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The Fujitsu Group will implement forward-looking business reforms and a new strategy for growth in order to realize its medium-term management plan. The business reforms will include initiatives to raise the profitability of core businesses and accelerate the creation of cloud computing-related businesses.
Over the years, the Fujitsu Group has developed a vertically integrated business model which will become an even more important strength in the cloud computing era. Using this model, we will address the key issues facing our customers and society, rapidly and with the kind of reliable services that only Fujitsu can deliver.
The Fujitsu Group is projecting operating income of 185 billion yen for fiscal 2010. A 55-billion-yen increase in operating income from strengthening core businesses will be crucial to meeting this projection. Moreover, in fiscal 2011, Fujitsu is targeting operating income of 250 billion yen as a result of higher profitability in its core businesses. To meet the targets, the Fujitsu Group will go on "offense" with structural reforms and with a new strategic growth plan.
The Fujitsu Group faces two major challenges in realizing its growth scenario. The first is accelerating our globalization. Fujitsu's future growth is dependent on its ability to grow business outside Japan as well as in Japan—we aim to become a truly global ICT company.
The second challenge is creating new services businesses. The Fujitsu Group must launch new businesses that can become a major source of future earnings. The entire Fujitsu Group is striving to achieve the medium- to long-term vision of creating an "Intelligent Society."
The Fujitsu Group's business is deeply rooted in the regions in which it operates. Our goal is to use this multicultural approach to spread best practices from one region to another. We seek to develop close relationships with customers in every region of the globe and optimally deliver services that bring together the comprehensive strengths of the Fujitsu Group. Currently, 37% of our total sales are generated outside of Japan, but the goal is to raise this level to over 40%.
The Fujitsu Group plans to expand the use of ICT into realms where it is not yet prevalent by leveraging cloud computing. At the same time, we will create new services businesses on top of cloud platforms.
People generate massive amounts of data in their professional and personal lives. We can use this data to engineer new services for a wide variety of industries, including energy, transportation, and logistics. This will make business and society more efficient and convenient. Currently, we are conducting a number of pilot initiatives and have begun to review their commercial potential.
The full-scale launch of cloud-related businesses is the starting line for the execution of the Fujitsu Group's growth scenario. We anticipate that the profits generated by accelerating globalization and creating new services businesses will begin to fully contribute to the Fujitsu Group's business performance starting in fiscal 2011. These two aspects of our business expansion must get on track for Fujitsu to generate profit growth in the medium- and long-term.
The Fujitsu Group is planning a total of 400 billion yen in capital expenditures and R&D expenses in fiscal 2010. We will devote 100 billion yen, or 25% of the overall amount, to cloud-related investments because cloud computing represents the main business for our medium- to long-term profit growth. In addition to these capital expenditures and R&D investments, we are aiming to train 5,000 cloud specialists by the end of fiscal 2011. We plan to front-load and accelerate investments in an effort to solidify our leadership in the cloud market.
The Fujitsu Group's medium-term targets for fiscal 2011 are operating income of 250 billion yen; net income of 130 billion yen; an operating income margin of over 5%; more than 40% of total sales from outside Japan; and free cash flow of over 150 billion yen.
First, the Fujitsu Group seeks to be a valued and trusted partner to our customers. We seek to unleash the new possibilities of ICT to support the new initiatives of our customers while growing together with them. Second, Fujitsu also seeks to be a truly global ICT company, committed to supporting the initiatives of customers seeking to expand their business globally. As a third aspiration, as president, I want Fujitsu to be an energetic and dynamic company. By continuing to transform Fujitsu into a fast-moving company that welcomes challenge, I want Fujitsu to work with customers to bring about a more prosperous future and remain committed to increasing corporate value.
The above information is true and accurate at the time of publication. However, it is subject to change at any time without prior notice.