NEC : Mid-term Management Plan 2025 (524KB)


NEC’s Business Model

Mid-term Management Plan 2025

Achievement of NEC’s “Purpose”-A Combination of Strategy and Culture

The NEC Group has formulated the Mid-term Management Plan 2025, which concludes in fiscal 2026, with the aim of realizing the NEC 2030VISION and NEC’s “Purpose” set within the NEC Way. This Purpose calls for a combination of strategy and culture, and therefore the Mid-term Management Plan 2025 promotes Purpose-driven Management with indicators set for strategy- and culture-based targets.

Strategy: We will achieve growth through acceleration of global growth and transformation of domestic businesses by providing customer value through NEC technology. In financial terms, our financial strategy is integrated with our business strategy, with the first priority being to maximize long-term profit, followed by optimizing short-term profit.

Culture: We believe that our cultural strength is the strength of people to implement our strategies and realize our Purpose. We aim to transform ourselves into a company that pursues innovation and brings together diverse people under the NEC Way-the NEC Group’s common set of values that form the basis for how the Group conducts itself.




EBITDA Growth Rate: 9% annual average

50% Engagement Score



Accelerate global growth and business transformation in

Transform into a company that pursues innovation and

Japan by leveraging strengths in technology, “Maximizing

brings together diverse people under the NEC Way

long-term profit” and “Optimizing short-term profit”

(Common values): “Employer of Choice”

Mid-term Management Targets

FY2021 Results

FY2022 Results

(Billions of yen)

FY2026 Targets





(Growth rate from FY2021)



Adjusted operating profit




(Percentage of revenue)




Adjusted net profit




(Percentage of revenue)








(Percentage of revenue)








*1 EBITDA = Gross profit – SG&A expenses + Depreciation/Amortization

*2 ROIC = (Unadjusted operating income – Deemed corporate tax [30.5%]÷Term-endinterest-bearing debt + Term-end net assets [including minority interest]

NEC Integrated Report 2022


Achieve Earnings Growth through Both Growth Businesses and Base Businesses

Growth businesses are classified as Digital Government/Digital Finance, global 5G, core DX, and future growth businesses, whereas base businesses are all other businesses.

In growth businesses, the NEC Group will prioritize the allocation of resources in order to acquire and strengthen its competitive advantage, with the aim of driving growth in revenue and profits.

In base businesses, given the cautious business environment, the focus will be on improving profitability and aiming to steadily increase profits.

Digital Government /

• Transform into a top-class vertical SaaS vendor in the global DG/DF market



Digital Finance

Global 5G business

• Aim for 20% market share in the Open RAN market in 2030, including expansion in



the Japanese market from primarily a base station hardware provider to a full soft-

ware and hardware solutions provider

• Expand our value proposition through a comprehensive approach encompassing

consulting to delivery

• Implement price strategy and improve gross profit through common ICT platform


Core DX business

technologies and offerings



• Strengthen competitiveness through hybrid IT (Cloud/DC/On-Premises) alliances



and in-house optimization

• Create new business opportunities (social, enterprise transformation). Expand the

DX domain by leveraging the implementation capabilities of technology/policy

linkage/end to end

Future growth businesses

• Create growth businesses that will realize the NEC 2030VISION with strong tech-



nologies and inbound innovation

Base businesses

• Maintain profitability above our competitors for our high- and medium-profit base




Maximizing long-term

• Improve profitability by establishing a monitoring system for low-profit businesses


• Use continuously generated cash flow to fund sustainable growth and enhance



profit and Optimizing

corporate value through optimal capital allocation and by building robust finan-


short-term profit

cial and non-financial measurement methodologies


Transformation of culture

• Transform our people and culture

• Establish business infrastructure



and how we work

• Create a shared vision for a brighter future


Adjusted Operating Profit

3,500.0 billion yen

300.0 billion yen



ratio of growth

Adjusted OP ratio


ratio of growth







Adjusted OP ratio





Adjusted OP ratio

Global 5G


Core DX

Future growth businesses






Adjusted OP ratio






* Excluding “one-time profit/loss” in the statement of profit or loss


NEC’s Business Model

Mid-term Management Plan 2025

Digital Government and Digital Finance Business

Digital governments (and digital municipalities) make full use of IT in all areas of administration to increase convenience and reduce the burden on citizens and companies. They achieve this by simplifying and streamlining administrative processes. Digitalization promotes collaboration and integration between various industries, but collaboration between government and financial institutions is expected to lead the way in this regard. In several European countries, digital IDs are already being used for authentication, identity verification, and as a link between government and financial institutions for assessing eligibility for various services. There are also new innovations emerging based around digital tokens, a form of independently issued digital currency. For example, verification trials in the U.K. are underway for the use of blockchain technology to conduct transactions and manage registration in real estate. The market for digital finance is also expected to grow over the long term as the use of digital technology becomes more widespread and a growing group of users utilize this technology to receive advanced asset management advice and conduct asset transactions.

