FY2013 Financial Results Briefing - Fujitsu€¦ · Bunmei Shimojima President and Representative...

Bunmei Shimojima President and Representative DirectorFujitsu Frontech LimitedApril 28, 2014

FY2013 Financial Results Briefing- FY2013 Financial Results and FY2014 Targets -

Copyright 2014 FUJITSU FRONTECH LIMITED

1. Summary of FY2013 Full-Year Consolidated Financial Results

1


The key points of the FY2013 financial results Net sales increased by 7% year on year to 107.9 billion yen, hitting an all time record high

since the Company was listed. Operating income increased by 72% year on year to 4.1 billion yen. Net income was 1.8 billion yen, 4.5 times as much as the previous fiscal year.

Consolidated Results of Operations

Item Net sales Operating income

Ordinary income Net income Net income

per share

FY2013 107.9 4.1 4.0 1.8 74.60 yen

FY2012 100.5 2.4 2.4 0.4 16.72 yen

Year-on-year +7.4 +1.7 +1.6 +1.4 +57.88 yenFigures announced in

April 103.0 3.7 2.5 1.5 62.63 yen

Change from the figures announced in April +4.9 +0.4 +1.5 +0.3 +11.97 yen

[Billion yen]

2

FY2013 27.5 (25.4%)

FY2012 19.8 (19.7%)

Overseas sales Overseas sales ratio in parentheses [Billion yen]

Average exchange rate during period (1USD=)

FY2013 100 yen*

FY2012 83 yen*The effects of the exchange rates Net sales: +4.7 billion yen Operating income: +0.6 billion yen


Increase in mechanical components for overseas

Increases in POS and RFID for both Japan and overseas

Increase in display systems, mainly bidding systems

for the used car market

Increase in financial services including ATM services

for stores and ATM outsourcing services

[Billion yen]

1.6 1.117.3 17.8

22.6 23.6

19.8 21.5

39.2 43.9

0

20

40

60

80

100

120

FY2012 FY2013

100.5Financial business: 43.9 billion yen (year-on-year increase of 4.7 billion yen, up 12%)

Retail business: 21.5 billion yen (year-on-year increase of 1.7 billion yen, up 9%)

Industrial/Public business: 23.6 billion yen (year-on-year increase of 1.0 billion yen, up 4%)

Service business: 17.8 billion yen (year-on-year increase of 0.5 billion yen, up 3%)

Financial business Retail businessIndustrial/Public business Service business

Sales by Segment (Major Factors for Changes)

Other

107.9

*A new segment “Other,” which does not belong to any reporting segment, has been added since the third quarter of FY2013, and businesses such as the metal mold, precision cutting and welfare which previously belonged to the Industrial/Public business have been reclassified into “Other” business segment.

3


Year-on-year increase +1.72.4

4

+1.8

+1.1

+0.6

4.1

Cost reduction

FY2012 results FY2013 results

[Billion yen]

Change to lean structure*(Increased business efficiency)

Decrease in price,etc.

Effect of exchange

rates

Efforts to “increase business efficiency” to build lean management base hasstarted to steadily bear fruits.

As the price competition is intensifying, we are planting seeds for new growth strategies.

Major Factors for Changes in Operating Income

-1.8

* Improvement of plant processIn-house productionHR measures, etc.


Outline Total assets Net assets Capital adequacy ratio Net assets per share

FY2013 65.2 35.5 54.1% 1,473.37 yen

FY2012 64.8 34.7 53.1% 1,437.15 yen

Increase/Decrease +0.4 +0.8 +1.0% +36.22 yen

OutlineC/F from

operating activities

A

C/F from investing activities

B

Free C/FA + B

C/F from financing activities

C

C/FA + B + C

Cash and cash equivalents at the end of year

FY2013 7.8 0.3 8.1 (4.2) 3.9 6.2

FY2012 6.8 (4.4) 2.4 (2.4) 0 2.1

Increase/Decrease +1.0 +4.7 +5.7 -1.8 +3.9 +4.1

[Billion yen]

[Billion yen]

Consolidated financial positions

Consolidated statements of cash flows

Consolidated Financial Positions and Cash Flows

5


2. Summary of FY2014 Full-year Targets

6


Item Net sales Operating income

Ordinary income

Net income

Net income per share

FY2014 forecast

First half 47.1 0.4 0.2 0.1 4.18 yen

Full year 110.0 4.9 4.3 3.0 125.34 yen

FY2013 results

First half 48.8 0.4 0.2 (0.4) (16.50) yen

Full year 107.9 4.1 4.0 1.8 74.60 yen

Increase/Decrease

First half -1.7 ±0 ±0 +0.5 +20.68 yen

Full year +2.1 +0.8 +0.3 +1.2 +50.74 yen

[Billion yen]

Consolidated Earnings Forecast

FY2014 forecast 29.5 (26.8%)

FY2013 results 27.5 (25.4%)

Overseas sales Overseas sales ratio in parentheses [Billion yen] Average exchange rate

during period (1USD=)

FY2014 assumption 100 yenFY2013 100 yen

7


Increase in mechanical components for overseas Increase due to a start of systems business such as ATM

for overseas

Decrease due to the change in distribution channelsof POS in Europe and the U.S.

