Financial Results for the 1Hfor the FY ending March 2023
October 28, 2022

Yushi Ushijima, President & CEO

NEC Networks & System Integration Corporation(TSE: 1973, NESIC)© NEC Networks & System Integration Corporation 2021

AgendaI. Results for the 1H FY2023/3& Forecasts for the FY2023/3
II.Update of “Shift up 2024”

I. Results for the 1H FY2023/3& Forecasts for the FY2023/3

1H FY2023/3 Summary（¥ Bn.）
1H
FY22/3

ChangeOrders received

165.9

172.4

-4%

Net sales

141.0

142.7

+1%

Gross proft

27.3

25.8

-1.4

(to sales)

19.3%18.1%-1.2pt

SG&A

19.6

21.2

Operating income

7.6

4.6

-1.6 S a l e s :⚫ Service increased-3.0 ⚫ SI/construction decreased due to longer TAT(to sales)

5.4%

3.3%

-2.1pt

Net income

4.7

2.7-2.0(to sales)

3.3%

1.9%

-1.4ptFree cash flows

13.6

8.1

-5.5

Orders backlog

163.2

196.4

+20%

attributable to owners of the parent

41H
FY23/3

Progress in strategic areas
despite of unexpected cost up© NEC Networks & System Integration Corporation 2021

Orders:⚫ 2-digit growth in 2Q(Jul-Sep) （＋11％）
・Increased orders from enterprises⚫ Orders grew lead by DX

Profits:⚫ Cost up due to rapid yen depreciation (-1.4)+loss at a Thai subsidiary (-1.1)
・GPM excluding above impacts improved yoy⚫ SG&A for future growth increased

・Sales and business development sections

Orders Received/Net Sales by Business Model
SI/construction: Orders increased with sales shift to 2H
Service: Although orders fluctuate due to the timing of large contracts,
sales is steadily expanding
Orders received

Net sales（¥ Bn.）

172.4

165.9

SI/construction

104.9

Service61.0＋９％

63％37％-４％

1H
FY22/35© NEC Networks & System Integration Corporation 2021

114.1

142.7

141.0

84.4

66％

60％

58.3

56.5

34％

40％

1H
FY23/3

1H
FY23/3-２％

83.0+６％

59.7

58％

42％

1H
FY23/3

Operating Income Analysis（¥ Bn.）
Profitability＋0.６
Sales increase＋0.５

GMP improved without
special impacts

SG&A-1.6

7.6(5.4%)

1H GPM

Weak yen-1.4

Excluding impacts of weak yen& loss in an overseas subsidiary

Loss in anoverseas
subsidiary*-1.1

19.3%

4.6～～(Operation)(Special impacts)-0.5-2.5

FY22/3
1H6© NEC Networks & System Integration Corporation 2021

18.1%

(3.3%)～～
FY23/3
1H*Thai telecom construction PJ

16.5%

16.6%

20/3

21/3

15.9%
FY19/3

22/3

23/3

1H FY2023/3 Orders Received by Segment（¥ Bn.）( ): 2Q only

177.9
GIGA
School：14DXS

68.9

NWS

38.4

165.9

61.1

41.0

172.4
61.6

+4%

(+11％)⚫ Slight increase making up for reactionary
fall of large orders in the previous 1H+1%- Product biz for financial companies increased- Increasing prospective DX PJs for
manufacturing companies and municipalities（+12％）+7%

44.0（+13％）

GIGA
School：13ESS

65.8

61.5

+3%

63.2（+10％）
Others

74.7

2.4

3.6

FY21/3
1H

FY22/3
1H

FY23/31H© NEC Networks & System Integration Corporation 2021

▐ DX Solutions (DXS)▐ Network Solutions (NWS)⚫ Local 5G & marine biz increased- Telecom carriers biz slightly decreased▐ Environmental & Social Solutions (ESS)⚫ Increased product related services biz⚫ Construction biz slightly decreased withrich prospective PJs※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

1H FY2023/3 Net Sales by Segment（¥ Bn.）

151.2
141.0
DXS

54.9

33.5

ESS57.9

8+1%+1%51.9▐ DX Solutions (DXS)⚫ Service biz increased (+10%)- SI/construction biz decreased with shift to 2H▐ Network Solutions (NWS)

NWS

Others

51.3

142.7

36.9

36.3

-2%

49.3

50.9

＋3%

4.9

3.5

3.6

FY21/3
1H

FY22/3
1H

FY23/3
1H© NEC Networks & System Integration Corporation 2021

⚫ Sales decreased due to delay by S/C andmaterials shortage▐ Environmental & Social Solutions (ESS)⚫ Sales slightly increased with negative
impact of S/C and materials shortage※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

