Financial Results for the 1Q
for the FY ending March 2023
July 28, 2022
NEC Networks & System Integration Corporation(TSE: 1973, NESIC)© NEC Networks & System Integration Corporation 2022

1Q FY2023/3 Summary(¥ Bn.)
1Q
FY23/3

1Q
FY22/3

Profits decreased due to proactive cost
increase and rapid change in exchange rate

Orders received

83.7

80.8-4%

Net sales

67.7

67.6-0%Gross proft

12.6

12.1

-0.5

(to sales)

18.7%

17.9%

-0.8pt

SG&A

9.7

10.6

-0.9 Net sales:

Operating income

3.0

1.5-1.5(to sales)

4.4%

2.2%-2.2pt

Net income

1.7

0.5

-1.2(to sales)

2.4%

0.7%

-1.7ptFree cash flows

21.9

14.6

-7.3

Orders backlog

153.8

179.2

+16%

attributable to owners of the parent

1Change© NEC Networks & System Integration Corporation 2022

Orders received:⚫ Large PJs of this FY are concentrated in 2Q and after（”Prospect PJs” for 2Q increased YoY)

⚫ DX orders increased⚫ Flat with negative impact of S/C and materials
shortage (-2) *including positive sales impact from shifted from the previous FY

Profits:⚫ Increased procurement cost due to yen depreciation
more than expected (-0.7)-GP margin improved excluding weak yen impact
from high level of result of previous 1Q⚫ Cost for the future (SG&A) increased- Enforce sales and business development sections

1Q FY2023/3 Orders Received/Net Sales by Business Model
Although service orders fluctuate due to the timing of large contracts,
sales is steadily expanding
Orders received(¥ Bn.)

83.7

SI/construction

54.0Services

29.7

65％

35％

80.8

-0％-9％

1Q
FY22/32© NEC Networks & System Integration Corporation 2022

Net sales
67.667.753.9

40.267％

59％

26.9

27.5

33％

41％

1Q
FY23/3

1Q
FY22/3

-6％

37.9

+8％

29.7

56％

44％
1Q
FY23/3

Factor Analysis of Operating Income YoY Change(¥ Bn.)

Virtualincrease inGP
＋0.4

Gross margin is improving substantiallyexcluding weak yen impact
SG&A
-0.9

3.0

Gross margin

Impact of S/C& materials
shortage

1Q with more highprofitability PJs thanordinary 1Q-0.3(4.4%)

Weak yen-0.7

Excluding weak yen impact

18.7%

17.9%
21.0%

+3.3pt+1.3pt1.5(Operation)(Special cause)-0.8-0.7

1Q
FY22/3
3© NEC Networks & System Integration Corporation 2022(2.2%)
15.4%+1.0pt

14.4%

1Q
23/3

FY20/3+0.9pt

19.7%
18.8%

FY21/3

FY22/3

1Q

FY23/3

FY20/3

FY21/3

FY22/3

2~4Q (9M)1Q FY2023/3 Orders Received by Segment(¥ Bn.)

84.4

83.7

GIGAschool：4.0DXS

33.0

29.9

80.7

-4%

26.9-10%▐ DX Solutions (DXS)⚫ Decreased due to reactionary fall of large
PJs of previous 1Q and postponement of PJs
because of unclear business environment▐ Network Solutions (NWS)
20.1

21.0

21.5

+2%

ESS

28.4

31.2

29.7

-5%Others

2.8

1.6

2.7

1Q
FY21/3

1Q
FY22/3

1Q
FY23/3

NWS
GIGAschool：2.04© NEC Networks & System Integration Corporation 2022

⚫ Increased driven by local 5G, withreactionary fall of a large order of previous
1Q from a telecom carriers (-2.0), orders
received▐ Environmental & SocialSolutions(ESS)⚫ Decreased as large PJs of this FY areconcentrated in 2Q and after※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

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

DXS

NWS

67.4

67.7

67.6-0%▐ DX Solutions (DXS)

26.0

24.8

24.7-0%▐ Network Solutions (NWS)

15.1

17.4-5%

16.5⚫ Services sales increased (+11%)⚫ There were impact of S/C and materials
shortage▐ Environmental & Social

Solutions(ESS)

＋6%

ESS

23.2

22.9

24.2

Others

3.1

2.6

2.1

1Q
FY21/3

1Q
FY22/3

1Q
FY23/35© NEC Networks & System Integration Corporation 2022

⚫ Increased by sales from abundant backlogs with negative impact of S/C andmaterials shortage
・Construction sales increased※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

1Q FY2023/3 Operating Income by Segment(¥ Bn.)

