Fujitsu Reports Fiscal 2014 First Quarter Financial Results
From the first quarter of fiscal 2014, the Fujitsu Group has adopted International Financial Reporting Standards (IFRS). In addition, consolidated financial statements for the previous fiscal year's first quarter and for the full 2013 fiscal year are presented in accordance with IFRS.
Consolidated revenue for the first quarter of fiscal 2014 amounted to 1,068.6 billion yen (US$10,580 million), an increase of 6.9% from the first quarter of fiscal 2013. Revenue in Japan increased 8.1%. Revenue from mobile phones and PCs rose significantly, and revenue from system integration services also increased, primarily from the public sector and financial services sector. Outside of Japan, revenue rose 5.3%, but was essentially unchanged on a constant-currency basis. Revenue from LSI devices and electronic components declined, but higher revenue from car audio and navigation systems was recorded in North America, and revenue of PCs grew in Europe.
Gross profit was 280.9 billion yen, an increase of 21.0 billion yen from the first quarter of fiscal 2013. The gross profit margin was 26.3%, an increase of 0.3 of a percentage point from the first quarter of the previous fiscal year as a result of improved profitability in mobile phones and other factors. Selling, general and administrative expenses were 274.4 billion yen, essentially unchanged from the first quarter of fiscal 2013. Other income (expenses) was 0.8 billion yen, a decline of 1.6 billion yen from the first quarter of fiscal 2013. This was attributable to the one-time posting of profit associated with a partial buyout of the retirement benefit plan of a European subsidiary, and other factors, in the first quarter of the previous fiscal year.
Fujitsu recorded an operating profit of 7.2 billion yen (US$71 million), an improvement of 18.0 billion yen from the previous fiscal year's first quarter. In addition to the positive impact from higher revenue, results benefited from structural reforms implemented last fiscal year in the mobile phone business and other areas.
Profit before income taxes amounted to 10.4 billion yen. This was on account of the addition of income from investments accounted for using the equity method, net to operating profit, and other factors.
President Masami Yamamoto commented: "I am delighted to report to our shareholders and investors, that for the first time since fiscal 2010, we have achieved operating profit in a first quarter. This is on account of improved profits in line with recovery to ICT investments in Japan, as well as being able to enjoy the benefits of structural reforms to our mobile phone business in the Ubiquitous Solutions segment. In fiscal 2013 we were able to set consistent goals for structural reforms, which put us on course for our May 29 announcement of a new medium-term management plan, commencing in fiscal 2014, and forward on to achieving sustainable growth. Together with steadily expanding our footprint in ICT domains, both in and outside of Japan, we are striving to achieve our fiscal 2014 operating profit and net profit goals, and to meeting our medium-term objectives."
Business Segment Results
Consolidated revenue in the Technology Solutions segment amounted to 708.0 billion yen (US$7,010 million), an increase of 4.5% from the same period in fiscal 2013. Revenue in Japan rose 3.2%. Revenue from system integration services rose, primarily in the financial services and public sectors. For network products, revenue rose as a result of the high level of spending by telecommunications carriers to expand their LTE coverage areas. Revenue outside Japan increased 6.4%, but declined by 1% on a constant currency basis. Overall revenue from infrastructure services declined as a result of temporary sluggishness in hardware-related demand in continental Europe. There was a decline in revenue from optical transmission systems in North America as this was a slow period for investment spending in this segment on the part of telecommunications carriers. The segment posted an operating profit of 11.4 billion yen (US$113 million), a decline of 2.9 billion yen compared to the first quarter of fiscal 2013. In Japan, operating profit rose on the impact of higher revenue. Outside Japan, operating profit declined on the impact of lower revenue in the infrastructure services business in addition to a one-time posting of profit related to a partial buyout of a retirement benefit plan of a European subsidiary in the prior fiscal year's first quarter.
Consolidated revenue in the Ubiquitous Solutions segment amounted to 268.9 billion yen (US$2,662 million), an increase of 24.5% from the first quarter of fiscal 2013. Revenue in Japan was up by 24.6%. Contributing factors included increased unit sales of PCs on account of higher demand for upgrades as a consequence of the ending of support for an operating system. For mobile phones, in addition to strong revenue in the Raku-Raku series, the launch of new models contributed to increased revenue. Revenue outside Japan increased 24.4%, and even on a constant currency basis rose 19%, primarily owing to higher revenue from PCs in Europe and Mobilewear in North America. The segment posted an operating profit of 8.7 billion yen (US$86 million), an improvement of 25.7 billion yen from the first quarter of the previous fiscal year. In addition to the impact of higher revenue, income from mobile phones increased because of the impact of the structural reforms implemented last fiscal year, a decline in costs relating to quality issues and a further reduction in operating costs.
Consolidated revenue in the Device Solutions segment amounted to 135.2 billion yen (US$1,339 million), a decrease of 7% from the same period of fiscal 2013. In Japan, revenue from both LSI devices and electronic components was essentially unchanged from the first quarter of fiscal 2013. Outside Japan, revenue decreased 13.7%. The segment posted an operating profit of 3.3 billion yen (US$33 million), a decline of 3.8 billion yen compared to the first quarter of fiscal 2013 primarily because of lower revenue.
