Fujitsu : FY 2020 Financial Results Announcement/Management Direction Update

Fiscal Year 2020

Financial

Results

Management Direction Update

April 28, 2021

Takahito Tokita

CEO & CDXO

Fujitsu Limited

Copyright 2021 FUJITSU LIMITED

Fujitsu's Purpose

Our purpose is to make the world more sustainable

by building trust in society through innovation

1	Copyright 2021 FUJITSU LIMITED

FY2020 Results and Initiatives

2

Summary of FY2020 Financial Results

• Despite a reduction in sales because of the impact of COVID-19, operating profit and

profit for the year reached the highest levels ever		(Unit: Billions of yen)
		2019（Actual）	2020（Actual）	Variance
	Revenue	3,857.7	3,589.7	▲268.0
	Operating Profit	211.4	266.3	54.8
	Operating Profit Margin	5.5%	7.4%	1.9%
	Profit for the Year	160.0	202.7	42.6
	Technology Solutions
	Revenue	3,212.9	3,043.6	▲169.2
	Operating Profit	187.9	188.4	0.5
	Operating Profit Margin	5.8%	6.2%	0.4%
		3
			Copyright 2021 FUJITSU LIMITED

Priority Issues in Achieving Our Purpose

• Creating value through "For Growth" and "For Stability" initiatives, and contributing to the growth and stability of our customers' businesses
• Self-transformationthrough further implementation of internal DX initiatives

Value For

Creation Growth

Our	For
Stability
Purpose
Internal	Internal
Transformation
	DX

• Rebuilding our global business strategy
• Strengthening issue resolution capability in Japan
• Contributing to greater business stability
• Becoming our customers' best DX partner
• Enforcing data-driven management
• DX talent development and productivity improvement
• Fully participatory, ecosystem-based DX promotion

4	Copyright 2021 FUJITSU LIMITED

Rebuilding Our Global Business Strategy

Implementing a globally uniform portfolio, account plans, offerings, and alliances

Reformed service delivery organization

Structural reforms in International Regions

Europe (NWE/CEE): Completed structural reforms to product manufacturing organization

Americas:	Currently implementing business structural reforms
Oceania:	Transformed and strengthened organizational formation by industry
Asia:	Enhancing offerings to priority industry segments

5	Copyright 2021 FUJITSU LIMITED

Strengthening Issue Resolution Capability in Japan

Launched Fujitsu Japan with an 11,000-employee organization

Establish single point of contact for customers and provide one-stop services

Falling Population	Increasing Severity	Disparities in the Ways
of Disasters	People Work

Aging Population and	Regional Disparities
Falling Birthrate

Establish 6 regional headquarters nationwide and promote proposal activities aligned with regional characteristics

Aggressively expand DX business by changing sales

style to deal with societal issues

Fujitsu Japan Limited

Abundant industry and

operational know-how

Business-centered proposals

Cloud First

6	Copyright 2021 FUJITSU LIMITED

Strengthening Issue Resolution Capability in Japan

Fugaku Continues to Dominate Global Rankings (Second Consecutive Term)

Contributing to Resolving Various Issues Facing Modern Society

The Environment	Disaster Prevention	Health
Contributing to improved	Delivering high-resolution	Providing network
accuracy in weather and	real-time tsunami and	analysis of cancer genes
climate change prediction	flood predictions	in less than a day
with history's largest ever
weather computation

©RIKEN

7	Copyright 2021 FUJITSU LIMITED

Strengthening Issue Resolution Capability in Japan

Launch of Future Society and Technology Unit

	Future Society			Social			Cutting Edge
			Implementation
	Design					Technology
			Architect

8	Copyright 2021 FUJITSU LIMITED

Contributing to greater business stability

Establishing Japan Global Gateway

• Improving quality and productivity through internal production and thoroughgoing standardization
• Building a delivery model that can apply globally

