fuji photo film co., ltd. · fuji photo film co., ltd. january 31, 2006 optimizing business systems...
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Earnings of Fiscal 2006 3QEarnings of Fiscal 2006 3QEnded December 31, 2005Ended December 31, 2005
(From April 1, to December 31, 2005)(From April 1, to December 31, 2005)
FORWARD-LOOKING STATEMENTSThis document contains projections of performance and other projections, which are made based on judgments regarding currently available information and which encompass potential risks and uncertainties. Accordingly, please be aware that diverse factors may cause actual results to differ materially from projected results.
FUJI PHOTO FILM CO., LTD.FUJI PHOTO FILM CO., LTD.January 31, 2006January 31, 2006
Optimizing Business Systems for Optimizing Business Systems for Imaging Solutions Segment Imaging Solutions Segment
and Growth Strategies for the Futureand Growth Strategies for the Future
11
Vision 75: Review of the Two YearsVision 75: Review of the Two Years
Principal Activities and Fundamental Strategies
Enhancing Consolidated Management
Enhancing Consolidated Management
Building New Growth Strategies
Building New Growth Strategies
Implementing Comprehensive Structural Reforms at
All Management Levels
Implementing Comprehensive Structural Reforms at
All Management Levels
Increase of investments in high growth business
R&D investments centered on new growth business
Strengthening strategic affiliation through M&A transactions and alliances
Reforming marketing and distribution systems for domestic imaging business
Reorganizing photo processing labs
Reexamining manufacturing systems
Introducing cash management systems
Transition to a holding company structure
Promote process innovationStrengthen bases toward new
growth
22
Unexpected Change in Business EnvironmentUnexpected Change in Business Environment
Changes in Imaging Business EnvironmentChanges in Imaging Business Environment
Trends in global demand for color filmTrends in global demand for color film Trends in demand for digital camerasTrends in demand for digital cameras
Decrease in overall demand
and price of color film
Slowing down in growth and
decrease in price of digital cameras
Unexpected worsening of business environment
0
20
40
60
80
100
120
Ind
exIn
dex
Index: Total demand in 2000 = 100Index: Total demand in 2000 = 100
0
100
200
300
400
500
600
2000 2001 2002 2003 2004 2005
Unit price (Index)
Uni
ts (I
nde
x)
-60
-50
-40
-30
-20
-10
0
Total demand (units)
Total demand (unitprice)
Growth Growth slowing slowing downdown
Unit price decrease: Unit price decrease: --10%/year10%/year
* Index: Total demand in 2000 = 100, total demand price = 0
* Figures do not include digital single-lens reflex cameras.
20002000 20012001 20022002 20032003 20042004 20052005 20062006 2007200720082008
Downtrend continuingDowntrend continuing
* Both graphs are based on the company’s studies.
