NEC (6701) Investor Day 2024 summary

Progress and targets for IT Services segment

• IT Services segment exceeded initial forecasts in FY March 2024, with sales of JPY 1.914 trillion and adjusted operating profit of JPY 184.1 billion, achieving a 9.6% margin.

• FY March 2026 targets were raised to JPY 2 trillion in revenue and JPY 220 billion in adjusted operating profit, with an 11% margin.

• Domestic IT business saw significant growth, driven by BluStellar and improved profitability, targeting JPY 1.69 trillion in revenue and 10.9% margin by March 2026.

• International IT business expects profitability improvements, aiming for JPY 310 billion in sales and 11.6% margin by March 2026.

• Growth is supported by strong domestic IT demand, modernization, and DX support, with BluStellar as a key driver.

BluStellar business strategy and growth

• BluStellar, launched as a new DX brand, is positioned as the growth engine, targeting JPY 493.5 billion in revenue and 11.4% adjusted OP margin by March 2026.

• Revenue contribution from BluStellar in public and enterprise BUs is expected to rise to 13.5% and 25.7% by March 2026, with CAGR over 34%.

• Profitability is being enhanced by shifting to high-margin products (AI, consulting, security, PaaS), aiming for over 50% of sales from these by March 2026.

• Productivity improvements include automation, generative AI, and standardization, reducing SI workload and boosting delivery speed.

• Consulting-based business, centered on ABeam and NEC Group strengths, targets JPY 165 billion in sales and 12.9% margin by March 2026, focusing on value creation and technology-driven innovation.

International IT and DGDF business developments

• International IT business structure, established in 2023, leverages acquisitions and organic growth in Digital Government and Digital Finance.

• DGDF BU targets JPY 310 billion in revenue and JPY 36 billion in adjusted OP by March 2026, with profitability improvements from structural reforms and efficiency gains.

• Cross-selling, APAC expansion, and BlackRock partnership are key to revenue and margin growth, with software revenue ratio targeted to rise to 83% by March 2026.

• Offshore development and divestment of non-core businesses support cost reduction and margin improvement.

• Effective order backlog rate improved to 84%, supporting confidence in achieving targets.