MIRA
INFORM REPORT
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Report Date : |
20.09.2008 |
IDENTIFICATION
DETAILS
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Name : |
NEC CORPORATION |
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Registered Office : |
5-7-1 Shiba Minatoku Tokyo 108-8001 |
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Country : |
Japan |
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Financials (as on) : |
31.03.2008 |
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Date of Incorporation : |
July 1899 |
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Legal Form : |
Limited Company (Kabushiki Kaisha) |
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Line of Business : |
Manufacturer of Communications/IT Equipment; Offers
IT/Networking Solutions |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
YEN 88,038.1 Million |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
name & address
NEC CORPORATION
REGD NAME: NEC KK
MAIN OFFICE: 5-7-1 Shiba Minatoku Tokyo 108-8001 JAPAN
Tel:
03-3454-1111 Fax: 03-3457-7249
E-Mail address: info@nec.co.jp
ACTIVITIES
Mfg of communications/IT equipment; offers IT/Networking
solutions
BRANCH(ES)
Sapporo, Sendai, Fuchu, Kawasaki, Yokohama, Abiko, Saitama,
Shizuoka,
Nagoya, Kanazawa, Osaka, Hiroshima, Takamatsu Fukuoka, other
(Tot 15)
OVERSEAS
Worldwide
FACTORY(IES)
NEC subsidiary mfrs
CHIEF EXEC
KAORU YANO, PRES, PRES
Yen Amount: In
million Yen, unless otherwise stated
SUMMARY
FINANCES FAIR A/SALES Yen 4,617,153 M
PAYMENTS REGULAR CAPITAL Yen 337,940 M
TREND STEADY WORTH Yen 1,185,521 M
STARTED 1899 EMPLOYES 152,922
COMMENT
PROVIDER
OF COMMUNICATIONS/IT EQUIPMENT & SOLUTIONS.
FINANCIAL
SITUATION COSIDERED FAIR AND GOOD FOR ORDINARY
BUSINESS
ENGAGEMENTS.
MAX CREDIT LIMIT: YEN 88,038.1 MILLION, 30 DAYS NORMAL
TERMS.
Forecast
(or estimated) figures for 31/03/2009 fiscal term
HIGHLIGHTS
The subject company is the nation’s representative high-tech powerhouse, and mfr of communications/IT equipment & peripherals, focusing on solution business (See OPERATION) Spun off in Nov/2002 from semiconductor business including HVA system LSI’s in bid to strengthen solution businesses. Controls 20.3% share in domestic PC’s sales. Aggressive in overseas operations. Products are wholly supplied from group subsidiary makers. Clients are government agencies, business firms, telecommunications carriers, other, nationwide.
(Recent News from the
Nikkei):
Dated 06/09/2008: NEC will supply core communications equipment for DoCoMo’s super 3G service. Super 3G will utilize 3.9-generation communications standards having communication speed of 100 megabits per second, making it 5-10 times faster than existing third-generation services. The equipment will be installed at telephone companies & function as switchboards to control large volumes of voice and data communications. It will be developed for commercial service in 2010, with shipment to DoCoMo starting in fiscal 2009.
Dated 06/09/2009: NEC has established Yen 500 billion investment target for future M&A’s and overseas business expansion. By strengthening its overseas operations NEC aims to boost its overseas sales ratio from the current 25% to 30% in the near future. This fiscal year, NEC has made one foreign acquisition after another, including US software development company and Hungarian communications equipment firm. Domestically, has acquired a major producer of undersea cables.
Dated 17/09/2008: NEC Electronics Corp (subsidiary) has agreed to form a strategic partnership with German firm Eolmos Semiconductor AG to develop & mfr semiconductor products for cars. The two plans to jointly sell the products, focusing on Europe.
FINANCIAL
INFORMATION:
The sales volume for Mar/2008 fiscal term amounted to Yen 4,617,153 million, a 0.8% down from Yen 4,652,649 million in the previous term. Despite steady increase in IT/Network Solutions business, the decrease is attributed to the sale of PC’s business in Europe, in the second half of the previous fiscal year in the Mobile/Personal Solutions business, and a decrease in sales of electronic components in Electron Devices business. By divisions, IT/networking Div up 4% to Yen 2,866,100 million; Mobile/Personal Solutions Div down 10% to Yen 872,900 million and Electron Device Div down 4% to Yen 830,900 million. The recurring profit was posted at Yen 112,240 million and the net profit at Yen 22,681 million, respectively, compared with Yen 16,347 million recurring profit and Yen 9,128 million net profit, respectively, a year ago. The improved profitability is attributed to the return to profits both of Mobile/Personal Solutions and Electron Devices businesses. It is also due to increased sales & cost reductions derived from production innovation activities in IT/Networking Solution business. The net income increase is mainly due to decrease in income taxes.
