Fujitsu Limited, a leading provider of IT-based business solutions for the global marketplace, today reported consolidated operating income of 13.3 billion yen (US$147 million*) for the first nine months of fiscal 2008 ended December 31, 2008, as higher profitability in the Technology Solutions business buoyed the company amid a decline in demand for semiconductors and mobile products.
Consolidated net sales in the nine-month period totaled 3,507.6 billion yen (US$38,546 million), a decline of 7.9% compared to the same period in fiscal 2007. Excluding the impact of the yen's appreciation, net sales decreased by 3%. The company reported a net loss of 36.1 billion yen (US$397 million) for the nine-month period compared with a net loss of 3.8 billion yen in the same period of fiscal 2007, due to one-time charges and higher non-operating losses.
Operating income from the mainstay Technology Solutions business, which includes IT services, system products and telecommunications equipment, grew 6.3% for the nine-month period to 77.6 billion yen (US$853 million) on higher sales of systems integration services and telecom equipment, along with greater cost efficiencies. Services sales grew 4.8% in Japan, and outside Japan sales rose 4% when excluding the impact of yen appreciation. The strong performance in IT services in Japan was due largely to solid systems integration orders from the public and healthcare sectors.
Volume product areas, such as PCs, mobile phones, hard disk drives (HDDs), and electronic devices were negatively impacted by increasingly severe market conditions brought on by a general downturn in consumer spending and intensified price competition.
On a geographic basis, nine-month net sales in Japan declined by 2.3% while sales outside Japan fell 17.0% due in part to the rapid appreciation of the yen in the third quarter.
"Our business operations remained profitable despite a harsh economic climate," said Fujitsu Limited President Kuniaki Nozoe. "We've proven that we can consistently generate profits in the IT services business, but overall we're not satisfied with the results. I'm confident that the measures we take in the coming months will put us in a better position to grow once the global economy turns the corner."
For the October-December 2008 third quarter, the company reported consolidated net sales of 1,053.8 billion yen (US$11,581 million), an operating loss of 25.1 billion yen (US$277 million) and a net loss of 40.7 billion yen (US$447 million).
Business Segment Results
Consolidated net sales in the Technology Solutions segment, which includes the System Platforms and Services sub-segments, declined 2.8% to 2,210.0 billion yen (US$24,286 million). Sales in Japan rose by 5.6% primarily due to higher sales of systems integration and outsourcing services, as well as higher sales of router equipment to telecom carriers. Sales outside Japan declined 16.1%. Operating income for the segment was 77.6 billion yen (US$853 million), an increase of 4.6 billion over the same period last year, as a result of higher cost efficiencies in the mobile phone base station business, higher sales of router equipment to telecom carriers, and both higher sales and greater cost efficiencies in the systems integration business in Japan.
Net sales in the Ubiquitous Product Solutions segment were 727.3 billion yen (US$7,993 million), a decrease of 17.4% from the same period last year. Mobile phone sales declined in Japan as a result of a longer upgrade cycle, and sales of PCs and HDDs declined globally due to intensified price competition and sluggish demand. The segment posted an operating loss of 2.6 billion yen (US$29 million) for the first nine months, due largely to intensified competition in the PC and HDD markets as well as increased cost of mobile phone development.
Net sales in Device Solutions for the first nine months were 490.4 billion yen (US$5,390 million), a decrease of 18.4% compared to the first nine months of fiscal 2007. Although sales of 65nm logic devices increased, sales of 90nm logic devices and standard logic devices declined. Demand is becoming increasingly weak, with sales declines of 13.5%, 22.4% and 30.8% recorded in the first, second and third quarters, respectively. The segment posted an operating loss of 28.4 billion yen (US$313 million) for the first nine months of fiscal 2008 as a result of the impact of lower sales and capacity utilization rates.
Fiscal 2008 Consolidated Projections
Since the previous forecast in October 2008, the economic environment has rapidly deteriorated, particularly in Europe and the United States, resulting in a severe global economic recession. In Japan, the economy is expected to continue to contract, with capital spending rapidly shrinking as a result of the deterioration in corporate earnings and with weaker consumer spending as employment conditions worsen. Due to these and other factors, the company has revised its full-year projections for fiscal 2008 as follows:
Please see the press release "Fujitsu Revises Earnings Projections for Fiscal 2008" issued today for more detailed information on earnings projections (http://www.fujitsu.com/global/about/ir/). Complete information on Fujitsu's financial results, including financial tables, explanation of results and supplementary information, may be found at the same site.
* All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 91 yen, the approximate closing exchange rate on December 31, 2008.
Note: These materials may contain forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors:
- General economic and market conditions in key markets (particularly in Japan, North America, Europe and Asia, including China)
- Rapid changes in the high-technology market (particularly semiconductors, PCs, etc.)
- Fluctuations in exchange rates or interest rates
- Fluctuations in capital markets
- Intensifying price competition
- Changes in market positioning due to competition in R&D
- Changes in the environment for the procurement of parts and components
- Changes in competitive relationships relating to collaborations, alliances and technical provisions
- Potential emergence of unprofitable projects
- Changes in accounting policies
Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 160,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.3 trillion yen (US$53 billion) for the fiscal year ended March 31, 2008. For more information, please see: www.fujitsu.com.
All other company or product names mentioned herein are trademarks or registered trademarks of their respective owners. Information provided in this press release is accurate at time of publication and is subject to change without advance notice.
Date: 30 January, 2009
Company: Fujitsu Limited, , , , ,
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