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S&P Upgrades NEC to A- on Improved Profitability

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S&P Global Ratings upgraded NEC's (TYO:6701) long-term issuer credit rating to A- from BBB+, according to a recent release.

The rating action reflects the better-than-expected increase in the company's profitability due to higher value-added business and a productivity boost. The company's IT services business has expanded orders and earnings in the public sector by obtaining solid system update demand, according to S&P.

The rating agency expects the company's EBITDA margin to rise to the high 15% range over the next one to two years amid improving profitability in core segments. The company should retain strong financial metrics, given better cash flow generation and prudent financial management that lead to controlled investments.

S&P derives the stable outlook on its view that the company will keep its healthy position with a solid IT service and social infrastructure segment base as well as disciplined financial management.

Notable shifts in the company's EBITDA margin or growth investments could trigger future rating actions.

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