(Apr/Jun/2008 results): Sales Yen 1,001,242 million (down 0.7%), operating profit Yen 4,109 million (down 64%), recurring profit Yen 7,050 million (down 14%), net profit Yen 483 million (down 51%). (% compared with the corresponding period a year ago). Sales in Mobile/Personal Solutions were strong due to increased mobile handset shipments. Sales decrease is mainly due to decreased sales of IT/Network Solutions business, as well as in the Electron Devices business, The profit deterioration is referred to higher R&D costs, according to the firm.
For the current term ending Mar 2009 the recurring profit is projected at Yen 135,000 million and the net profit at Yen 35,000 million, respectively, on a 4% rise in turnover, to Yen 4,800,000 million. Sales of communications systems increasing sharply, buoyed by commercialization of Next-Generation-Network. Large-lot of orders from overseas customers will contribute. Mobile phone will likely to grow, aided by reshipment to Soft Bank. By strengthening overseas operations in communications network, the firm aims to boost overseas sales ratio from the current 25% to 30% in future. Special funds set Yen 500 billion investment target for future M&As and overseas business expansion. (See Recent News above)
The financial situation is considered FAIR and good for ORDINARY business engagements. Max credit limit is estimated at Yen 88,038.1 million, on 30 days normal terms.
REGISTRATION
Date Registered: Jul 1899
Legal Status: Limited Company (Kabushiki Kaisha)
Authorized: 7,500 million shares
Issued: 2,029,732,035 shares
Sum: Yen 337,940 million
Major shareholders (%)
Japan Trustee Services T (4.5), Master Trust Bank of Japan T (4.1), Japan Trustee Services T (2.7), Hero & Co (2.4), Sumitomo Life Ins (2.0), Nippon Life Ins (1.9), Employees’ S/Holding Assn (1.5), State Street Bank & Trust 505103 (1.3), Dai-ichi Life Ins (1.2), JTSB (Sumitomo) (1.1); foreign owners (25.4)
No. of shareholders: 228,265
Listed on the S/Exchange (s) of: Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, NASDAQ
Managements
Hajime Sasaki, ch; Kaoru Yano, pres; Botaro Hirosaki, v pres; Masatoshi Aizawa, v pres; Konosuke Kashima, s/mgn dir; Akihito Otake, s/mgn dir; Kunitomo Matsuoka, mgn dir; Yoichiro Shioji, mgn dir; Ken Kobayashi, mgn dir; Minoru Terao, mgn dir
Nothing detrimental is known as to the commercial morality of executives.
Related companies
NEC Electronics, NEC Personal Products, other
OPERATION
Activities: Manufactures communications/IT equipment, offering solutions services:
(Sales Breakdown by Divisions):.
IT/Network Solutions (60%): Provides solutions for networking era, mainly to government agencies, communications service providers and other private-sector enterprises;
Mobile/Personal Solutions (15%): Provides mobile handsets, PC’s & other terminals, channeling individuals to ubiquitous networking society and Internet services, underpinning NEC brand;
Electron Device Business (17%): Provides semiconductors, LCD’s, other electronic components & products;
Others (8%);
(Products): PC & servers (PC’s (desktop PCs, Notebooks, workstations); servers, super computers, virtual PC center); Storage (NAS/SAN, tape storage); Software (middleware, ERP software); semiconductors & components (system LSI, IC & Discrete semiconductor, compound semiconductor); Peripherals (monitors, projectors, optical disc drives, floppy disk drives, printers); Networking (for Network service provider, for enterprise & small/medium business firms, unified communication, key telephone systems); Broadcasting (digital broadcast products); Home Appliances, others.
