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Fujitsu Reports Fiscal 2013 Second-Quarter Financial Results

Higher revenue drives first half operating income to exceed projections

Fujitsu Limited

Tokyo, October 31, 2013

Fujitsu today reported a consolidated net income of 12.3 billion yen (US$126 million), an increase of 1.2 billion yen compared to the second quarter of fiscal 2012. Operating income for the first-half of fiscal 2013 was an improvement over July projections by over 20 billion yen.

Net sales for the second quarter of fiscal 2013 were 1,152.3 billion yen (US$11,758 million), an increase of 3.4% from the same period of fiscal 2012, mainly as a result of foreign exchange fluctuations. Sales in Japan declined by 6.7%. Sales in system integration services grew, although sales of mobile phones declined. Sales outside of Japan rose 25.1%. Excluding the impact of foreign exchange fluctuations, sales rose by 2%. Sales of optical transmission systems and car audio and navigation systems in North America increased, as did LSI devices and electronic components.

Fujitsu recorded an operating income of 33.6 billion yen (US$343 million), an improvement of 2.5 billion yen from the previous fiscal year's second quarter. While there was the adverse impact stemming from lower sales of mobile phones, the improvement was primarily due to the impact of workforce-related measures and structural reforms in LSI devices business and businesses outside Japan.

There was a loss of 4.8 billion yen in other income and expenses, essentially unchanged from the previous fiscal year. The company posted 3.8 billion yen in other expenses, comprised of personnel-related expenses, primarily in its businesses outside Japan, and restructuring expenses for its LSI device business. On the other hand, there were improvements in foreign currency translation adjustment and other items.

"I am pleased to announce that we were able to beat the operating income target for the first half of fiscal 2013," commented Masami Yamamoto, President of Fujitsu Limited. "We saw solid contributions from structural reforms in the LSI devices business and businesses outside Japan as well as workforce-related measures. We will continue to pursue these initiatives for further profitable growth going forward."

Business Segment Results

Consolidated net sales in the Technology Solutions segment amounted to 785.3 billion yen (US$8,013 million), an increase of 10.1% from the same period in fiscal 2012. Sales in Japan increased 4.4%. For system integration services, sales grew on account of expanded investment, primarily in the financial services and public sectors. Server-related sales increased due to the contribution of large-scale systems deals in the public sector. Sales of network products also increased as a result of telecommunication carriers' investments to expand LTE service area coverage. Sales outside Japan increased 21.8%. On a constant currency basis, sales were on par with the same period in fiscal 2012. Sales of new UNIX server models were weak. Sales of optical transmission systems in North America increased on a recovery in spending by telecommunication carriers. The segment posted operating income of 55.7 billion yen (US$568 million), up 11.1 billion yen compared to the second quarter of fiscal 2012.

Net sales in the Ubiquitous Solutions segment were 262.7 billion yen (US$2,681 million), a decline of 16.5% from the second quarter of fiscal 2012. Sales in Japan were down by 27.1%. Enterprise PC sales grew on account of large-volume orders in the financial services industry and higher demand for upgrades following the end of support for an operating system product. In mobile phones, sales fell on account of the shrinking market for feature phones, which has continued from the first quarter, and the impact of the revised smartphone sales strategies of telecommunications carriers. Another factor in the year-on-year decline was the record high quarterly shipment of mobile phones in the second quarter of fiscal 2012 that coincided with the release of multiple new models. Sales of the Mobilewear sub-segment's car audio and navigation systems were roughly on par with the same period in fiscal 2012. Sales outside Japan increased 24.4%. On a constant currency basis, sales increased 3%. The segment posted an operating loss of 11.6 billion yen (US$118 million), representing a deterioration of 24.0 billion yen from the second quarter of the previous fiscal year.

Net sales in Device Solutions amounted to 159.0 billion yen (US$1,622 million), an increase of 15% compared to the second quarter of fiscal 2012. Sales in Japan declined 5%. Sales of LSI devices used in smartphones as well as sales of electronic components increased. Sales outside Japan increased 41.1%. On a constant currency basis, sales increased 12%. Sales of LSI devices for smartphones increased. Sales of electronic components, primarily to China, increased. The segment recorded operating income of 10.4 billion yen (US$106 million), an improvement of 13.8 billion yen compared to the second quarter of fiscal 2012, and representing the third straight quarter of profitable results.

Fiscal 2013 Consolidated Projections

Projected net sales for the full fiscal year have been revised upward by 70 billion yen, to 4,620 billion yen. The Technology Solutions segment accounts for 50 billion yen of the increase mainly due to the upward revision to sales in the segment. This reflects the positive impact of the weaker yen on Services outside Japan and the impact of a recovery in ICT spending on Services in Japan. Sales of Ubiquitous Solutions have been revised upward by 40 billion yen. Although sales of mobile phones are projected to be lower because of lower unit sales, overall sales in the segment are projected to be higher mainly on greater demand for replacement PCs, primarily among enterprise customers. Sales of Device Solutions are projected to decline by 30 billion yen, comprised of 10 billion yen for LSI devices and 20 billion yen for electronic components, due to lower projected sales for LSI devices used in smart phones and lower sales for electronic components used in PCs.

There has been no change to the consolidated operating income projection of 140 billion yen. Although the operating income projection for Ubiquitous Solutions has been revised downward because of lower unit sales and higher costs in the mobile phone business, operating income projection in Technology Solutions has been revised upward owing to the solid performance of network products and the services businesses. In addition, operating loss in the Other/Elimination and Corporate segment is projected to improve due to progress in streamlining company-wide expenses.

Full-year financial projections for fiscal 2013
(Billion Yen)
  FY 2013 Projections (Full-Year) Change from Previous (July) Projections
Net Sales 4,620.0 70.0
Operating Income 140.0 -
Net Income 45.0 -

* Yen figures have been converted to U.S. dollars, for convenience only, at a uniform rate of US$1 = 98 yen, the approximate closing rate on September 30, 2013.

About Fujitsu

Fujitsu is the leading Japanese information and communication technology (ICT) company offering a full range of technology products, solutions and services. Approximately 170,000 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 4.4 trillion yen (US$47 billion) for the fiscal year ended March 31, 2013. 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: 31 October, 2013
City: Tokyo
Company: Fujitsu Limited, , , , , , , , , , , , ,

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