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Review of Operations REVIEW OF OperatiONS PUBLIC BUSINESS NEC provides safe, secure and efficient social solutions Tomonori Nishimura for domestic and foreign governments, governmental Executive Vice President agencies, public institutions, financial institutions and other organizations by combining its distinctive technology assets, including networking and sensing technologies, with broad systems integration expertise and customer assets. SALES OPERATING INCOME, business, NEC and INTERPOL signed a partnership OPERATING INCOME RATIO agreement for strengthening measures to fight (Billion ¥) (Billion ¥) 800.0 60.0 increasingly complex and sophisticated cybercrime. 680.7 649.5 49.0 The two partners will work together on state-of-the-art 43.3 cyber security measures. 600.0 40.0 In the public services sector, sales remained strong in 7.2% the fire and disaster prevention area on the back of 6.7% 400.0 continued high demand due to regional enlargement 20.0 and digitization of wireless communication networks. 200.0 NEC also steadily built on its track record in the integration of cloud computing platforms and provision of services for local governments, schools, libraries and 0 2012 2013 0 2012 2013 Operating income other customers. In addition, NEC implemented a new Operating income ratio traffic management system that enables the real-time provision of traffic information thanks to the high-speed Fiscal 2013 Performance and Main processing of Big Data for the Shin-Tomei Expressway Accomplishments operated by Central Nippon Expressway Company Business segment sales increased 4.8% year on year Limited. And NEC delivered a new train wireless system to ¥680.7 billion. This increase mainly reflected steady to Odakyu Electric Railway Co., Ltd. that uses software- growth in fire and disaster prevention systems, and defined radio technologies to facilitate flexible operations. aerospace and defense systems. In the medical sector, NEC helped to implement and Operating income improved ¥5.8 billion to ¥49.0 billion, operate the Tsukuba Pediatric Allergy Information mainly reflecting increased sales and cost reductions. Network (T-PAN), which has been developed by In fiscal 2013 in the government agency sector, NEC Tsukuba Medical Center Hospital to share medical won an order through DSN Corporation, a special information between partner medical institutions and purpose company NEC invested in, for a Program to patient families, as part of the efforts to develop regional Upgrade and Operate X-Band Satellite Communications medical networks. Functions. This project is the first satellite private finance In the financial sector, we provided sales support initiative (PFI) in Japan. Through a similar PFI scheme, systems compatible with smartphones and other smart QZS System Services Inc., another special purpose devices, an area of increasing need among financial company invested in by NEC, won an order for operating institutions, to over 30 credit unions nationwide. a quasi-zenith satellite system. Furthermore, a “Bird For the media industry, we delivered digital transmitters Position Detection Solution,” which helps to reduce the for Mobacas, a new multimedia broadcasting service threat of collision between birds and aircraft during for smartphones, to Japan Mobilecasting, Inc. and NEC takeoff and landing, contributing to safe and secure delivered transmitters for digital television broadcasting airport operations, was adopted by Tokyo International to commercial broadcasters in Myanmar, building on Airport (Haneda Airport). Moreover, in the safety NEC’s track record at home and abroad. NEC Corporation 19 Annual Report 2013 I Business Report/Management Policies NEC’s digital train wireless system for Odakyu Electric Railway Portable DNA analyzer (prototype) For Further Growth With the ICT market in Japan still recovering, sharp In addition, we are also actively committed to creating growth is not expected for the foreseeable future. At new businesses that are not extensions of existing ones. the same time, economic growth led by emerging To create new social infrastructure utilizing ICT, we countries is expected to continue going forward and, continue to move ahead with developing and in developed countries, new demand will likely be commercializing a failure sign monitoring system for created from structural changes driven by new trends. large-scale plants capable of analyzing the signs of Responding effectively to globalization, structural failure in large facilities and identifying unsound changes and new markets will become even more conditions in facilities before failure occurs. This is made important in the years to come. possible by using data collected through many sensors NEC will look to capitalize on such changes and installed at