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Fujitsu Reports Fiscal 2015 Full-Year Financial Results

Business model transformation expenses lowered operating profit, although profit for the year attributable to owners of the parent was in line with the January projection

Fujitsu Limited

Tokyo, April 28, 2016

Fujitsu today reported profit for the year attributable to owners of the parent was 86.7 billion yen, down 53.2 billion yen from fiscal 2014.

Consolidated revenue for fiscal 2015 was 4,739.2 billion yen, essentially unchanged from fiscal 2014. In Japan, revenue from network products and PCs declined, but revenue from system integration services increased. Outside Japan, revenue from network products declined, but results benefited from foreign exchange movements.

Fujitsu recorded an operating profit of 120.6 billion yen, down 58.0 billion yen from fiscal 2014. The company recorded business model transformation expenses of 41.5 billion yen which include 32.4 billion yen for business outside Japan, 5.1 billion yen for network business realignment mainly in the Technology Solutions segment, and 3.9 billion yen for Ubiquitous Solutions business realignment. The operating profit margin was 2.5%, down 1.3 percentage points from the prior fiscal year.

Net financial expenses were 7.2 billion yen, representing a deterioration of 18.9 billion yen from fiscal 2014, when the company recorded a net gain on foreign exchange because of the sharp fall in the value of the yen. Income from investments accounted for using the equity method, net, was 18.4 billion yen, an increase of 9.9 billion yen from fiscal 2014. Fujitsu's system LSI device design and development business was transferred to an affiliate. In addition, Fujitsu recorded a dilution gain from changes in equity interest stemming from an offering of shares of an affiliate on China's Shenzhen Stock Exchange.

As a result, profit before income taxes was 131.8 billion yen, down 67.0 billion yen from the previous fiscal year.

Comparison with Earnings Forecast Announced in January 2016

Revenue fell short of the projection by 60.7 billion yen, primarily because of the lower yen value of revenue outside Japan resulting from the rapid strengthening of the yen toward the end of the fiscal year and also on lower-than-anticipated revenue from network products-related business. Operating profit fell short of the projection by 9.3 billion yen due to such factors as business model transformation expenses for business outside Japan (in North America and elsewhere). On the other hand, profit for the year attributable to owners of the parent was essentially in line with the January projection because of improvements in income from investments accounted for using the equity method and lower income tax expenses.

Business Segment Financial Results

Revenue in the Technology Solutions segment amounted to 3,283.3 billion yen, essentially unchanged from the previous fiscal year. Revenue in the Services sub-segment in Japan rose due to growth in system integration services on higher investment by customers in the financial services sector and public sector. Revenue in the Services sub-segment outside Japan declined because it was a slow period for large-scale deals in the UK and due to weakness in the US. In the System Platforms sub-segment, however, revenue in mobile phone base stations in Japan and optical transmission systems in Japan and North America declined due to continuing investment constraints by telecommunications carriers. In addition, in server-related business, revenue fell, particularly in mainframe-related business, due to a reduction in large-scale deals in Japan. The segment posted an operating profit of 186.2 billion yen, representing a decline of 36.2 billion yen compared to the previous fiscal year

Revenue in the Ubiquitous Solutions segment was 1,040.9 billion yen, a decrease of 2.1% from the previous fiscal year. For both enterprise and consumer PCs, revenue declined. For mobile phones, revenue fell due in part to the decline in unit sales of feature phones. The segment posted an operating loss of 7.6 billion yen, representing a deterioration of 16.4 billion yen from the previous fiscal year. In PCs, in addition to lower revenue, higher procurement costs for US dollar-denominated components in Europe and Japan, due to the continuing weakness of the yen and of the euro against the US dollar, adversely impacted results, resulting in a significant deterioration. In mobile phones, the deterioration was caused by the impact of lower revenue and the impact of expenses incurred in the first half of the fiscal year to deal with a defective mobile phone model.

Revenue in the Device Solutions segment amounted to 603.9 billion yen, up 1.4% due in part to the effects of the weak yen. The segment posted an operating profit of 30.3 billion yen, down 6.5 billion yen from the previous fiscal year due to the impact of transferring the system LSI device business to an affiliate, as well as the impact of revenue declines due to lower total demand for smartphones and PCs, especially in the second half.

Fiscal 2016 Consolidated Projections

For fiscal 2016, Fujitsu is projecting revenue of 4,600 billion yen. This represents a decline of 2.9% from fiscal 2015, however, excluding the impact of foreign exchange movements, it is essentially unchanged from fiscal 2015. The forecast for operating profit is 120.0 billion yen, essentially unchanged from the previous year. In fiscal 2016, Fujitsu plans to continue to transform its business model, and anticipates expenses associated with these measures of 45.0 billion yen. The projected profit for the year attributable to owners of the parent is 85.0 billion yen, approximately the same as in fiscal 2015.

Assumptions on exchange rates for fiscal 2016 are 110 yen for the US dollar, 125 yen for the euro, and 160 yen for the British pound.

Fiscal 2016 Consolidated Projections
FY2016 Projections
(Billion Yen)
Change vs. FY2015
(Billion Yen)
Revenue 4,600.0 -139.2
Operating Profit
(Operating Profit Margin)
120.0
(2.6%)
-0.6
(0.1%)
Profit for the Period Attributable to Owners of Parent 85.0 -1.70

About Fujitsu

Fujitsu is the leading Japanese information and communication technology (ICT) company, offering a full range of technology products, solutions, and services. Approximately 156,000 Fujitsu people support customers in more than 100 countries. We use our experience and the power of ICT to shape the future of society with our customers. Fujitsu Limited (TSE: 6702) reported consolidated revenues of 4.7 trillion yen (US$41 billion) for the fiscal year ended March 31, 2016. For more information, please see http://www.fujitsu.com.

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All 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: 28 April, 2016
City: Tokyo
Company: Fujitsu Limited