Rebuilding the Profit Structure

「First, we will wind down the conventional base station business, which was based on dedicated hardware, and focus going forward on businesses related to vRAN (virtualized radio access networks).」

「Revenue from the IT Services business increased by ¥28.2 billion, or 2.6%, year on year to ¥1,108.3 billion, due mainly to strong performance in domestic government business. Adjusted operating profit increased by ¥59.3 billion year on year to a profit of ¥115.6 billion, due to higher revenue and improved profitability centered on BluStellar, among other factors.」

「Adjusted operating profit for the IT Services business increased by ¥53.0 billion from the previous consolidated fiscal year to ¥237.1 billion, due to higher revenue and improved profitability in the systems integration area, among other factors.」

「Our consolidated subsidiary NEC Platforms Co., Ltd. entered into an agreement on 30 September 2024 to transfer its POS-related business to a newly established company and then transfer all shares in that company to a special-purpose company funded entirely by a fund managed by 日本みらいキャピタル㈱. The transfer was scheduled for August 2025.」

「Revenue from the IT Services business increased by ¥129.4 billion, or 10.9%, year on year to ¥1,314.5 billion, due mainly to strong performance in domestic corporate and government business. Adjusted operating profit and loss increased by ¥28.3 billion year on year to a profit of ¥106.1 billion, due to higher revenue and improved profitability in the systems integration area, among other factors.」

「Revenue from the IT Services business increased by ¥68.8 billion, or 8.9%, year on year to ¥843.4 billion, due mainly to strong performance in domestic corporate and government business. Adjusted operating profit and loss increased by ¥16.9 billion year on year to a profit of ¥59.3 billion, due to higher revenue and improved profitability in the systems integration area, among other factors. Revenue from the Social Infrastructure business increased by ¥35.8 billion, or 8.1%, year on year to ¥478.8 billion, due mainly to higher defense-related and Marine Systems revenue. Adjusted operating profit and loss increased by ¥13.1 billion year on year to a profit of ¥15.8 billion, due to higher revenue, the effects of structural reforms in overseas 5G, and a decline in one-time losses recognized in the same period of the previous year.」

「On 9 May 2023, we entered into an agreement with Aviat Networks to integrate the wireless backhaul businesses of both companies. At the end of the first quarter of the fiscal year, the disposal group held for sale consisted of a group of assets and liabilities related to the Wireless Backhaul business. The Wireless Backhaul business belongs to the Social Infrastructure business, and completion of the transfer of the business was scheduled for the third quarter of 2023.」

「Adjusted operating profit and loss improved by ¥7.3 billion year on year to a profit of ¥38.1 billion, due to higher revenue and measures including restraining unprofitable projects.」

「Adjusted operating profit and loss improved by ¥4.9 billion year on year to a profit of ¥22.0 billion, due to higher revenue and measures including restraining unprofitable projects.」

「In the Base business, we will formulate improvement plans for businesses with low profit margins and make management decisions, including exiting businesses if the plans are not achieved, with the aim of achieving steady growth in each business and profit margins exceeding those of competitors.」

「At the end of the third quarter of the fiscal year, the disposal group held for sale consisted of a group of assets and liabilities related to NEC Energy Solutions. NEC Energy Solutions belongs to the Global reporting segment, and completion of the transfer of all shares in the subsidiary was scheduled for the fourth quarter of the fiscal year.」

「At the end of the second quarter of the fiscal year, the disposal group held for sale consisted of a group of assets and liabilities related to NEC Energy Solutions. NEC Energy Solutions belongs to the Global reporting segment, and completion of the transfer of all shares in the subsidiary was scheduled for December 2021.」

「In terms of earnings, operating profit and loss improved by ¥11.4 billion year on year to a profit of ¥1.1 billion, due mainly to higher revenue. Adjusted operating profit and loss also improved by ¥16.3 billion year on year to a profit of ¥10.5 billion.」

「Operating profit and loss improved by ¥4.5 billion year on year to a profit of ¥82.4 billion. This was due mainly to improved selling, general and administrative expenses through cost efficiencies despite lower revenue, as well as improved other income (loss) resulting from gains on the sale of land and gains on the sale of shares in subsidiaries.」

「The tender offer was completed on 24 January 2020, and Nippon Avionics Co.,Ltd. will therefore cease to be our subsidiary as of 31 January 2020. The impact of this share sale on the fiscal year ending March 2020 is expected to be immaterial.」

