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NEC announces financial forecast revisions

Tokyo, Japan - January 30, 2017 - NEC Corporation (NEC; TSE: 6701) today announced revisions to the consolidated financial forecasts announced on October 31, 2016 for the fiscal year ending March 31, 2017.

1. Revised consolidated financial forecasts for the fiscal year ending March 31, 2017 (April 1, 2016 to March 31, 2017)

(In billions of yen)

  Revenue  Operating Profit  Net profit attributable to owners of the parent

Previous forecasts (A)

(Announced on October 31, 2016)
2,880.0  100.0  50.0
Revised forecasts (B) 2,680.0  30.0  20.0
Difference (B)-(A) -200.0 -70.0 -30.0
Change (%) -6.9% -70.0% -60.0%
FY ended March 31, 2016 (IFRS)
 2,824.8  91.4 75.9

2. Reasons for financial forecast revisions

Regarding the consolidated financial forecasts for the fiscal year ending March 31, 2017, the NEC Group anticipates consolidated revenue of 2,680.0 billion yen, a decrease of 200.0 billion yen from the previous forecasts. This decrease is mainly due to large-scale projects being delayed, failure to receive expected projects in the Public business, sluggish international growth in the Telecom Career business, a decrease in hardware sales in the System Platform business and a sales decrease in international business in Others, despite an anticipated sales increase from the consolidation of Japan Aviation Electronics, Limited through a tender offer bid.

The NEC Group anticipates consolidated operating income of 30.0 billion yen, a decrease of 70.0 billion yen from the previous forecasts. This decrease is mainly due to decreased sales, in addition to lower profitability in the Public business and international business in Others.

The NEC Group anticipates net profit attributable to owners of the parent of 20.0 billion yen, a decrease of 30.0 billion yen from the previous forecasts, despite gain on sales from the transfer of a portion of shares in Lenovo NEC Holdings B.V.

There is no change from the previous forecasts on an annual dividend of 6 yen per share of common stock.


Cautionary Statement with Respect to Forward-Looking Statements

This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial conditions and other overall management of the NEC Group (the "forward-looking statements"). The forward-looking statements are made based on information currently available to NEC and certain assumptions considered reasonable as of the date of this material. These determinations and assumptions are inherently subjective and uncertain. These forward-looking statements are not guarantees of future performance, and actual operating results may differ substantially due to a number of factors.

The factors that may influence the operating results include, but are not limited to, the following:

  • Effects of economic conditions, volatility in the markets generally, and fluctuations in foreign currency exchange and interest rate
  • Trends and factors beyond the NEC Group's control and fluctuations in financial conditions and profits of the NEC Group that are caused by external factors
  • Risks arising from acquisitions, business combinations and reorganizations, including the possibility that the expected benefits cannot be realized or that the transactions may result in unanticipated adverse consequences
  • Developments in the NEC Group's alliances with strategic partners
  • Effects of expanding the NEC Group's global business
  • Risk that the NEC Group may fail to keep pace with rapid technological developments and changes in customer preferences
  • Risk that the NEC Group may lose sales due to problems with the production process or due to its failure to adapt to demand fluctuations
  • Defects in products and services
  • Shortcomings in material procurement and increases in delivery cost
  • Acquisition and protection of intellectual property rights necessary for the operation of business
  • Risk that intellectual property licenses owned by third parties cannot be obtained and/or are discontinued
  • Risk that the NEC Group may be exposed to unfavorable pricing environment due to intensified competition
  • Risk that a major customer changes investment targets, reduces capital investment and/or reduces the value of transactions with the NEC Group
  • Risk that the NEC Group may be unable to provide or facilitate payment arrangements (such as vendor financing) to its customers on terms acceptable to them or at all, or risk that the NEC Group's customers are unable to make payments on time, due to the customers' financial difficulties or otherwise
  • Risk that the NEC Group may experience a substantial loss of, or an inability to attract, talented personnel
  • Risk that the NEC Group's ability to access the commercial paper market or other debt markets are adversely affected due to a downgrade in its credit rating
  • Risk that the NEC Group may incur large costs and/or liabilities in relation to internal control, legal proceedings, laws and governmental policies, environmental laws and regulations, tax practice, information management, and human rights and working environment
  • Consequences of natural and fire disasters
  • Changes in methods, estimates and judgments that the NEC Group uses in applying its accounting policies
  • Risk that the NEC Group may incur liabilities and losses in relation to its retirement benefit obligations

The forward-looking statements contained in this material are based on information that NEC possesses as of the date hereof. 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 the NEC Group. NEC does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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