NEC’s Digital Government and Digital Finance Business

Government systems operate for long periods of time and need to be reliable, and this task is not possible without a company that can fulfill its social responsibilities. NEC has a long track record of contributions to mission-critical social infrastructure, and has offered protection to Japan in the handling of sensitive data without any major issues. On the global front, we have developed a business that draws upon the strength of our biometrics to provide solutions related to public safety. In addition, the acquisition of NEC Software Solutions UK-hereinafter SWS (formerly Northgate Public Services [UK] Limited)-and KMD Holding A/S (KMD) has enabled us to conduct business

NEC Integrated Report 2022


Business Conditions

Mid-term Targets: Adjusted Operating Profit

and Adjusted Operating Profit Ratio

Key Achievements in Fiscal 2022

(Billions of yen)



• Acquired new projects thanks to synergies created between


Avaloq and local NEC subsidiaries in Asia


• Improved efficiency in development by utilizing offshore bases

in India

• Completed post-merger integration for Avaloq and conducted



bolt-on M&As for SWS


OP ratio


Acquired companies



Business Opportunities and Key Measures for the Medium to Long Term

that involves converting their know-how into software for customers in the public sector, which also includes functions related to public safety. We have also acquired Swiss company Avaloq Group AG (Avaloq) in order to enter the digital finance field, with the expectation that this entry will generate synergies with digital government. We are working to expand and develop business by taking advantage of the global embrace of DX. In addition, we are making a shift toward a software as a service (SaaS)-based business model.

1. Accelerate global development

London-based SWS has already expanded into Commonwealth nations such as Australia and New Zealand, with the intention to strengthen its presence in these areas

2. Transform our business model

We believe it is important to continue investingin our key business areas while making SaaS business a larger proportion of NEC’s business. We are planning to achieve a com-

3. Streamline development and operations

We are pursuing cost synergies and increasing the competitiveness of our software through the selection, concentration, and

Our Three Acquisitions

NEC Software Solutions UK (SWS) (formerly Northgate Public Services) SWS is an IT services company based in the United Kingdom. The company features a strong customer base and a shared business platform that can be used for a variety of sectors, including policing, tax collec- tion, social security benefits, and public housing management.

KMD Holding A/S (KMD)

KMD is Denmark’s largest IT company with a strong customer base, wide-ranging platforms, solutions for both financial and insurance sectors, and a proven track record in user experience and analytics, all of which it has leveraged to support digitalization of the government.


The growth of Swiss company Avaloq is partially driven by recurring business from provision of software via a SaaS-based business model. The company holds the top market share in wealth management software in Europe and ranks second in Asia Pacific.

going forward. KMD is currently expanding in Europe and is also working with NEC to enter the Asia Pacific region and Japan. Avaloq, which is headquartered in Switzerland, is offering solutions to Japanese customers while also looking to expand into the United States. Regarding digital IDs and DX, we have highlighted the U.S., Singapore, and Latin America as Centers of Excellence

in our effort to deploy NEC’s solutions

bined net sales of ¥169.5 billion in fiscal 2023 for SWS, KMD, and Avaloq. Software under the SaaS business model is expected to account for 77% of this result, but we intend to raise this ratio to 80% or higher by the end of fiscal 2026. At the same time, we will use bolt-on M&As to expand our business domains and customer base. We will also work to maximize our return on investment (ROI) by withdrawing from low-profit busi-

mutual utilization of assets. Outsourcing work offshore is particularly important when it comes to software development. SWS, KMD, and Avaloq have a combined workforce of approximately 9,000 employees, 3,800 of whom work in development, with 40% of the personnel located offshore or nearshore. We intend to increase the ratio to 55% over the period of the Mid-term Management Plan 2025, which will increase operating profit by