3.0▐ DX Solutions (DXS)(4.4％)

1.5

1.0(1.5％)(2.2％)▐ Network Solutions (NWS)(11.7％)

2.0(7.9％)

0.9

NWSESS

(5.9％)

Others/1.4(8.1％)

0.5

0.1(0.4％)(2.3％)-2.0-1.9

eliminations

1Q
FY21/36(-2.2pt)

2.9

2.3DXS-1.5

1Q
FY22/3© NEC Networks & System Integration Corporation 2022

⚫ There were reactionary impact of concentrated
high profitability PJs in previous 1Q andproactive cost increase-0.6(9.2％)(-2.5pt)

1.0-0.4(6.3％)

0.4(-1.8pt)-0.1(1.6％)(-0.7pt)

-2.2

-0.3

1Q
FY23/3⚫ Although sales decrease and proactive cost
increase depressed operating income, grossmargin improved▐ Environmental & SocialSolutions(ESS)⚫ Rapid change in exchange rate pushed
down the profit but gross margin without
this impact improved▐ Others/elimination⚫ Cost for HQ relocation increased※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

1Q FY2023/3 Gross Margin by Segment

1Q
FY22/3DX Solutions

7

※

22.6%

Network Solutions

20.7%

Environmantal & Social Solutions

15.0%

Company total

18.7%© NEC Networks & System Integration Corporation 2022

1Q
FY23/3※Change

21.0%-1.6pt21.4%+0.7pt13.9%-1.1pt17.9%-0.8pt※※FY22/3: High profitability PJsconcentrated in 1Q
FY23/3: Weak yen※ FY23/3: Weak yen※Segment information for FY21/3 & FY22/3 has been reclassified numbers to reflect the segment change in April 2022.

*Forecasts as at July 28, 2022

FY2023/3 Forecasts(¥ Bn.)

1H FY23/3
forecast

ChangeAlthough negative impact ofweak yen exceed expectation,
we aim at initial forecasts

Orders received

173+4%

350+4%Net sales

147+4%

330+6%⚫ Certain acquisition of large PJs concentrated
in 2Q and after

Operating income

7.7+0.1

26.0+2.8⚫ Price pass-through of weak yen impact⚫ Profitability improvement through higher
value-added service/more efficient operationwith DX(to sales)

5.2%-0.2pt7.9%+0.4pt

Net income

4.8

+0.1

15.3

+0.3

3.3%

0.0pt

4.6%

-0.2ptattributable to owners of the parent(to sales)
8Change

FY23/3forecast© NEC Networks & System Integration Corporation 2022

⚫ Reduction of nonurgent cost*Forecasts as at July 28, 2022

1H FY2023/3 Revised Forecasts by Segment

Revised segment forecasts considering the 1Q progress and impact of weak yen
Orders received¥ Bn.

DXSNWS

173±063-3

173
60

4343Net sales
147
DSX55

NWS±0-2

Operating income※( ) to sales

14753

393966

Others1
1H FY23/3e
Previous

9+366

ESS524Others

1

1H FY23/3e
Revised© NEC Networks & System Integration Corporation 2022

1H FY23/3e
Previous

52+23

1H FY23/3e
Revised±0.0

6.2-0.5(5.2％)

DXS
NWS

(11.3％)

4.0

5.7(10.3％)-0.3

Others/-5.6
elimination+0.8

1H FY23/3e
Previous(5.2％)

4.0(10.3％)(6.0％)

7.7(10.8％)

3.1

ESSESS

7.7

2.8(5.4％)-4.8

1H FY23/3e
RevisedTopics 1: In-building Network Solution
In-building network by carrier/local 5G x DAS-Collaboration with HFR, Inc. of South Korea
to support 5G area expansion with DAS technologies<Image of infrastructure-sharing>
WiFi-level reasonable priceFlexible area design

One antenna can control
plural carriers’ frequency
bands

Local 5G core network/
network of each carrier
DAS：Distributed Antenna System
10Smart building-Integrated system provision from core networks
to base stations using knowhow of carrier business-Local 5G x DX services (Working-style innovation)

DAS© NEC Networks & System Integration Corporation 2022

<NESIC business areas>

Infrastructure-sharing-Acquiring increasing infrastructure-sharing demand
supporting carrier 5G networks development forclosed space* Responding to cost reduction needs of mobile carriers

Topics 2: Adoption to Major ESG Indexes－ Global ESG Index －Aiming at corporate valueenhancement through sustainablemanagement
Integration of financial and non-financial value－ ESG Index of GPIF－
Newly adoption following FTSE Blossom Japan Sector Relative Index, MSCI Japan
Empowering Women (WIN) Select Index, S&P/JPX Carbon Efficient Index-New medium-term management plan
incorporating non-financial targets

Enhancement of sustainability management system- Sustainability Management Committee- Carbon Neutral Promotion Div.
Old

3.2
113.6

3.9

3.2

FTSE ESG rating

ENewS
3.0

G

4.1

© NEC Networks & System Integration Corporation 2022

3.0

4.0

ESG disclosure-Announced to support TCFD recommendations& started the info. disclosure based on TCFD frameworks-Enhancing disclosure by web and integrated report

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

12© NEC Networks & System Integration Corporation 2022

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.

13© NEC Networks & System Integration Corporation 2022NEC Networks & System Integration Corporation will be committed to increasing
customer value by redesigning future communications from the user's perspective.

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