1H FY2023/3 Operating Income by Segment(¥ Bn.)( ): to sales

6.7(4.5％)DXS

5.1(9.2%)

7.6▐ DX Solutions (DXS)(5.4％)

4.6(3.3％)(-2.1pt)

5.3

-0.3

5.6(10.9％)(10.1％)

NWS

3.1(9.3％)

ESS

2.7(4.7％)

Others/Elimination-4.2

FY21/31H
9-3.0(-0.8pt)

3.8(10.4％)

2.2(4.5％)-4.0

FY22/3
1H© NEC Networks & System Integration Corporation 2021

3.3-0.5(9.1％)(-1.3pt)

0.8-1.4(1.6％)(-2.9pt)

-4.8

-0.7

FY23/3
1H⚫ Decreased due to weak yen impact andcost up for future growth⚫ Profitability of conventional businessdecreased▐ Network Solutions (NWS)⚫ Decreased due to cost up for futuregrowth-GPM improved covering weak yen impact▐ Environmental & Social Solutions (ESS)⚫ Decreased due to weak yen impact andloss in Thai subsidiary▐ Others/elimination⚫ Cost for HQ relocation & ERP system※Segment information for FY21/3 & FY22/3
has been reclassified numbers
to reflect the segment change in April 2022.
development
impacted1H FY2023/3 Gross Margin by Segment

1H
FY22/3

10DX Solutions

21.7%

Network Solutions

1H
FY23/3

Change21.3%-0.4pt

22.0%

22.4%

+0.4ptEnvironmantal & Social Solutions

16.5%

13.1%-3.4pt

Company total

19.3%

18.1%-1.2pt© NEC Networks & System Integration Corporation 2021※※

*Weak yen impact , lower profitabilityof conventional biz*Weak yen impact,
loss in Thai subsidiary※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

*Forecasts as at October 28, 2022

FY2023/3 Forecasts(¥ Bn.)

1H FY23/3 FY23/3
forecasts forecasts

Previousforecasts

ChangeOrders received

336.8

350

+4%

350

-

Net sales

310.3

330

+6%

330

-

Operating income

23.2

22.0

-1.2

26.0

-4.0

(to sales)

7.5%

6.7%-0.8pt

7.9% -1.2pt

Net income

15.0

13.0

-2.0

15.3

(to sales)

4.8%

3.9%-0.9pt

4.6% -0.7pt

Orders backlog

165.2187+13%

attributable to owners of the parent

11Change© NEC Networks & System Integration Corporation 2021

-2.3

Revised income forecasts
reflecting weak yen, loss in Thai
subsidiary and sales mix in 2H
Aiming for improvement from the revised
forecasts accelerating the following measures:⚫ Crystallization of abundant prospective PJs
and orders backlogs⚫ Price pass-through of weak yen impact⚫ Profitability improvement through higher valueadded service/more efficient operation with DX⚫ Reduction of nonurgent cost*Forecasts as at October 28, 2022

FY2023/3 Forecasts by Segment
Orders received(¥ Bn.)

350

±０Net sales

Operating income( ): to sales

350

330±0330

26.0(7.9％)-422.0(6.7％)

DXS
NWS
ESS
Others

127

90

90

DXS

NWS

117

117

85

85

DXS
NWS
ESS

131
2
Previous
forecast

12127-3+3128
5
Revisedforecast© NEC Networks & System Integration Corporation 2021

ESS

126

Others2Previous
forecast-4+415.0(12.8％)-2(11.1％)

11.0

11.0

(12.9％)

12.5(9.9％)(12.9％)-3

6
Revisedforecast-12.5
Previous
forecast

9.5(7.8％)

122
Others/Elimination

13.0+1-11.5
Revisedforecast

*Forecasts as at October 28, 2022

Dividend（※予想値は、2021年1月29日現在のものです）

Dividend/share（¥）(Forecast)

46

43
Year-end
Interim35(Forecast)

23

23

4.7

FY07/313

No change in thedividend planInterim：¥23/share

Increasing for the 16thyear in a row* The results for the fiscal years ended March 2020 and prior thereto
presented below reflect the three-for-one stock split conducted onJune 1, 2020・・・・© NEC Networks & System Integration Corporation 2021

23/3

II. Update of “Shift up 2024”

What We Seek to Achieve in 2030 (From Slides at May)×DX

Beyond 5G(next-generationnetworks)＝(Sustainable
SymphonicSociety
Realization of a sustainable
society with prosperity
that resonates for all

Provide services that anticipate
future changes in society and technologies
Decarbonization