NEC has referenced its connections in leading coun-

Business Expansion Driven by Our Three Platforms

nesses and reorganizing our business portfolio.

between ¥5.0 billion to ¥6.0 billion over the course of the plan.

tries that have embraced digitalization to expand its software platforms globally. This expansion hinges on three software platforms rooted in common business, analysis, and data. In addition to these efforts, NEC possesses superior technology utilized in products related to analytics (NEC the WISE), biometrics (Bio-IDiom), and the blockchain, and works to enhance these products. Even further, it has built up trust over the course of many years spent sup-

Establish reference

points in leading countries,

then expand globally

Shared Business Share business functions that can

Platform be used across different sectors

Public Safety


Digital Finance


IDs Citizen

licenses Driver’s


justice and security, public Policing,

institutions Educational

housing Public


agencies Administrative

management asset financial and Banking



leasing and Financing

Service a as Banking

NEC Software Solutions UK

porting businesses run by local government and central agencies, plus a wealth of experience and resources related to the stable migration of sys tems, an important process for digitalization. Put together, this comprehensive set of capabilities is NEC’s true strength today.

Perform data


analysis and future




Collect and

Data Utilization

Data Platform

integrate data


Commonwealth nations

Digital IDs and DX



KMD (Denmark)

Europe, Asia Pacific, Japan


Digital IDs and DX

Avaloq (Switzerland)

Digital IDs and DX


Europe, Asia Pacific,

Business Opportunities

• Increased demand to reduce administrative work, to improve convenience, and to simplify and streamline operations

• Collaboration and integration between a variety of industries, such as government and finance

• Growing group of users utilizing digital technology to receive advanced asset management advice and conduct asset transactions

NEC’s Strengths

• Trust and a track record built up from many years of supporting businesses run by local government and central government agencies

• Superior technology and products related to biometrics, the blockchain, etc.

• Customer bases in countries with developed digital governments


• Expected synergies may fail to materialize, hindering profitability

• Market factors could lead to delays in establishing digital governments and finance

Japan, U.S.

New Zealand

Digital IDs and DX

Centers of Excellence (CoE):

U.S., Singapore, Latin America


NEC’s Business Model

Mid-term Management Plan 2025

Global 5G Business

In recent years, network connections have gone beyond the scope of smartphones and computers to include a variety of sensors, smart meters, home appliances, automobiles, medical devices, and other items. This shift has increased the number of domains that utilize data to a considerable degree and has made it possible to perform analysis, detection, and operation in real time. The technological development of 5G has been promoted globally as a means to provide a wireless communication standard that can handle this boom in IoT business in a way that 4G cannot. Commercial 5G service has the potential to dramatically change both business and social environments. Telecom carriers will play an important role in making sure that 5G is a reliable form of infrastructure that can support society at its core.

Traditionally, carriers have procured a complete set of telecommunications equipment from a single vendor. However, the establishment of various rules and standards related to base stations and their shift to open systems, coupled with improvements in hardware performance, have enabled global implementation of Open RAN, which makes it possible to procure equipment from multiple suppliers. Mobile operators have a strong desire to increase competitiveness and operate more efficiently by increasing the choice of telecommunications equipment, and therefore welcome the idea of more suppliers. At the same time, Open RAN comes with its own challenges. For instance, procuring telecommunications equipment from multiple suppliers could complicate systems, which raises the question of the real feasibility of cost reductions.

Globally, the overall RAN market is valued at roughly ¥3.5 trillion to ¥4.0 trillion. Over the period of 2022 to 2025, Open RAN is expected to grow within this market at an annual rate of 30% or higher, exceeding ¥1.0 trillion in 2025. With expectations on the rise, 85% of major telecom carriers have indicated their intention to adopt Open RAN in the future.

NEC Integrated Report 2022


Business Conditions

Mid-term Targets: Adjusted Operating Profit

Key Achievements in Fiscal 2022

and Adjusted Operating Profit Ratio

• Shipped commercial Open RAN equipment, put equipment

(Billions of yen)


into use, and had our mobile core software selected as part

of the full-scale launch of commercial 5G networks with

domestic carriers

• Selected as a vendor by top European carriers based on


evaluations of domestic performance


• Conducted 16 Open RAN trials, mainly in Europe, the U.S., and

India, as well as other countries

• More than 30 business negotiations ongoing in Japan, Europe,



the U.S., India, and other countries


*1 Above figures do not include NetCracker Technology Corporation.

