Brazil escapes storm in NEC
Valor Econômico 02/18/2009
Two weeks ago, the announcement of the layoff of 20 thousand employees at NEC - and thousands more in other companies of the home appliance sector of Japan - caught Herberto Yamamuro in the eye of the hurricane. The CEO of the Brazilian subsidiary of NEC was in Tokyo to present the headquarters the 2008 results when the weather got worse. He came back feeling a mixture of apprehension and relief. The good news is that Brazil was spared from the cuts planned by the company - much on the contrary, it should even hire more people. According to Yamamuro, more than one hundred people should join the staff of 870 employees, which had already been growing in recent years. The relief for the Brazilian NEC is the fact that it operates in segments that, so far, were not the ones most affected by the economic turbulence. In the country, it does not operate in the areas that have been making the headquarters and other Japanese companies bleed, like semiconductors and consumption electronics. Out of the three major business lines in which the group works, the Brazilian unit only has the line of products and services for the telecommunication networks and information technology (IT). When the crisis started, in the last months of 2008, NEC was getting ready to introduce some items of its consumption line in the Brazilian market, starting with monitors, servers and telephones aimed at small- and average-sized companies. Yamamuro affirmed that the plans were not ruled out, but they should be implemented in a more specific and cautious way. The subsidiary ended 2008 with a net income of R$ 480 million (US$ 262.3 million) 30% more than in 2007, and profit before taxes around R$ 19 million (US$ 10.4 million) (the figures are still being accounted). Out of the 64 companies NEC has outside Japan, only two should end the fiscal year that ends in March with profits: the Brazilian one (which already closed its accounts because it follows the calendar year) and the Irish one. In spite of the cloudy situation, the perspectives of NEC for the Brazilian market are very promising. The subsidiary foresees an increase of 15% in the net income in 2009, but with reduction in the profit margin. Yamamuro bets in two areas of business that should remain heated. One of them is the sale of equipment for the mobile telephone networks, since the operators have goals to reach. Another segment that should continue in the rise, in Yamamuro's opinion, is corporate networks.