2/2)
Mid-term Culture (2/2) Management Plan 2025 Smart Work 2.0 Accelerate Work Style Reforms as COVID-19 settles down - Selecting optimal work styles to maximize team productivity - • Take full advantage of “Real” communication opportunities • Location independent and flexible work schedules Reinforceme
Slide 27: Topics
Ⅲ. Topics
Slide 28: Overview of Segment Revision
Overview of Segment Revision From Q1, FY24/3, the conventional market/customer segmentation will be changed to segmentation by business area Current Segment New Segment** FY24/3 Forecasts（Approx.） Organization （Billions of Yen） Public Solutions Revenue Cross-Industry Healthcare 1,800.0 DGDF (Digital
Slide 29: Disclosure of Non-GAAP Indicators
Disclosure of Non-GAAP Indicators From Q1, FY24/3, NEC will newly disclose “Non-GAAP Profit/Loss” in addition to the conventional Adjusted Operating Profit/Loss Purpose Disclose NEC’s underlying profitability excluding one-time profits/losses by adopting global standard adjustment items to enhance c
Slide 30: Orchestrating a brighter world
\ Orchestrating a brighter world NEC
Slide 31: Financial Results for FY23/3 (Appendix)
Ⅳ. Financial Results for FY23/3 (Appendix)
Slide 32: Financial Results by Segment (3 years)
FY23/3 Financial Results by Segment (3 years) Results （Billions of Yen） Full Year FY21/3 FY22/3 FY23/3 Results Results Results YoY Revenue 483.5 442.6 456.7 + 3.2% Public Adjusted Operating Profit 49.6 35.9 42.7 + 6.7 Solutions % to Revenue 10.3% 8.1% 9.3% Revenue 634.4 608.4 649.7 + 6.8% Public Adj
Slide 33: Financial Results by Segment (Q4, FY23/3)
FY23/3 Financial Results by Segment (Q4, FY23/3) Results （Billions of Yen） 9 months <April to December> Q4 <January to March> Full Year FY22/3 FY23/3 FY22/3 FY23/3 FY22/3 FY23/3 YoY YoY YoY Results Results Results Results Results Results Public Revenue 290.4 286.1 - 1.5% 152.3 170.6 + 12.0% 442.6 45
Slide 34: Adjusted Operating Profit and Adjusted items, etc.
FY23/3 Adjusted Operating Profit and Adjusted items, etc. Results (Billions of Yen) FY22/3 FY23/3 YoY Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Operating Profit/Loss 1.1 22.1 24.1 85.3 132.5 -15.3 29.2 43.2 113.3 170.4 -16.5 +7.1 +19.2 +28.1 +37.9 Adjusted Items 9.3 9.6 9.8 9
Slide 35: NEC Order Quarterly Trends (Including Hardware)
FY23/3 NEC Order Quarterly Trends (Including Hardware) Results （YoY） FY22/3 FY23/3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Description Public Solutions -2% -4% -3% +9% +15% +13% +16% -3% Public *Excluding JAE +1% -12% -30% -3% +16% -10% +25% +9% Infrastructure Enterprise +10% +2% +10% +5% +17% +12% +5% +15% *Exclud
Slide 36: Adjusted Net Profit Change (Year on Year)
FY23/3 Adjusted Net Profit Change （Year on Year） Results (Billions of Yen) Others -48.4 Financial Income/Costs, etc Adjusted -14.7 Operating Profit +345 ・Income Taxes -48.4 FY22/3 167.2 ・Global +16.6 ・Enterprise +15.9 ・Foreign exchange FY23/3 ・Public Infrastructure+8.1 gains/losses -6.2 138.6 ・Publi
Slide 37: Financial Position Data
FY23/3 Financial Position Data Results （Billions of Yen） Change from End of March 2022 End of March 2023 End of March 2022 Total assets 3,761.7 3,984.1 +222.3 Total equity 1,786.6 1,912.7 +126.1 Interest-bearing debt 597.4 608.5 +11.1 Equity attributable to owners of the parent 1,513.5 1,623.8 +110.
Slide 38: Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025 (Appendix)
Ⅴ. Financial Forecasts for FY24/3 and Progress of the Mid-term Management Plan 2025 (Appendix)
Slide 39: Capital Expenditures, Depreciation and R&D Expenses
Forecasts Capital Expenditures, Depreciation and R&D Expenses FY24/3 (Billions of Yen) Capital Expenditure Depreciation R&D Expenses (Property, Plant, and Equipment) % to Revenue 4.2% 3.9% 130.2 136.0 3.7% 123.1 90.0 126.3 132.0 121.4 67.6 59.3 FY22/3 21年度 FY23/3 22年度 FY24/3 23年度 FY22/3 21年度 FY23/3
Slide 40: 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