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NEC establishes "Mid-term Management Plan 2015"

*** For immediate use April 26, 2013

Tokyo, April 26, 2013
- NEC Corporation (NEC; TSE: 6701) has established a new mid-term management plan, the "Mid-term Management Plan 2015," for a three year period through the fiscal year ending March 31, 2016.

The NEC Group aims "to be a leading global company leveraging the power of innovation to realize an information society friendly to humans and the earth" as part of the "NEC Group Vision 2017."

NEC's newly established "Mid-term Management Plan 2015" focuses on "Solutions for Society," which leverage Information and Communications Technologies (ICT) in order to advance social infrastructure, contribute to the resolution of a variety of social issues, expand business over the medium to long-term and to improve profitability as part of realizing a society that is safe, secure, efficient and fair.

1. Mid-term management goals

(1) Results for the fiscal year ended March 31, 2013 and business targets for the fiscal year ending March 31, 2016

 Results for the fiscal year
ended March 31, 2013
Targets for the fiscal year
ending March 31, 2016
Net Sales In billions of yen
In billions of yen
Operating income 114.6    150.0   
Net income 30.4    60.0   
Free cash flow (FCF) 42.0    100.0   
Return on equity (ROE) 4.5%    10.0%   

(2) Mid-term management policy

  1. Focus on Solutions for Society: Becoming a "Social value innovator"
    • Focus management resources on advancing social infrastructure with ICT
    • Seize growth opportunities that help resolve social issues. Establish new business models

  2. Focus on Asia, promotion of "locally-led" businesses: Establish a growth base for global competitiveness
    • Concentrate mostly on emerging and developing markets in Asia
    • Increase the Group's awareness of local market needs. Accelerate the speed of business

  3. Stabilize the financial foundation
    • Strengthen cost competitiveness
    • Establish a profit structure that creates operating income of 150.0 billion yen and FCF of 100 billion yen
    • Ensure financial capacity through hybrid-finance
⇒The NEC Group aims to quickly achieve a company-wide operating margin of 5% and an international sales ratio of 25% by realizing its mid-term management goals based on the management policy outlined above.

2. Management Strategy

  1. Focus on Solutions for Society
    • In response to the increasing demand for resources such as energy and food that accompany the world's growing population, as well as the increasing rate of urbanization, the NEC Group is focusing on its Social Solutions business, consisting of the public, telecom carrier, enterprise and smart energy business units, and leveraging its ICT strengths to provide new social infrastructure in order to realize a society that is safe, secure, efficient and fair. The Group is particularly focused on reinforcing contributions to emerging markets where economic growth is underscoring the need for infrastructure development
    • As part of implementing the Social Solutions business, the NEC Group carried out organizational restructuring in April 2013 that aims to establish a framework that is more responsive to market and customer needs
    • Emphasize investment in next generation virtual network, smart energy and security related solutions that support the Social Solutions business
    • Capitalize on the NEC Group's core competencies in next generation network technologies, high-performance, highly-reliable IT infrastructure technologies, as well as sensor and human interface technologies, in addition to leveraging the Group's competitive advantages in of its distinctive ICT assets, strengthening service areas and expanding business domains
    • Seize growth opportunities that help resolve social issues. Pursue the potential needs of customers and society. Enhance competitiveness and increase the means of "value creation" through the promotion of "open innovation"
    • Aim to expeditiously realize 70% of NEC Group sales and an 8% profit margin (NEC Group-wide profit margin of 5%) from the Social Solutions business by implementing the above measures

  2. Focus on Asia, promotion of "locally-led" businesses
    • Focus on the Social Solutions business to expeditiously realize an international sales ratio of 25%
      (targeting an international sales ratio of 23% for the 2015 fiscal year)
    • Focus on Asian markets where there is heavy demand for social infrastructure advancement. Proactively expand business segments such as the safety and smart energy domains
    • Promote the 5 international headquarter framework and accelerate the development of locally-driven business
      • As a part of increasing responsiveness to local needs, in April 2013, the NEC Group established a "Global Safety Division" in Singapore as a base for the strategic planning and implementation of the Safety business. The division will strengthen regional marketing functions as well as development functions for shared solutions that can be applied throughout multiple regions, while also supporting business development in different regions

  3. Stabilize the financial foundation
    • Realize across-the-board cost reductions by expanding global supply chain management (SCM), the use of offshore resources and further streamlining quality costs
    • Ensure net income and establish a profit structure that enables continued dividends by reducing non-operating loss and extraordinary loss
    • Generate stable annual FCF of more than 100 billion yen by the 2015 fiscal year by steadily accumulating profits and taking measures to reduce the Cash Conversion Cycle (CCC)
    • Strengthen financial foundations through measures that include the implementation of hybrid finance (130 billion yen procurement), while strengthening the Social Solutions business through advanced investment



This material contains forward-looking statements pertaining to strategies, financial targets, technology, products and services, and business performance of NEC Corporation and its consolidated subsidiaries (collectively "NEC"). Written forward-looking statements may appear in other documents that NEC files with stock exchanges or regulatory authorities, such as the Director of the Kanto Finance Bureau, and in reports to shareholders and other communications. NEC is relying on certain safe-harbors for forward-looking statements in making these disclosures. Some of the forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates," "targets," "aims," or "anticipates," or the negative of those words, or other comparable words or phrases. You can also identify forward-looking statements by discussions of strategy, beliefs, plans, targets, or intentions. Forward-looking statements necessarily depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC may not be able to realize the results expected by them.
You should not place undue reliance on forward-looking statements, which reflect NEC's analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Among the factors that could cause actual results to differ materially from such statements include (i) global economic conditions and general economic conditions in NEC's markets, (ii) fluctuating demand for, and competitive pricing pressure on, NEC's products and services, (iii) NEC's ability to continue to win acceptance of NEC's products and services in highly competitive markets, (iv) NEC's ability to expand into foreign markets, such as China, (v) regulatory change and uncertainty and potential legal liability relating to NEC's business and operations, (vi) NEC's ability to restructure, or otherwise adjust, its operations to reflect changing market conditions, (vii) movement of currency exchange rates, particularly the rate between the yen and the U.S. dollar, (viii) the impact of unfavorable conditions or developments, including share price declines, in the equity markets which may result in losses from devaluation of listed securities held by NEC, and (ix) impact of any regulatory action or legal proceeding against NEC. Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC to predict these events or how they may affect NEC. NEC does not undertake any obligation to update or revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise.
The management targets included in this material are not projections, and do not represent management's current estimates of future performance. Rather, they represent targets that management will strive to achieve through the successful implementation of NEC's business strategies.
Finally, NEC cautions you that the statements made in this material are not an offer of securities for sale. Securities may not be offered or sold in any jurisdiction in which required registration is absent or an exemption from registration under the applicable securities laws is not granted.

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