Financial Results for the 1Q for the FY ending March 2023

July 28, 2022

NEC Networks & System Integration Corporation

(TSE: 1973, NESIC)

© NEC Networks & System Integration Corporation 2022

1Q FY2023/3 Summary

Orders received Net sales Gross proft (to sales) SG&A Operating income

(to sales) Net income

attributable to owners of the parent (to sales)

Free cash flows

Orders backlog

1Q

1Q

FY22/3

FY23/3

83.7 80.8

67.7 67.6

12.6 12.1

18.7%

17.9%

9.7

10.6

3.0

1.5

4.4%

2.2%

1.7

0.5

2.4%

0.7%

21.9

14.6

153.8

179.2

(¥ Bn.) Change -4% -0% -0.5

-0.8pt-0.9

-1.5 -2.2pt-1.2 -1.7pt-7.3 +16%

Profits decreased due to proactive cost

increase and rapid change in exchange rate

Orders received:

  • Large PJs of this FY are concentrated in 2Q and after

"Prospect PJs" for 2Q increased YoY)

  • DX orders increased

Net sales:

  • Flat with negative impact of S/C and materials shortage (-2)

Profits:

  • Increased procurement cost due to yen depreciation more than expected (-0.7)
    -GP margin improved excluding weak yen impact from high level of result of previous 1Q
  • Cost for the future (SG&A) increased
    - Enforce sales and business development sections

1 © NEC Networks & System Integration Corporation 2022

1Q FY2023/3 Orders Received/Net Sales by Business Model

Although service orders fluctuate due to the timing of large contracts, sales is steadily expanding

Orders received

(¥ Bn.)

83.7

80.8

SI/con-

54.0

-0

53.9

struction

65

67

Services

35

-9

29.7

26.9

33

1Q

1Q

FY22/3

FY23/3

Net sales

67.767.6

40.2 -6 37.9

5956

27.5 +8 29.7

4144

1Q

1Q

FY22/3

FY23/3

2 © NEC Networks & System Integration Corporation 2022

Factor Analysis of Operating Income YoY Change

(¥ Bn.)

Gross margin is improving substantially

Virtual

excluding weak yen impact

increase in

GP

SG&A

0.4

-0.9

Gross margin

Impact of S/C

3.0

& materials

shortage

1Q with more high

(4.4%)

-0.3

18.7%

Excluding weak yen impact

profitability PJs than

Weak yen

ordinary 1Q

-0.7

17.9%

+3.3pt

21.0%

1.5

+1.3pt

(2.2%)

(Operation)

(Special cause)

15.4%

+1.0pt

19.7%

+0.9pt

-0.8

-0.7

14.4%

18.8%

1Q

1Q

FY20/3

FY21/3

FY22/3

FY23/3

FY20/3

FY21/3

FY22/3

FY22/3

23/3

1Q

2~4Q (9M)

3

© NEC Networks & System Integration Corporation 2022

1Q FY2023/3 Orders Received by Segment

(¥ Bn.)

84.4

83.7

80.7

-4%

DX Solutions (DXS)

GIGA

Decreased due to reactionary fall of large

school4.0

PJs of previous 1Q and postponement of PJs

DXS

33.0

29.9

26.9

-10%

because of unclear business environment

Network Solutions (NWS)

NWS

20.1

21.0

21.5

+2%

Increased driven by local 5G, with

reactionary fall of a large order of previous

GIGA

1Q from a telecom carriers (-2.0), orders

received

school2.0

ESS

28.4

31.2

29.7

-5%

Environmental & Social

Solutions(ESS)

Others

2.8

1.6

2.7

Decreased as large PJs of this FY are

1Q

1Q

1Q

concentrated in 2Q and after

FY21/3

FY22/3

FY23/3

4

© NEC Networks & System Integration Corporation 2022

Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

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NEC Networks & System Integration Corporation published this content on 27 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 August 2022 14:54:04 UTC.