30.01.2015, 11:50
Fujitsu Reports Fiscal 2014 Third-Quarter Financial Results
OREANDA-NEWS. Fujitsu today reported a profit for the third quarter attributable to owners of the parent of 27.6 billion yen (US\$228 million), a decline of 16.2 billion yen compared to the third quarter of fiscal 2013.
Consolidated revenue for the third quarter of fiscal 2014 was 1,171.5 billion yen (US\$9,682 million), a decrease of 2.4% from the third quarter of fiscal 2013. On a constant-currency basis, revenue fell by 6%. Revenue in Japan decreased 8.6%. In Japan, Revenue from LSI devices, system integration services and server-related products increased, but revenue from mobile phones, PCs, and network products decreased. Revenue outside of Japan rose 7.6%. Because the value of the yen declined against the US dollar, consolidated revenue increased by approximately 40 billion yen compared to the same period of the prior fiscal year. Revenue declined by 1% on a constant-currency basis due to the revenue decline of LSI devices and PCs outside Japan.
Gross profit was 301.9 billion yen, a decrease of 3.7 billion yen from the third quarter of fiscal 2013, resulting from the impact of lower revenue. The gross profit margin was 25.8%, an increase of 0.3 of a percentage point compared to the same period of the prior fiscal year, primarily the result of improved profitability in mobile phones, despite the negative impact of higher procurement costs in Europe resulting from the value of the euro declining against the US dollar.
Fujitsu recorded an operating profit of 33.1 billion yen (US\$274 million), a decrease of 3.0 billion yen from last fiscal year's third quarter.
Net financial income (including financial income, financial expenses, and income from investments accounted for using the equity method, net) was 7.6 billion yen, essentially unchanged from the third quarter of the prior fiscal year. Profit before income taxes was 40.7 billion yen, a decrease of 2.9 billion yen from the same period in the previous fiscal year.
Profit for the period attributable to owners of the parent declined to 27.6 billion yen mainly due to the liquidation of a subsidiary in the US in the third quarter of fiscal 2013, which served to lower income tax expenses in that period.
Comment from President Masami Yamamoto
"In the third quarter, in addition to a boost from the weaker yen and the positive impact of structural reforms in our semiconductor business, there was also brisk business in our Services sub-segment in Japan. As a result, I am delighted to report that on an operating profit basis we were able to exceed our own internal projections. Fiscal 2014 is an important first step on our way to achieving our medium-term management plan goals of fiscal 2016 operating profit of 250 billion yen and profit for the period attributable to owners of the parent of 150 billion yen or above. Given this, we are investing to expand ICT utilization, and at the same time, working to achieve the fiscal 2014 operating profit goal of 185 billion yen, aiming for a steady stream of successful new business deals and accelerating efforts to improve global cost efficiencies."
Business Segment Financial Results for the Third Quarter
Revenue in the Technology Solutions segment amounted to 802.7 billion yen (US\$6,634 million), up 2.1% from the same period in fiscal 2013. Revenue in Japan fell 2%. Revenue in the System Platforms sub-segment fell sharply on a periodic decline in demand by telecommunication carriers for mobile phone base stations in the network products business. In the Services sub-segment in Japan, however, revenue from system integration services rose on higher spending by customers in the public sector and financial services sector. Revenue outside Japan increased 8.6%. On a constant-currency basis, however, revenue rose by 1%. Revenue in the Services sub-segment outside Japan rose slightly. For the System Platforms sub-segment, revenue from x86 servers rose in Europe, but revenue from optical transmissions systems in North America declined with ongoing restrained investments by telecommunications carriers with regard to relevant segments of Fujitsu's business. The segment posted an operating profit of 44.6 billion yen (US\$369 million), a decline of 6.5 billion yen compared to the third quarter of fiscal 2013. In the System Platforms sub-segment, operating profit declined due to lower revenue from network products and because of higher component costs in Japan and Europe stemming from the weakness in the yen and euro against the US dollar. In the Services sub-sector, however, operating profit rose on higher revenue in Japan and the UK.