factories and power stations, and represents steadily carry out business centered on customers in an effort to provide new value through utilization of Big Japan, while also actively branching out globally using Data. Further, NEC has partnered with the Swiss firm strengths stemming from its cumulative experience and Gutermann AG, a global leader in advanced leak expertise. For the government and governmental detection technologies, to develop and market solutions agencies, we will seek to meet demand for integration of for effective use of water resources as a part of its smart new systems and upgrading systems associated with city business. establishment of the common number, or “my number,” Safety is an area where growth is expected globally law, by actively making related system proposals. In the going forward. In a move to strengthen cyber security, area of aerospace and defense systems, a new satellite NEC has acquired a 100% stake in Cyber Defense assembly plant will be constructed on the premises of Institute, Inc., which boasts industry-leading the Fuchu Plant to augment capacity. Leveraging its technologies in system security vulnerability diagnostics. track record of past involvement in integration of And, in collaboration with Cyber Security Factory, an numerous satellites, NEC will work to further develop organization established in November 2012 that assists Japan’s satellite infrastructure, which makes possible with the installation and operation of cyber security environmental protection, resource development and measures for government agencies and the private provision of positioning data on a global scale, as well sector, NEC intends to develop even more advanced as capture satellite demand in emerging countries in cyber security solutions. Portable DNA analyzers are Asia and other parts of the world. another safety and security product NEC is currently In the fire and disaster prevention domain, we will developing. They will help accelerate crime steadily meet domestic demand while developing investigations and reduce crime. Joint assessments are globally, particularly in the Asia-Pacific region. We have underway with Japan’s National Research Institute of already received an order for a disaster prevention and Police Science and New Zealand’s Institute of emergency information cloud system in Taiwan and will Environmental Science & Research Limited, and we continue to focus on consultative sales going forward. intend to accelerate the process to commercialization. NEC Corporation Annual Report 2013 20 ENTERPRISE BUSINESS NEC provides IT solutions to meet private-sector demand, Manabu Kinoshita centering on manufacturing and retail/services, while Executive Vice President launching new services to help create new value for customers. We intend to accelerate development in retail/distribution infrastructure in particular, both in Japan and overseas, as it will be a growth field going forward. SALES OPERATING INCOME, features. OPERATING INCOME RATIO For the retail/services sector, NEC implemented a (Billion ¥) (Billion ¥) 300.0 6.0 5.5 new distribution system for real-time tracking and 251.6 management of the inventory of main ingredients used 222.2 by Mister Donut, which is managed by DUSKIN CO., 200.0 4.0 LTD., and began providing a cloud service for Toyo Logistics Co., Ltd. that enables the company to 2.2% efficiently verify the position of cargo in transport, 100.0 2.0 inventory availability and other status information. NEC also focused on proposals for solutions utilizing smart 0.5 devices such as tablet terminals and received orders for 0.2% an IT platform for Lawson, Inc. to improve the 0 2012 2013 0 2012 2013 Operating income administrative efficiency of store trainers and for a Operating income ratio customer service support system for Kojima Co., Ltd. In addition, steady progress was made on initiatives Fiscal 2013 Performance and Main for expanding new business domains. As a part of Accomplishments efforts to bolster Big Data-related businesses, NEC Business segment sales increased 13.2% year on launched machine-to-machine (M2M) utilization year to ¥251.6 billion. This increase mainly reflected solutions for customers in manufacturing and other steady growth in sales to manufacturing and retail/ sectors for when they begin business activities using services sectors. M2M technologies. The solution provides end-to-end Operating income improved ¥4.9 billion year on year support for business development through integrated to ¥5.5 billion, mainly due to higher sales. services that are needed at different stages, from In fiscal 2013 for the manufacturing sector, drawing planning to commercialization. NEC has begun on its experience in overhauling core systems, NEC supplying the solution to machinery
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