NEC FY26 Operating Profit Jumps 40% to ¥360bn as Digital Services and AI Drive Margin; Net Profit Up 54%, 1-for-5 Stock Split Completed

NEC Corporation (TSE: 6701), the Tokyo-based IT services and integrated solutions company that traces its roots to Japan's earliest electrical-equipment industry, reported FY3/2026 consolidated IFRS results showing a step-change in profitability and a major shareholder-capital action. Revenue rose 4.7% to ¥3,582.7 billion, operating profit jumped 40.3% to ¥359.9 billion, profit before tax soared 66.1% to ¥398.2 billion, and profit attributable to owners of the parent climbed 54.3% to ¥270.2 billion. Comprehensive income more than doubled (+102.0%) to ¥408.4 billion.

Non-GAAP measures: the underlying picture

NEC reports both IFRS and Non-GAAP profit measures. On the Non-GAAP basis (which excludes business-restructuring charges, M&A-related amortization and other non-recurring items), adjusted operating profit was ¥386.8 billion (+34.7%), Non-GAAP operating profit was ¥397.2 billion (+27.6%), and Non-GAAP profit attributable to owners was ¥279.8 billion (+24.0%). Non-GAAP basic EPS was ¥210.11, with IFRS basic EPS of ¥202.95 (vs ¥131.50 on a post-split-adjusted prior-year basis). The Non-GAAP figures confirm the headline IFRS strength is not an artifact — the underlying business is also growing materially, supplemented by favorable one-off items at the IFRS line.

1-for-5 stock split and dividend lift

Effective April 1, 2025, NEC executed a 1-for-5 common-stock split, expanding issued shares to 1,364.2 million (vs the pre-split equivalent). All per-share figures in this article are stated on the post-split basis. On the dividend front, NEC raised the FY3/2026 end-period dividend from ¥16 to ¥22 per share (announced concurrently with the earnings on April 28, 2026), bringing the full-year payout to ¥38 per share (post-split) — equivalent to ¥190 pre-split, up from ¥140 in the prior year. The payout ratio compressed to 18.7% from 21.3% on the much higher earnings base. Management guides FY3/2027 dividend at ¥40 per share (post-split) annually (¥20 + ¥20), implying continued conservative payout under a multi-year capital-return ramp.

Balance sheet strengthens, owner equity ratio crosses 49%

Total assets grew to ¥4,466.8 billion from ¥4,315.4 billion, and total equity rose to ¥2,281.9 billion from ¥2,071.5 billion. Equity attributable to owners of the parent climbed to ¥2,196.6 billion, lifting the owners' equity ratio to 49.2% from 45.2% — a noteworthy improvement for a Japanese systems-integration major historically operating with mid-40s capitalization. BPS per share reached ¥1,656.11 (post-split). Operating cash flow expanded to ¥438.5 billion from ¥344.4 billion, while investing activities turned positive to +¥33.7 billion (vs -¥131.2 billion prior, reflecting asset disposals), and financing outflows widened sharply to -¥418.0 billion (vs -¥104.0 billion) — a meaningful step-up in debt repayment and capital return.

FY27 outlook: Non-GAAP OP +5.7%, conservative top-line

For FY3/2027, NEC guides revenue of ¥3,500.0 billion (−2.3%) — the slight decline reflects selective portfolio exits and FX assumptions — alongside Non-GAAP operating profit of ¥420.0 billion (+5.7%) and Non-GAAP profit attributable to owners of ¥285.0 billion (+1.9%). Non-GAAP EPS is guided at ¥214.88. The guidance is consistent with NEC's medium-term plan trajectory of mid-single-digit margin expansion and disciplined revenue selection, leaning into Digital Government / public-sector DX, the 5G / Open RAN buildout supporting global telcos, and biometrics. No material going-concern issues or significant subsequent events were noted; the consolidated scope was unchanged year-on-year.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.