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FUJIFILM (FUJIY) Q2 Earnings Top, Stock Down on Weak Revenues
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FUJIFILM (FUJIY - Free Report) shares have declined 4.8%, following its second-quarter fiscal 2019 results announced on Nov 7. The company’s top line was negatively impacted by lower document solutions and imaging segment revenues, partially offset by growth in the healthcare & materials segment.
However, solid progress in the structural reforms related to Fuji Xerox — the joint venture between FUJIFILM and Xerox Corporation (XRX - Free Report) — drove operating profit in the quarter.
The company reported earnings of 77 cents per share in the quarter, which beat the Zacks Consensus Estimate by 14 cents. However, revenues of $5,453 million (¥607.9 billion) lagged the Zacks Consensus Estimate of $5,682 million. Revenues (in ¥) declined 1.4% from the year-ago quarter, primarily due to lower sales in the document business.
Domestic — 41.3% of revenues — was ¥250.9 billion, down 2.8% from the year-ago quarter. Overseas — 58.7% of revenues — was ¥357 billion, down 0.4% from the year-ago quarter.
During the quarter, the company established FUJIFILM Toyama Chemical to accelerate development of new drugs.
Fujifilm Holdings Corp. Price, Consensus and EPS Surprise
Imaging Solutions segment — 14.5% of revenues — was ¥87.9 billion, down 1% from the year-ago quarter on a constant currency (cc) basis.
Photo imaging business gained from strong sales of instant photo systems such as instax series and films. The company launched FUJIFILM X-T3 in September in the electronic imaging segment.
Healthcare & Material Solutions segment — 43.3% of revenues — was ¥263.2 billion, up 5.4% from the year-ago quarter at cc.
Healthcare revenues rose 12.1% at cc to ¥121.6 billion, driven by solid medical systems business that benefited from strength in X-ray imaging diagnostics and ultrasound.
Further, materials business increased primarily due to solid sales of TAC products, and new products related to touch-panels and OLED in the display materials business. Strong sales of EXCLEAR benefited industrial products business. Electronic materials business sales increased, owing to strong sales of advanced products such as peripheral materials related to photolithography.
Document Solutions segment — 42.2% of revenues — was ¥256.7 billion, down 6.2% from the year-ago quarter at cc. The decline was primarily attributed to reduction of low-profit, low-end printer business. However, sales in China, and the solutions and services business remained solid.
Operating Details
Research & development (R&D) expenses as percentage of revenues declined 20 basis points (bps) on a year-over-year basis to 6.5% in the reported quarter.
Selling, general & administrative (SG&A) expenses as percentage of revenues increased 70 bps on a year-over-year basis to 27.1%.
Expenses related to structural reform were ¥1.8 billion in the quarter. The program realized positive impact of ¥8.5 billion in the first-half of fiscal 2019.
Operating income increased 23% year over year at cc to ¥47.1 billion, driven by profits from medical systems, electronic materials and document businesses.
Imaging Solutions segment operating income fell 10.6% at cc to ¥9.4 billion.
Healthcare & Material Solutions segment operating income increased 8.6% at cc to ¥19.4 billion. Document Solutions segment operating income jumped 81.7% year over year to ¥28.4 billion.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash and cash equivalents were ¥600.6 million, down from ¥723.9 million as of Jun 30, 2018.
FUJIFILM bought back ¥22.2 billion shares under its ¥100-billion share buyback program.
Guidance
FUJIFILM estimates 1.5% year-over-year increase in revenues to ¥2,470 billion for fiscal 2019. However, the figure is lower than the previous guidance of ¥2,500 billion.
Imaging solutions revenues are projected to be ¥400 billion, up 4.4% year over year. Healthcare & Material Solutions revenues are expected to increase 5.7% to ¥1,060 billion. Document solutions revenues are projected to decline 3.6% to ¥1,010 billion.
Operating income is still projected at ¥200 billion, driven by benefits from structural reforms that are making good progress. The figure is expected to surge 62.2% year over year.
Imaging solutions operating income is projected to be ¥60 billion, up 7.5% year over year. Healthcare & Material Solutions operating income is expected to increase 1.8% to ¥93 billion. Document solutions revenues are projected to jump from ¥8.4 billion to ¥73.6 billion.
Earnings are projected to be ¥305.31 per share, up from the previous guidance of ¥302.16 but down 5.6% year over year.
For fiscal 2019, expenses related to structural reforms are expected to be ¥25 billion, while positive impact is likely to be ¥27 billion. R&D expenses as percentage of revenues are expected to be 6.5%.
Long-term earnings growth rate for Intel and NetApp is currently pegged at 8.4% and 14.1%, respectively.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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FUJIFILM (FUJIY) Q2 Earnings Top, Stock Down on Weak Revenues
FUJIFILM (FUJIY - Free Report) shares have declined 4.8%, following its second-quarter fiscal 2019 results announced on Nov 7. The company’s top line was negatively impacted by lower document solutions and imaging segment revenues, partially offset by growth in the healthcare & materials segment.