Revenue in the Ubiquitous Solutions segment was 269.2 billion yen (US\$2,225 million), a decrease of 16.2% from the same period of the prior fiscal year. Revenue in Japan fell by 25.2%. For mobile phones, revenue fell in comparison with the third quarter of fiscal 2013, when one of Fujitsu's smartphones was selected by a telecommunication carrier as a recommended model. For PCs, demand for upgrades as a consequence of the ending of support for an operating system had already peaked, resulting in lower revenue from both enterprise PCs and consumer PCs. Revenue outside Japan increased by 8%, and revenue even increased by 2% on a constant-currency basis. Revenue increased in the Mobilewear sub-segment, primarily in North America. The segment posted an operating loss of 1.2 billion yen (US\$10 million), which still represented an improvement of 4.1 billion yen from the third quarter of the previous fiscal year. In mobile phones, a combination of the impact of structural reforms, a decline in costs owing to stabilized quality, and a further reduction in operating costs led to a sharp improvement in operating profit, returning operations to profitability in comparison with the loss posted in the same period of the prior fiscal year.
Revenue in the Device Solutions segment amounted to 153.7 billion yen (US\$1,270 million), an increase of 5.2% from the same period of fiscal 2013. In Japan, revenue increased by 8.4%. Revenue from LSI devices increased, primarily from devices used in smartphones and devices used in servers. Outside Japan, revenue rose 2%. On a constant-currency basis, however, revenue declined 12%. Revenue from LSI devices declined with the sale of the microcontroller and analog device business, as well lower demand for smartphones. The segment posted an operating profit of 14.5 billion yen (US\$120 million), an increase of 11.3 billion yen compared to the third quarter of fiscal 2013. For LSI devices, operating profit was 10.7 billion yen, up 7.6 billion yen on the positive impact of structural reforms, the weaker yen and the improvement in capacity utilization rates on production lines for 300 mm wafers. For electronic components, operating profit was 3.8 billion yen, up 3.7 billion yen with the benefit of a depreciating yen and a decline in development costs resulting from the liquidation of an affiliate developing semiconductors for communication equipment.
Fiscal 2014 Consolidated Projections
For the full fiscal year, Fujitsu is projecting revenue of 4,800 billion yen and operating profit of 185 billion yen, unchanged on a consolidated basis from previous projections.
The projection for profit for the year before income taxes has been revised upward by 10 billion yen, to 200 billion yen, and the projection for profit for the year attributable to owners of the parent has been revised up by 7 billion yen, to 132 billion yen. The revised projections reflect the beneficial impact of the gain on foreign exchange throughout the first nine months of fiscal 2014.
Consolidated revenue for the third quarter of fiscal 2014 was 1,171.5 billion yen (US\$9,682 million), a decrease of 2.4% from the third quarter of fiscal 2013. On a constant-currency basis, revenue fell by 6%. Revenue in Japan decreased 8.6%. In Japan, Revenue from LSI devices, system integration services and server-related products increased, but revenue from mobile phones, PCs, and network products decreased. Revenue outside of Japan rose 7.6%. Because the value of the yen declined against the US dollar, consolidated revenue increased by approximately 40 billion yen compared to the same period of the prior fiscal year. Revenue declined by 1% on a constant-currency basis due to the revenue decline of LSI devices and PCs outside Japan.
Gross profit was 301.9 billion yen, a decrease of 3.7 billion yen from the third quarter of fiscal 2013, resulting from the impact of lower revenue. The gross profit margin was 25.8%, an increase of 0.3 of a percentage point compared to the same period of the prior fiscal year, primarily the result of improved profitability in mobile phones, despite the negative impact of higher procurement costs in Europe resulting from the value of the euro declining against the US dollar.
Fujitsu recorded an operating profit of 33.1 billion yen (US\$274 million), a decrease of 3.0 billion yen from last fiscal year's third quarter.
Net financial income (including financial income, financial expenses, and income from investments accounted for using the equity method, net) was 7.6 billion yen, essentially unchanged from the third quarter of the prior fiscal year. Profit before income taxes was 40.7 billion yen, a decrease of 2.9 billion yen from the same period in the previous fiscal year.
Profit for the period attributable to owners of the parent declined to 27.6 billion yen mainly due to the liquidation of a subsidiary in the US in the third quarter of fiscal 2013, which served to lower income tax expenses in that period.
