TIDMFUJ
RNS Number : 4374K
Fujitsu Ld
30 July 2013
Fujitsu Limited
Consolidated Financial Results for the First-Quarter Ended June
30, 2013
July 30, 2013
Fujitsu Limited
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Stock exchange listings: Tokyo, Nagoya
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Code number: 6702
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URL: http://jp.fujitsu.com/
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Representative: Masami Yamamoto, President and Representative Director
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Contact person: Isamu Yamamori
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Vice President, Public and Investor Relations Division
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Tel. +81 3 6252 2175
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Scheduled filling date of statutory financial report: August 9, 2013
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Scheduled dividend payment date: -
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Supplementary material: No
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Financial results meeting: Yes (for media and analysts)
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1. Consolidated Results for the First-Quarter Ended June 30,
2013
(Monetary amounts are rounded to the nearest million yen)
(1) Consolidated Financial Results
(The percentage figures represent the percentage of increase or
decrease against the same period of the previous year.)
Yen (Millions)
Net Sales Change Operating Change Net Income Change
(%) Income (%) (Loss) (%)
(Loss)
------------------- ---------- ------- ---------- ------- ----------- -------
1Q FY 2013 999,233 4.4 -22,836 - -21,983 -
(4/1/13-6/30/13)
------------------- ---------- ------- ---------- ------- ----------- -------
1Q FY 2012 957,370 -2.9 -26,739 - -25,492 -
(4/1/12-6/30/12)
------------------- ---------- ------- ---------- ------- ----------- -------
Reference Comprehensive income : 1Q FY2013 -1,901 million yen [
- %]
1Q FY2012 -29,567 million yen [ - %]
Yen
Net Income (Loss) per
Common Share
------------------- ------------------------
Basic Diluted
------------------- ----------- -----------
1Q FY 2013 -10.62 -
(4/1/13-6/30/13)
------------------- ----------- -----------
1Q FY 2012 -12.32 -
(4/1/12-6/30/12)
------------------- ----------- -----------
(2) Consolidated Financial Position Yen (Millions)
Total Assets Net Assets Owners' Equity
Ratio (%)
--------------- ------------- ----------- ---------------
June 30, 2013 2,906,117 746,738 21.3
--------------- ------------- ----------- ---------------
March 31,
2013 2,920,326 752,438 21.4
--------------- ------------- ----------- ---------------
Reference Owners' Equity: June 30, 2013 619,378 million yen
March 31, 2013 624,045 million yen
2. Dividends per Share of Common Stock
Dividends per Share (Yen)
-------------------- ----------------------------------
Year- Full
1Q 2Q 3Q End Year
-------------------- ---- ------ ---- ------ ------
FY 2012 - 5.00 - 0.00 5.00
-------------------- ---- ------ ---- ------ ------
FY 2013 -
-------------------- ---- ------ ---- ------ ------
FY 2013 (Forecast) 0.00 - - -
-------------------- ---- ------ ---- ------ ------
Note: Revisions to forecast of dividends in this quarter;
None
Year-end dividend amounts for FY2013 (fiscal year ending March
31, 2014) has yet to be determined.
3. Consolidated Earnings Forecast for FY2013
(The percentage figures represent the percentage of increase or
decrease against the same period of the previous year.)
Yen (Millions, except per share data)
Net Sales Change Operating Change Net Income Change Net Income
(%) Income (%) (Loss) (%) (Loss) per
(Loss) Common Share
---------- --------- ------ --------- ------ ---------- ------ -------------
1H FY2013 2,050,000 -1.1 -10,000 - -30,000 - -14.50
---------- --------- ------ --------- ------ ---------- ------ -------------
FY 2013 4,550,000 3.8 140,000 58.6 45,000 - 21.75
---------- --------- ------ --------- ------ ---------- ------ -------------
Note; Revisions to forecast of financial results in this
quarter; None
4. Other Information
(1) Significant Changes to Subsidiaries in the Current Reporting
Period
(Changes to specified subsidiaries resulting from changes in
scope of consolidation): None
(2) Application of accounting procedures specific to preparation
of quarterly consolidated financial
statements: None
(3) Changes in accounting policies and accounting estimates, and
restatements
1. Changes in accounting policies arising from revision of
accounting standards: Yes
2. Changes arising from factors other than 1: None
3. Changes in accounting estimates: None
4. Restatements: None
(4) Number of Issued Shares (Common shares)
1. Number of issued As of June 30, 2,070,018,213 shares
shares at end of period 2013
------------------------- ---------------- -------------- -------
As of March 31, 2,070,018,213 shares
2013
------------------------- ---------------- -------------- -------
2. Treasury stock held As of June 30, 755,688 shares
at end of period 2013
------------------------- ---------------- -------------- -------
As of March 31, 723,691 shares
2013
------------------------- ---------------- -------------- -------
3. Average number of 1Q FY 2013 2,069,272,053 shares
issued and outstanding
shares during period
------------------------- ---------------- -------------- -------
1Q FY 2012 2,069,347,904 shares
------------------------- ---------------- -------------- -------
Notes;
1. Compliance with Quarterly Review Procedures
These materials fall outside the jurisdiction of the quarterly
review procedures of the Financial Instruments and Exchange Act.