33
ComparisonComparison with the Vision 75 Planwith the Vision 75 Plan
Operating income in FY 2006*Operating income in FY 2006*
Comparison of Operating Income by Business Segment Comparison of Operating Income by Business Segment
—— Achievement levels taking Vision 75 FY 2006 Plan as 100 ——
Big gap in imaging segment onlyBig gap in imaging segment only
Note: FY 2006 forecast = 1st half results + 2nd half plan (increase in structural reform costs not included)
* Before allocation of corporate expenses
0
25
50
75
100
V75計画 2005見通
0
25
50
75
100
V75計画 2005見通
0
25
50
75
100
V75計画 2005見通
Imaging Imaging
Index
Document Document Information Information
Index Index
Gap: -85%
V 75 Plan V 75 Plan V 75 Plan V 75 Plan V 75 Plan V 75 Plan FY06ForecastFY06Forecast FY06ForecastFY06Forecast 2006 Forecast2006 ForecastFY06ForecastFY06Forecast
**FY2006,ending March 31,2006FY2006,ending March 31,2006
44
Towards New GrowthTowards New Growth
Acceleration of structural reform- Structural reform of photosensitive materials business- Restructuring of electronic imaging business
Acceleration of structural reform- Structural reform of photosensitive materials business- Restructuring of electronic imaging business
Priority commitment of resources to growth business fields- Continuous development in existing growth businesses- Promotion of new businesses
Priority commitment of resources to growth business fields- Continuous development in existing growth businesses- Promotion of new businesses
Positive Positive investment investment
for the futurefor the future
Great Great changes in changes in
business business environmentenvironment
FY2005–FY2006 FY2008 and beyond
Intensive Intensive implementation implementation
in FY06in FY06--FY07FY07
ImagingImaging
InformationInformation
DocumentDocument
Toward Toward new new growthgrowth
FY2007–FY2008
**FY2005,ended March31,2005FY2005,ended March31,2005
*FY2006~FY2008,ending *FY2006~FY2008,ending March31,2006,~March31,2008March31,2006,~March31,2008
55
Structural Reform of Photosensitive Structural Reform of Photosensitive Materials BusinessMaterials Business
1. 1. Reorganizing of tripartite (Japan, USA, Europe) Reorganizing of tripartite (Japan, USA, Europe) production systemproduction system
- Termination of part of production facilities
- Slimming-down of personnel through reorganization
Global tripartite (Japan, USA, Europe) system
based on promotion of local productivity
Global tripartite (Japan, USA, Europe) system
based on promotion of local productivity
Present Present
Optimization of production capacity on worldwide basis
Cost minimization
Optimization of production capacity on worldwide basis
Cost minimization
Future
66
Structural Reform of Photosensitive Structural Reform of Photosensitive Materials BusinessMaterials Business
(1) Reduction of SG&A through slimming-down of personnel in marketing and distribution
(2) Substantial reduction of R&D investment
(3) Rationalization of photo-processing laboratories
2. 2. Optimization of SG&A and R&D investment, etc.Optimization of SG&A and R&D investment, etc.
77
Structural Reform of Electronic Imaging Structural Reform of Electronic Imaging BusinessBusiness
Strengthen distinctive product lineup centered on high-sensitivity models
Scale down domestic production system and establish mass production system in China
Implement exhaustive cost reduction and reduction of total inventory through strengthening of SCM
Realize a stable profit structure based on launching of distinctive products and thorough promotion of efficiencyin marketing and production
Restructuring of Electronic Imaging BusinessRestructuring of Electronic Imaging Business
88
Expected Cost Reduction Results of Expected Cost Reduction Results of Structural ReformsStructural Reforms
Expected cost reduction
Approx. 50 billion yen/year(against FY 2006)
Slimming-down of staffassociated with photosensitive
materials business
Approximately 5,000 persons
Temporary expenses(FY 2006 – FY 2007 total)
Temporary expenses(FY 2006 – FY 2007 total)
一時費用累計(’05~’06)
110Reduction of assets including production facilities
Slimming-down of
staff
55
Billion yen
165
FY2006 FY2007 Total
80 85 165
Expected results of structural reforms (FY 2008)Expected results of structural reforms (FY 2008)