Comment from President Masami Yamamoto
"In the third quarter, in addition to a boost from the weaker yen and the positive impact of structural reforms in our semiconductor business, there was also brisk business in our Services sub-segment in Japan. As a result, I am delighted to report that on an operating profit basis we were able to exceed our own internal projections. Fiscal 2014 is an important first step on our way to achieving our medium-term management plan goals of fiscal 2016 operating profit of 250 billion yen and profit for the period attributable to owners of the parent of 150 billion yen or above. Given this, we are investing to expand ICT utilization, and at the same time, working to achieve the fiscal 2014 operating profit goal of 185 billion yen, aiming for a steady stream of successful new business deals and accelerating efforts to improve global cost efficiencies."
Business Segment Financial Results for the Third Quarter
Revenue in the Technology Solutions segment amounted to 802.7 billion yen (US\$6,634 million), up 2.1% from the same period in fiscal 2013. Revenue in Japan fell 2%. Revenue in the System Platforms sub-segment fell sharply on a periodic decline in demand by telecommunication carriers for mobile phone base stations in the network products business. In the Services sub-segment in Japan, however, revenue from system integration services rose on higher spending by customers in the public sector and financial services sector. Revenue outside Japan increased 8.6%. On a constant-currency basis, however, revenue rose by 1%. Revenue in the Services sub-segment outside Japan rose slightly. For the System Platforms sub-segment, revenue from x86 servers rose in Europe, but revenue from optical transmissions systems in North America declined with ongoing restrained investments by telecommunications carriers with regard to relevant segments of Fujitsu's business. The segment posted an operating profit of 44.6 billion yen (US\$369 million), a decline of 6.5 billion yen compared to the third quarter of fiscal 2013. In the System Platforms sub-segment, operating profit declined due to lower revenue from network products and because of higher component costs in Japan and Europe stemming from the weakness in the yen and euro against the US dollar. In the Services sub-sector, however, operating profit rose on higher revenue in Japan and the UK.
Revenue in the Ubiquitous Solutions segment was 269.2 billion yen (US\$2,225 million), a decrease of 16.2% from the same period of the prior fiscal year. Revenue in Japan fell by 25.2%. For mobile phones, revenue fell in comparison with the third quarter of fiscal 2013, when one of Fujitsu's smartphones was selected by a telecommunication carrier as a recommended model. For PCs, demand for upgrades as a consequence of the ending of support for an operating system had already peaked, resulting in lower revenue from both enterprise PCs and consumer PCs. Revenue outside Japan increased by 8%, and revenue even increased by 2% on a constant-currency basis. Revenue increased in the Mobilewear sub-segment, primarily in North America. The segment posted an operating loss of 1.2 billion yen (US\$10 million), which still represented an improvement of 4.1 billion yen from the third quarter of the previous fiscal year. In mobile phones, a combination of the impact of structural reforms, a decline in costs owing to stabilized quality, and a further reduction in operating costs led to a sharp improvement in operating profit, returning operations to profitability in comparison with the loss posted in the same period of the prior fiscal year.
Revenue in the Device Solutions segment amounted to 153.7 billion yen (US\$1,270 million), an increase of 5.2% from the same period of fiscal 2013. In Japan, revenue increased by 8.4%. Revenue from LSI devices increased, primarily from devices used in smartphones and devices used in servers. Outside Japan, revenue rose 2%. On a constant-currency basis, however, revenue declined 12%. Revenue from LSI devices declined with the sale of the microcontroller and analog device business, as well lower demand for smartphones. The segment posted an operating profit of 14.5 billion yen (US\$120 million), an increase of 11.3 billion yen compared to the third quarter of fiscal 2013. For LSI devices, operating profit was 10.7 billion yen, up 7.6 billion yen on the positive impact of structural reforms, the weaker yen and the improvement in capacity utilization rates on production lines for 300 mm wafers. For electronic components, operating profit was 3.8 billion yen, up 3.7 billion yen with the benefit of a depreciating yen and a decline in development costs resulting from the liquidation of an affiliate developing semiconductors for communication equipment.
Fiscal 2014 Consolidated Projections
For the full fiscal year, Fujitsu is projecting revenue of 4,800 billion yen and operating profit of 185 billion yen, unchanged on a consolidated basis from previous projections.
The projection for profit for the year before income taxes has been revised upward by 10 billion yen, to 200 billion yen, and the projection for profit for the year attributable to owners of the parent has been revised up by 7 billion yen, to 132 billion yen. The revised projections reflect the beneficial impact of the gain on foreign exchange throughout the first nine months of fiscal 2014.
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