Therefore, at the time of disclosure, a portion of the audit has
not yet been completed.
Upon completion of the review, a statutory quarterly report will
be submitted on August 9, 2013.
2. Precautions on Usage of Earnings Projections
These materials may contain forward-looking statements that are
based on management's current information, views and assumptions
and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in such statements. Actual results
may differ materially from those projected or implied in the
forward-looking statements due to, without limitation, the
following factors listed below.
For information regarding the assumptions used to prepare these
projections, please refer to "3.FY2013 Earnings Projections."
- General economic and market conditions in key markets
(Particularly in Japan, North America, Europe, and Asia,
including China)
- Rapid changes in the high-technology market (particularly
semiconductors, PCs, etc.)
- Fluctuations in exchange rates or interest rates
- Fluctuations in capital markets
- Intensifying price competition
- Changes in market positioning due to competition in
R&D
- Changes in the environment for the procurement of parts and
components
- Changes in competitive relationships relating to
collaborations, alliances and technical provisions
- Risks related to public regulations, public policy and tax
matters
- Risks related to product or services defects
- Potential emergence of unprofitable projects
- Risks related to R&D investments, capital expenditures,
business acquisitions, business restructuring, etc.
- Risks related to natural disasters and unforeseen events
- Changes in accounting policies
Part I: Financial Results
1. Explanation of Financial Results
<Business Environment>
During the first quarter of fiscal 2013 (April 1, 2013 - June
30, 2013), the global economy continued to experience a weak
recovery. In Europe, economic conditions continued to deteriorate
as a result of fiscal austerity measures and rising unemployment.
Although the US is experiencing a mild recovery, expectations that
quantitative easing would be scaled down resulted in instability in
financial markets. The rate of economic growth in emerging market
countries continued to slow on account of depressed consumer
spending and lower exports.
In Japan, the economy saw a partial improvement in consumer
spending due to a stock market rally and yen depreciation spurred
on by the government's economic policy and monetary easing by the
Bank of Japan. Exports also displayed signs of recovery as a result
of the improved economic environment due to yen depreciation.
Although companies in Japan continue to take a cautious stance
toward investments in information and communication technology
(ICT), there were signs of a partial recovery. Outside of Japan,
primarily in Europe, economic conditions continued to deteriorate,
and companies have persisted in putting constraints on investment
spending.
FY2013 First-Quarter Financial Results (Billion Yen)
1Q 1Q 1Q Change vs. 1Q FY
2012
FY2012 FY2012 FY2013
(Before 4/1/12- 4/1/13-
Revisions)
6/30/12 6/30/13
--------------------- ------------- ------------- ---------
Change
(%)
--------------------- ------------- ------------- --------- ---------- -------
< -2 >
Net Sales 957.3 957.3 999.2 41.8 4.4
Cost of Sales 706.7 706.7 739.6 32.8 4.7
--------------------- ------------- ------------- --------- ---------- -------
Gross Profit 250.6 250.6 259.6 8.9 3.6
[Gross Profit [ 26.2%] [ 26.2%] [ 26.0%] [ -0.2%]
Margin]
Selling, General
and Administrative
Expenses 275.6 * 277.3 282.4 5.0 1.8
--------------------- ------------- ------------- --------- ---------- -------
Operating Income
(Loss) -25.0 * -26.7 -22.8 3.9 -
[Operating Income [ -2.6%] [ -2.8%] [ -2.3%] [ 0.5%]
Margin]
--------------------- ------------- ------------- --------- ---------- -------
Other Income and
Expenses 0.1 0.1 4.1 3.9 -
Income (Loss)
Before Income
Taxes and Minority
Interests -24.9 * -26.6 -18.7 7.8 -
--------------------- ------------- ------------- --------- ---------- -------
Income Taxes -1.8 -1.8 1.2 3.1 -
--------------------- ------------- ------------- --------- ---------- -------
Minority Interests
(Loss) 0.7 0.7 2.0 1.2 167.0
--------------------- ------------- ------------- --------- ---------- -------
Net Income (Loss) -23.7 * -25.4 -21.9 3.5 -
--------------------- ------------- ------------- --------- ---------- -------
< > Change (%) Constant Currency
*In accordance with the amended IAS 19 Employee Benefits, of the
International Financial Reporting Standards (IFRS), which the
Fujitsu Group's consolidated subsidiaries outside of Japan have
adopted, the figures for the first quarter of fiscal 2012 have been
retroactively revised. As a result, selling, general and
administrative expenses have increased by 1.6 billion yen, and
operating income has been reduced by 1.6 billion yen. Similarly,
other income statement figures, including net income, have also
been revised.
Net assets have been reduced due to the unrecognized obligation
for retirement benefits of subsidiaries outside Japan as of the end
of fiscal 2012, which amounted to 157.3 billion yen, has been
brought onto the consolidated balance sheet. For further details,
please see "Retroactive Revisions from Changes in Accounting
Standards."
<Profit and Loss>
Note: In these explanatory materials, the yen figures for net
sales, operating income, and other figures are converted into US$
amounts, for reference purposes, at a rate of $1=99 yen, the
approximate Tokyo foreign exchange market rate on June 30, 2013.
