NEC Australia reports AU$44.4m full-year loss for 2017

The local arm of the Japanese technology giant has been in the red for two years in a row.
Written by Tas Bindi, Contributor

NEC Australia has reported a comprehensive loss of AU$44.4 million for the full-year ended March 31, 2017, a substantial decline from AU$8.2 million loss reported in the previous corresponding period.

The company's Cloud Collaboration and Mobile Access Controller businesses contributed AU$5.8 million to the overall operating loss.

Restructuring of these businesses set NEC Australia back by AU$17.1 million, with the company saying that eliminating these "loss making businesses" will improve its overall financial position in the upcoming year.

NEC Australia clarified with ZDNet that the company's Cloud Collaboration offering -- which was essentially a Cisco UC Cloud services product with NEC as the integrator -- and its Mobile Access Controller solutions have been dissolved as part of its restructuring efforts.

The company said these solutions were considered to be outside its core areas of business.

A further AU$10.5 million has been added in NEC Australia's financial report to reflect potential losses from future projects, while the company's operational performance contributed an operating loss of AU$19.3 million.

Revenue for the full-year was AU$432.1 million, down 2.5 percent from the AU$443.1 million reported in the prior year.

NEC Australia paid AU$8.5 million in income tax during the year, more than 12 times the AU$619,000 paid in 2016.

Cash and cash equivalents stood at AU$1.9 million at the close of the year, a 254 percent jump from the negative AU$757,000 reported in 2016.

Over the last year, NEC Australia secured a number of contracts within the Australian public sector. NEC's facial recognition technology was last year adopted by the South Australian police force to identify persons of interest and missing persons, following the Northern Territory's implementation of the technology in September 2015.

Australia's peak law-enforcement technology agency CrimTrac also awarded NEC Australia a AU$52 million contract to replace the National Automated Fingerprint Identification System this year with a new Biometric Identification System that will give law enforcement agencies access to fingerprints, palm prints, and facial images.

Additionally, NEC is continuing to service its other contracts signed over the last three years, including the AU$10.8 million system build contract it inked with the Department of Education and Training; the four-year contract it has with the Australian Department of Foreign Affairs and Trade; and another contract it has with Western Australia Department of Water.

Parent company NEC Corporation similarly reported losses for the first quarter of the 2017-18 financial year, though its financial report reflects an improvement. The company posted an operating loss of 14.4 billion yen for the three months ended June 30, 2017, up from the 30 billion yen reported in the previous corresponding period.

Revenue also rose 12.3 percent from 518.7 billion yen in Q1 2016 to 582.5 billion yen in the most recent quarter.

All but NEC's Enterprise business reported an operating loss, though revenue increased for all but the Enterprise business.

NEC's Enterprise business reported an operating profit of 5 billion yen on revenue of 87.8 billion yen for the quarter, down 0.7 percent and 1.5 percent from 5.7 billion yen and 89.2 billion yen, respectively.

The company attributed the decrease in revenue and operating profit to decline in sales and increased Internet of Things-related investment expenses. The Enterprise business accounted for 15 percent of total quarterly revenue.

The technology company's Telecom Carrier business -- which accounted for 21 percent of NEC's quarterly revenue -- posted an operating loss of 3.3 billion yen during the April-June period, up from a loss of 7 billion yen in the previous corresponding quarter. Revenue improved 3.9 percent from 118.7 billion yen to 123.3 billion yen.

NEC's Public business reported a quarterly operating loss of 500 million yen, up from the loss of 6.1 billion yen reported for same period in 2016, while revenue increased 49.9 percent year on year from 120.7 billion yen to 181 billion yen. The Public business was the highest performing in terms of revenue generation, accounting for 31 percent of NEC's quarterly revenue.

In the System Platform business, revenue increased 2 percent year on year from 150.2 billion yen to 153.2 billion yen, while operating loss rose from 4.6 billion yen to 1.7 billion yen. The System Platform business accounted for 26 percent of NEC's quarterly revenue, the company's second-highest performing unit in terms of revenue.

NEC Corporation's cash and cash equivalents for the quarter ended June 30, 2017 increased 72.9 percent quarter on quarter from 240 billion yen to 414.9 billion yen.

During the quarter, the company sold all of its shares in NEC Tokin and a portion of its shares in Renesas Electronics, collectively generating 19.1 billion in non-operating income.

NEC Corporation recently announced its advanced surveillance system has been rolled out across major cities in Georgia, including the nation's capital Tbilisi.

The surveillance system, which began operation in June, uses NEC's facial recognition software for video called NeoFace Watch, which checks images captured by CCTV cameras in real-time against offender databases and "watch lists" for faster detection of "suspicious individuals".

This system was introduced as part of Georgia's "Safe City, Safe Region, Safe Country" program with the goal of improving public safety.

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