Increase due to a steady deployment of totalizatorterminals

Decrease due to narrowing down product models inthe smartphone test supporting business

Increase in the ATM services for stores

[Billion yen]

1.1 0.617.8 19.2

23.6 23.6

21.5 16.8

43.9 49.8

0

20

40

60

80

100

120

FY2013 FY2014

Financial business: 49.8 billion yen (year-on-year increase of 5.9 billion yen, up 13%)

Retail business: 16.8 billion yen (year-on-year decrease of 4.7 billion yen, down 22%)

Industrial/Public business: 23.6 billion yen (unchanged year on year at 0.0 billion yen, 0% change)

Service business: 19.2 billion yen (year-on-year increase of 1.4 billion yen, up 8%)

Financial business Retail business

Industrial/Public business Service business

Other

Sales by Segment (Major Factors for Changes)

107.9 110.0

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Year-on-year increase +0.8

4.1

9

+0.5

+1.7 -1.4

4.9

FY2013 results FY2014 targets

[Billion yen]

Change to lean structure(continuing efforts to

increase business efficiency)

Cost reductionDecrease in

price, strategic investment

Major Factors for Changes in Operating Income Strictly continue efforts to “increase business efficiency” to build lean

management base. Implement incubation and strategic investment for new growth.


Development of the next-generation totalizator terminals Introduction of cash management solution services to the markets Approach to businesses related to the Tokyo Olympic Games

(Reference) Medium-term Strategic Investments

Enhancement of manufacturingsystem at the major plant

in the PhilippinesIncreased production of

mechanical components for overseas market

Global ATM(Spain → European markets)

Overseas investments

Investment in Japan

Introduction of new POSproducts to theChinese market

TCR (Teller Cash Recycler)development

Introduction of newself-checkout systems for

Europe and the U.S.

Cross-boarder M&A

Overseas strategies for ATM cover both systems and mechanical components in the future.

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Dividends

Dividend policy:

16 yen 16 1718

1.2 billion yen

0.4

1.8

3.0

0

5

10

15

20

25

30

FY2008 FY2012 FY2013 FY2014

Stable payouts of 16 yen for 5 years

Item Interim Year-end Full year

FY2013 8 yen 9 yen (scheduled)

17 yen (scheduled) (increased dividend)

FY2014 9 yen (planned)

9 yen (planned)

18 yen (planned) (increased dividend)

Placing a focus on stable dividend payouts, dividends are decided in consideration of profits in each fiscal year and future business developments.

Past dividend distributions

Dividend per share (left axis)

Net income (right axis)

3.0

2.5

2.0

1.5

1.0

0.5

0

[Billion yen][Yen]

11


Overseas net sales ratio:FY2013 25.4%→FY2014 26.8%

Start of the ATM system business in Spain Geographical and segmental expansion of

the mechanical components business Establishing POS sales structure for China

and Asia

Review of processes for the new product development

Review of manufacturing system Optimizing supply chains

Cash management solution services TCR RFID solution

Policies for FY2014

A. Promoting a total businessranging from products tosolution / services

B. Strategic expansion of globalbusiness

C. Development into LCM businesswith service as the core

1) Strategic business promotion

2) Strict continuation of efforts to increase business efficiency

(i) Expansion of global businesses

(ii) Strict enforcement of business efficiency

(iii) Creating new businesses/new products

Medium-term management policy Policies for FY2014

12


<Market trend> Continued growth of the global ATM market at a high growth rate Continued expansion of the Chinese market, bill recycling

type ATM becoming mainstream, and advancement of the shiftto domestic production

<Measures for FY2014> Continued sales expansion of the global bill recycling units Special demands in China related to the banknote serial number reading

function becoming mandatoryPromotion of vigorous sales expansion of new bill dispensing units andbill recycling units compliant with the above mandated requirements.