Figures for and comparisons to prior reporting periods are provided
only for reference. The impact of foreign exchange fluctuations has
been calculated by using the average US dollar, euro, and British
pound foreign exchange rates for the first quarter of fiscal 2012
to translate the current period's net sales outside Japan into
yen.
Consolidated net sales for the first quarter of fiscal 2013 were
999.2 billion yen (US$10,093 million), an increase of 4.4% from the
first quarter of fiscal 2012 as a result of foreign exchange
fluctuations and other factors. Net sales in Japan declined by
5.7%. The decline in sales was primarily in hardware products, such
as mobile phones and PCs. On the other hand, sales of system
integration services rose in such sectors as manufacturing,
financial services, and the public sector. Sales outside of Japan
rose 22.8%. Excluding the impact of foreign exchange fluctuations,
sales rose by 3%. Sales increased largely on a recovery in demand
for optical transmission systems in North America, and there were
also higher sales of LSI devices and electronic components.
For the first quarter of fiscal 2013, the average yen exchange
rates against major currencies were 99 yen for the US dollar
(representing yen depreciation of 19 yen from the first quarter of
fiscal 2012), 129 yen for the euro (depreciation of 26 yen), and
152 yen for the British pound (depreciation of 25 yen). The impact
of foreign exchange movements was to increase net sales by
approximately 65.0 billion yen compared to the first quarter of
fiscal 2012. Sales generated outside Japan as a percentage of total
sales were 41.6%, an increase of 6.3 percentage points compared to
the first quarter of the previous fiscal year, mainly as a result
of foreign exchange fluctuations and a reduction in hardware sales
in Japan.
Gross profit was 259.6 billion yen, an increase of 8.9 billion
yen from the first quarter of fiscal 2012. Despite the adverse
impact from the decline in sales of mobile phones and other
products, gross profit increased because of foreign exchange
movements and a variety of measures implemented to reduce costs.
The gross profit margin was 26%, a decline of 0.2 of a percentage
point from the first quarter of the prior fiscal year.
Selling, general and administrative expenses were 282.4 billion
yen, an increase of 5.0 billion yen from the first quarter of
fiscal 2012. The increase was the result of the weaker yen, despite
the implementation of Group-wide measures to generate cost
efficiencies, and decline on a constant currency basis.
Fujitsu recorded an operating loss of 22.8 billion yen (US$230
million), an improvement of 3.9 billion yen from the previous
fiscal year's first quarter. While there was the adverse impact
stemming from lower sales of mobile phones, the improvement was the
result of the impact of a weaker yen and emergency
workforce-related measures. In addition, the impact of structural
reforms in the LSI business and businesses outside Japan has
gradually begun to contribute to earnings.
There was 4.1 billion yen in other income and expenses,
representing a year-on-year improvement of 3.9 billion yen,
primarily the result of an improvement in foreign currency
translation adjustments and a gain on the sale of equity
securities.
Fujitsu reported a consolidated net loss of 21.9 billion yen
(US$221 million), representing an improvement of 3.5 billion yen
compared to the loss posted in the first quarter of fiscal
2012.
<Results by Business Segment>
Information on fiscal 2013 first-quarter consolidated net sales
(including intersegment sales) and operating income broken out by
business segment is presented as follows.
Technology Solutions
(Billion Yen)
------------ -------------------------------------
First Quarter Change
FY2013 vs.
1Q FY2012
------------ ------------------- ----------------
Net Sales 677.5 8.0 %
------------------- ----------------
Japan 405.2 0.7 %
Outside
Japan 272.3 21.1 %
----------- ------------------- ----------------
Operating
Income 2.5 3.4
------------ ------------------- ----------------
Consolidated net sales in the Technology Solutions segment
amounted to 677.5 billion yen (US$6,843 million), an increase of 8%
from the same period in fiscal 2012. Sales in Japan were
essentially unchanged. Server-related sales declined due to a
slower-than-expected initial launch period for new UNIX server
products. In network products, despite higher spending by
telecommunications carriers to expand LTE coverage, sales as a
whole were on par with the first quarter of fiscal 2012, when there
was higher demand for 3G communications equipment to handle
increasing volumes of communications traffic. In infrastructure
services, outsourcing services grew steadily, but overall sales
were weak compared to the first quarter of the previous fiscal
year, when demand related to network services increased as
telecommunications carriers tried to keep up with higher volumes of
communications traffic. For systems integration services, despite
the adverse impact of a shift toward spending on hardware by
telecommunications carriers, sales grew on account of increased
spending, primarily in the manufacturing, financial services and
public sectors. Sales outside Japan increased 21.1%. On a constant
currency basis, sales increased by 3%. Infrastructure service sales
declined due to the impact of corporate spending restraints from
the economic downturn in Europe. In addition, sales of new UNIX
server models were weak. Sales of optical transmission systems in
the US increased on a recovery in spending by telecommunications
carriers.