「Revenue from the System Platforms business increased by ¥42.4 billion, or 12.2%, year on year to ¥389.2 billion, due mainly to higher hardware sales, particularly business PCs. Adjusted operating profit and loss improved by ¥27.5 billion year on year to a profit of ¥32.3 billion, due to higher revenue and the effects of structural reforms, among other factors.」

「Adjusted operating profit and loss in the System Platforms business improved by ¥15.8 billion year on year to a profit of ¥20.8 billion, due to higher revenue and the effects of structural reforms, among other factors. The transfer of the business was completed on 1 April 2019, and a loss of ¥229 million on the business transfer was recognized in the condensed quarterly consolidated income statement for the fiscal year ending March 2020.」

「On 31 July 2019, we entered into an application agreement to tender all of our shares in Nippon Avionics Co.,Ltd. in the tender offer for the common shares of Nippon Avionics Co.,Ltd. to be conducted by NAJ Holdings Co., Ltd. (hereinafter, “NAJ”), whose issued shares are wholly owned by NAJ Holdings No. 5 Co., Ltd., a wholly owned subsidiary of Nippon Industrial Partners Co., Ltd., and managed and operated by the Nippon Industrial Partners No. 5 Investment Limited Partnership. We also entered into a shareholders’ agreement with NAJ concerning the handling of the shares in Nippon Avionics Co.,Ltd. held by us and NAJ, among other matters.」

「In addition to implementing a special career transition support program for domestic employees in indirect functions and hardware business areas, we reduced headcount by approximately 3,000 through measures including promoting secondments and transfers to companies outside the NEC Group and transferring the Lighting business.」

「In addition, other income (loss) for the nine months ended 31 December includes ¥20,059 million in business structure improvement costs incurred in connection with the special career transition support program.」

「Revenue from the Global business increased by ¥1.3 billion, or 0.6%, year on year to ¥213.3 billion, due mainly to higher Safety revenue, despite declines in Marine Systems and Displays. Operating profit and loss improved by ¥6.0 billion year on year to a loss of ¥5.0 billion, mainly due to improved profitability in Safety and Mobile Backhaul.」

「The transaction was not completed because the buyer failed to fulfill its payment obligation on 29 June 2018, the scheduled closing date. Meanwhile, there has been no change in the policy to sell the shares of NEC Energy Devices and Automotive Energy Supply, and activities toward the transfer are continuing.」

「We will undertake fundamental earnings improvement, including fixed-cost reductions. Specifically, we will implement structural reforms targeting domestic personnel in indirect functions and the hardware business, and reduce personnel and other expenses by improving the efficiency of real estate and other costs. We will also advance structural reforms in the telecom carrier and energy businesses.」

「On 4 December 2017, the company decided to transfer all shares it held in NEC Energy Devices, Ltd. to GSR Capital, a private investment firm. The share transfer was scheduled to take place on the same day as the transfer to NISSAN MOTOR CO.,LTD. of all shares in Automotive Energy Supply Corporation held by the company and NEC Energy Devices, Ltd.」

「In terms of earnings, operating profit improved by ¥3.5 billion year on year to ¥7.3 billion. This was due mainly to higher revenue.」

「Revenue for the first quarter was ¥582.5 billion, an increase of ¥63.8 billion, or 12.3%, from the same period of the previous year. … Operating loss improved by ¥15.5 billion year on year but remained a loss of ¥14.4 billion. This was due mainly to higher revenue.」

「Under the business reform initiative, NEC Management Partner Co., Ltd. led efforts to improve the efficiency of administrative functions and reduce general and IT costs, achieving approximately ¥14.0 billion in cost reductions, broadly in line with the plan, compared with the previous fiscal year. As part of the optimization of development and production functions, the domestic hardware development and production subsidiaries and software development subsidiaries were reorganized and integrated on 1 April 2017, respectively.」

「Operating profit improved by ¥2.8 billion year on year, to ¥16.9 billion, due to higher sales and improved profitability in system integration services, among other factors.」

「Operating profit improved by ¥3.3 billion year on year, to ¥13.2 billion, due to higher sales and improved profitability in system integration services, among other factors.」

「Operating profit improved by ¥300 million year on year, to ¥3.7 billion, due mainly to improved profitability in system integration services and other factors.」

「First, to address underperforming businesses and unprofitable projects, we will undertake structural reform of the smart energy business and strengthen project management capabilities to contain unprofitable projects.」