1517

Energeticcommunities© NECNEC Networks
Networks&&System
SystemIntegration
IntegrationCorporation
Corporation
2021
2022

Smart industry

Work/lifestyles
with greater freedom

Safetyand security

HealthWell-Being)Spiral-Type Growth Model (From Slides at May)

A factor added to new strengths
in the new medium-term
management plan

based on expertise
2 Consulting
obtained through experience in co-creation& self-implementation

1

Create value
Be smarter

Seek original value
Accelerate shift to services

Create new social value
16

Win Customers
Design / Suggest

Strengths and assets developed
under the previous
medium-term management plan⚫ Digital x 5G
⚫ Symphonict⚫ Co-creation and selfimplementation biz model

Realize the customers
success and sustainability© NEC Networks & System Integration Corporation 2021

High customer value
Long-term relationshipof trust(Spiral of quality improvement)

4

OperateSite-specificconsulting

Existing
strengths and assets

Realize⚫
⚫
⚫
⚫

Apply DX3

SI capabilities
Technological capabilities
Field Capabilities
Nationwide coverage

to realizationand operation
processes toimprove quality

Accumulateknowhow, data toenhance insightBasic Strategy (From Slides at May)

17

1

Accelerating Original ValueCreation⚫
⚫
⚫
⚫

2

Advancing Solution
Capabilities⚫ Biz area expansion for infra. Operators and local 5G⚫ Evolving existing assets for community development with DX x
beyond 5G⚫ Transforming all biz to ensure they address climate change

3

Evolve into DX-NativeCompany⚫ Leverage DX to improve quality, speed, productivity and profit,
developing a reference model⚫ Foster highly skilled professionals© NEC Networks & System Integration Corporation 2021

Self-implementation based & site-specific consultation
Service models for specific biz types & specific application
Common platform services leveraging our strengths
Co-creation, self-implementation and innovation

Accelerating Original Value Creation: Offering Models*23 models as at Sep. 2022

Prepared NESIC original offering service models* leveraging our knowhow and strengths
Horizontally expanding value-provision with consultation based on our self-implementation
Case1; Network environment development for amanufacturing company
IT&OT coordination⚫ Non-stop⚫ Flexible⚫ Highly secure⚫ Visualized※OT/Operational Technology

Coordination withconcerned parties

Site-specific OT expertisesuch as workstyle innovation
High security based on
mission-critical network
expertise with SOC operation
over 10 years
On-site capability
with construction ability

Needs for reconstruction of manufacturing map18© NEC Networks & System Integration Corporation 2021

Case2: Workstyle innovation for a prefectural
government

Workstyle innovation andbetter service to citizen
through utilization of
public cloud⚫ Active communication⚫ Efficient work⚫ Productivity

Accumulated expertiseof DX/workstyle via
thorough self-implementation

Grand design
toward future conceptTop-class experiencethrough operationfor NEC group

MIC guideline β-modelAccelerated Public DX BusinessAppealing municipality
DX/community development

Tour corresponding to customer interests

with our innovation base & technical baseLaunched on July 4

Public DX
showcase

20

Workstyle innovation
Better service to citizen

Serviceexpansion

Services forpublic customers

ICT for public
LGWAN-ASP

19© NEC Networks & System Integration Corporation 2021

WorkstyleDX
cordinateservices

Alreadycustomers visited(as of end of Sep)

BCP
Secure community

Vurtual tourAdvancing Solution Capabilities – Local 5G
2022
Feb

Disclosed L5G strategy
Apr

Invested in FLARE SYSTEMSa L5G venture company

Invested in HFRApra Korean telecom manufacturer

Jul20© NEC Networks & System Integration Corporation 2021

Started trainingof highly skilled engineers using real L5G
at Shin-Kawasaki technical centerReclassified quarterly data and other data

Please see our supplementary data sheet for- Reclassified quarterly data for FY2021/3 & FY2022/3- Sales by business type, sales by market etc.
https://www.nesic.co.jp/english/ir/library/2022.html

21© NEC Networks & System Integration Corporation 2021

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 avariety 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 businessof this Company’s group, consumer trends vis-a-vis systems and services provided by this Company’sgroup, 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.
Some information for reference such as impact of special factors is calculated and shown in roundnumbers.
There was segment change in April 2022. Segment information for the FY 2021/3 and FY 2022/3 havebeen recalculated to reflect the change in the content of business segments.

22© NEC Networks & System Integration Corporation 2021

NEC Networks & System Integration Corporation will be committed to increasing
customer value by redesigning future communications from the user's perspective.

nesic23© NEC Networks & System Integration Corporation 2021

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