The segment posted operating income of 2.5 billion yen (US$25
million), up 3.4 billion yen compared to the first quarter of
fiscal 2012. In Japan, operating income was positively impacted by
higher sales of system integration services, while network-related
sales fell and upfront R&D spending increased. Outside Japan,
operating income rose as a result of cost reductions, primarily for
x86 servers and in the European services business, as well as the
impact of higher sales of network products.
(a) Services
(Billion Yen)
------------ -------------------------------------
First Quarter Change
FY2013 vs.
1Q FY2012
------------ ------------------- ----------------
Net Sales 554.9 8.0 %
------------------- ----------------
Japan 321.1 1.7 %
Outside
Japan 233.8 18.2 %
----------- ------------------- ----------------
Operating
Income 5.5 2.2
------------ ------------------- ----------------
Net sales in the Services sub-segment amounted to 554.9 billion
yen (US$5,605 million), an increase of 8% from the first quarter of
the previous fiscal year. Sales in Japan rose 1.7%. In systems
integration services, despite the adverse impact of a shift toward
spending on hardware by telecommunications carriers, sales rose due
to increased spending, primarily in the manufacturing, financial
services and public sectors. In infrastructure services,
outsourcing services grew steadily, but overall sales were weak due
to a drop in subscribers in the ISP business and a shift away from
packaged products that include connection fees to stand-alone
products. Also impacting comparisons was the increased demand
related to network services in the first quarter of fiscal 2012,
when telecommunications carriers tried to keep up with higher
volumes of communications traffic. Sales outside Japan increased
18.2%. On a constant currency basis, sales were on par with the
same period in fiscal 2012. Sales were adversely affected by lower
corporate spending stemming from the economic downturn in
Europe.
Operating income for the Services sub-segment was 5.5 billion
yen (US$56 million), an increase of 2.2 billion yen compared to the
first quarter of the previous fiscal year. In Japan, despite a
decline in network service sales, operating income as a whole
increased on the positive impact of higher sales of system
integration services. Outside Japan, progress was made in achieving
cost efficiencies in the European business, and goodwill
amortization expenses declined.
In accordance with the amended IAS 19 Employee Benefits, of the
International Financial Reporting Standards (IFRS), comparisons of
operating income in the first quarter of fiscal 2012 reflect the
retroactive revision of fiscal 2012 first quarter figures. For
further details, please see "Retroactive Revisions from Changes in
Accounting Standards." In this quarter, the change in the
accounting standards caused retirement benefit expenses to increase
by approximately 2.4 billion yen.
(b) System Platforms
(Billion Yen)
------------ -------------------------------------
First Quarter Change
FY2013 vs.
1Q FY2012
------------ ------------------- ----------------
Net Sales 122.5 8.1 %
------------------- ----------------
Japan 84.0 -2.8 %
Outside
Japan 38.5 42.8 %
----------- ------------------- ----------------
Operating
Income -2.9 1.1
------------ ------------------- ----------------
Net sales in the System Platforms sub-segment were 122.5 billion
yen (US$1,237 million), an increase of 8.1% from the same period of
the year earlier. Sales in Japan fell 2.8%. Server-related sales
declined due to delays in the launch of new UNIX server products.
In network products, despite higher spending by telecommunications
carriers to expand LTE coverage, sales as a whole were on par with
the first quarter of fiscal 2012, when there was higher demand for
3G communications equipment to handle growing volumes of
communications traffic. Sales outside Japan increased 42.8%. On a
constant currency basis, sales significantly increased by 17%.
Sales of new UNIX server models were weak. Optical transmission
system sales in the US increased on a recovery in spending by
telecommunications carriers.
The System Platforms sub-segment posted an operating loss of 2.9
billion yen (US$29 million), representing an improvement of 1.1
billion yen compared to the same period of fiscal 2012. In Japan,
operating income decreased due to lower sales and higher upfront
R&D spending in network products. Outside Japan, income was
positively impacted by cost efficiencies, primarily in the x86
server business, and higher sales of network products.
Ubiquitous Solutions
(Billion Yen)
------------ -------------------------------------
First Quarter Change
FY2013 vs.
1Q FY2012
------------ ------------------- ----------------
Net Sales 215.9 -8.0 %
------------------- ----------------
-16.9
Japan 146.1 %
Outside
Japan 69.7 18.7 %
----------- ------------------- ----------------
Operating
Income -17.1 -15.1
------------ ------------------- ----------------
Net sales in the Ubiquitous Solutions segment were 215.9 billion
yen (US$2,181 million), a decline of 8% from the first quarter of
fiscal 2012. Sales in Japan were down by 16.9%. PC sales declined
as unit sales fell on account of the shrinking consumer PC market,
and on account of the large-volume orders received during the first
quarter of the previous fiscal year from customers in the financial
services industry. In mobile phones, sales fell on account of the
shrinking market for feature phones, in addition to revisions in
the smartphone sales strategies of telecommunications carriers.
Sales of the Mobilewear sub-segment's car audio and navigation
systems were adversely impacted by lower new vehicle sales due to
the conclusion of the government's subsidy program for eco-friendly
vehicles, but sales as a whole rose as a result of strong sales of
luxury vehicles. Sales outside Japan increased 18.7%. On a constant
currency basis, sales increased 2%. Unit sales in Europe declined
due to an emphasis on profitability, but Mobilewear sales rose,
primarily in North America.
