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July 30, 2013

Fujitsu reports fiscal 2013 first quarter financial results

Structural reforms gradually beginning to contribute to improved earnings.

By Claire Vanner

Fujitsu has reported a consolidated net loss of 21.9 billion yen (US$221 million), representing an improvement of 3.5 billion yen compared to the loss posted in the first quarter of fiscal 2012.

The operating loss was an improvement over April projections. Fujitsu is keeping the full-year projections unchanged.

Net sales were 999.2bn yen (US$10,093m) for the first quarter of fiscal 2013, an increase of 4.4% from the first quarter of fiscal 2012. Sales in Japan declined by 5.7% but sales outside Japan rose 22.8%. Sales of system integration services rose, but mobile phone and PC sales declined. On a constant currency basis, sales rose by 3%.

Sales increased largely because of a recovery in demand for optical transmission systems in North America, as well as higher sales of LSI devices and electronic components. The impact of foreign exchange fluctuations for the first quarter was to increase net sales by approximately 65bn yen.

Gross profit was 259.6bn yen, an increase of 8.9 billion yen from the first quarter of fiscal 2012. Selling, general and administrative expenses were 282.4bn yen, an increase of 5.0 bn yen from the first quarter of fiscal 2012, primarily as a result of yen depreciation.

Masami Yamamoto, President of Fujitsu, commented: "We are beginning to see a positive impact of structural reforms in the LSI business and businesses outside Japan as well as various workforce-related measures and progress in streamlining corporate headquarter functions. We will continue to pursue aggressive structural reforms to achieve profitable growth for this fiscal year and years forward."

Consolidated net sales in the Technology Solutions segment amounted to 677.5bn yen (US$6,843m), an increase of 8% from the same period in fiscal 2012. Sales in Japan were essentially unchanged. Server-related sales declined due to a slower-than-expected initial launch period for new UNIX server products.

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In infrastructure services, outsourcing services grew steadily, but overall sales were weak compared to the first quarter of fiscal 2012, when demand related to network services increased as telecommunication carriers tried to keep up with higher volumes of communications traffic.

For systems integration services, sales grew primarily in the manufacturing, financial services, and public sectors. Sales outside Japan increased 21.1%. On a constant currency basis, sales increased by 3%. Sales of infrastructure services declined due to the impact of corporate spending restraints from the economic downturn in Europe. In addition, sales of new UNIX server models were weak.

Sales of optical transmission systems in North America increased on a recovery in spending by telecommunications carriers. The segment posted operating income of 2.5bn yen (US$25m), up
3.4bn yen compared to the first quarter of fiscal 2012.

PC sales declined as unit sales fell on account of the shrinking consumer PC market, as well as the large-volume orders received during the first quarter of last year from customers in the financial services industry. In mobile phones, sales fell due to the shrinking market for feature phones, in addition to revisions in the smartphone sales strategies of telecommunication careers.

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