**FY2006~FY2008:FY2006~FY2008:
ending March31,2006,~March31,2008ending March31,2006,~March31,2008
99
Financial Forecast for FY 2006Financial Forecast for FY 2006 (consolidated)(consolidated)
135135
108108
3.3%3.3% 84.584.5
6.4%6.4% 162.3162.3
6.5%6.5% 164.4164.4
100.0%100.0% 2,527.32,527.3
FY 2005,endedFY 2005,ended
March31,2005March31,2005
ResultsResults
+1+1
+6+6
(65.0)(65.0)
(91.0)(91.0)
(95.0)(95.0)
(50.0)(50.0)
ChangeChange
(A)(A)--(B)(B)
135135
107107
3.1%3.1% 85.085.0
6.1%6.1% 164.0164.0
6.3%6.3% 170.0170.0
100.0%100.0% 2,700.02,700.0
FY 2006FY 2006
Previous Previous forecast (B)forecast (B)
136136
113113
0.8%0.8% 20.020.0
2.8%2.8% 73.073.0
2.8%2.8% 75.0 75.0
100.0%100.0% 2,650.0 2,650.0
FY 2006FY 2006
Revised Revised forecast (A)forecast (A)
ExchangeExchangerates (yen): rates (yen):
US$US$
RevenueRevenue
Operating Operating incomeincome
Net incomeNet income
EuroEuro
Income Income before taxbefore tax
((billions of yen)billions of yen)
Forecast for the fiscal year ending March31, 2006
1010
Priority PoliciesPriority Policies
Concentration of Resources into Growth Business Fields
Concentration of Resources into Concentration of Resources into Growth Business FieldsGrowth Business Fields
Medical Imaging/Life ScienceMedical Imaging/Life Science
DocumentDocument
Graphic ArtsGraphic Arts
Highly Functional MaterialsHighly Functional Materials
■■FlatFlat--panel Display Materialspanel Display Materials
■■Electronic MaterialsElectronic Materials
■■Ink for Inkjet PrintersInk for Inkjet Printers
Optical Devices Optical Devices
1111
Priority Business Fields (1)Priority Business Fields (1)
Medical Imaging/Life Science Medical Imaging/Life Science
XX--Ray System, PACSRay System, PACSBusiness expansion centering on FCRExpansion of network service businesses through enhancement of SYNAPSE functionsReinforcement of sales system for priority areas (Western Europe, China, India, etc.)
Shift from filmShift from film--centered portfolio to centered portfolio to device/networkdevice/network--centered portfoliocentered portfolio
Provision of total solutions for the Provision of total solutions for the lowlow--end marketend market
Reinforcement of distinctiveness of endoscopes for digestive organsReinforcement of overseas branches and new dealers, enhancement of foreign and domestic service systems
Electronic EndoscopeElectronic Endoscope
Sales expansion centering on overseas operations including blood examination and gene isolationProduct supply in new fields
Life ScienceLife Science
Increase of share using TransnasalEndoscopes as leverage
Enhancement of endoscope peripherals
Increase of exporting countries, reinforcement of sales channels, sales expansion to animal market
Creation of clinical diagnosis and health maintenance businesses
1212
Priority Business Fields (2)Priority Business Fields (2)
DocumentDocument
Achievement of the top share in Achievement of the top share in the color copier markets of Europe, the color copier markets of Europe, North America and Asia/ChinaNorth America and Asia/ChinaEnhancement of overseas OEM business for color LBPsMaintenance and expansion of the customer base in Japan
Office Field Office Field
Winning of after-sales service contracts and annual fees by speeding up the development of our service business
Expansion of overseas business by expanding the product lineContinuance and reinforcement of the promotion of color device in the Japanese marketResponse to more advanced needs of customers: e.g., document control linked document control linked with the core systemwith the core system- Handling of requests for reinforcement
of internal control- Efforts to satisfy needs for distributed
output from core system- Expansion of devices and applications
Production Service FieldProduction Service Field
Expansion through creation of new Expansion through creation of new service business baseservice business base
Growth through digital color Growth through digital color publishing business publishing business
Securing of demand in the variable printing market for iGen3, etc. Expansion of publishing business Expansion of publishing business including upstream printing processes- Reinforcement of color management