The Ubiquitous Solutions segment posted an operating loss of
17.1 billion yen (US$173 million), down 15.1 billion yen from the
first quarter of the previous fiscal year. In Japan, unit sales of
mobile phones declined and procurement costs rose. In addition, PC
sales also fell on lower unit volumes and increased procurement
costs as a result of yen depreciation. Despite the positive impact
of higher sales, operating income for Mobilewear remained
essentially unchanged from the first quarter of last year due to
higher development expenses. Outside Japan, operating income
benefitted from an emphasis on profitability for sales of PCs, as
well as cost reductions in parts procurement. Mobilewear was also
positively impacted by increased sales.
Device Solutions
(Billion Yen)
------------ -------------------------------------
First Quarter Change
FY2013 vs.
1Q FY2012
------------ ------------------- ----------------
Net Sales 145.3 11.5 %
------------------- ----------------
Japan 67.4 -6.4 %
Outside
Japan 77.9 33.6 %
----------- ------------------- ----------------
Operating
Income 7.6 11.2
------------ ------------------- ----------------
Note: LSI devices sales include intrasegment sales to the
electronic components business.
Net sales in Device Solutions amounted to 145.3 billion yen
(US$1,468 million), an increase of 11.5% compared to the first
quarter of fiscal 2012. Sales in Japan declined 6.4%. Sales of LSI
devices used in smartphones increased, but sales of LSI devices
used in digital audio-visual equipment and manufacturing equipment
decreased. Sales of electronic components, including semiconductor
packages and batteries, also decreased. Sales outside Japan
increased by 33.6%. On a constant currency basis, sales increased
10%. Sales of LSI devices for smartphones, particularly in Asia,
increased. For electronic components, sales of semiconductor
packages, primarily to China, declined, but sales of batteries
increased.
The Device Solutions segment recorded operating income of 7.6
billion yen (US$77 million), an improvement of 11.2 billion yen
compared to the first quarter of fiscal 2012, and representing the
second straight quarter of profitable results. In Japan, results
for LSI devices were adversely affected by lower sales, but
overhead expenses decreased because of the sale of production
facilities in the prior fiscal year. Capacity utilization on the
production lines for 300mm wafers remained high because of an
increase in demand for use in smartphones, but capacity utilization
rates on the production lines for standard logic devices continued
to be low. Fujitsu is consolidating the production lines for
standard logic devices in the Aizu-Wakamatsu region and thereby
raise capacity utilization rates. Results for electronic components
were adversely affected by lower sales and the burden of
development expenditures incurred by an affiliate developing
semiconductors for communications equipment. Operating income
outside of Japan improved on higher demand and the impact of higher
sales resulting from the weaker yen.
As part of the structural reforms to its LSI business, Fujitsu
implemented an early retirement incentive plan with the aim of
adjusting the headcount in the business to an optimal level. In
Japan, 1,963 employees enrolled in the program, of which
approximately 1,600 retired by the end of June. Employees working
on production lines for standard logic devices who signed up for an
early retirement incentive plan are expected to retire after the
production lines have been consolidated in the Aizu-Wakamatsu
region.
Other/Elimination and Corporate
This segment recorded an operating loss of 15.9 billion yen
(US$161 million), representing an improvement of 4.3 billion yen
from the first quarter of fiscal 2012 as a result of Group-wide
progress in generating cost efficiencies.
<Results by Geographic Segments>
Sales and operating income for Fujitsu and its consolidated
subsidiaries according to country and region are as follows.
Net Sales (Billion Yen)
First
Quarter
FY2013
---------------- --------
Japan 708.1
[-1.4%]
---------------- --------
Outside Japan 425.4
[24.0%]
--------
EMEA 202.9
[17.5%]
-------------- --------
The Americas 92.2
[50.6%]
-------------- --------
APAC & China 130.1
[19.2%]
-------------- --------
Note: Numbers inside brackets indicate % changes over same
period in previous year.
Operating Income (Billion Yen)
First First Change
Quarter Quarter vs.
FY2012 FY2013
1Q FY2012
-------------- -------- -------- -----------
Japan 5.9 2.2 -3.6
[0.8%] [0.3%] [-0.5%]
-------------- -------- -------- -----------
Outside -14.1 -5.7 8.4
Japan [-4.1%] [-1.4%] [ 2.7%]
-------- -------- -----------
EMEA -12.5 -8.7 3.8
[-7.3%] [-4.3%] [3.0%]
------------ -------- -------- -----------
The Americas -2.3 1.5 3.8
[-3.8%] [1.7%] [5.5%]
------------ -------- -------- -----------
APAC & 0.7 1.4 0.6
China [0.7%] [1.1%] [0.4%]
------------ -------- -------- -----------
Note: Numbers inside brackets indicate operating income
margin.
The figures for the first quarter of fiscal 2012 have been
retroactively revised in accordance with the adoption of the
amended IAS 19 Employee Benefits. As a result, operating income
outside of Japan has been reduced by 1.6 billion yen, primarily
from the EMEA region.
