Fujitsu 2013 Annual Report Download - page 100

outside Japan. Sales began to rise year on year in the third quarter,
however, with the recovery of the services businesses outside Japan
and other factors. The fourth quarter saw a significant increase in
sales with the added boost of the yen’s depreciation. On the other
hand, the Ubiquitous Solutions segment, which involves PCs, mobile
phones, and so forth, saw sales decline sharply year on year in the
third and fourth quarters, under increasing pressure from competi-
tion, while the LSI device business, which is the core of the Device
Solutions segment, saw sales decline year on year in each quarter.
In fiscal 2012, the average yen exchange rates against the U.S.
dollar, the euro, and the British pound were ¥83, ¥107, and ¥131,
respectively, representing a year-on-year depreciation of ¥4 against
the U.S. dollar, appreciation of ¥2 against the euro, and depreciation
of ¥5 against the British pound. Exchange rate fluctuations versus
the U.S. dollar and British pound caused increases in net sales of
approximately ¥20.0 billion and ¥10.0 billion respectively, while the
effect of fluctuation versus the euro was negligible. As a result,
currency exchange rate fluctuations had a positive impact of approxi-
mately ¥30.0 billion on net sales for fiscal 2012. The ratio of sales
outside Japan was 34.2%, an increase of 0.5 of a percentage point
compared to the previous fiscal year.
Cost of Sales, Selling, General & Administrative Expenses,
and Operating Income
The cost of sales totaled ¥3,177.9 billion ($33,808 million), with
gross profit of ¥1,203.7 billion ($12,806 million), for a gross profit
margin of 27.5%. Gross profit decreased ¥31.6 billion compared to
the previous fiscal year, due mainly to revenue declines in PCs,
mobile phones and LSI devices. The decline was partially offset by
increases in revenues from Network Services and Network Products,
and the impact of cost reductions, mainly in x86 servers. The gross
profit margin was 27.5%, a decline of 0.2 of a percentage point
compared to the prior fiscal year.
Selling, general and administrative, (SG&A) expenses were
¥1,108.4 billion ($11,792 million), a decrease of ¥21.6 billion from
the previous year. Among SG&A expenses, research and development
spending amounted to ¥231.0 billion ($2,458 million), a decrease of
¥7.3 billion compared to the previous year. The decrease was primar-
ily as a result of efforts across the Group to generate cost efficiencies.
There was also an increase in strategic investment in network-related
technologies and cloud services. The ratio of R&D expenses to sales
was essentially unchanged from the previous fiscal year at 5.3%.
As a result, operating income amounted to ¥95.2 billion ($1,014
million), a decrease of ¥10.0 billion compared to fiscal 2011. The
operating income margin was 2.2%, a decline of 0.2 of a percentage
point, mainly because of intensifying competition for hardware
products centered on PCs and mobile phones and impacts on foreign
exchange fluctuations.
The Technology Solutions segment achieved income substan-
tially on par with the previous year up until the third quarter, after
which income saw more than 10% growth in the fourth quarter to
finish with a year-on-year increase. Meanwhile, the Ubiquitous
Reference: Quarterly Breakdown of Net Sales and Operating
Income for the year ended March 31, 2013 (Unit: billion yen)
Consolidated 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 957.3 1,114.4 1,048.2 1,261.6 4,381.7
YoY Change . . . . . . (28.7) 8.1 (31.4) (33.8) (85.8)
Operating income . . . (25.0) 32.7 (4.1) 91.7 95.2
YoY Change . . . . . . (7.9) 8.5 (7.3) (3.3) (10.0)
Breakdown by Main Business Segment (Unit: billion yen)
Technology Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 627.1 713.3 700.6 901.3 2,942.3
YoY Change . . . . . . (32.0) (12.9) 14.4 37.9 7.4
Operating income . . . 0.8 46.2 23.5 110.2 180.9
YoY Change . . . . . . (1.6) 3.0 (2.3) 10.6 9.6
Ubiquitous Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 234.6 314.7 266.5 274.3 1,090.2
YoY Change . . . . . . (0.8) 34.4 (34.6) (62.9) (64.0)
Operating income . . . (2.0) 12.4 (2.0) 1.2 9.6
YoY Change . . . . . . (2.0) 8.0 (4.1) (12.2) (10.3)
Device Solutions 1Q 2Q 3Q 4Q Full Year
Net sales . . . . . . . . . . 130.3 138.3 129.5 142.1 540.3
YoY Change . . . . . . . . (10.5) (9.2) (8.6) (15.8) (44.3)
Operating income . . . . (3.6) (3.3) (9.3) 2.1 (14.2)
YoY Change . . . . . . . . (2.6) 0.4 (0.9) (0.9) (4.0)
Net Sales
Consolidated net sales for fiscal 2012 were ¥4,381.7 billion ($46,614
million), a decline of 1.9% from fiscal 2011. On a constant currency
basis, sales were down by 3%. Net sales in Japan fell by 2.6%. The
primary reason for the decrease was a drop in sales of PCs, mobile
phones, LSI devices, and electronic components, along with a decline
in sales revenues stemming from Japan’s Next-Generation Supercom-
puter System, for which deliveries peaked in fiscal 2011. On the other
hand, there was an increase in revenues of Network Services and
Network Products. Outside of Japan, sales were essentially
unchanged from the previous fiscal year, and on a constant currency
basis, sales decreased by 3%. Sales of infrastructure services, particu-
larly in Europe, were buffeted by deteriorating economic conditions,
and sales of PCs in Europe and optical transmission systems in North
America were lower.
The Technology Solutions segment comprises the Group’s core
businesses, including services, server-related, and Network Products
businesses. Consolidated segment net sales increased year on year,
mainly around the services businesses in Japan, with steady year-
round performance from Infrastructure Services such as network
services, and Systems Integration. First and second quarter net sales
were down year on year, mainly due to a lag in ICT investment recov-
ery in the server-related business and the services businesses
098 FUJITSU LIMITED ANNUAL REPORT 2013