system through cooperation between FUJIFILM and FUJI XEROX
1313
Increase of market share taking Increase of market share taking advantage of our topadvantage of our top--quality thermal quality thermal and photopolymer CTPand photopolymer CTP
Cultivation of industrial products/ Cultivation of industrial products/ package printing market with UV ink package printing market with UV ink for highfor high--speed IJ printersspeed IJ printers
Reinforcement of global quadripartite production system for CTP platesFull-fledged operation of processless CTP platesExpansion of ink business for industrial digital devices (inkjet printers) through FUJIFILMSericol
Graphic Arts Graphic Arts
Start of new CTP production line at Holland factoryStart of new CTP production line at Holland factory
Start of production of photopolymer CTP at Holland factoryStart of production of photopolymer CTP at Holland factory
Launch of Suzhou factory (2Launch of Suzhou factory (2ndnd factory in China)factory in China)
Start of production of thermal CTP at China factoryStart of production of thermal CTP at China factoryStart of production of photopolymer CTP at US Start of production of photopolymer CTP at US factoryfactory
Start of production of photopolymer CTP at China factoryStart of production of photopolymer CTP at China factory
Oct 2006Oct 2006
20052005FebFeb
MarMar 20072007
OctOct
Aug Aug
AprilApril 20042004
20042004
20042004
Global quadripartite production system
-- Target share of global market for Target share of global market for CTP plates: 40% CTP plates: 40%
0
100
200
300
400
500
05 06 07 08 09
CTP
Conventional
Billion yen Forecast of CTP Market
FY
Priority Business Fields (3)Priority Business Fields (3)
Ended/ingMarch 31
1414
Priority Business Fields (4)Priority Business Fields (4)--11
Enhancement of TAC film production capacity
Start of operation of FUJIFILM Kyushu
Maintenance and expansion Maintenance and expansion of the structure of highof the structure of high--growth and highgrowth and high--profit profit businesses businesses as our core businesses
Development of high-value added products following TAC film and WV film
For Monitors and Note PCs
Proliferation of WV film as a de facto standard
For LCD TVs
Increase of the amount of WV film Increase of the amount of WV film used in LCD TVsused in LCD TVs
Sales expansion of high-value added film for VA, IPS, and OCB
Sales expansion in color filter fields such as transer
For PDPs
Full-fledged launch with electro-magnetic radiation shielding film
FlatFlat--Panel Display Materials Panel Display Materials
FY0
100
200
300
400
500
05 06 07 08 09
OthersTVMonitor/Note PC
Million m2
Forecast of LCD panel market (by application)
Ended/Ended/ingingMarch 31March 31
1515
Winning of top share in the Winning of top share in the leadingleading--edge positive resist field edge positive resist field (ArF, liquid immersion, etc.)(ArF, liquid immersion, etc.)
Establishment of position in new Establishment of position in new business fields, business fields, such as CMP such as CMP slurry, lowslurry, low--k, and polyimidek, and polyimide
Priority Business Fields (4)Priority Business Fields (4)--22
Photo resist for semiconductor manufacturingPhoto resist for semiconductor manufacturingEstablishment of core technology for next-generation photo resist in line with advances in miniaturization and multilayering of semiconductor devicesFull-fledged start of business in new materials field including semiconductor post-processing Establishment of global tripartite production and sales system(In Feb. 2006, Suzhou factory is scheduled to start supplying products in China.)
Electronic Materials Electronic Materials
Resist Ultra low-k, etc.
Abrasive
Entire semiconductor marketEntire semiconductor marketApprox. 25 trillion yenApprox. 25 trillion yen
Semiconductor material market sizeSemiconductor material market size
Materials we offerMaterials we offer
Semiconductor materialsSemiconductor materialsApprox. 2.5 trillion yenApprox. 2.5 trillion yen
050
100150200250300350400
Billionyen
06 07 08 09 10 11FY
Forecast of world demands for semiconductor materialshandled by our company
Other materialsCMP slurryFilm m aterials Photo resist
(ultra-low-k, etc.)
