Nec Corp Unsp/Adr New

Thank you for your precious time despite your busy schedule. We have just made an announcement for the FI2027, the first quarter, as well as fully in the forecast for FI2027 March. This shows the important points I'd like to cover today. As has been announced in our press list on July 10th, actually we have changed some segmentations. As for the numbers for FY26 March, actually these numbers are based upon the newly created segmentations. And also for your information, the unit in this set of materials is ¥1 billion. Now allow me to go through the financial results for Q1 FY27 March. First, I'd like to begin with these key takeaways. IT services, domestic as well as aerospace and national security actually turned Rubino quite firm, making great contributions to overall performance. Starting from the main, actually, we incorporated CSG in the USA. Thank you for watching. Based upon the actually latest progress for the first quarter, actually we revised up our full year forecast. In regards to non-GAAP opening profits, compared with the past announcement, actually increased 10 billion yen becoming 430 billion yen. First, allow me to go through the major numbers as well as the segment performance. The bottom left shows the action numbers, performance basis, excluding the M&A and impacts. Assuming that starting from last year, revenue actually improved 9.8% or profit grew 27 billion yen. As for the actions by segment, allow me to move on to the next pages. First, IT services segmentation. Domestic situations, the blue cellar expanded, and also due to the impacts from the structural reform among the subsidiaries, on a basis actually, the profit actually improved 13.4 billion yen. and Profit are actually improved 2.7 points. As for the overseas, due to the CSC newly integrated, year-on-year basis, up 46% in revenue and 3.6 billion yen improvement in profit. Next, allow me to explain the domestic ID services, Blue Stella, and the base business separately. First, Blue Stella. Thanks to our scenario business and actually solutions, actually trying to solve the customers' issues, particularly in the municipalities and the financial services, on a basis actually, revenue improved 33%. Profit improved 7.6 billion yen. As for base business, we decided to end in a low profit of making a business and also making shift toward a below stellar result in actually revenue in profit. But thanks to the actual structural reforms among the subsidiaries, thanks to the ending of the previous years unprofitable businesses, and actually the profit actually improved by 5.7 billion yen. Allow me next, I'd like to move on to the domestic IT service booking status. At a high level, the larger projects and the special demands are actually ending of the low-profit making business, excluding them. In the actual basis, it became a positive 3%. Sitting around the monetization of projects, the demand momentum has been rather strong. By domain, digitalization project for the central government and the telecommunication area of our firm. On the enterprise, the financial services and the retail and services actually grew, actually giving us positive numbers. Next, I'd like to move on to the social infrastructure segmentation. Aerospace and national security continues to be strong. On a basis, the revenue increased 50% resulting in a profit of 9.2 billion yen. As for the submarine systems, we have received orders last year that actually made a contribution to the actual numbers. Actually, we turned out to be positive as much as by 52%. Next, I'd like to move on to the financial forecast for FY27 March.

First, I will explain the company-wide financial forecast. As explained at the beginning, based on the business progress in the first quarter, we have revised our forecast upward. Revenue is revised up by ¥40 billion to ¥3,540 trillion. Non-GAAP operating profit is up by ¥10 billion to ¥430 billion. Please note that the impact of the full-year forecast from the new consolidation of CSG is currently under close review. Therefore, it is not reflected in this forecast. We plan to disclose a forecast that includes CSG's results at the first half earnings announcement. Next is the financial forecast by segment. Details regarding both the IT services and social infrastructure segments will be explained on the following pages. Please note that we have maintained the allowances which were set at the beginning of the fiscal year against component shortage risks and the macroeconomic uncertainty. The amounts factored in are 100 billion yen for revenue and 30 billion yen for non-GAAP operating profit. Regarding component shortages, the impact. As of the first quarter, it has been minor. However, the uncertain situation still continues and We will continue to take measures to minimize the risks. Next is the IT services segment. The revisions to the financial forecast and IT services are entirely implemented in the domestic market. The revised forecast for revenue is up by 20 billion yen to 2 trillion 175 billion yen. Non-GAAP operating profit is up by 5 billion yen to 329 billion yen. We have factored in a negative revenue impact of ¥100 billion due to municipal standardization in the public sector and the peaking out of the flyer and disaster prevention projects. We also factored in ¥100 billion for component shortage risks. Despite these, we plan to improve profitability through the expansion of Blue Stiller. As for overseas, we will continuously work on improving profitability. In addition, by curbing unprofitable projects that occurred in the previous fiscal year, we plan for a profit of 52 billion yen, which is a profit increase of 9.2 billion yen. Again, please note that, at this time, the impact of CSG consolidation is not reflected. Next, we will present FY March 2027 financial forecasts for domestic IT services divided into Blue Stellar and the base business. The revisions to the financial forecasts are entirely implemented in the base business, leaving Blue Stellar unchanged. For Blue Stellar, we will work on further expanding scenarios using AI and improving productivity. This will contribute to further profit margin improvement for the overall IT services. This is a breakdown of the first quarter results and full year financial forecast for Blue Stellar by segment. Until now, Blue Stellar has been entirely disclosed as included within IT services. However, assuming that its deployment into social infrastructure will expand in the future, we will disclose the breakdown by segment starting this fiscal year. Next is social infrastructure. Since the first quarter results exceeded our internal expectations, we have made upward revisions. For aerospace and national security, revenue is revised upward by ¥20 billion and profit by ¥4 billion. For submarine systems, profit is revised upward by ¥1 billion. In addition to the further expansion of aerospace and national security, which has strong demand, submarine systems will turn profitable. As a result, for the full-year forecast, we plan for a profit of ¥99 billion, which is an increase of ¥45.6 billion. Finally, we have topics. The first point is a topic on Blue Stellar. In April, we became the first Japanese company to become global partner of Anthropic. We are advancing efforts toward providing this to our customers. We are jointly developing a secure task-specific AI solution with excellent safety and reliability. First, aiming for realization in financial industry, we started co-creation with multiple financial institutions in June. Furthermore, as the first service based on this collaboration, we launched the NEC AI Insight Reporting Service this month. This service utilizes cloud to fully automate the creation of product planning and sales promotion plans based on consumer purchase data. Internally, we have rolled out Cloud Code to 30,000 NEC Group employees. By utilizing education provided by Anthropic, we aim to build the largest AI native engineer organization in Japan. Finally, I will explain the integration of NEC and NEC Solution innovators, scheduled for October 1st. With the rapid advancement of AI, The business model of the IT service business is expected to change significantly. It will shift from the conventional man-month basis to one centered on end-to-end value provision. This time, through the integration of the two companies, we will bring together 20,000 engineers, as well as domain knowledge and implementation capabilities. We will accelerate the transformation into a value provision model that consistently offers everything from consulting to system integration and operations. This integration is a strategic move to transform the entire NEC group ahead of changes in the market environment. We aim to strengthen our competitiveness in the AI-native era and achieve further growth in the IT services business. That concludes my explanation. Thank you very much.