Fujitsu 2014 Annual Report Download - page 42

MARKET TRENDS
2013 Global Market Trends
The value of Japan’s IT services market in 2013 increased 1.6%
year on year to US$51.3 billion. Due to the government’s eco-
nomic policy and monetary easing by the Bank of Japan, the
economy has clearly demonstrated signs of a trend toward
recovery, with ICT investment gradually improving in both public
and private sectors. Another factor has been a surge in demand
ahead of the increase in the consumption tax rate.
In the private sector, strong performance in the automotive
industry has spread to the ICT field, and IT investment has also
grown steadily year on year in the financial services and retail
sectors, among others.
By service field, demand for system integration rebounded. The
outsourcing field also saw wider uptake of cloud services with the
market increasing in scale compared to the previous year.
The global market for IT services expanded 2.4% year on year to
US$634.2 billion. The global economy continued to experience a mod-
erate recovery, while in Europe, there was a resumption of economic
growth, and signs of an economic recovery, particularly in Germany
and the UK. In the US, as well, the economy continues to recover,
especially with consumer spending and corporate capital investment.
Outlook for 2014
The Japanese IT services market in 2014 is projected to grow
1.6% year on year to US$52.1 billion.
Although concerns exist that the Japanese economy will
experience a temporary slowdown in consumption associated
with the hike in consumption tax and rising prices for import
materials following the yen’s depreciation, a range of economic
polices initiated by the government is expected to continue
driving recovery trends. In line with this, IT investment in Japan is
expected to gradually recover.
The global IT services market is projected to grow 3.4% year
on year to US$655.5 billion, with China, ASEAN, and emerging
markets leading the way. The increasing momentum of the US
economic recovery is expected to have a positive effect, with the
European market also expected to continue its gradual recovery.
Against this economic backdrop, IT investment is projected to
increase gradually in every region.
OPERATIONAL REVIEW AND INITIATIVES
Fiscal 2013 Business Results
Sales from the Services sub-segment (Solutions/System Integra-
tion, Infrastructure Services) increased 10.1% year on year to
¥2,627.2 billion.
Solutions/System Integration: Sales increased 10.0% year on
year to ¥920.4 billion.
In Japan, sales increased over the previous year in all indus-
tries. In the financial field, the Company had strong sales to a
wide range of customers including megabanks, a
government-related financial institution, regional banks, securi-
ties companies, and customers in the credit and leasing busi-
ness. In the industrial field, sales continued to be favorable from
the previous year, mainly owing to the automotive sector. Year-
on-year sales increased substantially in the public sector, with
rising demand for system upgrades from government agencies
and local governments, healthcare, and education. Particularly,
sales in healthcare increased significantly, reaching a new record.
Infrastructure Services: Sales increased 10.1% year on year to
¥1,706.7 billion.
In Japan, overall sales increased slightly. In addition to ongo-
ing brisk outsourcing business, there were large projects and
favorable business results at subsidiaries in network services.
However, these were offset by a decline in sales due to changes
in distribution channels in the Internet service provider (ISP)
business. Outside Japan, however, sales increased significantly
although the level was essentially unchanged on a constant
currency basis. While there are signs of economic recovery, the
need for structural reforms remains, primarily in Europe, and
sales continued to be lackluster on a local currency basis.
Operating profit increased ¥26.5 billion year on year to
¥151.1 billion. The higher operating profit reflected a strong
year-on-year increase in profit in the Solutions/System Integra-
tion business, which outweighed the effects of upfront invest-
ments for the future and a decline in operating profit in Japan
due to underperforming projects. The higher operating profit also
reflected contributions from large network service business deals
in infrastructure services, and the positive impact of cost cutting.
Outside Japan, operating profit increased due to the effects of
structural reforms and foreign exchange rates.
Initiatives Going Forward
Solutions/System Integration: In light of firm trends toward
recovery in ICT investment in Japan, Fujitsu is steadily moving
forward on system development in both the private- and
public-sector fields, including large-scale system integration
projects and provision of public ICT infrastructure.
Fujitsu will help customers reduce maintenance and opera-
tions costs through its modernization service, where it stream-
lines and renews customers’ existing application assets. We will
also offer system integration services that respond flexibly to
customers’ initiatives to increase business process efficiency,
organizational changes, and service expansion. Through these
services, Fujitsu will work together with customers to achieve
business innovation, such as enhancing enterprise competitive-
ness, and social innovation that addresses social issues.
To realize these initiatives, we are utilizing the strengths and
characteristics of regional system engineering companies as a
Group to their full potential as we work to effectively utilize their
resources and make effective investments in development to
bolster competitiveness.
040 FUJITSU LIMITED ANNUAL REPORT 2014
OPERATIONAL REVIEW AND OUTLOOK
Technology Solutions/Services