Ending March 31Ending March 31
1616
Priority Business Fields (4)Priority Business Fields (4)--33
Ink for Industrial Inkjet PrintersInk for Industrial Inkjet Printers
Ink dyes for Consumer Inkjet PrintersInk dyes for Consumer Inkjet Printers
Commercialization of ink dyes with excellent features such as high image preservation capability
Establishment of leading position in the field of ink dyes for inkjet printers
Reinforcement of global development and production system for ink for consumer inkjet printers through acquisition of Avecia (UK), the world's No. 1 manufacturer in this field
Expansion of ink business through Sericol, the world's top manufacturer of ink for industrial printers
Cultivation of the industrial product/package printing market with UV ink for high-speed IJ printers
Ink for Inkjet PrintersInk for Inkjet Printers
1717
Priority Business Fields (5)Priority Business Fields (5)
Optical LensOptical Lens
Expansion of optical device operation by strengthening consolidated strategies and optical technologies
Optical Devices Optical Devices
Establishment of Optical Device Division as a consolidated administrative function
Lens for Camera Phones
Reinforcement of distinctiveness from competitors in mega-pixel-class cameras- Aspheric lens- AF/Zoom
High growth and increase of share High growth and increase of share in the mainstream megain the mainstream mega--pixel pixel model market model market
Establishment of position in the lens market for security/ in-vehicle devices
Lens for Security/In-Vehicle Devices
Full-fledged entry into this growing market taking advantage of high specifications, high efficiency, and low price
1818
R&D StrategyR&D Strategy
Advanced Core Technologies Laboratory (artist’s conception)
Opening of the Opening of the ““Advanced Core Technologies LaboratoryAdvanced Core Technologies Laboratory”” (Anticipated date of (Anticipated date of completion: March 2006)completion: March 2006)
Total commitment to development of original
technology
Concentration of R&D Investment in Priority Fields
Company-wide center for advanced interdisciplinary research
Business fields: FPD materials, medical imaging/life science, electronic materials, fine chemicals, etc.
Inspiring creativity through the integration of different fields
Creating of the new value through “Integrating Knowledge and Innovation”
Fusion and integration of the group’s technologies
Fields for Resource ConcentrationFields for Resource Concentration
100
150
200
05 06 07 08 09
Projected R&D Expensebillion yen
(fiscal year ended/ing March 31
1919
Transition to a Holding Company StructureTransition to a Holding Company Structure
Optimization of the Group as a Whole
FUJI XEROXFUJIFILM
ProductionProduction
Sales and Marketing Sales and Marketing
R&DR&D
ServicesServices
Operating companies
Holding Company
Image of the Organization After Transition
Group Strategy, Corporate Functions, Shared Administration Functions
Group Strategy, Corporate Functions, Shared Administration Functions
Transition ScheduleJune 2006: Approval at regular
shareholders’ meetingOctober 2006: Holding company
structure inaugurated
Purpose of the Transition
Acceleration of Business Operations
Personnel Exchanges and Promotion of Integration
of Shared Functions
Optimization of Resource Allocation
Strengthening of Group Strategic Management
Increasing areas of synergy among group companies
ProductionProduction
Sales and Marketing Sales and Marketing
R&DR&D
ServicesServices
2020
Towards a Towards a ““Second FoundationSecond Foundation””
Transformation of the business Transformation of the business structurestructure across the whole Groupacross the whole Group
- Establishment of stable on-site strength - Efficient allocation of resources- Optimal allocation and strengthening of staff
Radical business model shiftRadical business model shiftRadical business model shift
To create a new business model and To create a new business model and achieve a achieve a ““second foundationsecond foundation””::
Thorough structural reform of Thorough structural reform of imaging fieldimaging field
⇒Existing huge-scale research, production, sales, and laboratory network
Existing huge-scale research, production, sales, and laboratory network
IncompatibleIncompatible
2121
Plan forPlan for Improvement of ProfitabilityImprovement of Profitability
164.4
200.0
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010
In billions of yen
Towards new
growth
75.075.0
Implement structural reforms
Operating IncomeOperating Income
280.0~300.0
Year Year ended/ending ended/ending March31March31
FYFY