FUJIY Reports Weak 3Q

On January 30, 2012, Fujifilm Holdings Corporation (FUJIY - Analyst Report) reported its financial results for the third quarter of fiscal year 2012. The company reported a net income of ¥8.8 billion ($11.4 million), down 51.4% from ¥18.1 billion ($21.9 million) in the prior-year quarter. The results reflected negative impact of yen appreciation, surging raw material cost and demand decrease in Europe.

Revenue

Revenue in the third quarter inched down 2.1% year over year to ¥535.1 billion ($6.9 billion). The decrease was due to depressed results from the company’s three operating segments, which was affected by 3% decrease in domestic sales, despite new product launch and promotional programs.

Revenues from the Imaging Solutions segment reached ¥86.4 billion ($1.1 billion), down 5.3% year over year. Revenue from the Information Solutions segment decreased 1.0% year over year to ¥211.6 billion ($2.7 billion) in the reported quarter. Revenues from the Document Solutions reached ¥237.2 billion ($3.1 billion), down 1.8% year over year.

Of the total revenue, domestic revenue accounted for 45.3% while international revenue came in at 54.7%.

Margins

As a percentage of revenue, cost of sales in the third quarter inched up 1.8% year over year and gross margins stood at 39.4% versus 41.2% in the year-ago quarter. SG&A and R&D expenses together accounted for 34.4% of total revenue. Operating margin fell from 6.7% in the year-ago quarter to settle at 5% in the quarter.

Balance Sheet

Cash, cash equivalents and marketable securities exiting the third quarter, registered a decrease of 23.3% over the quarter ended March 31, 2011. Property, plants and equipments plummeted 3.7% over the quarter ending March 31, 2011.

Long-term debt of the company stood at ¥124.0 billion ($1.6 billion) in the reported quarter ended December 31, 2011, up 3.9% in the quarter ended March 31 2011.

Cash flow

Net cash provided by operating activities for nine months ended December 31, 2011, decreased 42.3% year over year to ¥69.1 billion ($0.9 billion).

Fujifilm is a leading global producer of photographic imaging products. The company develops, manufactures, and markets traditional and digital imaging products competing with peer such as, Canon Inc. (CAJ - Analyst Report).

We currently hold a Neutral recommendation on the stock. Fujifilm has a Zacks #4 Rank, implying a short-term (1-3 months) Sell rating.

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