Fujitsu 2014 Annual Report Download - page 108

On a Group-wide basis, net sales increased year on year in every
quarter, but sales performance by operating segment was mixed. In
the Technology Solutions segment, which comprises the Group’s core
businesses, including services, server-related, and network products
businesses, consolidated segment net sales increased at an ever
faster pace quarter after quarter, with sales growth of over ¥50 billion
in the first quarter, over ¥70 billion in the second quarter, over ¥80
billion in the third quarter, and over ¥90 billion in the fourth quarter.
Consolidated segment net sales increased year on year, mainly
around the services businesses in Japan, with steady performance
from infrastructure services throughout the year, in addition to strong
sales in Systems Integration as customers expanded their investment
spending. The Ubiquitous Solutions segment, which involves PCs,
mobile phones and so forth, saw sales decline sharply in the first half
of the fiscal year, but double-digit sales growth was attained in the
second half, with sales increasing year on year on a full-year basis.
Mobile phone sales volume fell sharply in the first half of the fiscal
year due to a revision of smartphone sales strategies by telecom-
munications carriers, but recovered in the second half, returning to
mostly the same level as the previous fiscal year. In addition, there
was a significant increase in enterprise PC sales from the second
quarter onward on higher demand for replacements on the end of
support for an operating system product. The Device Solutions seg-
ment saw the core LSI device business post higher sales year on year
in each quarter.
In fiscal 2013, the average yen exchange rates against the US
dollar, the euro, and the British pound were ¥100, ¥134, and ¥159,
respectively, representing a year-on-year depreciation of ¥17 against
the US dollar, ¥27 against the euro, and ¥28 against the British
pound. Exchange rate fluctuations versus the US dollar, euro, and
British pound caused an increase in net sales of approximately
¥100.0 billion, ¥110.0 billion, and ¥70.0 billion, respectively. As a
result, currency exchange rate fluctuations had a positive impact of
approximately ¥280.0 billion on net sales for fiscal 2013, lifting the
overseas sales ratio by 3.6 percentage points to 37.8%.
Cost of Sales, Selling, General & Administrative Expenses,
and Operating Income
The cost of sales totaled ¥3,493.2 billion ($33,915 million), with
gross profit of ¥1,269.1 billion ($12,322 million), representing net
sales minus cost of sales, for a gross profit margin of 26.7%. Gross
profit increased ¥65.4 billion compared to the previous fiscal year,
due mainly to foreign exchange movements and the beneficial effect
of initiatives for improving profitability, although there was a decline
in mobile phone sales. The gross profit margin declined 0.8 of a
percentage point compared to the previous fiscal year, primarily the
result of deteriorating profitability in mobile phones.
Selling, general and administrative (SG&A) expenses were
¥1,126.6 billion ($10,938 million), an increase of ¥11.1 billion from
the previous year, attributable to foreign exchange effects and other
factors. The Company made progress in generating Group-wide cost
efficiencies, and SG&A expenses declined on a constant-currency
basis. Among SG&A expenses, R&D spending amounted to ¥221.3
Reference: Financial Indicators (Unit: billion yen)
Years ended March 31 2013 2014 YoY Change
Net sales . . . . . . . . . . . . . . . . . . . 4,381.7 4,762.4 380.7
Sales outside Japan . . . . . . . . . . . [1,498.2] [1,801.4] [303.2]
Ratio of sales outside Japan . . . . [34.2%] [37.8%] [3.6%]
Gross profit margin . . . . . . . . . . . 27.5% 26.7% (0.8%)
Operating income margin . . . . . . 2.0% 3.0% 1.0%
Return on equity (ROE) . . . . . . . . (11.8%) 8.1% 19.9%
Notes: Owners’ equity: Net assets – Subscription rights to shares –
Minority interests
Return on equity (ROE): Net income ÷ {(Owners’ equity at beginning of
period + Owners’ equity at end of period) ÷ 2}
Reference: Quarterly Breakdown of Net Sales and Operating
Income for the year ended March 31, 2014 (Unit: billion yen)
Consolidated 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 999.2 1,152.3 1,200.7 1,410.1 4,762.4
YoY Change . . . . . . 41.8 37.9 152.4 148.4 380.7
Operating income . . . (22.8) 33.6 26.1 105.5 142.5
YoY Change . . . . . . 3.9 2.5 32.0 15.7 54.2
Breakdown by Main Business Segment (Unit: billion yen)
Technology Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 677.5 785.3 786.3 993.7 3,243.0
YoY Change . . . . . . 50.4 72.0 85.7 92.4 300.6
Operating income . . . 2.5 55.7 44.4 106.3 209.1
YoY Change . . . . . . 3.4 11.1 22.6 (2.0) 35.1
Ubiquitous Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 215.9 262.7 321.2 325.4 1,125.4
YoY Change . . . . . . (18.6) (52.0) 54.7 51.1 35.2
Operating income . . . (17.1) (11.6) (5.4) 12.0 (22.1)
YoY Change . . . . . . (15.1) (24.0) (3.3) 10.8 (31.7)
Device Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 145.3 159.0 146.0 149.7 600.2
YoY Change . . . . . . . . 15.0 20.7 16.5 7.5 59.9
Operating income . . . . 7.6 10.4 4.2 6.1 28.3
YoY Change . . . . . . . . 11.2 13.8 13.5 3.9 42.6
Net Sales
Consolidated net sales for fiscal 2013 were ¥4,762.4 billion ($46,237
million), an increase of 8.7% from fiscal 2012. Excluding the impact
of foreign exchange fluctuations, sales were up by 2%. Net sales in
Japan increased by 2.7%. Sales of mobile phones were down sharply,
in the first half, but sales of system integration services increased,
mainly to the public sector and financial institutions, as did sales of
PCs and network products. Outside Japan, sales were up 20.2% from
the previous fiscal year, and on a constant currency basis, increased
by 1%. Sales of car audio and navigation equipment and optical
transmission systems in North America were higher than fiscal 2012.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS
106 FUJITSU LIMITED ANNUAL REPORT 2014