Fujitsu Services

Fujitsu Services sees fast growth in outsourcing in late 2005.

Fujitsu Services's parent company Fujitsu Group last night unveiled its Q3 results for the quarter ending 31. December 2005. At group level, sales rose 7.5% to Yen 1,121bn (about $9.5bn), while headline operating margin doubled from 0.5% to 1.1%. Fujitsu kept its forecast for the full year unchanged at Yen 4,800bn and an operating margin of 3.6%.

Hellerup, Den 13. januar 2006 — Fujitsu Services sees fast growth in outsourcing in late 2005.

Fujitsu Services's parent company Fujitsu Group last night unveiled its Q3 results for the quarter ending 31. December 2005. At group level, sales rose 7.5% to Yen 1,121bn (about $9.5bn), while headline operating margin doubled from 0.5% to 1.1%. Fujitsu kept its forecast for the full year unchanged at Yen 4,800bn and an operating margin of 3.6%.

In the Technology Services division, sales rose 9.1% to Yen 669bn, and in the overseas segment of Technology Services (where Fujitsu Services resides), sales rose a very healthy 15.9% to reach Yen 226.bn. Across the whole Technology Services division, including sales in Japan, IT services revenues rose 12% to reach just under Yen 520bn, with operating margin up from 2.3% to 3.7%.

Fujitsu said sales of IT services outside Japan grew by 17.8% in Q3 to reach Yen 182bn, "driven by especially robust outsourcing service revenues in the UK".

Comment: It's clear Fujitsu Services had an excellent Q4. Standing guidance for Fujitsu Services is for core revenue growth of 9% in the year to March 2006, supplemented by another 6% from the absorption of Fujitsu's IT services operation in Spain (which transferred to Fujitsu Services in 2005), taking revenues to a total of about £2,280m (around €3.3bn).

It's very likely that Fujitsu Services including Spain grew much faster than 9% in Q3, so it will be interesting to see if the full-year growth for Fujitsu Services turns out to be higher than expected. We certainly expect operating margin at Fujitsu Services to be much higher than in the Japanese and global businesses (Fujitsu Services' operating margins were 4.2% last year).

Overall, we see Fujitsu Services as a company that plays well to its strengths in infrastructure outsourcing, that understands its core market (UK public services), and that's quietly strengthening its capabilities in consulting in order to move up the value chain, both to protect those outsourcing revenues and generate new ones. Nevertheless, it needs to strengthen its position outside the public sector and outside the UK, it needs to develop its global-sourcing capabilities further, and needs to sort out its BPO story. With the core outsourcing business doing well, that should be very possible.

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