NEC Fiscal Update Shows COVID-19 Impact and Tentative Recovery

“Looking ahead, NEC anticipates what it described as “New Normal demand” for things like contactless technology and remote work solutions…”

NEC Corporation has issued a corporate update for the end of 2020, showing the negative impact of COVID-19 and what may be the beginning of a sustained recovery.

The quarter ended December 31, 2020, is the third in NEC’s fiscal year. But in its update, the company also looked back on the nine months leading up to it, which showed a six percent decline in revenues “due to market deterioration”, as the biometrics specialist put it in an investor presentation.

Fortunately, NEC appears to have been quick to implement mitigation and adjustment measures, and managed to see an adjusted operating profit of 97 billion Yen during that nine-month period (a 6.4 billion Yen year-over-year improvement). And in absolute terms, revenues increased by 0.4 percent in NEC’s fiscal Q3.

In its presentation, NEC described that last revenue uptick as a turn “to positive recovery growth supported by solid order from Q2”. Particularly important revenue generators were increased demand for NEC’s 5G base station solutions and contracts related to a government-led school digitization project in Japan called GIGA, or “Global and Innovation Gateway for All“.

The company also noted that while it has been scaling back its energy and display businesses, it has maintained activities in important areas including “Submarine Systems”, “Wireless Backhaul”, and “Safer Cities”.

Looking ahead, NEC anticipates what it described as “New Normal demand” for things like contactless technology and remote work solutions, due to the ongoing impact of COVID-19. For its “FY21/3” forecast, NEC expects a slight dip in revenues, by 2.1 percent, and a ten percent drop in net profit; but its operating profit is anticipated to increase by 22.4 percent, with an expected increase in adjusted operating profit of 19.2 percent.

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January 29, 2021 – by Alex Perala