TOKYO, Apr 28 – Fujitsu today reported profit for the year attributable to owners of the parent was 88.4 billion yen, representing an improvement of 1.7 billion yen from fiscal 2015. Consolidated revenue for fiscal 2016 was 4,509.6 billion yen. Excluding the impact of foreign exchange movements, revenue was essentially unchanged from the previous fiscal year.
Revenue in Japan was essentially unchanged from fiscal 2015. Revenue from LSI devices used in smartphones declined on weak demand. On the other hand, revenue in the Services sub-segment remained strong, both in system integration and infrastructure services, and there was an increase in revenue from enterprise PCs and the Mobilewear sub-segment.
Revenue outside of Japan fell 13.2%. Results were significantly impacted by foreign exchange movements, and, in addition, there was a decline in revenue from infrastructure services in Europe and from network products in North America. Compared to the prior fiscal year, the appreciation of the yen against the US dollar, euro, and British pound served to reduce revenue by roughly 200 billion yen.
Fujitsu recorded an operating profit of 128.8 billion yen, up 8.2 billion yen from fiscal 2015. In the Ubiquitous Solutions segment, in addition to the beneficial impact of higher revenue from enterprise PCs and from the Mobilewear sub-segment, operating profit also improved on cost reductions and cost efficiencies in PCs and mobile phones. Fujitsu recorded 44.7 billion yen in business model transformation expenses in fiscal 2016, an increase of 3.1 billion yen from fiscal 2015.
Of that amount for fiscal 2016, 34.0 billion yen was for structural reform expenses outside of Japan for greater efficiencies and a shift toward digital business (of which 29.4 billion yen was for a shift toward digital business in Europe), 3.9 billion yen was for restructuring expenses for datacenters in Japan, and 6.6 billion yen was for restructuring expenses for production facilities both in and outside of Japan.
Net financial expenses were 0.6 billion yen, representing an improvement of 6.5 billion yen from the prior fiscal year. Income from investments accounted for using the equity method was 6.9 billion yen, representing a decline of 11.5 billion yen from fiscal 2015. Profit for the year before income taxes was 135.1 billion yen, an increase of 3.3 billion yen over the previous fiscal year.
Business Segment Financial Results
Revenue in the Technology Solutions segment amounted to 3,126.6 billion yen, a decrease of 4.8% from fiscal 2015. Revenue in Japan rose 3.0%. In systems integrations services in the Services sub-segment, there was an increase in revenue from customers in the manufacturing and services fields as well as from telecommunications carriers. In addition, revenue from infrastructure services rose, primarily in outsourcing services.
In the System Platforms sub-segment, revenue from network products rose on sales of mobile phone base stations to a telecommunications carrier. Revenue outside Japan fell 17.7%. In addition to the impact of foreign exchange movements, revenue in Europe from infrastructure services fell compared to the prior year because some large-scale public sector businesses ended, and revenue also declined because of weak sales of network products in North America.
The segment posted an operating profit of 190.7 billion yen, up 4.5 billion yen compared to fiscal 2015, primarily due to the effects of higher revenue in the Services sub-segment in Japan and from the impact of cost reductions in system products stemming from the lower cost of purchasing US dollar-denominated components, owing to the strong yen. Business model transformation expenses were essentially unchanged from fiscal 2015.
Revenue in the Ubiquitous Solutions segment was 1,025.7 billion yen, down 1.5% from fiscal 2015. Revenue in Japan rose by 1.8%. Revenue from mobile phones declined because of lower shipments as a result of the lengthening of the replacement cycle in the smartphone market. For PCs, revenue rose on the back of continuing strong sales of enterprise PCs. Revenue from Mobilewear in car audio navigation devices also rose.
Revenue outside Japan fell by 7.6%. Excluding the impact of foreign exchange movements, revenue was essentially unchanged from the previous fiscal year. The Ubiquitous Solutions segment posted an operating profit of 28.7 billion yen, an improvement of 36.4 billion yen over fiscal 2015. In addition to the beneficial impact of higher revenues from PCs in Japan, both PCs and mobile phones benefited from cost reduction and further progress in cost efficiencies.
In addition to lower procurement prices for components, the cost reductions also include the impact of lower procurement costs owing to the stronger yen. Operating profit increased in Mobilewear because of higher revenue. Revenue in the Device Solutions segment amounted to 544.3 billion yen, down 9.9% from fiscal 2015.
The segment posted an operating profit of 4.2 billion yen, down 26.1 billion yen from fiscal 2015. In addition to the impact of lower revenue from LSI devices, particularly for use in smartphones, because of weak demand, operating profit declined for both LSI devices and electronic components due to the impact of lower revenue as a result of the continuing strength of the yen against the US dollar.
Fiscal 2017 Consolidated Projections
The revenue and operating profit of FUJITSU TEN (in the Ubiquitous Solutions segment), whose shares Fujitsu today (April 28) decided to sell, are not included in fiscal 2017 forecasts. For comparative purposes, actual revenue and operating profit (including business model transformation expenses) for fiscal 2016 are also presented to reflect this change.
For fiscal 2017, Fujitsu is projecting revenue of 4,100.0 billion yen. Excluding the impact of the loss of approximately 50 billion yen in revenue from the sale of Nifty Corporation, revenue is projected to be essentially unchanged from fiscal 2016. The forecast for operating profit is 185.0 billion yen, an increase of 67.5 billion yen over fiscal 2016.
One factor contributing to this anticipated improvement is the elimination of 42.0 billion yen in business model transformation expenses that were recorded in fiscal 2016. In contrast to the past two fiscal years, in which there were upfront expenses, under fiscal 2017 business model transformation plans expenses and profits are expected to offset one another, thereby having no impact on profit and loss.
The projected profit for the year attributable to owners of the parent is 145.0 billion yen, up 56.5 billion yen from fiscal 2016. Assumptions on exchange rates for fiscal 2017 are 105 yen for the US dollar, 115 yen for the euro, and 130 yen for the British pound.