Overseas Sales Ratio (24.9%): Asia 9.6% (mainly China, Taiwan India, Indonesia, Singapore; Europe 6.8% (mainly UK, France, Netherlands, Germany, Italy, Spain); other area 8.5% (mainly USA, Canada)
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Clients
[Governments, telecommunications carriers, business firms, wholesalers] NTT Corp, KDDI Corp, Defense Ministry, JR group firms, other
No. of accounts: 3,000
Domestic areas of activities: Nationwide
Suppliers
[Mfrs, wholesalers] Supplied from group subsidiary firms: NEC Saitama, NEC Personal Products, NEC Fielding, NEC Communication Systems, NEC Computer Techno, NEC Soft, NEC System Technology, NEC Infrontia, NEC Networks & System Integration Services, NEC Engineering, other. .
Payment record: Regular
Location
Business area in Tokyo. Office premises at the caption address are owned and maintained satisfactorily.
Bank References
SMBC (Tokyo)
Mizuho Corporate Bank (H/O)
Relations: Satisfactory
FINANCIALS
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FINANCES: (Consolidated
in million yen) |
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Terms Ending: |
31/03/2008 |
31/03/2007 |
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INCOME STATEMENT |
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Annual Sales |
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4,617,153 |
4,652,649 |
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Cost of Sales |
3,142,844 |
3,242,459 |
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GROSS PROFIT |
1,474,309 |
1,410,190 |
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Selling & Adm Costs |
1,317,544 |
1,340,214 |
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OPERATING PROFIT |
156,765 |
69,976 |
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Non-Operating P/L |
-44,525 |
-53,329 |
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RECURRING PROFIT |
112,240 |
16,347 |
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NET PROFIT |
22,681 |
9,128 |
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BALANCE SHEET |
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Cash |
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247,447 |
332,446 |
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Receivables |
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853,773 |
874,543 |
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Inventory |
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457,493 |
493,224 |
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Securities, Marketable |
127,908 |
91,570 |
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Other Current Assets |
162,193 |
255,898 |
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TOTAL CURRENT ASSETS |
1,848,814 |
2,047,681 |
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Property & Equipment |
640,747 |
684,529 |
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Intangibles |
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222,635 |
221,991 |
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Investments, Other Fixed Assets |
814,599 |
777,468 |
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TOTAL ASSETS |
3,526,795 |
3,731,669 |
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Payables |
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700,797 |
786,899 |
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Short-Term Bank Loans |
89,632 |
110,385 |
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Other Current Liabs |
758,877 |
799,195 |
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TOTAL CURRENT LIABS |
1,549,306 |
1,696,479 |
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Debentures |
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38,615 |
127,815 |
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Long-Term Bank Loans |
121,249 |
42,759 |
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Reserve for Retirement Allw |
224,143 |
216,769 |
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Other Debts |
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407,961 |
407,724 |
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TOTAL LIABILITIES |
2,341,274 |
2,491,546 |
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MINORITY INTERESTS |
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Common
stock |
337,940 |
337,822 |
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Additional
paid-in capital |
464,875 |
464,838 |
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Retained
earnings |
179,391 |
173,003 |
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Evaluation
p/l on investments/securities |
29,898 |
57,706 |
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Others |
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176,650 |
209,979 |
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Treasury
stock, at cost |
(3,233) |
(3,225) |
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TOTAL S/HOLDERS` EQUITY |
1,185,521 |
1,240,123 |
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TOTAL EQUITIES |
3,526,795 |
3,731,669 |
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CONSOLIDATED CASH FLOWS |
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Terms ending: |
31/03/2008 |
31/03/2007 |
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Cash
Flows from Operating Activities |
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192,302 |
238,318 |
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Cash
Flows from Investment Activities |
-135,760 |
-169,676 |
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Cash
Flows from Financing Activities |
-100,209 |
-103,739 |
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Cash,
Bank Deposits at the Term End |
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374,838 |
423,369 |
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ANALYTICAL RATIOS Terms ending: |
31/03/2008 |
31/03/2007 |
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Net
Worth (S/Holders' Equity) |
1,185,521 |
1,240,123 |
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Current
Ratio (%) |
119.33 |
120.70 |
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Net
Worth Ratio (%) |
33.61 |
33.23 |
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Recurring
Profit Ratio (%) |
2.43 |
0.35 |
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Net
Profit Ratio (%) |
0.49 |
0.20 |
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Return
On Equity (%) |
1.91 |
0.74 |
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FOREIGN EXCHANGE
RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.46.32 |
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UK Pound |
1 |
Rs.83.57 |
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Euro |
1 |
Rs.65.90 |
RATING
EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)