Earnings Report: Fujitsu Reports Record Heights in Q2, Aiming for Growth in Security

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Earnings Report: Fujitsu Reports Record Heights in Q2, Aiming for Growth in Security

Fujitsu Ltd. (TYO: 6702), a global information and communication technology company, has announced its financial results for the second quarter of the 2024 fiscal year. The company reported a slight revenue increase of 0.9% year-over-year, reaching 1,696.6 billion ¥, with the Service Solutions segment being a significant growth factor.

Fujitsu's adjusted operating profit for the quarter soared to a record level, showing a remarkable 56.6% increase compared to the previous year. CFO Takeshi Isobe emphasized the company’s focus on enhancing profitability and particularly on growth initiatives related to national security contracts and digital transformation services.

Key Highlights:

  • Fujitsu's revenue rose by 0.9% to 1,696.6 billion ¥, led by Service Solutions growth.
  • Adjusted operating profit increased by 56.6% to a record 88.7 billion ¥.
  • The company saw a 69% revenue increase in modernization work and over 30% growth in Fujitsu Uvance orders.
  • Despite a decline in international revenue, the firm expects further growth, especially in national security contracts.
  • Fujitsu maintains its full-year revenue forecast at 3,760 billion ¥ and its adjusted operating profit target at 303 billion ¥.

Company Outlook: Fujitsu anticipates growth in the second half of the fiscal year, particularly from large-scale national security-related contracts. The revenue target for Uvance is set at 450 billion ¥ for the 2024 fiscal year, growing to 700 billion ¥ by the 2025 fiscal year. The company is actively investing in growth initiatives and focusing on enhancing profitability across all segments.

Negative Highlights:

  • International revenue declined by 4% due to the disposal of low-margin businesses.
  • The Hardware Solutions segment experienced a revenue drop of 4.4%.
  • Ubiquitous Solutions saw a revenue reduction of 16.9%.

Positive Highlights:

  • The Service Solutions segment reported a 7% revenue increase in Japan.
  • The adjusted operating profit margin increased to 4.7%.
  • Device Solutions revenue grew by 3.3%, resulting in a profit increase of 4.1 billion ¥.

Points Below Expectations:

  • The company recorded a one-time loss of 20 billion ¥ due to the expansion of its self-developed support system for human resources transformation.
  • Demand recovery in the Device Solutions segment was slower than expected.

Q&A Highlights:

  • Consolidated results and market demand expectations for service solutions were met.
  • Orders in Japan for the first half were similar to the previous year, with no significant changes expected in demand for the second half.
  • Financial forecasts for the 2024 fiscal year remained unchanged, with expected revenue of 3,760 billion ¥ and adjusted operating profit of 303 billion ¥.
  • Fujitsu's commitment to advancing digital transformation is clearly reflected in its plan to implement an ERP system in service solutions by the 2024 fiscal year. The firm’s focus on increasing profitability and executing its medium-term business plan is expected to enhance performance in the upcoming periods. Despite some setbacks, Fujitsu's overall strategy and projections indicate a path toward meeting its initial targets and increasing corporate value.