<Retroactive Revisions from Changes in Accounting
Standards>
The Fujitsu Group's consolidated subsidiaries outside of Japan,
which prepare their financial statements in accordance with
International Financial Reporting Standards (IFRS), have adopted
the amended IAS 19 Employee Benefits from the beginning of FY2013.
As a result, for comparison figures, we have retroactively revised
the financial statement figures stated for fiscal 2012.
A summary of the revised standards and their impact on the
consolidated financial statement figures for fiscal 2012 are as
follows.
1. Summary of the Revisions
i. Unrecognized obligation for retirement benefits are reflected
on the consolidated balance sheets after adjusting for tax
effects.
ii. The corridor approach for amortizing actuarial gains or
losses is eliminated under IFRS, but it is necessary to reflect
these amortized amounts under Japanese accounting standards, and
amortization expenses have increased because of amounts that
previously had not been recognized under the corridor approach.
iii. Net interest on the net defined benefit liability (asset)
has been adopted. (Gains in pension assets are also calculated by
the discount rate, so costs have increased.
2. Retroactive Revisions to Fiscal 2012 Results
(Consolidated Balance Sheets) (Billion Yen)
FY 2012 FY 2012
Before Revisions Retroactive After Revisions
Revisions
------------------- ----------------- ------------ ----------------
Total Assets 3,049.0 -128.7 2,920.3
Total Liabilities 2,139.2 28.6 2,167.8
Net Assets 909.8 -157.3 752.4
-------------------- ----------------- ------------ ----------------
Owner's Equity 781.4 -157.3 624.0
-------------------- ----------------- ------------ ----------------
Reference: Unrecognized Obligation for Retirement Benefits
(Off Balance Sheet)
Total 466.1 -157.3 308.7
----------------
In Japan
(*1) 308.7 - 308.7
1.
Outside Japan 157.3 -157.3 - i
------------------- ----------------- ------------ ----------------
*1 Unrecognized obligation for retirement benefits in Japan are
expected to be reflected on the consolidated balance sheets at the
end of fiscal 2013 after adjusting for tax effects.
(Consolidated Income Statement) (Billion Yen)
FY 2012 FY 2012 1Q 1Q
FY 2012 FY 2012
Before Retroactive After Before Retroactive After
Revisions Revisions Revisions Revisions Revisions Revisions
------------------------ ----------- ------------ ----------- ----------- ------------ -----------
Net Sales 4,381.7 - 4,381.7 957.3 - 957.3
Operating Income (*2) 95.2 -7.0 88.2 -25.0 -1.6 -26.7
Net Income -72.9 -7.0 -79.9 -23.7 -1.6 -25.4
------------------------ ----------- ------------ ----------- ----------- ------------ -----------
*2 The impact on segment income stems from the changes to income
in the Services sub-segment of Technology Solutions.
Reference: Pension Expenses Outside Japan (the Defined Benefit
portion)
Service Cost 3.6 - 3.6
Upper: Expenses
(Net) Interest costs 1. from retirement
/ Expected return 27.3 - 27.3 iii benefit obligations
Lower: Returns
-22.6 2.5 -20.0 from pension assets
------------------------------ ------- ------ -------
[Actuarial assumptions
in FY 2012]
Discount rate:
primarily 4.4%
Expected rate of
return on plan
Amortization of unrecognized 1. assets: primarily
obligation (corridor) 6.5 -6.5 - ii 5.7%
Amortization expenses
under Japanese accounting
standards - 11.1 11.1
------------------------------ ------- ------ -------
Total 14.9 7.0 21.9
------------------------------ ------- ------ -------
3. Projections for Fiscal 2013
The projections for fiscal 2013 announced in April 2013 already
reflected the impact of the change in accounting standards (which
served to reduce operating income and net income each by
approximately 9.5 billion yen).
(Billion Yen)
FY 2012 FY 2012 FY 2013
Before Retroactive After (April Change
Revisions Revisions Revisions Forecast)
------------------ ----------- ------------ ----------- ----------- -------
Operating Income 95.2 -7.0 88.2 140.0 51.7
Services 131.6 -7.0 124.6 138.0 13.3
------------------ ----------- ------------ ----------- ----------- -------
2. Explanation of Financial Condition
(1) Assets, Liabilities and Net Assets
Consolidated total assets at the end of the first quarter were
2,906.1 billion yen (US$29,355 million), a decrease of 14.2 billion
yen from the end of fiscal 2012. Current assets decreased by 26.0
billion yen compared with the end of fiscal 2012, to 1,696.2
billion yen. Notes and accounts receivable, trade decreased by
175.7 billion yen compared to the end of the prior fiscal year,
reflecting the collection associated with the large concentration
of sales toward the end of each fiscal year. In preparation for
future expected sales, particularly in the services business,
inventories at the end of the quarter increased to 374.1 billion
yen, an increase of 51.0 billion yen from the ending balance of
fiscal 2012. The monthly inventory turnover ratio, which is an
indication of asset utilization efficiency, was 0.89 times, an
improvement 0.05 times compared to the end of the first quarter of
fiscal 2012.
Non-current assets increased by 11.8 billion yen from the end of
fiscal 2012, to 1,209.8 billion yen. Investments and other
non-current assets increased by 13.0 billion yen because the rise
in stock prices increased the value of investment securities.
