Fujitsu Reports Fiscal 2015 Third-Quarter Financial Results

OREANDA-NEWS. February 03, 2016. Fujitsu today reported profit for the period attributable to owners of the parent of 5.2 billion yen, representing a deterioration of 22.3 billion yen from the third quarter of fiscal 2014.

Consolidated revenue for the third quarter of fiscal 2015 was 1,166.9 billion yen, essentially unchanged from the third quarter of fiscal 2014. Revenue in Japan decreased 1.5%. Although revenue in Japan from system integration services increased, revenue from PCs and server-related products decreased. Revenue outside of Japan rose 1.2%. Revenue from the Mobilewear sub-segment increased. Fujitsu recorded an operating profit of 14.0 billion yen, down 19.1 billion yen from the third quarter of fiscal 2014. The decline was the result of recording 17.6 billion yen in business model transformation expenses for strengthening business fundamentals in the EMEIA region, such as expenses relating to the closure of a product development facility in Europe.

Net financial income was 2.5 billion yen, down 2.9 billion yen from the same period in fiscal 2014, when the company recorded a net gain on foreign exchange because of the sharp fall in the value of the yen.

As a result, the profit before income taxes was 19.9 billion yen, a decline of 20.8 billion yen from the third quarter of the previous fiscal year.

Business Segment Financial Results for the Third Quarter

Revenue in the Technology Solutions segment amounted to 800.3 billion yen, essentially unchanged from the third quarter of fiscal 2014. Revenue in and outside of Japan was also for the most part unchanged. Revenue in the Services sub-segment in Japan rose due to growth in system integration services on higher investment by customers in the financial services and public sectors. In the System Platforms sub-segment, however, revenue in Japan fell due to the adverse impact of large-scale mainframe-related deals in the previous fiscal year’s third quarter. The segment posted an operating profit of 34.9 billion yen, representing a year-on-year decline of 9.6 billion yen. The decline was the result of recording 15.9 billion yen in business model transformation expenses. Excluding such expenses, despite the adverse impact of lower server-related revenue, the segment’s operating profit rose on account of cost efficiencies and the impact of higher Services revenue in Japan.

Revenue in the Ubiquitous Solutions segment was 259.2 billion yen, a decrease of 3.7% from the third quarter of fiscal 2014. Revenue in Japan fell by 5.9%. Although revenue from the Mobilewear sub-segment increased, revenue from PCs fell, primarily in enterprise PCs. Revenue outside Japan was essentially unchanged. Revenue from PCs in Europe fell, but revenue in the Mobilewear sub-segment rose, primarily in Europe and the US. The segment posted an operating loss of 1.0 billion yen, essentially unchanged from the same period in fiscal 2014. Higher procurement costs for US dollar-denominated components in Europe due to the continuing weakness of the euro against the US dollar, adversely impacted results in PCs, and 1.6 billion yen in business model transformation expenses were also recorded, but these were largely offset by cost-saving measures.

Revenue in the Device Solutions segment amounted to 151.6 billion yen, down 1.3% from the third quarter of fiscal 2014.The segment posted an operating profit of 5.7 billion yen, down 8.8 billion yen from the third quarter of fiscal 2014. In addition to the impact of transferring the system LSI device business to an affiliate, operating profit declined because, in the third quarter of fiscal 2014, there was a gain on the sale of equipment stemming from the closure of a production line.

Fiscal 2015 Consolidated Projections

Fujitsu has revised its full-year fiscal 2015 financial forecast announced on October 29, 2015, as follows.

The revenue forecast has been reduced by 80.0 billion yen from the announcement last October, to 4,800.0 billion yen. The forecast for revenue in the Technology Solutions segment has been reduced by 50.0 billion yen because of lower demand for network products. The forecast for revenue in the Device Solutions segment has been reduced by 30.0 billion yen on lower demand for devices used in smartphones and PCs.

The forecast for operating profit has been reduced by 20.0 billion yen, to 130.0 billion yen. The projected operating profit for Technology Solutions has been reduced by 10.0 billion yen. Within that segment, the projected operating profit for the Services sub-segment has been revised up by 3.0 billion yen because of profitability improvements and other factors, but the projected operating profit in the System Platforms sub-segment has been reduced by 13.0 billion yen because of lower projected sales of network products.

The projected operating profit for Device Solutions has been reduced by 10.0 billion yen because of the lower revenue from LSI and electronic components. In addition, 20.0 billion yen in business model transformation expenses that, in the forecast announced last October, were included in the Other/Elimination and Corporate segment have been reallocated to the Technology Solutions segment as 8.0 billion yen in expenses to the Services sub-segment and 12.0 billion yen in expenses to the System Platforms sub-segment, but this reallocation has no effect on the forecast for overall consolidated operating profit.

On account of the downward revision to the forecast for operating profit, the forecast for profit for the period attributable to owners of the parent has been reduced by 15.0 billion yen, to 85.0 billion yen.

Full-year financial projections for fiscal 2015

	FY2015 Projections (Full-Year) (Billion Yen)	Change from Previous Projections (October) (Billion Yen)
Revenue	4,800.0	-80.0
Operating Profit (Operating Profit Margin)	130.0 (2.7%)	-20.0 (-0.4%)
Profit for the Year Attributable to Owners of Parent	85.0	-15.0