NEC Networks & System Integration (1973) Q1 2025 earnings summary

Executive summary

• Sales and profits grew substantially in 1Q FY2025, with net sales up 10.4% year-over-year to ¥79,127 million and operating income up 113.1% to ¥2,384 million.

• Net income attributable to owners surged 732.4% to ¥1,518 million, and comprehensive income improved to ¥1,711 million from a loss of ¥26 million.

• Orders received increased 1% year-over-year, offsetting the prior year’s large project decline.

• Growth was driven by government-related areas, especially firefighting and disaster prevention.

Financial highlights

• Gross profit increased to ¥13,938 million from ¥12,526 million year-over-year, with gross profit margin at 17.6%.

• Operating income more than doubled to ¥2,384 million (3.0% margin), up from ¥1,118 million (1.6%).

• Net income attributable to owners increased to ¥1,518 million from ¥182 million.

• Free cash flow remained strong at ¥18.8 billion, and cash and cash equivalents increased to ¥87,573 million.

• Net assets stood at ¥155,395 million as of June 30, 2024, with an equity ratio of 56.8%.

Outlook and guidance

• FY2025 forecasts remain unchanged: net sales expected at ¥365 billion (+1.5%), operating income at ¥29.0 billion (+15.4%), and net income at ¥18.0 billion (+17.4%).

• Orders and sales growth rates, excluding special items, are projected at +5% and +4% respectively.

• Annual dividend forecast raised to ¥56.00 per share.

• Strategy execution and profit growth acceleration are emphasized for the annual target.