Entry into the ATM and TCR markets- Commencement of supply of new-model ATMs to Spain (from March 2014)- Joint development of teller machines for bank branches with a manufacturer

13

Financial Business (1)

Expansion of systems business such as ATM in addition tomechanical components sales

Overseas business

Segment net sales: FY2013 results 43.9 billion yen, FY2014 targets 49.8 billion yen

New-model ATM for Spain

Mechanical components


<Market trend> Continued replacement demand for older

ATM models after 10 years since theissuance of new bills

Now is the time before emerging demands for replacement of banking terminals by the next-generation systems

<Measures for FY2014> Continued strong sales of new-model ATMs,

FACT-V X200. Aiming for further salesexpansion through the market launch ofa web-linkage feature

FY2014 becoming in between time forbanking terminals before renewal.Promoting new developments for the next-generation systems starting fromFY2015

Financial Business (2)

14

<Market trend> The biometric market has become active

worldwide as security awareness is heightened

Demand expansion from financial marketto the markets for government agenciesand public sectors

<Measures for FY2014> Introduction of laptops with a palm vein

authentication sensor as well as externalsensors (SL) to the overseas markets

Promotion ofintroduction of theproduct for banks andlocal governments inJapanIncreased number oftablets equipped with the product

Domestic business

Securing replacement demandby enhancing solutions

Expansion to markets for government agencies and

public sectors

Palm vein authentication

Laptop with the palm vein authentication sensor


Start of the ATM system business in Spain Introducing new-model ATMs in Spain where we have a large number of ATM

installed baseAiming for further expansion into Europe and Central/South America

Expansion of the gaming market using mechanical components Growing shipment of bill dispensing units for money changer manufacturers

in North America for which continued growth expectedWith the momentum for installation of bill storage devices for table gameson the rise, aiming for promotion of bill acceptor units as well

Ultra-thin palm vein authentication sensor Mounted on corporate-use tablets and laptop

PCsAdopted as terminals used for external activities byfinancial institutions

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Financial Business (3) Topics

Tablet with the palm vein authentication sensor

Copyright 2014 FUJITSU FRONTECH LIMITED16

Retail Business (1)

Retail Store systems business

<Market trend> Expansion of use of smart devices in store operations Diversification of retail sites (Omni channel) Growing trend of low price due to commoditization

of POS<Measures for FY2014: Japan> Simultaneous sales expansion of the existing POS and

mobile solutions by adopting WS-POS**WS-POS：Web Services for Point of Service

Promoting use of RFID in retail store systems<Measures for FY2014: Overseas> Introducing new SCO products for

Europe and the U.S. (from Sep. 2014) Adding low-priced POS for China and

Asia to the product lines

<Domestic business> Increase in gross profits by

sales expansion of POS forspecialty stores and mobilesolutions

Eliminating the effect of the yendepreciation by reducing costsfor procurement

Continuing to reduce costs bypromoting higher efficiency

<Overseas business> Higher efficiency achieved by

reviewing distribution channelswithin the Fujitsu Group(Direct operation of POS inEurope and the U.S.)

Improving profits

Proposing new “store front”


SCO for Europe and the U.S.


Use of RFID in store systems Accelerated adoption of RFID in the apparel industry due to reduced RFID brand-tag prices

[Benefits to customers]− Display of the product information of a chosen

product[Benefits to stores]− Grasping the hot-selling products by knowing

what are tried on− Product strategies by analyzing customer behaviors

RFID solution deployment Proposal to brand-specific apparel stores and

collaboration for POS packages, etc.− Increased accuracy of inventory

→ sales and purchasing strategies− Shorter time for customers waiting in a line for

checkout− Prevention of theft

Cloud-based linkage Provision of an RFID tracking system on a cloud platform

− Integrated control of RFID data at a center− Systems linkage for operations including receiving/shipping

and inspecting goodsTarget: apparel, medical, public sectors, etc.

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Retail Business (2) Topics

RFID shelf sensor


Industrial/Public Business (1)

Public racing

<Market trend> Sales of totalizator terminal peaked out

due to the shrinking number of sales counters, led by the increased number of Internet votes

<Measures for FY2014> Steady deployment of the 7th generation

totalizator terminal Entering the server business for race track

operators - Sales expansion of

cashless servers Planning and developing

the 8th generationtotalizator terminal

<Market trend> Continuing the business for replacement

aimed at reducing costs for operation,as the systems are aging

Increase in projects for building andmaintaining stadiums and infrastructuretargeted at the 2020 Tokyo Olympic Games

<Measures for FY2014> Offering a total system in use at

used-car auction house(bidding system + operation system +video system, etc.)

