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Japan-Update

Fujitsu sees highest profit in over a decade in fiscal 2018

Profitability improving as it unloads PC, mobile phone businesses

Lenovo CEO Yang Yuanqing, left, and Fujitsu President Tatsuya Tanaka in Tokyo earlier this month.

TOKYO -- Fujitsu expects robust performance in the coming fiscal year as corporate Japan flocks to its information systems and services in pursuit of workplace reform and productivity growth.

Sales are expected to total somewhere in the upper 3 trillion yen range, a decline from the 4.1 trillion yen projected for fiscal 2017 and a substantial drop from the 5 trillion yen-plus figures seen before the 2008 financial crisis.

This is due largely to a shift in Fujitsu's business focus from low-margin hardware products to more profitable software and information technology-related services.

Fujitsu is set to give up a majority stake in its key PC subsidiary to China's Lenovo Group. This is expected to result in a loss of tens of billions of yen in Fujitsu's annual sales. The company is also selling its cellphone business, which generates more than 150 billion yen in revenue. It has also shed car-navigation systems and other low-margin segments.

Although sales are projected to decline in fiscal 2018 due to the business reorganization, the operating margin is expected to rise to 6%. The job cuts the company announced in Europe last fiscal year are expected to start helping the bottom line next fiscal year as well. The growing use of cloud computing and artificial intelligence is also giving a boost to Fujitsu, which sees increasing demand for its systems among the automotive, logistics and various other industries.

For the current year through March 2018, operating profit is forecast at 185 billion yen, up more than 40% from fiscal 2016, when a car navigation subsidiary was included in the consolidated results. Fujitsu probably will post operating profit of a little more than 70 billion yen for the nine months through December. The figure is only about 40% of the full-year projection, which is because the company does substantial business with government agencies and tends to book sales from them in the fourth quarter.

(Nikkei)

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