Tokyo, April 27, 2005
Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales of 4,762.7 billion yen (approximately US$44,512 million*) for fiscal year 2004 (April 1, 2004 - March 31, 2005), roughly even with the net sales recorded in the previous fiscal year. Solid sales gains in the Platforms segment helped to offset modest sales declines in Software & Services and Electronic Devices. Although sluggish domestic sales and certain problematic projects in Japan adversely impacted Software & Services income, bolstered by continued gains in production efficiency, strong results in Platforms - where operating income more than doubled - and higher income in Electronic Devices contributed to an increase in consolidated operating income to 160.1 billion yen (US$1,497 million), up 3.4% over the previous year.
Consolidated net income was 31.9 billion yen (US$298 million), compared to 49.7 billion yen in FY 2003. A number of extraordinary items affected these earnings. These included a 133.2 billion yen gain on sales of marketable securities, primarily sales of a portion of the company's shareholdings in FANUC, Ltd. and Advantest Corporation, as well as a 36.5 billion yen gain on the transfer of plasma display panel operations to Hitachi, Ltd. Offsetting these gains, the company recorded 15.2 billion yen in real estate valuation losses and 20.0 billion yen in restructuring charges. It also recognized a 93.5 billion yen valuation allowance for deferred tax assets. The overall effect of these measures helped to shore up Fujitsu's financial position.
"Although disappointed that we were not able to meet our original earnings targets for fiscal 2004, I am encouraged by the strong performance in our Platforms segment, as well as by significant improvement in our overseas businesses, where we were profitable in every region," said Fujitsu Limited president Hiroaki Kurokawa. "We will continue to aggressively pursue reforms in our domestic Software & Services business, promote further groupwide efficiency gains in development and production, intensify our overseas sales efforts, and further solidify our financial base."
Business Segment Results
Consolidated sales in the Platforms segment increased 6.0% to 1,705.1 billion yen (US$15,936 million). Sales increased in all key sub-segments, with especially strong growth in sales of UNIX servers in Europe and North America, double-digit gains in sales of transmission systems, and a nearly 20% increase in sales of hard disk drives. As a result of higher sales volumes and further cost efficiencies in manufacturing and development, operating income in the Platforms segment jumped by 25.7 billion yen over the previous fiscal year to 55.0 billion yen (US$514 million).
In Software & Services, consolidated sales declined 1.1% to 2,070.4 billion yen (US$19,350 million). Reflecting the slow pickup in IT investment in Japan, domestic sales fell 3.0%, due to sluggish sales in solutions/systems integration and lower income from public infrastructure system sales. Led by the continuing success of Fujitsu Services in winning large-scale government outsourcing contracts in the UK, overseas sales in this segment were strong, increasing 4.7% (9.8% on a continuing operations basis). Operating income in the segment declined by 25.7 billion yen to 113.0 billion yen (US$1,057 million), primarily as a result of significantly higher-than-anticipated development costs relating to certain domestic system development projects with deteriorating profitability that were completed during the fiscal year.
Consolidated sales in the Electronic Devices segment were roughly flat at 733.8 billion yen (US$6,859 million), although they were up 4.6% on a continuing operations basis. Worsening supply/demand balance and price erosion in the markets for plasma display panels and liquid crystal displays were partially offset by stronger demand for advanced technology devices and higher sales by components subsidiaries. Nevertheless, operating income in this segment increased by 5.0 billion yen to 32.5 billion yen (US$305 million), thanks to further improvements in production efficiency and higher income from components subsidiaries.
FY 2005 Projections
Looking to fiscal 2005, Fujitsu anticipates higher sales and significant improvement in operating income for Technology Solutions**, particularly with respect to networks and solutions/systems integration. In Ubiquitous Product Solutions**, the company foresees higher sales yet a decline in operating income due to intensifying price competition in the PC and hard disk drive markets. In Device Solutions**, the transfer of PDP and LCD businesses will contribute to an expected reduction in sales, and start-up costs associated with the ramping up of the Mie Plant's 300mm line for advanced logic chip production are expected to sharply lower operating income. In light of these and other factors, the company projects the following consolidated financial results for fiscal 2005:
Fujitsu Limited Consolidated Earnings Forecast for Fiscal 2005
| (billion yen) |
|
| FY 2005 (estimate) |
FY 2004 (actual) |
Change |
| Net Sales |
4,850.0 |
4,762.7 |
+1.8% |
| Operating Income |
175.0 |
160.1 |
+9.2% |
| Net Income |
50.0 |
31.9 |
+56.7% |
Complete information on Fujitsu's FY 2004 financial results, including financial tables, explanation of results, and supplementary information, may be found at: http://www.fujitsu.com/about/ir/.
*Note: All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 107 yen, the approximate closing exchange rate on March 31, 2005.
**Note: Beginning in FY 2005, Fujitsu will report its financial results according to these newly named business segments. Details may be found in the explanatory materials of Fujitsu's FY 2004 financial results. See: http://www.fujitsu.com/about/ir/
