Tokyo, October 26, 2011
Fujitsu today reported consolidated net income of 26.1 billion yen (US$339 million) for the second quarter of fiscal 2011 (July 1 to September 30, 2011), compared with 17.4 billion yen posted in the corresponding period of fiscal 2010. Full-year projections for sales have been revised downward by 60.0 billion yen in light of anticipated exchange rates, although earnings expectations remain unchanged from those made in July 2011.
Second quarter net sales totaled 1,106.2 billion yen (US$14,366 million), an increase of 0.6% from the corresponding period of the previous fiscal year. In Japan, sales rose by 1.4%. Overall Japan sales rose due to higher sales of mobile phones, which benefited from the merger of Toshiba Corporation’s mobile phone business, as well as sales of mobile phone base stations. Sales outside Japan declined 1.0%, but rose 4.0% on a constant-currency basis. Although sales of electronic components decreased, there were higher sales of infrastructure services outside of Japan.
Fujitsu recorded second-quarter operating income of 24.1 billion yen (US$313 million), representing a deterioration of 12.9 billion yen compared to the same period of fiscal 2010.
For the April–September first half, operating income was 7.0 billion yen (US$91 million), an improvement of 2.0 billion yen over the July forecast. Net income for the first half was 5.7 billion yen higher than projected due to factors such as decreased tax expenses in line with share transfers related to a group reorganization in Europe, originally expected to take place in the second half of fiscal 2011.
“I am pleased that we were able to beat our profit targets despite a challenging business environment after the devastating earthquake in Japan,” commented Masami Yamamoto, President of Fujitsu. “Although we are now faced with an array of new risks—from the dramatically appreciating yen and turmoil in capital markets as a consequence of financial issues in the United States and European countries, to a deceleration of growth in emerging markets—I am committed to meeting our targets for the full fiscal year.”
Business Segment Results
Consolidated net sales in the Technology Solutions segment amounted to 726.2 billion yen (US$9,431 million), down 1.2% from the second quarter of fiscal 2010. Sales in Japan fell by 2.2%. Although sales of mobile phone base stations for LTE services increased, server-related sales declined because of fewer large-scale systems deals compared to the second quarter of fiscal 2010, and sales of network services also declined. In system integration services, although there were fewer large-scale systems deals compared to the second quarter of fiscal 2010, sales as a whole were essentially unchanged. Sales outside Japan were also on par with the same period of the previous fiscal year. Excluding the impact of exchange rate fluctuations, however, sales increased by 5%. Although there was a decline in North American sales of UNIX servers, sales of infrastructure services grew in Australia and Nordic regions.
The segment posted operating income of 43.1 billion yen (US$560 million), a decrease of 4.5 billion yen compared to the second quarter of fiscal 2010. In Japan, despite the positive impact of higher sales of mobile phone base stations and cost reductions in the x86 server business, income declined due to lower server-related and system integration services sales, as the result of fewer large-scale systems deals, as well as upfront investments in cloud services. Outside Japan, operating income increased due to improved performance in European sales of infrastructure services.
Net sales in the Ubiquitous Solutions segment were 280.3 billion yen (US$3,640 million), an increase of 6.1% compared to the same period in fiscal 2010. Sales in Japan increased 5.2%. Sales of PCs were essentially unchanged from the second quarter of fiscal 2010. Unit sales increased as lower prices in the consumer market sparked demand for replacement purchases, however, sales in the enterprise market decreased on account of a delayed recovery in demand. Sales outside Japan increased 8.6%. Unit sales of PCs increased, particularly in Europe. Sales of mobilewear devices also increased due to the impact of the normalization of automobile production outside Japan, which had been temporarily interrupted following the earthquake.
Operating income for Ubiquitous Solutions was 4.3 billion yen (US$56 million), essentially unchanged from the second quarter of fiscal 2010. In Japan, despite the positive impact of cost reductions in PC operations against a backdrop of yen appreciation, income was negatively impacted by the trend towards lower sales prices for feature phones and higher smartphone development costs in the mobile phone business.
Net sales in Device Solutions amounted to 147.5 billion yen (US$1,916 million), a decline of 8.4% compared to the second quarter of fiscal 2010. The segment recorded an operating loss of 3.8 billion yen (US$49 million), representing a deterioration of 9.0 billion yen from the second quarter of fiscal 2010.
Complete information on Fujitsu's first half, fiscal 2011 financial results, including financial tables, explanation of results and supplementary information, may be found at: http://www.fujitsu.com/about/ir/
* All yen figures have been converted to U.S. dollars, for convenience only, at a uniform rate of US$1 = 77 yen, the approximate closing rate on September 30, 2011.
Note: These materials may contain forward-looking statements that are based on management’s current information, 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 listed below.
- 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
- Risks related to public regulations, public policy and tax matters
- Risks related to product or services defects
- Potential emergence of unprofitable projects
- Risks related to R&D investments, capital expenditures, business acquisitions, business restructuring, etc.
- Risks related to natural disasters and unforeseen events
- Changes in accounting policies