Consolidated total liabilities amounted to 2,159.3 billion yen
(US$21,811 million), a decrease of 8.5 billion yen compared to the
end of fiscal 2012, reflecting the payment of trade notes and
accounts payable relating to the concentration of sales at the end
of the prior fiscal year, as well as the payment of accrued
expenses, including salary bonuses. The balance of interest-bearing
loans was 635.6 billion yen, an increase of 100.7 billion yen from
the end of fiscal 2012. Borrowings increased to finance a portion
of working capital. As a result, the D/E ratio was 1.03 times, a
deterioration of 0.17 of a percentage point compared to the end of
fiscal 2012, and the net D/E ratio was 0.40 times, unchanged
compared to the end of fiscal 2012. Both ratios have deteriorated
compared to the end of the first quarter of the previous fiscal
year because of the deterioration in owners' equity resulting from
the losses recorded in fiscal 2012 and the first quarter of fiscal
2013.
Net assets were 746.7 billion yen (US$7,542 million), a decrease
of 5.7 billion yen from the end of fiscal 2012. Shareholders'
equity decreased by 21.9 billion yen as a result of the net loss
recorded in the quarter, but accumulated other comprehensive income
increased by 17.3 billion yen as a result of the weakening of the
yen and the rise in stock prices. The owners' equity ratio was
21.3%, essentially unchanged from end of fiscal 2012.
(Billion Yen)
FY2012 1Q FY2013 Change 1Q FY2012
(March 31, (June 30, (June 30,
2013) 2013) 2012)
--------------------------- ------------ ----------- ------- -----------
Cash and Cash Equivalents
at End of Period 286.6 387.2 100.6 366.2
Interest-bearing Loans 534.9 635.6 100.7 542.9
Net Interest-bearing
Loans 248.3 248.4 0 176.6
Owners' Equity 624.0 619.3 -4.6 691.7
--------------------------- ------------ ----------- ------- -----------
D/E Ratio (Times) 0.86 1.03 0.17 0.78
Net D/E Ratio (Times) 0.40 0.40 - 0.26
Shareholders' Equity
Ratio 28.3 % 27.7 % -0.6 % 31.2 %
Owners' Equity Ratio 21.4 % 21.3 % -0.1 % 24.2 %
----------------------- -------- ------- ------- -------
1. D/E ratio: Interest-bearing loans/Owners' equity
2. Net D/E ratio: (Interest-bearing loans - Cash and cash
equivalents at end of period)/Owner's equity
3. The figures for the first quarter of fiscal 2012 and
full-year fiscal 2012 have been retroactively revised in accordance
with the adoption of the amended IAS 19 Employee Benefits. Owners'
equity for the first quarter of fiscal 2012 has been reduced by
101.7 billion yen, and it has been reduced by 157.3 billion yen for
full-year fiscal 2012. D/E ratio and others are also revised.
(2) Cash Flows
Net cash flows from operating activities in the first quarter
amounted to 21.1 billion yen (US$213 million). This represents an
increase in cash inflows of 31.2 billion yen compared to the first
quarter of fiscal 2012. Despite the adverse impact from lower sales
of PCs and mobile phones, cash flows increased owing to improved
income (loss) before income taxes and minority interests due to the
impact of workforce-related measures and structural reforms, and
the positive impact of a weaker yen, in addition to a decline in
working capital.
Net cash used in investing activities was 18.5 billion yen
(US$187 million). Outflows mainly consisted of the acquisition of
property, plant and equipment amounting to 21.8 billion yen,
primarily related to datacenters, and the acquisition of intangible
assets, primarily software, amounting to 13.6 billion yen. Compared
to the same period in fiscal 2012, net outflows decreased by 15.8
billion yen. The maturity of time deposits on temporary surplus
funds resulted in an inflow of cash.
Free cash flow, the sum of cash flows from operating and
investing activities, was 2.6 billion yen (US$26 million),
representing an increase in net cash inflows of 47.0 billion yen
compared with the same period in the previous fiscal year.
Net cash provided by financing activities was 90.5 billion yen
(US$914 million). A portion of working capital was financed through
short-term borrowings. In addition, short-term borrowings in the
previous fiscal year that were used to finance a special
contribution to the pension fund of a UK subsidiary were replaced
by long-term borrowings. Compared to the first quarter of fiscal
2012, cash inflows decreased by 56.8 billion yen.
As a result of the above factors, cash and cash equivalents at
the end of the first quarter of fiscal 2013 were 387.2 billion yen
(US$3,911 million), an increase of 102.6 billion yen compared to
the end of fiscal 2012.
(3) Status of Retirement Benefit Plans
Of Fujitsu's unrecognized obligation for retirement benefits,
157.3 billion yen, representing the portion from the pension plans
of subsidiaries outside Japan, was reflected on the consolidated
balance sheets through other comprehensive income. The portion from
the pension plans of Fujitsu and its subsidiaries in Japan will be
reflected on the consolidated balance sheets at the end of fiscal
2013.
The amortization expenses stemming from the actuarial losses in
the pension plans of subsidiaries outside Japan are transferred
from other comprehensive income.
