Controlled costs helped NEC Australia offset decline in FY21 revenue

NEC Australia's 2021 financial report has revealed the company achieved revenue of AU$377.6 million and after-tax profit of nearly AU$18.4 million.
Written by Aimee Chanthadavong, Contributor

NEC Australia has reported after-tax profit for the 2021 financial year came in just shy of AU$18.4 million for the 2021 financial year, exceeding the year prior by nearly AU$7 million.

Total revenue for the 12 months was AU$377.6 million, down from last year's AU$417 million. Of that, managed services accounted for more than half, coming in at AU$237 million. This was followed by sales of goods including hardware, software, enterprise network solutions, network infrastructure, system devices, and lighting equipment, which earned the company AU$68 million during the financial year. The remainder was other services and professional services.  

The Australian arm of the Japanese conglomerate took nearly AU$442 million from customers, slightly lower than the AU$475 million during the 2020 financial year. Payments to suppliers were also lower and resulted in a total of AU$384 million, versus AU$406 million last year.

NEC said while the COVID-19 pandemic outbreak "adversely impacted" revenue compared to the prior year, it was able to maintain gross margins through cost management and control, and reducing sales and general administration costs.

Administration expenses were reduced by AU$708,000 to AU$5.61 million, and corporate services costs were down by nearly AU$5 million to AU$6.3 million. Other expenses, such as leasing, were reduced to AU$63,000, compared to AU$2.86 million last year, while maintenance expenses came in at AU$927,000, which was significantly less than the AU$2.52 million paid last year.

NEC Australia added "there was a concerted effort taken by management to optimise the profitability of contracts through extensive monitoring and reduction of its cost base without impacting on customer delivery standards".

During the 2021 financial year, NEC recorded an income tax benefit of AU$8.28 million, which was due to AU$8.08 million in deferred taxes.

While NEC Australia did not disclose the number of employees, the company dedicated AU$150 million towards employee salaries and wages, approximately AU$8 million lower than last year.

Looking ahead, NEC Australia said it will continue to "refine" its operations and offerings, as well as introduce new solutions.

"The next financial year will focus on the pursuit of opportunities related to new customers, development of the smart transport business stream and digital transformation solutions, as well as the renewal of current contracts," the company stated.

"The ongoing focus of the group is to continue to pursue additional revenue growth opportunities, closely manage costs of sales, and administrative expenses."

NEC Australia is 100% owned by Japan-based NEC Corporation, which is the parent entity and ultimate controlling entity. Since March 2019, NEC Australia has reported directly to NEC Corporation. 

On Monday, NEC Corporation launched its 5G transport transformation services with the establishment of its centres of excellence in the Europe, Middle East, and Africa, and Latin America regions.

The company also recently signed an agreement with Star Alliance and SITA that would eventually enable Star Alliance customers to use their biometric identity as their boarding pass with participating airlines at participating airports. The biometric platform will be built using NEC I:Delight platform, which will be connected to SITA's airport infrastructure that already exists at more than 460 airports worldwide.

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