Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales of 2,513.1 billion yen (approximately US$21,853 million*) for the first half of fiscal 2007 (April 1, 2007 - September 30, 2007), an increase of 6.4% over the first half of fiscal 2006 and a record on a half-year basis.
The increase in sales was broadly based, with each of Fujitsu's three business segments reporting year-on-year first-half sales gains of at least 5%. Sales in the Services sub-segment remained strong, rising 9.2%. Sales in Japan increased by 3.9%, while sales outside Japan rose 10.8%.
Fujitsu posted consolidated operating income of 43.9 billion yen (US$382 million), a decline of 6.7 billion yen compared to the same period the previous year. The company implemented significant changes to its accounting policies this fiscal year to bring them more closely in line with International Financial Reporting Standards (IFRS). Excluding the impact of these accounting changes, operating income declined by 3.4 billion yen compared to the first half of fiscal 2006. Operating income was also affected by higher upfront strategic investments in logic LSI devices and next-generation networks; severe price declines for hard disk drives (HDDs) for notebook computers; lower utilization of standard logic LSI facilities stemming from a slow recovery in demand; and one-time expenses relating to overseas acquisitions in the Company's services businesses.
In other income and expenses, with the adoption of new accounting policies, Fujitsu posted a valuation loss of 25.0 billion yen on inventories at the beginning of the period. The Company also posted a gain of 11.6 billion yen from the sale of shares in affiliates. Fujitsu recorded a first-half consolidated net loss of 9.3 billion yen (US$81 million). Excluding the impact of accounting policy changes, there was net income of 7.6 billion yen.
Consolidated first-half net sales in the Technology Solutions segment, which includes the System Platforms and Services sub-segments, rose 5.5% over the same period in fiscal 2006, to 1,507.5 billion yen (US$13,109 million). Sales in Japan declined by 1.6%, as higher sales of systems integration services were offset by lower sales of mobile phone base stations and optical transmission systems. Overseas sales increased by 19.4% on higher sales of UNIX servers and optical transmission systems as well as continued strong performance in outsourcing. Operating income for the segment was 38.7 billion yen (US$337 million). In terms of operating income, despite lower sales of mobile phone base stations and continued investments in the development of optical transmission systems in the UK, operating income rose because of higher sales in our services business and rising sales of servers and related products, as well as higher profitability in our systems integration business in Japan.
Net sales in the Ubiquitous Product Solutions segment, which includes PCs, mobile phones, hard disk drives (HDDs) and other products, were 575.0 billion yen (US$5,000 million), an increase of 8.8% over the same period last year. Sales in Japan increased by 9.6%, led by strong demand for mobile phones. Outside Japan, sales increased by 7.4%, with strong sales of HDDs and notebook PCs. Operating income for the segment was 21.8 billion yen (US$190 million), an increase of 1.8 billion yen over the comparable period last year. In terms of operating income, despite the impact of severe price declines in HDDs for notebook PCs, operating income for the segment rose as a result of higher sales of PCs in overseas markets, higher sales of mobile phones, progress in reducing component costs and greater cost efficiencies.
Net sales in the Device Solutions segment increased 5.6% over the first half of fiscal 2006, to 397.9 billion yen (US$3,460 million). Sales in Japan rose by 21.2%, driven by higher sales of advanced LSI devices as new production lines came on stream. Overseas sales declined by 15.3%, primarily reflecting the realignment in the company's sales organization for Flash memory chips used in mobile phones. Operating income for the segment declined sharply, to 6.1 billion yen (US$53 million). Excluding the impact of accounting policy changes, operating income declined by 13.1 billion yen, primarily as a result of the weak market for standard technology logic devices and higher depreciation and development expenses for advanced technology logic devices. After posting an operating loss in the first quarter, however, the segment swung back to profitability in the second quarter.
As announced on October 22, 2007, in order for a dividend to be paid out of retained earnings resulting from the unconsolidated net income of 29.8 billion yen (US$259 million) reported for the first half of fiscal 2007, Fujitsu has prepared special accounts settlement reports using, in accordance with the Japanese Corporate Law, September 30, 2007 as the special accounts settlement date. The lengthier audit procedures required for the special accounts settlement resulted in a delay of approximately one month in the announcement of the first-half results, although the results closely reflected the revised first-half projections announced on October 22.
Fujitsu is maintaining its fiscal 2007 full-year consolidated earnings forecast unchanged, as follows:
Complete information on Fujitsu's first-half fiscal 2007 financial results, including financial tables, explanation of results and supplementary information, may be found at:
* All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 115 yen, the approximate closing exchange rate on September 30, 2007.
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:
Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that create infinite possibilities for its customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.1 trillion yen (US$43.2 billion) for the fiscal year ended March 31, 2007. For more information, please see: www.fujitsu.com
Date: 22 November, 2007
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