NEC & System Integration : Presentation

Financial Results for the 1Q for the FY ending March 2024

July 28, 2023

NEC Networks & System Integration Corporation

(TSE: 1973, NESIC)

© NEC Networks & System Integration Corporation 2023

1Q FY2024/3 Summary

						(¥ Bn.)
		1Q		1Q		Change
		FY23/3		FY24/3
Orders received	80.8	96.5	+19%
Net sales	67.6	71.7	+6%
Gross proft	12.1	12.5	+0.4
(to sales)	17.9%	17.5%		-0.4pt
SG&A	10.6	11.4	-0.8
Operating income	1.5	1.1	-0.4
(to sales)	2.2%	1.6%		-0.6pt
Net income	0.5	0.2	-0.3
attributable to owners of the parent
(to sales)	0.7%	0.3%		-0.4pt
Free cash flows	14.6	18.5	+3.8
Orders backlog	179.2	225.7	+26%

1 © NEC Networks & System Integration Corporation 2023

Progress was made in line with

expectations

Profit decreased due to higher SG&A

expenses

Topline:

• Both orders received and net sales expanded - The strong performance continued, mainly in areas related to workstyle DX and social infrastructure
  -Orders highly jumped gaining large projects on top of the good situation above

Operating income:

• Despite higher net sales, rising SG&A expenses* had an impact
• • Development expenses for new mission-critical systems, etc.

1Q FY2024/3 Orders Received/Net Sales by Business Model

SI / Construction: Strong growth in order in part due to large projects earned

Services: Mainly impacted by a fall in COVID-related demand at subsidiaries

Orders received		Net sales

(¥ Bn.)

			96.5
	80.8
SI/con-		+32％	71.1
struction	53.9

Services	26.9	-6％	25.4
		1Q		1Q
		FY23/3		FY24/3

2 © NEC Networks & System Integration Corporation 2023

71.7

67.6

37.9	42.6
+13％

29.7	-2％	29.0

1Q1Q

FY23/3 FY24/3

1Q FY2024/3 Orders Received by Segment
(¥ Bn.)			96.5
	83.7		+19%	▐ DX Solutions (DXS)
	80.7			⚫ Expansion in strategic areas including workstyle DX
		27.2	+1%
			- Orders received by a subsidiary fell (-1.0) due to
DXS	29.9				decreased COVID-related demand
26.9			▐ Network Solutions (NWS)
			21.2	-2%	⚫ Growth in orders from social infrastructure fields*1 despite
					decline in telecom carrier-related businesses that was in
NWS	21.0	21.5			part a reactional decline froma large project*2 in the
					previous 1Q.
					*1: Space, broadcasting, marine, etc.
			46.4	+56%	*2: Local 5G-related
ESS			▐ Environmental & Social
31.2	29.7
					Solutions(ESS)
Others	1.6	2.7	1.8		⚫ Growth in orders in part due to large projects*
	1Q	1Q	1Q		* Equipment procurement, overseas construction-related
	FY22/3	FY23/3	FY24/3

3	© NEC Networks & System Integration Corporation 2023	※Segment information FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

1Q FY2024/3 Net Sales by Segment
(¥ Bn.)
	67.7	67.6	71.7	+6%	▐ DX Solutions (DXS)
			⚫ Sales expanded in both strategic and existing
			27.8		areas, in part due to sales from order backlogs
DXS	24.8	24.7	+12%
					▐ Network Solutions (NWS)
NWS	17.4	16.5	18.1	+10%	⚫ Sales increased mainly in the social
		infrastructure field
					▐ Environmental & Social
ESS	22.9	24.2	23.1	-5%	Solutions(ESS)
					⚫ Impact of timing for the recording of sales
Others	2.6	2.1	2.7		from orders backlog being weighted toward
	1Q	1Q	1Q		2Q and beyond
	FY22/3	FY23/3	FY24/3

4	© NEC Networks & System Integration Corporation 2023	※Segment information for FY22/3 has been reclassified numbers to reflect the segment change in April 2022.