NTT DATA grows on strong Japanese and European performance

Japanese IT giant reports soaring sales, profits buoyed by regional strengths

Japanese solutions provider NTT DATA claimed net sales and operating profits are on the rise thanks to a strong performance in both Japan and Europe.

Net sales soared by 25.1 per cent, reaching ¥4.4tr (£22.4bn), a significant increase from the previous year's ¥3.4tr (£17.4bn).

The company's order book, excluding orders from NTT Ltd, witnessed a remarkable surge of 75.8 per cent, totalling ¥4.8tr (£24.5bn) in new orders received.

This robust order intake translated into a 50.4 per cent increase in operating profits, which reached ¥309.6bn (£1.5bn) for the fiscal year.

However, operating margins slightly decreased by 0.3 basis points, settling at 7.1 per cent, compared to the previous year's figure.

Growth in revenue and operating profit can be largely credited to the strong performance of its European and Japanese operations, as well as the consolidation of NTT Ltd. into the company's financial results.

The EMEA and LATAM businesses reported net sales surging by a remarkable 136 per cent, reaching ¥828.5bn (£4.2bn), a substantial increase from the previous year's ¥692.5bn (£3.5bn).

Additionally, the EBITDA for these regions witnessed a 7.7 per cent upward tick.

The momentum extended to the order book, where new orders received in these regions skyrocketed by an astonishing 102.3 per cent, totalling ¥876.9bn (£4.4bn), compared to the previous year's ¥774.6bn (£3.9bn).

FY24/25 outlook

Looking forward to the 2024/25 fiscal year, NTT DATA said the growth trajectory is expected to take a different path.

Net sales are anticipated to experience a modest increase of 1.4 per cent year-over-year, while operating profit is projected to grow at a more robust rate of 8.5 per cent year-over-year.

This divergence can be attributed to the diminishing impact of the business consolidation that occurred in the previous fiscal year.

Despite this, shareholders remain optimistic about the long-term effects of the consolidation with NTT DATA Group Corp, as evidenced by the company's share price, which is still up more than 21 pre cent compared to a year ago.

The group has set ambitious targets for the coming years, aiming to expand its client base to 120 companies by the end of 2025, up from the current 106 clients.

Additionally, the company is targeting revenue of ¥4.7tr.

To achieve these goals, NTT has outlined a strategic investment plan as part of its current three-year plan.

This plan predictably highlights a combination of leveraging generative AI technologies and pursuing M&A opportunities in both the domestic Japanese market and overseas markets.