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NEC Posts Q3 Results

NEC institutes some 'fundamental business structural reforms' as sales fall 5% from the previous year to ¥1.068 trillion (US$8.96B)

January 30, 2003

3 Min Read

TOKYO -- NEC's consolidated net sales for the three months ended December 31, 2002 were 1,068.2 billion yen, a decrease of 56.7 billion yen (or 5%) as compared with the corresponding period of the previous fiscal year. Despite steady growth in sales for systems integration ("SI") services in Japan and for semiconductors, market conditions were weak in the area of hardware related businesses including network infrastructure equipment and mobile handsets. As a result of restructuring measures implemented in the previous fiscal year that effectively reduced fixed expenses and promoted cost reductions, NEC improved the ratio of the cost of sales and selling, general and administrative expenses as against net sales by 6.0 % and 1.9 % respectively as compared with the corresponding period of the previous fiscal year. In spite of a decrease in net sales, NEC recorded a consolidated operating income of 23.2 billion yen (an improvement of 87.5 billion yen as compared with the corresponding period of the previous fiscal year) and an income before income taxes of 2.1 billion yen (an improvement of 255.2 billion yen as compared with the corresponding period of the previous fiscal year). However, NEC posted a net loss of 4.5 billion yen (an improvement of 150.5 billion yen as compared with the corresponding period of the previous fiscal year), mainly due to equity in losses of affiliated companies of 6.2 billion yen (an improvement of 2.3 billion yen as compared with the corresponding period of the previous fiscal year) as a result of poor operating results of semiconductor companies.NEC Networks
Sales: 337.9 billion yen (-20%)
Segment profit: 7.4 billion yen (+6.9 billion yen) Sales for NEC Networks decreased by 20% to 337.9 billion yen as compared with the corresponding period of the previous fiscal year. Sales by main product areas were as follows: In the area of network infrastructure, sales decreased by 28% to 176.6 billion yen mainly due to a decrease in shipments of network infrastructure equipment caused by the continued deterioration of the global telecommunications market. Sales for mobile handsets also decreased by 23% to 110.0 billion yen due to a decrease in domestic mobile handset shipments which had been very favorable in the corresponding period of the previous fiscal year. This decrease was largely influenced by the slowdown in the growth of new mobile handset subscribers in Japan. In the area of others, sales increased by 54% to 51.3 billion yen due to an increase in shipments of equipment for domestic airborne signal digital broadcasting over the corresponding period of the previous fiscal year. In spite of a large decrease in overall sales and a very severe business environment, NEC Networks posted a segment profit of 7.4 billion yen, an increase of 6.9 billion yen as compared to the corresponding period of the previous fiscal year. This was due to the effective restructuring measures, including reduction of fixed expenses and costs, which had been implemented since the previous fiscal year.NEC Corp.

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