(Billion Yen)
Unrecognized Obligation Amortization Expenses
for Retirement Benefits
(Off Balance Sheet)
--------------------------------------- --------------------------
FY2012 First Quarter FY2013
(As of March 31, 2013) (4/1/13-6/30/13)
----------- ---------------------------------------
(Before Revisions) (After Revisions) Amounts Transferred
From Other
Comprehensive
Income
---------- ------------------- ------------------ ----- -------------------
Total 466.1 308.7 10.8 4.2
------------------- ------------------ ----- -------------------
In Japan 308.7 308.7 6.5 -
---------- ------------------- ------------------ ----- -------------------
Outside
Japan 157.3 - 4.2 4.2
---------- ------------------- ------------------ ----- -------------------
Note: Amortization expenses exclude one-time amortization
expenses of 4.5 billion yen stemming from a partial buyout in the
retirement benefit plans at a European subsidiary.
3. FY2013 Earnings Projections
For the first quarter of fiscal 2013, Fujitsu reported
consolidated net sales of 999.2 billion yen, an increase of 41.8
billion yen, and an operating loss of 22.8 billion yen, an
improvement of 3.9 billion yen compared to the loss in the first
quarter of fiscal 2012. The PC and mobile phone businesses
experienced a sharp decline in operating income as the weak yen
increased procurement costs for parts and materials, and because
the competitive environment remained severe. On an overall
consolidated basis, however, operating income improved on better
results in the Device Solutions segment, where results were helped
by the positive impact of a weaker yen and a recovery in demand for
LSI devices, and because of various workforce-related measures and
progress in streamlining corporate headquarters functions.
Compared to the projections announced at the beginning of the
fiscal year, PCs and mobile phones have slightly underperformed,
whereas the Device Solutions segment has outperformed, primarily as
a result of the positive impact of the weaker yen. On an overall
consolidated basis, results are trending slightly above
projections.
Compared to assumptions made at the start of the fiscal year,
the yen was weaker than expected in the first quarter, but in light
of the risk of continued fluctuations in the second quarter and
beyond, Fujitsu has not changed its foreign exchange assumptions of
93 yen for the US dollar, 120 yen for the euro, and 140 yen for the
British pound.
In light of these circumstances, at the present time projections
for the first half of fiscal 2013 and full-year fiscal 2013 remain
unchanged from those announced at the beginning of the fiscal
year.
FY2013 First-Half Consolidated Forecast (Billion Yen)
-------------
FY2012 FY2012 FY2013 Change Change vs.
vs. Previous
Forecast*
First-Half First-Half First-Half 1H FY2012
(Before (Actual) (Forecast)
Revisions)
------------------ ------------- ----------- ----------- -------------
Change
(%)
------------------ ------------- ----------- ----------- ------------- --------- --------
Net Sales 2,071.8 2,071.8 2,050.0 - -21.8 -1.1
------------------ ------------- ----------- ----------- ------------- --------- --------
Operating Income 7.6 ** 4.3 -10.0 - -14.3 -
[Operating Income [0.4%] [0.2%] [-0.5%] [- %] [-0.7%]
Margin]
------------------ ------------- ----------- ----------- ------------- --------- --------
Other Income
and Expense -4.5 -4.5 - - 4.5 -
------------------ ------------- ----------- ----------- ------------- --------- --------
Net Income -11.0 ** -14.4 -30.0 - -15.5 -
------------------ ------------- ----------- ----------- ------------- --------- --------
FY2013 Full Year Consolidated Forecast (Billion Yen)
-------------
FY2012 FY2012 FY2013 Change Change vs. FY2012
Full-Year Full-Year Full-Year vs. Previous
(Before (Actual) (Forecast) Forecast*
Revisions)
------------------ ------------- ----------- ------------ -------------
Change
(%)
------------------ ------------- ----------- ----------- ------------- --------- --------
Net Sales 4,381.7 4,381.7 4,550.0 - 168.2 3.8
------------------ ------------- ----------- ------------ ------------- --------- --------
Operating Income 95.2 ** 88.2 140.0 - 51.7 58.6
[Operating Income [2.2%] [2.0%] [3.1%] [- %] [1.1%]
Margin]
------------------ ------------- ----------- ------------ ------------- --------- --------
Other Income
and Expense -140.3 -140.3 -35.0 - 105.3 -
------------------ ------------- ----------- ------------ ------------- --------- --------
Net Income -72.9 ** -79.9 45.0 - 124.9 -
------------------ ------------- ----------- ------------ ------------- --------- --------
* Previous Forecast as of April 30, 2013.
** In accordance with the Amended IAS 19, "Employee Benefits,"
of the International Financial Reporting Standards (IFRS), which
the Fujitsu Group's consolidated subsidiaries outside of Japan have
adopted, the figures for FY2012 have been retroactively revised.
The revised amounts have been reduced by 3.3 billion yen for the
first half and by 7.0 billion yen for the full year, and FY2013
comparisons with FY2012 also reflect these revisions.
To view the full announcement of the FY 2013 First-Quarter
Financial Results, please paste the following link into your web
browser;
http://www.fujitsu.com/global/about/ir/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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