However, solid progress in the structural reforms related to Fuji Xerox — the joint venture between FUJIFILM and Xerox Corporation (XRX - Free Report) — drove operating profit in the quarter.
The company reported earnings of 77 cents per share in the quarter, which beat the Zacks Consensus Estimate by 14 cents. However, revenues of $5,453 million (¥607.9 billion) lagged the Zacks Consensus Estimate of $5,682 million. Revenues (in ¥) declined 1.4% from the year-ago quarter, primarily due to lower sales in the document business.
Domestic — 41.3% of revenues — was ¥250.9 billion, down 2.8% from the year-ago quarter. Overseas — 58.7% of revenues — was ¥357 billion, down 0.4% from the year-ago quarter.
During the quarter, the company established FUJIFILM Toyama Chemical to accelerate development of new drugs.
Fujifilm Holdings Corp. Price, Consensus and EPS Surprise
Fujifilm Holdings Corp. Price, Consensus and EPS Surprise | Fujifilm Holdings Corp. Quote
Segment Details
Imaging Solutions segment — 14.5% of revenues — was ¥87.9 billion, down 1% from the year-ago quarter on a constant currency (cc) basis.
Photo imaging business gained from strong sales of instant photo systems such as instax series and films. The company launched FUJIFILM X-T3 in September in the electronic imaging segment.
Healthcare & Material Solutions segment — 43.3% of revenues — was ¥263.2 billion, up 5.4% from the year-ago quarter at cc.
Healthcare revenues rose 12.1% at cc to ¥121.6 billion, driven by solid medical systems business that benefited from strength in X-ray imaging diagnostics and ultrasound.
Further, materials business increased primarily due to solid sales of TAC products, and new products related to touch-panels and OLED in the display materials business. Strong sales of EXCLEAR benefited industrial products business. Electronic materials business sales increased, owing to strong sales of advanced products such as peripheral materials related to photolithography.
Document Solutions segment — 42.2% of revenues — was ¥256.7 billion, down 6.2% from the year-ago quarter at cc. The decline was primarily attributed to reduction of low-profit, low-end printer business. However, sales in China, and the solutions and services business remained solid.
Operating Details
Research & development (R&D) expenses as percentage of revenues declined 20 basis points (bps) on a year-over-year basis to 6.5% in the reported quarter.
Selling, general & administrative (SG&A) expenses as percentage of revenues increased 70 bps on a year-over-year basis to 27.1%.
Expenses related to structural reform were ¥1.8 billion in the quarter. The program realized positive impact of ¥8.5 billion in the first-half of fiscal 2019.
Operating income increased 23% year over year at cc to ¥47.1 billion, driven by profits from medical systems, electronic materials and document businesses.
Imaging Solutions segment operating income fell 10.6% at cc to ¥9.4 billion.
Healthcare & Material Solutions segment operating income increased 8.6% at cc to ¥19.4 billion. Document Solutions segment operating income jumped 81.7% year over year to ¥28.4 billion.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash and cash equivalents were ¥600.6 million, down from ¥723.9 million as of Jun 30, 2018.
FUJIFILM bought back ¥22.2 billion shares under its ¥100-billion share buyback program.
Guidance
FUJIFILM estimates 1.5% year-over-year increase in revenues to ¥2,470 billion for fiscal 2019. However, the figure is lower than the previous guidance of ¥2,500 billion.
Imaging solutions revenues are projected to be ¥400 billion, up 4.4% year over year. Healthcare & Material Solutions revenues are expected to increase 5.7% to ¥1,060 billion. Document solutions revenues are projected to decline 3.6% to ¥1,010 billion.
Operating income is still projected at ¥200 billion, driven by benefits from structural reforms that are making good progress. The figure is expected to surge 62.2% year over year.
Imaging solutions operating income is projected to be ¥60 billion, up 7.5% year over year. Healthcare & Material Solutions operating income is expected to increase 1.8% to ¥93 billion. Document solutions revenues are projected to jump from ¥8.4 billion to ¥73.6 billion.
Earnings are projected to be ¥305.31 per share, up from the previous guidance of ¥302.16 but down 5.6% year over year.
For fiscal 2019, expenses related to structural reforms are expected to be ¥25 billion, while positive impact is likely to be ¥27 billion. R&D expenses as percentage of revenues are expected to be 6.5%.
Zacks Rank & Stocks to Consider
Currently, FUJIFILM has a Zacks Rank #3 (Hold).
Intel (INTC - Free Report) and NetApp (NTAP - Free Report) are stocks worth considering in the broader computer and technology sector. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Intel and NetApp is currently pegged at 8.4% and 14.1%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>