FUJIY 1Q Down

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Fujifilm Holdings Corporation (FUJIY) reported a net income of ¥2.5 billion ($31.2 million) for first-quarter of fiscal 2013 (ending June 30, 2012), down 82.7% year over year.

Revenue: Revenue in the reported quarter inched down 2.2% year over year to ¥518.3 billion ($6469.9 million).

Revenues from the Imaging Solutions segment accounted for 14.2% of total revenue, Information Solutions segment contributed 38.9%, and Document Solutions generated 46.9%.

Of the total revenue, domestic revenue accounted for 44.1% while international revenue generated 55.9% during the quarter

Margins: As a percentage of revenue, cost of sales in the quarter inched down 1.4% year over year. Gross margins stood at 39.6% versus 40.1% in the year-ago quarter. SG&A and R&D expenses together accounted for 35.6% of total revenue compared with 40.1% recorded in the year-ago quarter. Operating margin decreased from 5.5% in the year-ago quarter to settle at 4.0%.

Balance Sheet: Cash and cash equivalents at the end of the period registered an increase of 10.0% over the previous sequential quarter. Total property, plants and equipment decreased 2.4% sequentially at the end of the reported period

Long-term debt of the company stood at ¥19.7 billion ($247.7 million) at the quarter ended June 30, 2012, down 3% at the quarter ended March 31, 2012.

Cash flow: Net cash provided by operating activities for three months ended June 30, 2012, increased 37.0% year over year to ¥69.5 billion ($867.6 million).

Fujifilm faced sluggish European demand alongside yen appreciation against euro, affecting the company’s performance. However, structural reforms across the corporate constitution generated profit, which was lower than expected.

The company operates in a highly competitive industry wherein traditional and digital imaging products face fierce rivalry from competitors, such as Canon Inc. (CAJ).

Currently, we are maintaining a long-term ‘Neutral’ recommendation on FUJIY. Also, the company has a Zacks #3 Rank, implying a short-term (1-3 months) ‘Hold’ rating.

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