Fujitsu 2003 Annual Report Download - page 27

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Net Sales
Market conditions affecting Fujitsu in the fiscal year ended
March 31, 2003 (fiscal 2002) remained difficult. Amid the
prolonged aftermath of the bursting of the IT bubble in the
U.S. and the subsequent economic downturn and global
deflationary trends, stock markets remained depressed,
personal consumption lagged and businesses continued to
place stringent restraints on their investments in IT. With
price competition increasingly fierce as a result of the rise
in production capacity in China and elsewhere, the IT sec-
tor continued to experience drastic and rapid structural
change, and market conditions remained severe through-
out the year. At the same time, however, the
implementation of the e-Japan initiative continued to have
a beneficial effect, and China and other Asian markets
began to recover in the second half. There were also signs
that the decline in IT investment by telecommunications
carriers in Europe and the U.S. had finally hit bottom.
Unfortunately, toward the close of the fiscal year, the
prospects for economic recovery worldwide became less
certain as a result of the tense international situation,
including the Iraq conflict and possible adverse effects from
the SARS epidemic.
In this difficult environment, fiscal 2002 consolidated
net sales were ¥4,617.5 billion ($38,480 million), a
decrease of 7.8% from the previous fiscal year.
We accelerated worldwide efforts to increase sales of
software and services to the manufacturing, government
and healthcare sectors and also strived to expand sales of
consumer products, such as personal computers and
mobile telephones. Despite these initiatives, however,
telecommunications carriers worldwide continued to cut
back on their capital investments. There was also a drop-off
in large-scale system orders in Japan, particularly from
financial institutions. As a result, sales of platform products
fell significantly. Our services business was also impacted
by conditions in the telecommunications and financial sec-
tors. In semiconductors, however, although price
competition intensified, there was great improvement in
the demand-supply balance for logic chips and flash memo-
ry, and sales increased.
Cost of Sales,
Selling, General & Administrative Expenses,
and Operating Income
Compared to the previous year, the cost of sales decreased
by 10.8%, to ¥3,328.2 billion ($27,736 million), while the
cost of sales ratio also fell by 2.4% from the previous fiscal
year, to 72.1%. Gross profit on sales (net sales minus the
cost of goods sold) rose to ¥1,289.3 billion ($10,744 mil-
lion), a 1.1% increase over the previous fiscal year. As a
result, the gross profit margin improved by 2.4% from last
year’s 25.5%, to 27.9%. This improvement in profitability is
a result of the effects of the streamlining achieved by
restructuring as well as concerted efforts to cut costs and
make expenditures more productive.
Selling, general and administrative expenses declined
by 11.9% from the previous year, to ¥1,188.8 billion
($9,907 million). These efficiency gains, combined with the
decrease in sales, led to a 1.3% reduction in the ratio of
these expenses to net sales, to 25.7%. As a result of the
Software and Services Electronic Devices Platforms
Financing
Net Sales by Business Segment (excluding intersegment sales)
(¥ Billions)
(Years ended March 31)
Other Operations
SG&A (¥ Billions)
Ratio of SG&A to Net Sales (%)
(Years ended March 31)
FINANCIAL SECTION
Management’s Discussion and Analysis of Operations