Fujitsu reports fiscal 2016 first-quarter financial results
Jul 29, 2016
Operating profit improved owing to solid performance in Technology Solutions, although consolidated revenues declined
Tokyo, July 28, 2016
Fujitsu today reported a loss for the first quarter attributable to owners of the parent of 14.0 billion yen, representing an improvement of 4.8 billion yen compared to the first quarter of fiscal 2015.
Consolidated revenue for the first quarter of fiscal 2016 was 986.5 billion yen, down 78.5 billion yen over the last year. Although revenue in Japan from services increased, especially in systems integration and outsourcing services, revenue from mobile phones and LSI devices declined. In addition to a decline in revenue from infrastructure services in the US and Europe, and a decline in revenue from network products in North America, results were also impacted by foreign exchange movements.
Fujitsu recorded an operating loss of 11.2 billion yen, an improvement of 16.0 billion yen over the last year. Despite the impact of lower revenue from LSI devices and other areas, operating profit improved because of higher revenue from services in Japan and cost reductions and efficiencies in PCs and mobile phones, as well as the reduced impact from one-time expenses related to employee relocations in the network business in Japan.
Net financial income was a loss of 4.0 billion yen, representing a deterioration of 5.8 billion yen from the same period in fiscal 2015. This was due to the recording of a foreign exchange loss accompanying the sudden rise in the value of the yen at the end of this first quarter. Income from investments accounted for using the equity method, net, was 2.0 billion yen, a decrease of 6.6 billion yen from the same period in fiscal 2015. This was, in part, the result of recording one-time profits from an offering of shares of an affiliate on China's Shenzhen Stock Exchange in the same period of fiscal 2015.
As a result, the loss before income taxes was 13.2 billion yen, an improvement of 3.5 billion yen over the previous fiscal year.
Business Segment Financial Results
Revenue in the Technology Solutions segment amounted to 672.7 billion yen, a decrease of 6.4% from the first quarter of fiscal 2015. Revenue in the Services sub-segment fell as a result of weak sales in Europe and the US, in addition to the impact of foreign exchange movements, although sales in Japan rose. Revenue in the System Platforms sub-segment also fell due to continued investment constraints by telecommunications carriers both in Japan and North America. The segment posted an operating profit of 7.1 billion yen, representing an improvement of 11.1 billion yen compared to the same period in fiscal 2015. In the Services sub-segment, although revenue fell, operating profit increased because of ongoing profitability improvements both in and outside Japan. In the System Platforms sub-segment, in addition to profitability improvements in the server-related business, primarily in x86 servers, operating profit for network products improved as a result of lower overhead costs and because the company recorded 4.4 billion yen in business model transformation expenses in the first quarter of fiscal 2015.
Revenue in the Ubiquitous Solutions segment was 219.8 billion yen, a decrease of 9.6% from the first quarter of fiscal 2015. For mobile phones, there was a significant decline in revenue from the previous year, primarily in high-end models, due to a longer replacement cycle. Revenue from PCs in Europe fell. Revenue in the Mobilewear sub-segment rose, primarily in Japan and Europe. The segment posted an operating profit of 4.6 billion yen, an improvement of 12.2 billion yen over the same period in fiscal 2015. For PCs, operating profit improved due to cost efficiencies, in addition to ongoing component cost reductions in Japan on the continued strength of the yen against the US dollar. For mobile phones, although revenue declined, operating profit improved as a result of cost reductions and efficiencies. Operating profit increased for Mobilewear because of higher revenue.
Revenue in the Device Solutions segment amounted to 130.0 billion yen, down 13.3% from the first quarter of fiscal 2015. The segment posted an operating loss of 1.1 billion yen, representing a deterioration of 11.9 billion yen from the first quarter of fiscal 2015. In addition to the impact of lower revenue from LSI devices, particularly for use in smartphones, operating profit declined due to the cost burden and lower capacity utilization associated with legally mandated inspections of manufacturing facilities. In addition, operating profit for both LSI devices and electronic components was adversely affected by lower revenue as a result of the continuing strength of the yen against the US dollar.
Fiscal 2016 Consolidated Projections
Projections for the full-year fiscal 2016 remain unchanged from those announced in the beginning of the fiscal year.
Assumptions on exchange rates for fiscal 2016 are 110 yen for the US dollar, 125 yen for the euro, and 160 yen for the British pound.
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