Financial Results
for the First 9 Months
for the Fiscal Year ending March 2020(For Press Conference)
January 29, 2020
NEC Networks & System Integration Corporation(TSE: 1973, NESIC)9M FY2020/3 Summary▐ Orders, sales and operating income grewOrders: Increased offsetting a reactionary fall due to large overseas projects inthe previous fiscal year (-¥10Bn.)* Over 10％ growth excluding impacts above
Operating income: Increased due to profitability improvement and sales growth
despite increased growth expenditure and loss-project cost.

▐ Net income remained flat mainly due to extraordinary losses(¥ Bn.)
9M
FY2019/3

FY2020/3

FY2019/3

FY2020/3

Orders received

207.5

215.2

+4%

60.7

63.5

+5%

Net sales

191.0

214.0

+12%

68.5

77.8

+14%

Gross margin

16.6%

16.8%

+0.2pt

17.8%

17.3%

-0.5ptOperating income

6.3

8.2

1.9

3.7

3.8

0.2

(to sales)(3.3%)(3.8%)+0.5pt

(5.3%)(4.9%)-0.4ptExtraordinary losses

0.0

3.4

-3.4

0.0

1.2

-1.2

Net income

4.3

4.3

0.0

2.4

1.4

-1.0

(to sales)(2.2%)(2.0%)-0.2pt

(3.5%)(1.8%)-1.7ptFree cash flows

2.0

1.9-0.1-9.5-8.9+0.6

attributable to owners of the parent2(ref.) 3Q© NEC Networks & System Integration Corporation 2020

ChangeChange

9M FY2020/3 Orders Received by Segment(¥ Bn.)

201.7

DSL

62.3

207.5

77.4

215.2 +４%81.0 +5%▐ Digital Solutions (DSL)Although orders from financial
companies decreased due to PJ
concentration in the previous FY,
workstyle innovation orders increased▐ Network Infra. (NWI)

Social/public infra. orders* increased*Networks for firefighting/disaster prevention and video/CATV

NWI

60.7

ESS

73.8

64.9

4.8

6.0

7.0

9M
18/3

9M
19/3

9M
20/3

Others359.2

63.6 +7%

63.6 -2%© NEC Networks & System Integration Corporation 2020

-Business for telecom. carriers was picking
up from sluggish pace in 1H▐ Engineering & Support
Services (ESS)Decreased slightly as a result ofoffsetting the reactionary drop inorders due to large overseas orders in
the previous FY(-10) mainly byincreased domestic construction biz.
*Networks for firefighting, etc.

9M FY2020/3 Net Sales by Segment(¥ Bn.)

214.0 +12%
184.9

▐ Digital Solutions (DSL)

191.0
78.6 +13%

DSL

64.1

Workstyle innovation area andnetwork for hotels increased▐ Network Infra. (NWI)

69.6

Sales for social/public infra.* increased

56.7 +4%

NWI

51.1

54.6

ESS

65.0

62.3

4.7

4.5

8.7

9M
18/3

9M
19/3

9M
20/3

Others470.1 +13%

© NEC Networks & System Integration Corporation 2020

*Networks for traffic, space, firefighting/disaster prevention, etc.

▐ Engineering & SupportServices (ESS)Both of domestic construction* andmaintenance/operation businessesincreased*Mega-solar and networks for firefighting, etc.

9M FY2020/3 Operating Income by Segment(¥ Bn.)( ) : to sales

4.4（2.4%）

6.3

8.2+1.9（3.8%）(+0.5pt)

 Digital Solutions (DSL)（3.3%）

Total

5.1
DSL
NWI
ESS

4.5(7.1%)

2.4(4.6%)

3.5(5.4%)

Others/Elimi- -5.9
nation

9M
18/3
5

7.3

+2.2(9.3%) (+2.0pt)(7.3%)(5.7%)

4.8+1.7(8.5%) (+2.8pt)

4.3

3.2

-1.1

3.1

(6.9%)

-6.3

9M
19/3

(4.6%)-7.1(-2.3pt)

-0.8

9M
20/3

© NEC Networks & System Integration Corporation 2020・Profit increased due to improved fixed cost
efficiency as a result of higher net sales

 Network Infra. (NWI)

・Profit increased due to dissolving loss
projects in addition to higher net sales
and the reorganization effect**Resource efficiency enhancement,enhanced PJ management etc.

 Engineering & Support
Services (ESS)・ Profit decreased due to increased lossproject cost

-Profitability improved excluding impacts above Others/Elimination
・Growth expenses increased(Office realignment, etc.)

9M FY2020/3 Factors of Operating Income Change(¥ Bn.)

Improved
efficiency+1.9

Sales growth+3.7
Loss-PJ
in 9M 19/3

6.3～
～6Growthexpenses-1.9
Loss-PJ
in 9M 20/3
-2.9

Officerealignment-1.0

1Q：-1.1
3Q：-1.8

8.2 +1.9
YOY(3.8%)+1.2(3.3%)

9M
19/3© NEC Networks & System Integration Corporation 2020

9M
20/3

～～

Expansion of Loss in Mega Solar Construction Project▍ Factors for theexpansion ofproject loss:

Additional costs expected to arise from theimplementation of environmental measures, such as
the expansion of grit chambers aimed at preventing
the diffusion of dirty water, and stronger safetymeasures attributable to heavy rainfall, and theresulting extension of the construction period intowinter.

