Fiscal Year 2022 is officially under way.

We now find ourselves in the third year of the COVID-19 pandemic, and working and living life with COVID-19 has become the norm. Meanwhile, social instability, including the crisis in Ukraine, is also growing by the day. As new unrest and turmoil sweeps across the world, the NEC Group will once again set its sights on achieving further growth and change in this new fiscal year with the aim of fulfilling our Purpose, which is "to create the social values of safety, security, fairness and efficiency."

Last fiscal year, we laid out our direction for the future as well as our priorities by announcing both the Mid-term Management Plan 2025 and the NEC 2030VISION—the embodiment of our Purpose and a visualization of the future we envision realizing as a company.

In the Mid-term Management Plan 2025, we declared our commitment to integrating strategy and culture as two pillars of management towards the realization of our Purpose. It goes without saying that business and financial strategies play an important role in corporate management, but it is people (i.e., employees) who actually execute those strategies. This is why we believe that creating a strong corporate culture that supports a highly motivated workforce and ensuring that it becomes instilled within NEC is just as important as our strategies.

In terms of strategy, over the past year we have designated three areas as growth businesses—that is, Global 5G, Core DX (Digital Transformation), and Digital Government/Digital Finance—and have been working on bolstering these businesses globally.

For example, in the area of Global 5G, Vodafone, Telefónica, and other global telecommunications carriers have decided to introduce our 5G base station equipment, and we have acquired Blue Danube Systems, a U.S.-based venture company engaged in the development of base stations, which has enabled us to strengthen our development structure.

As for Core DX, we have not only expanded strategic partnerships with Microsoft, Amazon Web Services, SAP, and other companies on a global level but also participated in DX projects in various industries and business segments utilizing biometrics and other core technologies as well as in smart city and super city projects.

In Digital Government/Digital Finance, we completed the acquisition of Switzerland's Avaloq. The company's operations, which were integrated with the NEC Group following the acquisition, are now fully under way.

In terms of the other pillar of culture, NEC has committed itself to making internal changes. Highly motivated personnel are vital to the realization of our Purpose, and raising our employee engagement score to 50% by 2025 is one of the numerical targets included in our Mid-term Management Plan.

Last fiscal year, we began reorganizing our business infrastructure and promoting internal DX through the Transformation Office, which was established directly under the CEO. In addition, under Smart Work 2.0, which promotes the implementation of the Code of Values, the code of conduct for NEC Group employees, we have expanded our efforts from the three perspectives of Workplace, Digital Technology, and Work Principles to provide our employees with greater job satisfaction.

In addition, I have been holding monthly online dialogue meetings with employees since being appointed president, with a total of more than 150,000 employees having participated thus far. By promoting a variety of initiatives, we have improved our engagement score by 10 points from the previous year, which is a major step towards our 2025 goal of 50%.

I believe that this was a year in which we were able to advance and give momentum to NEC's corporate transformation as we set our sights on achieving the Mid-term Management Plan 2025.

As the second year of our Mid-term Management Plan, FY2022 will be a year in which we translate our past efforts into tangible results.

Speed is crucial when it comes to developing and implementing strategy. The organizational reforms we implemented this April were aimed at reducing the number of business divisions to one-third, speeding up decision-making, and further promoting the delegation of authority, thereby transforming our organization into one capable of flexibly responding to changing customer needs and ensuring that we are customer-oriented.

Changes in awareness and behavior in the workplace will also be necessary. To drive change, we will continue to promote our internal DX and SmartWork 2.0 initiatives to develop an environment that facilitates productive and creative work while valuing communication.

In addition to this, we are committed to investing in the recruitment and training of human resources to generate greater value. As one example, our full acceptance of the union's demand for an improvement in wage levels at this year's spring labor-management negotiations as well as our commitment to raising the salary level of our younger workers are both based on this stance.

NEC's growth model is based on the advantage it holds in terms of technological capabilities and its ability to transform them into value for its customers. In our pursuit of innovation, we were able to demonstrate consistent results last year by strengthening our AI drug discovery business and increasing our presence in the 5G Open-RAN segment. Going forward, we will also focus on building a network of partners with whom we can create innovation. In April, we reinforced our Thought Leadership function through the Institute for International Socio-Economic Studies, the think tank of the NEC Group.

We are committed to showing the world not only the vision we have for the future of society but also the role NEC will play in achieving that vision, and will work together with all of our stakeholders to make that world a reality while earning their support and trust. This is why we will be further accelerating our activities to create a shared vision for a brighter future.

NEC intends to make FY2022 a year in which we take additional steps to achieve the NEC 2030VISION and strive to further expand the value we provide to society and our customers.

Takayuki Morita
President and CEO
NEC Corporation

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