OP ratio



*2 Excluding strategic expenses, operating profit ratio above segment (Network Services) level

Business Opportunities and Key Measures for the Medium to Long Term

Trend in the Global Base Station Market













Traditional RAN

Open RAN

Source:NEC estimates based on various market reports

Status of Open RAN Development



Will not introduce

In operation

Open RAN to

More complicated

Open RAN 15%

commercially 4%

85% planning

In procurement


systems due to

stage 9%




Possess an



Open RAN lab

with 48%


flexibility in vendor

Potential inability


taking specific



Open RAN


Interest in

of new systems

strategy 38%

trials 24%

to reduce total

Source: Mobile World Live, industry survey on Open RAN

potential cost

cost of ownership




1. Focus on customers that support

Open RAN to expand market

NEC’s Global 5G Business

We intend to open the door to Open RAN projects and build a track record of results by strengthening our relationships with telecom carriers that are taking active steps to introduce Open RAN. Working together with customers and other vendors will help invigorate this market while helping us develop and expand the reach of our products. This will allow us to provide precise solutions that meet the expectations of our customers. We will also enhance our verification system and other relevant systems in global operation in order to ensure a rapid response

2. Expand 5G portfolio beyond

hardware to include software

and develop a recurring

business model

3. Establish a global 5G business


to customers.

Traditionally, NEC has focused on providing fixed-line and wireless telecommunications equipment for telecom carriers, operation support system (OSS) software for equipment management, business support system (BSS) software for customer support, and service platforms for end-users. We have captured the top position in Japan in the 5G market due to the wider range of solutions we offer compared to our competitors; our results, which show our ability to respond to customer needs; the robust nature of our products and solutions; and our track record of working with telecom carriers and industrial partners to create 5G use cases. Similarly, we are able to ensure that Open RAN 5G can function as a mission-critical solution that meets customer needs, and watch over the integration of Open RAN 5G into customer systems, a process that we consider to be our responsibility. This will make it possible to guarantee services under a multi-vendor system, as opposed to services dependent solely on NEC products. In terms of developing products for the global market, we have leveraged our track record

We are expanding our 5G portfolio to includesoftware in the areas of central and distributed units (CUs/DUs), 5th generation core networks (5GC), and service management and orchestration (SMO). We also consider it our responsibility to provide system integration (SI) services as part of our effort to offer an optimal solutions package. In addi- tion, NEC’s virtualization software technology will expand the domains where our general- purpose hardware can be utilized, which will make it possible to reduce costs while increasing trust with customers. These efforts will help achieve a shift toward a more software-focused business and higher profit margins.

In Japan, we are working to implement development and quality control for both infrastructure-related products that take full advantage of 5G’s capabilities, and for advanced functions such as AI and machine learning that are set to become core technologies in the future. In addition, we are building a system for global development and production related to the Internet of Things (IoT) that can also be utilized by partners. This system is primarily being developed in India for the country’s cost competitiveness and is aimed at IoT for use in production and ensuring connectivity. First, we will select and focus on customer bases in North America and Europe where Open RAN is being actively promoted, and expand from there. Establishing a system for promoting Open RAN early on and providing services to a large number of customers will help us secure a position as a key Open RAN vendor.

Expand Portfolio

HW = Hardware

Measures to Expand and Develop Portfolio

SW = Software


• Establish operational support systems for mobile networks


(Service Management and Orchestration)

• Streamline and automate operations

in domestic business related to 5G with global-oriented companies such as NTT Corporation and Rakuten Mobile, Inc. To address rapidly increasing communication traffic and expand business opportunities, we need to increase the

operational efficiency of network equipment and both introduce and manage services with greater speed and efficiency. As a result, OSS and BSS have become increasingly important. Therefore, we are working with Netcracker Technology Corporation, which we acquired in 2008, utilizing its vast customer base and track record of implementing OSS and BSS to help leverage its products and others to conduct business in the global market.

