Fujitsu Siemens boosts profits

Fujitsu Siemens provisional group results for the year ending March 2004 show signs of steady improvement at the hardware giant. Against a backdrop of declining hardware prices, intense competition, margin pressure and the declining dollar value, Fujitsu Siemens still managed to increase pre-tax profits.

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By  Stuart Wilson Published  April 7, 2004

Fujitsu Siemens provisional results for the year ending March 2004 show signs of steady improvement at the hardware giant. Against a backdrop of declining hardware prices, intense competition and the declining dollar value, Fujitsu Siemens still managed to increase both profits and gross margins. But hardware remains a tough place for vendors to make money and Fujitsu Siemens will look to improve gross margins still further in the year ahead. Fujitsu Siemens sales fell 0.6% to €5.3bn ($6.4bn) despite unit volume growth of 19% for the year ending March 2004. These contrasting figures highlight the impact of price erosion still being felt by hardware vendors. Pre-tax profits climbed to €57m (US$68.9m) from just €7.9m (US$9.5m) a year earlier, thanks in part to Fujitsu Siemens’ ability to knock 4% off its total operating expenses. Given that operating expenses had totaled €731.1m (US$883.3m), this 4% saving accounts for €30m (US$36.3m) of Fujitsu Siemens pre-tax profits figure improvement. Jacquie Carson, marketing and communications director at Fujitsu Siemens Middle East, said: “In the second half of the fiscal year, the growth in unit volumes touched 25%, significantly boosting the profit levels and helping the company to outperform the market. In the Middle East, we continued to maintain an upward trend, securing several major deals from the large enterprise sector as well as gaining market share in the SME and consumer segment.” Fujitsu Siemens is aiming for sales growth of 5% in the next financial year driven by mobile PCs and its PRIMERGY server range. It will also look to boost its ability to sell SAP-related hardware infrastructure by boosting its internal professional services capability. These strategic directions also represent an opportunity to chase higher-margin business. In the commodity IT hardware space, margins remain wafer-thin at best — even from a vendor perspective. Fujitsu Siemens preliminary results represent a boost from a year earlier when its pre-tax profit margin stood at just 0.14%. For the fiscal year ending March 2004, the pre-tax profit margin hit 1.08% — a significant improvement but also a reminder that margins remain extremely tight in the IT hardware sector.

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