Presentation [1.9MB]

*We will have a briefing meeting on November 1, 2021.

These slides here are to be included in the presentation slides

at the meeting and will be replaced with new one on the day.

Financial Results for the 1H for the FY ending March 2022

October 29, 2021

NEC Networks & System Integration Corporation (TSE: 1973, NESIC)

© NEC Networks & System Integration Corporation 2021

1H FY2022/3 Summary

				（¥ Bn.）
	1H	1H	Change		Forecasts
	FY2021/3	FY2022/3		as at Jul.29
Orders received	177.9	165.9	-7%		165
Net sales	151.2	141.0	-7%		147
(Gross margin)	16.6%	19.3%	+2.7pt		-
SG&A	18.4	19.6	-1.2		-
Operating income	6.7	7.6	+0.9		8.7
(to sales)	(4.5%)	(5.4%)	+0.9pt		(5.9%)
Net income	4.0	4.7	+0.7		5.5
attributable to owners of the parent
(to sales)	(2.6%)	(3.3%)	+0.7pt		(3.7%)
Free cash flows	14.4	13.6	-0.8

1 © NEC Networks & System Integration Corporation 2021

Record high profits as 1H

• Orders/sales

Decreased due to special impacts*

but the strategic areas** grew as expected

Except for special impacts

Orders:+11％, Sales:+3％

Backlog: +15%

• reactionary fall of big projects (GIGIA school & mega-solar) of the previous year and the impact of a subsidiary to have been unconsolidated
• DX/workstyle innovation, telecom carrier business

• Profits

Profitability improved due to sales mix and efficiency improvements while increasing SG&A***

*** resource enhancement for new business development

Factor Analysis of YoY Change

While growth strategy went well as plan, net sales was temporarily affected by semiconductor shortage and the shift to service provision model.

Profit grew thanks to improved sales-mix and efficiency with SG&A increase

Orders received

（¥ Bn.）

177.9

	GIGA
	school			165.9
	Approx.
	- 27.0	DX/tele-		(-7%)
		com etc.
		Approx.
	Unconsoli-	+16.5
	dated
	affiliate*
	Approx. -1.5
～	*Impact of a subsidiary that to have	～
been unconsolidated from 2Q
～	FY2021/3		～
1H FY21/3			1H FY22/3

Net sales		Operating income

					GIGA
					School
				Profitability	Approx.
				-0.4
				improvement
				(higher value	SG&A
	GIGA			added,
			Approx.
			improved
151.2	school			efficiency, etc.)	-1.2
Approx.			+1.8
	-6.0				7.6
	Mega-solar			Sales
	Approx.			increase of	(5.4%)
	-6.5			DX/telecom
	Unconsoli-	DX/tele-	141.0	etc. +0.7
	com etc.
	dated	Approx.	6.7
	affiliate*	+ 4.0	(-7%)
	Approx. -1.5			(4.5%)
～			～	～	～
～			～	～	～
1H FY21/3			1H FY22/3	1H FY21/3	1H FY22/3

2 © NEC Networks & System Integration Corporation 2021

1H FY2022/3 Orders Received by Segment

（¥ Bn.）	▐ Digital Solutions (DSL)

		177.9	165.9	-７%		 Decreased due to the impacts of GIGA school
	151.7		(＋11％)			(-14) and un-consolidation of a subsidiary (-1.5)
							 DX/workstyle innovation-related businesses
		71.3	62.2		-13%			continuously grew (DX for governments/
DSL	55.4		（＋12％）			municipalities expanded)
						▐ Network Infrastructures (NWI)
NWI	45.3	47.6	49.6		+４%			Business for telecom carriers drove the growth
								- Penetration as a partner progressed
ESS	46.6	54.3	51.9		-５%	▐ Engineering & Support Services (ESS)
	（＋25％）		 Decreased by reactionary fall of GIGA school (-13)
Others	4.4	4.7	2.3				 Increased construction business in Japan
	FY20/3	FY21/3	FY22/3		( ): excluding special
			(transport/traffic etc.)
	1H	1H	1H		impacts (P4)

3 © NEC Networks & System Integration Corporation 2021

1H FY2022/3 Net Sales by Segment
（¥ Bn.）					▐ Digital Solutions (DSL)
		151.2	141.0	-７%		Reactionary fall of GIGA school (-1.0) and un-
	136.3					consolidation of a subsidiary (-1.5) impacted
		56.7			 Lead-time has been longer according to shift to
DSL	53.2	52.4	-８%		service-provision model
					▐ Network Infrastructures (NWI)
NWI		38.1	42.8	+12%	 Business for telecom carriers drove the growth
35.5
		- Social/public infrastructures also increased
ESS		51.6			▐ Engineering & Support Services (ESS)
41.6	42.3	-18%	 Decreased due to the impacts of GIGA school
Others	6.0	4.9	3.5			(-5.0) and mega-solar projects (-6.5)
		*increased by 7% except these impacts
	FY20/3	FY21/3	FY22/3		 Semiconductor shortage started to appear
	1H	1H	1H
4 © NEC Networks & System Integration Corporation 2021