Business Opportunities

NEC’s Strengths


• Commercialization of 5G services, with the potential to

• Track record of providing a wide range of solutions, ranging

• Market regulations and changes in

dramatically change both business and social

from access to core and IT services

the macro environment may delay


• No. 1 in Japan in terms of ability to respond to customers,

the introduction of 5G services

• Increased demand for Open RAN from mobile operators

reliability, and performance

• Efforts to introduce 5G in existing

• Increased demand for OSS and BSS

• Ownership of Netcracker, which possesses a vast customer

commercial projects may fail

base and a track record of implementing OSS and BSS



(5th Generation Core network)



(Radio Access Network System Integration)



(Central Unit/Distributed Unit)



(Open Radio Unit)

  • Create open, virtualized mobile core software to enable flexible services
  • Create Open RAN ecosystems assembled with NEC and partners’ products
  • Ensure safe and secure mission-critical systems
  • Create open, virtualized radio intelligent control software
  • Support a wide range of radio units (RUs) through the combination of NEC and partner products
  • Establish Open RAN radio units (O-RUs) for Massive Multiple Input Multiple Output (M-MIMO) in order to utilize features of 5G
  • Utilize partners to expand portfolio


NEC’s Business Model

Mid-term Management Plan 2025

Core DX Business

The conditions that affect society and companies change with each passing day, becoming increasingly complex and uncertain. This situation has made digital transformation (DX) increasingly important. DX is defined as “the process by which companies respond to rapid changes in business, using data and digital technology to transform their products, services, and business models based on the needs of customers and society, as well as to transform the business itself, the organization, processes,

NEC Integrated Report 2022


Business Conditions

Mid-term Targets: Adjusted Operating Profit

and Adjusted Operating Profit Ratio

(Billions of yen)


Key Achievements in Fiscal 2022

and corporate culture to establish a competitive advantage.” Recent years have seen DX permeate society and companies at an accelerated pace. This is due to changing business conditions, such as the rapid rise in collaboration between industries and active restructuring efforts across industries, as well as the evolution of technologies such as AI, IoT, and

5G networks. In addition, there is an increasing demand for end-to-end solutions that range from consulting to delivery. Framed in terms of seizing the future together, it is imperative that we present clearly what changes these technologies are supposed to elicit from society, how data is to be held and utilized, and how the systems we propose are crucial to this process. Moreover, we must include the negatives alongside the positives. Now, more than ever, we need to put forth an image of the future from the user’s perspective and outline what we need to do to make that image a reality.





OP ratio



  • Leveraged collaborations with hyperscalers to gain a competitive edge in cloud-related business
  • Launched a strategic partnership program in anticipation of acquiring large projects
  • Acquired large projects through collaboration with ABeam Consulting

NEC’s Core DX Business

NEC’s strengths lie in its efficient R&D and its high-quality implementation capabilities, which it has used to help develop social infrastructure and network platforms in Japan for many years. All of NEC’s businesses are tied to DX in some way, so

Business Opportunities and Key Measures for the Medium to Long Term

we naturally have a track record of providing DX solutions to customers in a wide range of industries. In addition, NEC utilizes itself as a testing ground to promote DX. This practice has a dual purpose. First, using our DX initiatives in-house increases competitiveness as a company, which means that, second, we become a powerful use case that we can show customers the efficacy of our cutting-edge offerings. In February 2021, NEC was named as a DX-certified operator by the Ministry of Economy, Trade and Industry, in recognition of its overall commitment to DX as shown in its vision, business strategy, and systems-making it the first company in the electronics industry to receive such certification. Now NEC is working to further enhance its human resources while increasing coordination with its powerful delivery capabilities.

These efforts include working with one of its Group companies, ABeam Consulting Ltd., one of the top consulting firms in Japan in terms of the number of consultants and sales, and establishing its own strategic consulting division.

Menu of DX Offerings

1. Provide value via a comprehensive approach encompassing consulting to delivery

This strategy relies on a combination of the upstream consulting strength of ABeam Consulting, which operates on a domestic scale of approximately 5,000 consultants, enhancing NEC’s own consultants through its DX personnel development program and utilizing these people in tandem with NEC’s robust delivery capabilities. These one-stop services will help us support DX for society and companies. Moreover, this strategy will allow us to provide support across the entire life cycle of a customer, beginning with strategic consulting for customers, and thereby widening the scope in which we can generate value.

  • For more details on the development of DX personnel, please refer to page 49.

