Fujitsu 2013 Annual Report Download - page 102

2. Segment Information
Information by Operating Segment
Sales and Operating Income by Segment
The reportable segments were consolidated into the three segments
of “Technology Solutions,” “Ubiquitous Solutions,” and “Device Solu-
tions,” based on organizational structure, the characteristics of the
products and services, and the similarities in sales markets. The
“Other Operations” segment includes operations not included in the
reportable segments, such as Japan’s Next-Generation Supercomputer
project, facility services and the development of information systems
for Group companies, and welfare benefits for Group employees.
Sales (including intersegment sales) and operating income by
segment for fiscal 2012 are shown as follows.
(Unit: billion yen)
Years ended March 31 2012 2013
YoY
Change
Change
(%)
Technology
Solutions
Net sales . . . . . . . 2,934.9 2,942.3 7.4 0.3
Operating income . . 171.2 180.9 9.6 5.6
[
Operating income
margin ] . . . . . . . [5.8%] [6.2%] [0.4%]
Ubiquitous
Solutions
Net sales . . . . . . . 1,154.2 1,090.2 (64.0) (5.5)
Operating income . . 19.9 9.6 (10.3) (51.7)
[
Operating income
margin ] . . . . . . . [1.7%] [0.9%] [(0.8%)]
Device
Solutions
Net sales . . . . . . . 584.7 540.3 (44.3) (7.6)
Operating income . . (10.1) (14.2) (4.0) —
[
Operating income
margin ] . . . . . . . [(1.7%)] [(2.6%)] [(0.9%)]
Other
Operations/
Elimination
& Corporate
Net sales . . . . . . . (206.3) (191.2) 15.0 —
Operating income . . (75.7) (81.0) (5.3) —
Consolidated
Net sales . . . . . . . 4,467.5 4,381.7 (85.8) (1.9)
Operating income . . 105.3 95.2 (10.0) (9.5)
[
Operating income
margin ] . . . . . . . [2.4%] [2.2%] [(0.2%)]
Technology Solutions
The Technology Solutions segment delivers products, software, and
services to customers in an optimal, integrated package of compre-
hensive services. These consist of Solutions/Systems Integration,
which are services for the construction of information and communi-
cation systems, Infrastructure Services, which are primarily outsourc-
ing and maintenance services, System Products, which covers mainly
the servers and storage systems that comprise ICT platforms, and
Network Products, which are used to build communications infra-
structure, such as mobile phone base stations and optical transmis-
sion systems.
Consolidated segment net sales amounted to ¥2,942.3 billion
($31,302 million), essentially unchanged from fiscal 2011. Sales in
Japan increased 1.2%. Server-related sales declined due to the high-
volume production of dedicated servers for use in the K computer,
Japan’s Next-Generation Supercomputer, during the first half of fiscal
2011. A decline in large-scale system deals also had an adverse
impact. Sales of Network Products increased, mainly in routers, due
to higher spending by telecommunications carriers to handle larger
volumes of communications traffic and to expand LTE*1 coverage. In
system integration services, despite the impact of fewer large-scale
system deals, mainly in the financial sector, and a shift toward
spending on hardware in response to increased communications
traffic by telecommunications carriers, sales as a whole increased
due to a recovery in spending, primarily in the manufacturing and
public sectors. Sales of infrastructure services also rose on steady
growth of outsourcing services, in addition to higher demand related
to network services, as telecommunications carriers tried to keep up
with higher volumes of communications traffic. Sales outside Japan
declined 1.6%. On a constant currency basis, sales fell by 4%. Infra-
structure services sales declined as businesses tightened up on
investment due to the economic downturn in Europe, primarily in the
first half, despite steady growth in the datacenter business in
Australia and North America. Meanwhile, sales of optical transmis-
sion systems in the first half of this fiscal year declined due to a shift
toward spending on wireless networks by North American telecom-
munications carriers. In addition, sales of UNIX servers decreased in
anticipation of the introduction of new models.
Segment operating income amounted to ¥180.9 billion ($1,925
million), up ¥9.6 billion compared to fiscal 2011. In Japan, there
was a decline in deals for large-scale systems in the Solutions/
System Integration and server-related fields, in addition to upfront
R&D spending for network products. Nevertheless, income rose
overall on the back of higher revenues in Network Service and Net-
work Products, and the impact of cost reduction, mainly for x86
servers. Outside Japan, operating income declined as a result of the
impact of lower sales in the European business, reduced sales of
optical transmission systems in North America and UNIX servers, as
well as increased expenses related to retirement benefit obligations
at a UK subsidiary.
In light of continued deterioration of economic conditions in
Europe and intensified competition, the Group has revised the busi-
ness plan for FTS, the wholly owned European subsidiary acquired in
April 2009 (including its subsidiaries). This revision is due to the
likelihood that the investment at acquisition will not be recoverable
within 10 years as initially planned. As a result, the Group recorded
an impairment loss of ¥28.0 billion ($298 million), on the unamor-
tized balance of goodwill and other intangible assets recognized
under other expenses. With the business environment deteriorating,
the Group decided to implement workforce rationalization as a part
of structural reforms to improve FTS’s profitability, and recorded other
expenses of ¥18.4 billion ($196 million) on restructuring costs
including for personnel-related expenses.
*1 LTE: An abbreviation for Long Term Evolution, a next-generation standard
for high-speed mobile communications which improves upon the third-
generation (3G) standard.
100 FUJITSU LIMITED ANNUAL REPORT 2013