Reorganization of SI Group Companies

• Improving productivity and profitability by reorganizing the SI structure of the Group as a whole
• Aggregating the technical strengths of each company, expanding business through integrated capabilities and resource utilization

Stable Operation of Customer IT Platforms

• Establishing a company-wide risk management office under the CEO
• Conducting a company-wide inspection to prevent critical system faults

9	Copyright 2021 FUJITSU LIMITED

Becoming Our Customers' Best DX Partner

Enhancing Front-line Capabilities

・Developing Business Producers who can lead customers' DX with an ability to empathize ・Integrating Business Producer and delivery functions

Activities of Ridgelinez

・Currently extending consulting services for achieving DX to around 300 customers in a variety of industries

・Building a professional human resources system to maximize performance

10	Copyright 2021 FUJITSU LIMITED

Becoming Our Customers' Best DX Partner

Creating DX Business Through Collaboration with Partners

Established a new company (PeptiAID) with the goal of developing treatments for COVID-19

Established a new company (DUCNET) to provide cloud services that will enable DX in the manufacturing industry

Supported accelerated DX and enhanced competitiveness for customer retail storefronts (Collaboration with Zippin)

11	Copyright 2021 FUJITSU LIMITED

Internal Transformation

Enhancing Data Driven Management

• Promoting One Fujitsu initiatives to make all important business operations globally uniform
• Implementing data analysis technology internally

DX Talent Development and Productivity Improvement

• Developing DX talent by promoting design thinking
• Support highly productive ways of working with job-based HR management and Work Life Shift

Fully Participatory, Ecosystem-based DX Promotion

• Started internal DX project (Fujitra), with approximately 300 transformation plans underway
• Started "VOICE Program" which collects voices from our customers and employees to be reflected in our management and business initiatives

12	Copyright 2021 FUJITSU LIMITED

Financial Forecast for FY2021

- Working toward the achievement of the FY2022 management targets -

13

Financial Forecast for FY2021

• Aim for higher revenue and profit in Technology Solutions by fully executing the initiatives from last fiscal year

				(Billions of yen)
	2019(Actual)	2020(Actual)	2021(Forecast)	Variance from FY
	20 to FY 21
Revenue	3,857.7	3,589.7	3,630.0	40.3
Operating Profit	211.4	266.3	275.0	8.7
Operating Profit Margin	5.5%	7.4%	7.6%	0.2%
Profit for the Year	160.0	202.7	205.0	2.3
Technology Solutions
Revenue	3,212.9	3,043.6	3,200.0	156.4
Operating Profit	187.9	188.4	240.0	51.5
Operating Profit Margin	5.8%	6.2%	7.5%	1.3%
		14
		Copyright 2021 FUJITSU LIMITED

Accelerate Growth Alongside Customers

Based on Resolving Societal Issues

• Seven key focus areas that will drive the "For Growth" sector

	Sustainable	Consumer	Healthy	Trusted
V e r t i c a l
Manufacturing	Experience	Living	Society
	Circular, traceable	Payments, logistics and retail	Supporting all kinds of	Creating communities
	manufacturing with	that provide consumers with	people in living in ways	that embody safe, secure
	consideration to the	diverse experiences	that promote wellbeing	and resilient
	environment and people

Horizontal

Digital Shifts	Business Applications	Hybrid IT
Data-Driven	Work Style Reform	Cloud Integration	Applications	Cloud	Security

15	Copyright 2021 FUJITSU LIMITED

Enhanced R&D to Accelerate Innovation

• Integrated Fujitsu Laboratories directly under the CTO and consolidated research and analysis functions and R&D functions
• Rapid execution of research and development aligned with corporate strategy

Research/Analysis Functions

Medium- and Long-term

Technology Strategy

R&D Functions

Basic research

Applied research

Global Technology	Use of open technology	Creating future	Practical use of
Trends Survey	(M&A, Tie-up )	corporate value	products and services

16	Copyright 2021 FUJITSU LIMITED

Capital Allocation Policy

• To achieve the management target, Fujitsu is continuing its initiatives to generate over 1 trillion yen of free cash flow over 5 years , and over 500 billion yen in strategic growth investments.