2. Develop and establish common ICT platform technologies and standardized offerings

We will transition from solutions that were previously optimized individually by industry and customer toward a business that is optimized overall, driven by a common platform in the form of NEC’s digital platform. This will enable us to provide value to our customers with a sense of speed. Our plan is to create a platform using NEC technology that will effectively facilitate DX for both companies and society with the idea that repeated usage will reduce costs. We also aim to improve price competitiveness by standardizing our solution offerings and setting prices based on value provided.

DX Goals

DX Offerings for All Industries


DX Offerings by Industry

Creating Innovation

Creating New Market and



Social and

Business Opportunities

Client Contact

Client Experience Reform

Value Chain


Safer Cities

Lifestyle DX

Industrial DX




Logistics &



Supply Chain Reforms





Smart Cities







Operational Automation


3. Increase competitiveness through hybrid IT

We intend to increase competitiveness by creating a hybrid IT environment through an optimal combination of cloud, data center, and on-site functions. This IT environment will be optimized to meet individual needs through the combination of NEC’s own high-securitymulti-cloud and global strategic collaborations with AWS (Amazon) and Azure (Microsoft).

4. Lead the shift in society with DX

We will coordinate with government policy and utilize NEC’s technol-ogies, such as biometrics and AI, as well as our end-to-end implementation to support projects that will transform society. These projects involve the steady promotion of DX in domestic governments spurred on by the creation of the Japanese government’s Digital Agency, construction of super cities, and infrastructure-­ coordinated mobility.





Logistics &



Operation Reforms



Retail CX




Workstyle Reforms /

Hotel / Leisure /



Public Safety /


New Workstyles

Real Estate

(Social Value)

Transportation Disaster Prevention


Establishing Digital Trust







Human Capital /

Organization /

Digital Finance

Public Safety

Capital /

Venue CX





Talent to Support Digital Shift


Strengthening DX

AI & Use of Data





Supporting DX

Cloud Services

Biometrics / Video Analysis


Business Opportunities

NEC’s Strengths


• Increased importance of DX

• Efficient R&D

• A shortage of DX personnel that could

• Increased demand for end-to-end solutions that

• High-quality implementation capabilities and a strong

lead to sluggish earnings growth

range from consulting to delivery

track record

• Abundance of resources, including the human resources

and foundation provided by ABeam Consulting and

in-house strategic consulting division

Consulting – Overall Design – Area Selection for Digitalization

Technology Design – Implementation –

Strategic Consultants


Data Scientists






(Strategy / Industry / Process / Technology)

ABeam’s Consulting Capabilities


Domestic: Approx. 5,000 professionals

Overseas: Approx. 1,000 professionals


Consultant training



Maintenance /




scale SI



BPO capabilities

Rich pool of talent to support the NEC Group’s end-to-end execution capabilities

Approx. 200

Approx. 20,000

Approx. 25,000

Approx. 2,600


maintenance /

DX strategic consultants

IT consultants / SEs


facility personnel


NEC’s Business Model

Mid-term Management Plan 2025

Creation of Future Growth Businesses

Looking to the future, the Mid-term Management Plan

Accelerating commercialization by integrating R&D

2025 also calls for the creation of future growth businesses,

and business development

in addition to digital governments, digital finance, 5G, and

Disruptive technologies

core DX. NEC’s disruptive technology stands to upend the

• Unique technologies that could disrupt current business

mainstream technologies of the current day. It is the basis

models (privacy-preserving data analytics)

of our efforts to create new businesses, and we will work

• Defense technologies (quantum cryptography, laser

communication, etc.)

with forward-looking customers in Japan and overseas and

Inbound innovation

research institutions in Japan and abroad to commercialize

• Overseas business models and industry-specificknow-how

the technology, applying the business development know-

• Collaboration with advanced customers, research institutions,

how we have cultivated in recent years. Our target business

and venture capitalists

areas align with the layers of the NEC 2030VISION: envi-

New business development know-how

ronment, society, and life.

• dotData, AI-based drug discovery, and other new business

development achievements

We plan to create growth businesses that will help

• Business development methods*1 utilizing internal and

realize the NEC 2030VISION, using our highly capable

external capital

technology, overseas business models abroad, industry

*1 Carve-out, M&A, spin-in/spin-out, crowdfunding

know-how, and collaborations with research institutions

and venture capitalists as starting points.