Approach to businesses related to theTokyo Olympic Games

Industrial/Public system

Expansion of the business by offering a total solution

for race tracks

Proposing a total solution combined with the peripheral systems


Cashless terminal


Expansion of the Chinese airport business Our share in FIDS (Flight Information Display System)

− Operating in 19 airports (57% share in China)Design and manufacture in Japan to exportto China

Product equipped with a color LCD unit uniquelydeveloped by the Company− Development of FSC (Field Sequential Color)

LCD units controllable by general-purpose PCs

Manufacturing FIDS in China(i) Scheme change from the manufacture in

Japan to China

(ii) Aiming for expansion of business to cover the entireairport display systems including medium- andsmall-sized monitors other than FIDS

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Industrial/Public Business (2) Topics

FSC LCD unit

Hangzhou Airport (Zhejiang)

Hongqiao Airport (Shanghai)


Service Business (1)

Financial service

<Market trend> Strong desire of medium-sized financial

institutions for BCP, security, andfocusing on their core businesses, leading to a robust demand

Expansion of ATM installation sites fromconvenience stores to general retailstores

<Measures for FY2014> Start of the sale of options for the ATM

service for stores (such as the cashmanagement solutions)

Enhancing BCP-compliant features of the ATM outsourcing service

<Market trend> A robust demand for services, owing to

the progress of renovation of retail stores Trend of low price continuously growing

<Measures for FY2014> Expansion of service features offered by

the POS help desk services for thecloud-based products (TeamCloud/M)

Expanding pricevariations offeredby the help deskservices

Retail service

Tapping into potential markets by expanding features of

the existing services

Enhancing variation ofthe LCM service for stores


POS help desk


Service Business (2)

Start of the sale of the cash management solutions (TC/CM) Significantly enhanced efficiency of store cash management and its linkage with the store ATMs

(i) Store proceeds management (visualized flow of cash) and a significant reduction of the operational load for preparations of change fund used at counters

(ii)Cost reduction by using secure transportation of ATM funds for delivery of store change fund as well (iii)Expediting clearing of sales proceeds and ensuring security equivalent to a night depository safe

by depositing store proceeds in ATMs

Topics

[Headquarter]

[Store back office]

Automatic change dispenserAutomatic change dispenser

Deposit proceedsDeposit proceeds

POS

Change fund delivery

Collection/refilling

Customer

Withdrawal

Cash Recycler Call center

Servicecenter

Deposit

ATM

Bank

[Store floor]

HQ account

Clearing of fundsClearing of funds

POS sales/Balance Info Cloud center

Deposit/withdrawal,cash information,

inquiry/coordination







Deposit/withdrawal Information

Purchase

Securetransportation plan


B to B to Front

Logistics/stores

Internet SNS

Financial institutionsDistribution/retail Public racing

Bank branches/ATMTicket sales

counters

B

B

Front

to

to

(Contact point between

companies and consumers)

(Companies/organizations)

1. Collaboration inter-industryRetail/Internet/

banks/securities/credit

Renovation of front officesSales/office administration→Place to offer various

services Stores: payment/delivery

to home/Internet Bank branches:

investment/ insurance

2. Interactive network among consumers and companies/ consumers connected through SNS

(Consumers)

3.

CustomersCustomers

Customers

Fujitsu FrontechService

Retail business Industrial/PublicFinancial business

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■ Expand into newmarket/business

● Apply technologies in whichthe Company has strengthsto new businesses

● Enter new markets

e.g.) Take approach to the medicaland logistics markets

• Bank/ATM• Store/POS• Public racing/totalizator

terminal• Mechanical components• Palm vein authentication • RFID

■ Innovation

● Create new business● Create new value

e.g.) Start cash managementsolutions services

■ Deepen technologiesand values offeredPromote a total business

● Add new features and products● Develop into the LCM business

e.g.) Deploy RFID solution

Existingbusinesses

Existing technologies

New technologies

New businesses

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By creating new businesses with the “B to B to Front”

approach (the front line facing with the consumers) based on

our strategic advancement of business and strict continuation

of efforts to increase business efficiency, we will strive to

achieve:

<FY2014 targets>

Consolidated net sales: 110.0 billion yen

Consolidated operating income: 4.9 billion yen

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<Notes Regarding Forward-Looking Statements>

●This material contains certain statements about projections and forecasts for the future plans, strategies, and performance based on assumptions made using information available to Fujitsu Frontech at that time.

● In addition, this material contains various risks and uncertainties (including economic trend, fierce competitions in the related industries, market demands, foreign exchange rates, tax rules and other regulations). Accordingly, please be informed that the actual results may materially differ from the forecasts made by the Company.

<Trademark>The proper nouns herein including product names are the trademarks or

registered trademarks of the respective companies.

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FY2013 Financial Results Briefing - Fujitsu€¦ · Bunmei Shimojima President and Representative...

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