Review of the Mid-term Management Plan 2020 (114KB)

20	NEC Integrated Report 2021		21

NEC's Business Model

Review of the Mid-term Management Plan 2020

Performance Results and

Key Management Measures

Achieve the targets for operating profit and operating profit ratio set out in the Mid-term Management Plan 2020 by repositioning NEC on a growth trajectory by optimizing our business portfolio, growing our business, and strengthening our financial foundation

FY2011	FY2014	FY2019
Made NEC Electronics Corporation, a	Divested all of NEC's stakes in NEC Mobiling,	Established dotData, Inc. in the U.S.
semiconductor business and currently	Ltd., currently MX Mobiling Co., Ltd., a mobile	Established NEC X, Inc. in the U.S.
Renesas Electronics Corporation, into	phone sales business	Acquired Danish company KMD
an equity-method affiliate	FY2015	Holding ApS
FY2012	Sold shares in electrode business
Divested all of NEC's stakes in NEC BIGLOBE,	FY2020
Made the consumer PC business into	Ltd., currently BIGLOBE Inc., an internet
an equity-method affiliate	service provider, in March 2014	Sold shares of Nippon Avionics Co., Ltd.
FY2013	FY2017	FY2021
Acquired the business support system	Consolidated Japan Aviation Electronics	Decided to convert NEC Display
business of U.S.-based Convergys	Industry, Limited	Solutions Ltd. into a joint venture
Corporation	FY2018	Acquired Swiss company Avaloq
	Group AG
	Acquired U.K. company Northgate Public
	Services Limited

Background to Formulating the Mid-term Management Plan 2020

Slump in Profitability

(Fiscal 2017 operating profit ratio

of 1.6%)

Decline of Existing Businesses

Exceeding Expectations

Inability to

Fully Implement

Main Initiatives and Core Objectives of the Mid-term Management Plan 2020
1	Reform of Profit Structure
Reduction of SG&A Expenses
▲Career transition support measures
Business Structure Reforms
▲Decision to stop receiving new orders in the energy business
▲Sale of electrode business
▲
Joint venture for display business
Production Structure Reform	structure,
▲
	Optimization of NEC Platforms production
	sale of Tsukuba Research Laboratories
2	Growth Achievement
Safer Cities	Limited (currently NEC
▲Acquisition of Northgate Public Services
Software Solutions UK Limited) in the United Kingdom, KMD Holding
ApS in Denmark, and Avaloq Group AG in Switzerland
5G
▲Strategic cooperation with NTT Corporation and Rakuten Mobile, Inc.
▲Launch of trial tests with the United Kingdom and Germany
	Digital Transformation (DX)
	▲Establishment of digital platforms and offerings

Trends in Business Performance

Revenue (Billions of yen)  Operating profit (Billions of yen)  Operating profit ratio (%)

3,115.4	3,036.8	3,071.6	3,043.1	2,935.5	2,824.8			2,844.4	2,913.4	3,095.2	2,994.0
					2,665.0		5.1%
					4.4%							4.1%	153.8
		3.7%		3.5%									127.6
	2.4%	114.6	106.2		128.1	3.2%
									2.2%
1.9%	73.7							91.4	1.6%	2.0%
57.8								63.9	57.8
							41.8
2011	2012	2013		2014	2015		2016		2017	2018		2019	2020	2021	(FY)

Note: Financial results were reported under Japanese Generally Accepted Accounting Principles (JGAAP) until fiscal 2015. From fiscal 2016 onward, results have been reported under

International Financial Reporting Standards (IFRS).

3	Restructuring of
Execution Capabilities
Strengthening of Business Development Capabilities
▲Establishment of dotData and NEC X with aim of monetizing new technology
▲Entry into drug discovery business
Transformation of NEC's Culture
▲Revision of the NEC Way
▲
	Revamp of the corporate officer system, one-year terms of office
	▲Introduction of new evaluation system that encourages innovative
	actions and challenges
	▲Hiring and appointment of diverse talent to executive and other positions

Initiatives for "Materiality"

-Priority Management Themes from an ESG Perspective

Incorporate world-renowned Environmental, Social, and Governance (ESG) indices E: Contribute to decarbonization through business

S: Minimize the impact of serious security incidents, promote businesses that prioritize respect for human rights, transform NEC's culture, and promote inclusion and diversity

G: Achieve zero cases of involvement with serious cartels and/or bid-rigging, reinforce Board of Directors system, revise remuneration system for directors and A&SBMs, and promote initiatives for collaborating with suppliers

1. For more details on ESG-related goals, achievements and progress, and degree of completion, please refer to page 11 of Sustainability Report 2021.