Specific examples of initiatives: 1) Healthcare and life-related businesses; FY2031 NEC healthcare business value (forecast): ¥500.0 billion*2

NEC Integrated Report 2022


Base Businesses

To improve the profitability of our base businesses, we have set a hurdle rate for operating profit ratio and divided the businesses into categories. We are using this rate to conduct a Group analysis, after which we will clarify policies in response to the analysis and formulate individual plans accordingly.

For medium- and high-profit businesses, we will select benchmark companies and strive to overtake them in terms of operating profit ratio. As for low-profit businesses, we have formulated individual turnaround plans aimed at improving profitability. We are monitoring progress of these plans, taking resources from businesses that do not achieve their objec- tives, allocating them to key areas, and taking appropriate action in cases where recovering profitability is deemed unlikely. In fiscal 2022, we began this monitoring under the leadership of the CFO, and our adjusted operating profit ratio has since increased 2.6%. In fiscal 2023, we plan to ramp up these activities and optimize our business structure with actions that include downsizing some businesses and shifting resources, and we expect that our adjusted operating profit ratio will increase by more than 1% compared with fiscal 2022 as a result.

With these measures, we expect to reap the benefits of our improvement plan, complete the review of our business portfolio, and raise profitability up to our target level by fiscal 2026.

Adjusted OP Ratio

High-, medium-


Goals for

profit business



High-, medium-






profit business



Deliver healthcare tailored to people’s health conditions

Leverage electronic medical records and ordering system

Support personalized healthcare with

AI-based analysis of endoscopic images; sales launch in Japan and Europe

Monitoring and provision of advice based on gait conditions from insoles equipped with gait analysis

Start of clinical trials on personalized neoantigen

Electronic medical records and ordering system

Visualization of health conditions and disease risks from minimal blood protein

Design of vaccines against the novel coronavirus

Living Life to the


  • Overcome diseases
  • Prevent illness
  • Lack of want
  • Mental and physical wellness

Healthcare industry:

33.0 trillion yen*3



Results for





Results for












(Billions of yen)

Low-profit Business Monitoring System

*2 Calculated using both the comparable company method and the DCF method based on a target for 2030 (sales revenue of ¥100.0 billion)

*3 Source: Future Direction of the Next Generation Healthcare Industry Council (published by the Ministry of Economy, Trade and Industry, 2018). Market size is an estimate of the Japanese market in 2025.

Setting of hurdle rate Formulation of turnaround plan


Improved adjusted operating profit ratio as a result of thorough

NEC’s Recent Efforts in the AI Drug Discovery Business

April 2022

• CEPI*4 partners with Japan’s NEC Group to develop artificial intelligence-designed broadly protective betacoronavirus vaccine.


For more information on AI drug development, please refer to page 45.

*4 Coalition for Epidemic Preparedness Innovations

• NEC and Shionogi & Co., Ltd. enter into strategic research collaboration for novel hepatitis B therapeutic vaccine.

November 2021 NEC and Transgene announce positive preliminary data from Phase I studies of a novel individualized cancer vaccine, jointly developed using NEC’s AI-driven neoantigen prediction system.

Specific examples of initiatives: 2) Businesses related to carbon neutrality

  • For more information on our businesses related to carbon neutrality, please refer to “2. Increase Contributions through Businesses” on page 57.





Reaping of benefits

from our results

Implementation of investments to carry out plans

Review of business portfolio Exit/Resource allocation from underper- forming business to key segments

End of FY2026

Achievement of target levels

monitoring led by CFO Transferred shares of NEC Energy Solutions

Initiatives in FY2023

Ramp up efforts to optimize business structure, including downsizing some businesses and shifting resources

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NEC Corporation published this content on 14 December 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 December 2022 08:25:01 UTC.

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Yield 2023 2,33%
Capitalization 1 276 B
9 337 M
9 337 M
EV / Sales 2023 0,45x
EV / Sales 2024 0,40x
Nbr of Employees 117 418

Duration :

Period :

NEC Corporation Technical Analysis Chart | MarketScreener

Technical analysis trends NEC CORPORATION

Short Term Mid-Term Long Term
Trends Bearish Bearish Neutral

Income Statement Evolution



Mean consensus BUY
Number of Analysts 13
Last Close Price 4 720,00 JPY
Average target price 6 470,00 JPY
Spread / Average Target 37,1%


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