Value Creation

	•	Expand Key focus areas
Growth	•	Enhance Services business

Free Cash

Investments

Flow

（FCF）

ESG

Initiatives

Shareholder

Returns

Internal Transformation

• Fostering talent development , Reforming the ways we work
• Enhancing data-driven management

• Environment

• Regional communities

• Sports

• Generating stable shareholder returns
• Cash dividend increase by 20 yen this term, set treasury stock plan for 50 billion yen

In terms of capital efficiency, Fujitsu aims for sustaining growth (CAGR 12%) of Earnings Per Share.

17	Copyright 2021 FUJITSU LIMITED

Environmental Initiatives

SBT* 1.5°C

Certification

Greenhouse Gas Reduction Targets

• Upward revision of reduction targets from 2°C Certification(2017) to 1.5°C
• Accelerate comprehensive energy saving and utilization of renewable energy, with the goal of a 71.4% reduction by 2030 (compared to FY2013)

Avoid Risks,

Minimize

Environmental Burden

In our Business Activities

• Make further progress in resource-saving designs for products and packaging with the goal of reducing plastics
• Reduce water usage across the supply chain, strengthen water risk evaluation

Resolve

Environmental Issues

Through Business

• 100% renewable energy will be used for operating our cloud service "FJcloud" by FY2022.
• Contributing customers to reduce CO2 emissions through more efficient logistics routes using Digital Annealer

*Science Based Targets:

• Goals identified by initiatives established by organizations such as the UN Global Compact.
• Certified greenhouse gas emission reduction targets that are scientifically consistent with the levels required by the Paris Agreement

18	Copyright 2021 FUJITSU LIMITED

Non-Financial Indicators

• Assessment of relationship of trust between stakeholders and Fujitsu's own transformation using objective indicators

Client Net Promoter Score

• Conducted global survey
• Plan to set target by this fiscal year

Employee Engagement	56 %	65 %	75 %
	FY2019(Actual)	FY2020(Actual)	FY2022(Target)

DX Promotion Indicator

1.9 2.4 3.5

FY2019(Actual) FY2020(Actual) FY2022(Target)

19	Copyright 2021 FUJITSU LIMITED

Initiatives to Achieve Management Goals by FY2022

• Accelerate growth investments, aiming for revenue of 3.5 trillion yen and an operating

profit margin of 10% in Technology Solutions	10 ％

Operating		6.2	％	7.5 ％
5.8 ％
Profit Margin
			3,500.0
Revenue	3,212.9
3,043.6	3,200.0
		1,300
For Growth	985	988.9
(37	％
	(31％)	(32％)	)

For Stability

Billions of yen

(Fiscal Year)	2019	2020	2021	2022
	(Actual)	(Actual)	(Forecast)	(Medium-term Plan)
				20

Expanding Revenue

• Expanding on key focus areas
• Enhancing the services business

Improving Profitability

• Transforming the service delivery structure
• Structural transformation in regions outside Japan
• Limiting unprofitable projects

Copyright 2021 FUJITSU LIMITED

21

Cautionary Statement

These materials may contain forward-looking statements that are based on management's current information, views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors listed below.

• General economic and market conditions in key markets (Particularly in Japan, Europe, North America, Oceania, and Asia, including China)
• Fluctuations in exchange rates or interest rates
• Fluctuations in capital markets
• Intensifying price competition
• Changes in market positioning due to competition in R&D
• Changes in the environment for the procurement of parts and components
• Changes in competitive relationships relating to collaborations, alliances and technical provisions
• Risks related to public regulations, public policy and tax matters
• Risks related to product or services defects
• Potential emergence of unprofitable projects
• Risks related to R&D investments, capital expenditures, business acquisitions, business restructuring, etc.
• Risks related to natural disasters and unforeseen events
• Changes in accounting policies

22