Fujifilm pre-tax profit reaches record high

By Richard Stuart-Turner, Wednesday 08 May 2019

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Fujifilm’s pre-tax profit reached a record high of ¥212.8bn (£1.48bn) in its fiscal year ended 31 March 2019, but its revenue was down marginally to ¥2.432tn.

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Fujifilm spoke about its initiatives for structural reforms of Fuji Xerox

The Japanese manufacturer’s sales were down by 0.1% from the ¥2.433tn recorded in the fiscal year ended 31 March 2018 but the company’s pre-tax profit climbed by 7.6% from the previous year’s figure of ¥197.8bn.

The company’s operating income and net income also reached record highs, of ¥209.8bn (up 70.1% year-on-year from ¥123.3bn) and ¥157.1bn (up 8.9% year-on-year from ¥144.2bn) respectively.

Fujifilm’s Document Solutions segment recorded revenue of ¥1.006tn, down 4% year-on-year. The segment’s operating income was ¥96.4bn, 11.5 times the level of the previous fiscal year.

“Major contributions to the record-high [operating income] figure came from a large increase of operating income in the healthcare business including the medical systems and bio CDMO and in the electronic materials business, and good progress with improvements of profitability and structural reforms in the document business,” said Fujifilm Holdings director and corporate vice president Junji Okada in an earnings presentation to investors earlier today.

In the Document Solutions segment’s production services business, Okada said sales were strong for the Iridesse, which is a Fuji Xerox product, mainly in the US and Europe.

In January, Fuji Xerox (in which Xerox has a 25% stake, and Fujifilm 75%) unveiled a new high-speed inkjet web, the 11000 Inkjet Press, which borrows some inkjet knowhow from the Fujifilm Jet Press 720.

The machine, which prints at up to 80m/min at 1,200x1,200dpi, is targeted at commercial printing applications such as direct mail and catalogues. Its sales started in February 2019 in Japan though a European launch date has yet to be confirmed.

“Though revenue in the Document Solutions segment declined mainly due to a reduction in some low-profit, low-end printer business, operating income largely increased by such factors as improvements in profitability and a positive impact from structural reforms.”

In a statement, chief executive Shigetaka Komori commented about Fujifilm’s thwarted takeover deal for Xerox last year.

He said: "Our approach to this issue has consistently remained unchanged. If the scheme approved by both companies [in January 2018] is accepted, I believe that we will be able to strengthen business in an ideal manner for both parties."

In addition, chief operating officer Kenji Sukeno stated: "As we are fundamentally strengthening Fuji Xerox's business, a combination with Xerox is preferable but not a necessity. Since we still believe the proposal for a business combination structured as announced on 31 January 2018 would be best for both companies and their shareholders, we will thoroughly explain its validity and legitimacy in the courts."

Okada also spoke about Fujifilm’s initiatives for structural reform of Fuji Xerox, which was hit by inappropriate accounting practices at its Australia and New Zealand operations in 2017. Corporate governance has been strengthened as a result. 

“One-time expenses including structural reform costs in the fiscal year ended March 2019 totalled ¥16.1bn as some measures were carried over to the fiscal year ending March 2020 onwards.

“A positive impact from the structural reforms was ¥31bn, as contributions from some measures realised ahead of the schedule.”

He added: “By executing structural reforms, we aim to establish a business base where sustainable growth can be realised by reducing expenses and maintaining profitability and productivity to withstand market changes and competition, while reinvesting in new growth areas.”

The annual dividend for the fiscal year ended March 2019 is expected to be ¥80 per share, which is an increase of ¥5 from the previous fiscal year.

For the fiscal year ending March 2020, Okada said Fujifilm is “planning to increase revenue and largely increase the operating profit to reach a record high operating income”. The expected revenue for the year is ¥2.48tn while the expected operating income is ¥240bn.

Fujifilm’s share price opened at ¥5,005 in early trading, down by 1.44%, but had since risen to ¥5,051 at the time of writing.

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