▍ Order backlogs
for mega solar
projects:

Three projects amounting to approx. ¥14 bn(as at December 31, 2019)

We are carefully implementing project management for two mega
solar projects other than this loss-making project to avoid theoccurrence of similar unprofitable situations.

7© NEC Networks & System Integration Corporation 2020

FY2020/3 Forecasts▌Upward revisionof operating income forecastin view of strong progress（¥ Bn.）
FY19/3

FY20/3(Forecasts)

ChangePrevious forecasts(2019/10/29)

Difference

Orders Received

284.7

295+4％295－

Net Sales

277.9300+8%300－Operating Income

12.8

15.0＋2.2

14.0＋1.0(to Sales)(4.6%)(5.0%)+0.4pt

(4.7%)+0.3pt

Net income

8.9

9.0+0.1

9.0－(to Sales)(3.2%)(3.0%)-0.2pt

(3.0%)－

attributable to owners of the parent(*Forecasts as at January 29, 2020)8© NEC Networks & System Integration Corporation 2020

FY2020/3 Forecasts by Segment(*Forecasts as at January 29, 2020)▌Upward revision mainly by DSL and NWINet SalesYoY（¥ Bn.）

277.9

300

300

Operating Income( ) to sales+8%

12.8(4.6%)
DSL

NWI

99.8

80.4

107+285

10985

90.4

100-397

Others

7.4

8+199+6%

DSL
NWI
ESS

ESS

F19/3

+9%

FY20/3(forecast asat Oct. 29)

FY20/3(Revised)© NEC Networks & System Integration Corporation 2020

+7%

Others/Elimination

8.4(8.5%)

5.9

14.0

+1.015.0 +2.2

9.7+1.3 11.0+2.6

7.5+1.0 8.5

＋2.6

-1.5

6.5

-0.7

-11.2 +0.2 -11.0-2.2(9.1%)(7.4%)

7.2

8.0

-8.8

F19/3

(5.0%)(4.7%)(8.8%)(7.9%)

YoY(8.0%)(10.1%)(10.0%)

FY20/3(forecast asat Oct. 29)(6.7%)

FY20/3(Revised)December 2019 Balance Sheet(\ Bn.)Cash and cash equivalents
Notes & accounts receivable
Inventories
OthersCurrent Assets
Noncurrent Assets

Assets
Notes and accounts payable
Loans
OthersLiabilities
Shareholders' equity
Accumulated othercomprehensive income
Non-controlling interests

Diff.

-0.9
-9.4
1.8
1.3

181.0
35.1
216.2

174.0
36.5
210.4

-7.1
1.3
-5.7

41.1
6.461.1

36.5
8.1
57.3

-4.5
1.6-3.8

108.6

101.9

-6.7

-4.1

-3.7

0.5

2.7

2.9

0.2

109.0

109.4

0.3

Liabilities & Net Assets

107.6
216.2

108.6
210.4

1.0-5.7

Owner's Equity Ratio

48.5%

50.2%

+1.7ptNet Assets

10End of Mar.19 End of Dec.19
54.4
53.5
107.2
97.8
13.2
15.0
6.3
7.7

© NEC Networks & System Integration Corporation 2020

9M FY2020/3 Cash Flows（¥ Bn.）
9M FY19/3

11

9M FY20/3

Operating Cash Flow (A)

6.4

6.7

Investment Cash Flow(B)-4.4-4.8

Free Cash Flows (A)+(B)

2.0

1.9

Financial Cash Flow-5.0-2.7© NEC Networks & System Integration Corporation 2020

APPENDIX12© NEC Networks & System Integration Corporation 2020

(Ref.) Net Income Attributable to Owners of the Parent（¥ Bn.）

9M
FY20/3

YoY

8.2+1.9-0.0-0.3

8.2+1.7

Extraordinary losses

3.4-3.4

Income before
income taxes

4.8-1.7

Income taxes

0.3＋1.7

Net income attributable tonon-controlling interests

0.2+0.0

Net income attributable

4.3-0.0

Operating income
Other income/expense

Ordinary income

to owners of the parent

13© NEC Networks & System Integration Corporation 2020

Office transfer cost(1Q)
Impairment loss for a
training center closure(1Q)
Compensation for damage
by a delayed PJ(3Q)
Impact of review of therecoverability of DTA(1Q)

-0.4
-1.8
-1.3

+1.6

Cautionary Statement
Forecasts and targets of results mentioned in this document are future
estimates and are thus inclusive of risks and uncertain factors since they are
not based on definite facts. Please be aware that a variety of factors could
cause actual results to differ significantly from those projected. The major
factors affecting actual results include the economic climate and social trends
surrounding the business of this Company’s group, consumer trends vis-a-vis
systems and services provided by this Company’s group, as well as pressure
to lower prices and ability to cope with the market in response to intensifiedcompetition.
Factors affecting results are not limited to the ones mentioned above.
NESIC has changed the reportable segments from the FY March 2020
according to the reorganization at April 2019. The segment figures for the FY
March 2018 and FY March 2019 in these slides were reclassified for disclosure
to reflect the changes in this event.

14© NEC Networks & System Integration Corporation 2020

NEC Networks & System Integration Corporationis committed to increasing customer value byredesigning future communications from the user’sperspective.

nesic
15

© NEC Networks & System Integration Corporation 2020

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