medium-term management plan vision75 - new departure · medium-term management plan vision75 - new...

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February 5, 2004

Medium-Term Management PlanVISION75

- New Departure -

MediumMedium--Term Management PlanTerm Management PlanVISION75VISION75

-- New Departure New Departure --

Fuji Photo Film Co., Ltd.Fuji Photo Film Co., Ltd.

1

Change in operating results

3,000(Unit: Billions of yen)

1,387.0 1,348.8 1,383.3

2,401.12,505.7

165.3147.9 149.7

168.6183.3

Revenue

11.9%11.0% 10.8%

7.0% 7.3%

Operating marginOperating margin

Operating incom

e

500

Note: Operating income for the year ended March 31, 2003 excludes a loss of ¥23.1 billion onthe settlement and curtailment of a defined benefit plan.

2,500

2,000

1,500

1,000

500

0

450

400

350

300

250

200

150

100

50

01999 2000 2001 2002 2003

Change in Operating ResultsChange in Operating Results

Reve

nue

Operating incom

e

Year ended March 31

2

2

Business Environment OverviewBusiness Environment Overview

Rapid digitization of the marketRapid digitization of the marketRapid digitization of the market1 Converted Fuji Xerox Co., Ltd., into a consolidated subsidiaryConverted Fuji Xerox Co., Ltd., Converted Fuji Xerox Co., Ltd., into a consolidated subsidiaryinto a consolidated subsidiary2

Intensified competitionIntensified competition

MediumMedium--Term Management PlanTerm Management PlanAhead of Fujifilm’s 75th anniversary, over the next three years, the Company will execute

structural reforms and implement a new growth strategy under its new management system.

“New Departure”

Reduced operating marginExpansion of business areasReduced operating margin

Expansion of business areas

3

Basic Strategies & Objectives for VISION75Basic Strategies & Objectives for VISION75

Further motivate employeesFurther motivate employeesand enhance skillsand enhance skills

Building new growth strategies

Building new growth strategies

Enhancing consolidated management

Enhancing consolidated management

Implementing comprehensivestructural reforms overall management levels

Implementing comprehensivestructural reforms overall management levels

Target for the year ending March 31, 2009

Revenue: ¥3,500 billionOperating margin: 10%

3

New Growth StrategiesNew Growth Strategies

Expand growing businesses by concentrating management resourcesSustain consumer imaging products and ensure a culture of photographyCreate new businesses to support the futureExpand business development in China

Expand growing businesses by concentrating management resourcesSustain consumer imaging products and ensure a culture of photographyCreate new businesses to support the futureExpand business development in China

5

Electronic Imaging BusinessElectronic Imaging Business

Digital camerasDigital camerasDigital cameras

Consolidate our positionamong the top three worldwide

Consolidate our positionConsolidate our positionamong the top three worldwideamong the top three worldwide

13 million units6.2 - 6.3 million units

Outlook for the Yearending Mar. 31, 2004Outlook for the Yearending Mar. 31, 2004

Target for the Yearending Mar. 31, 2007Target for the Year

ending Mar. 31, 2007

Sales objectives

Respond to CCD production increase (Have purchased a general-purpose-wafer manufacturing plant from Tohoku Semiconductor Corporation)Broadly strengthen R & D systems (Add approximately 180 employees)Enhance production systems, including those in China(target for the year ending March 31, 2007: 5 million units/year)Reinforce marketing systems (Integrate FUJIFILM AXIA Co., Ltd., FUJIFILM Battery Co., Ltd., and Fujifilm’smarketing division)

Optical electronic components businessOptical electronic components businessOptical electronic components business

Expand into a business with annual revenuesin excess of ¥50 billion by the year ending March 31, 2007

Expand into a business with annual revenuesExpand into a business with annual revenuesin excess of in excess of ¥¥50 billion by the year ending March 31, 200750 billion by the year ending March 31, 2007

Camera modulesLens units

Expand business for mobile phoneswith cameras by adding new buyersExpand business for mobile phonesExpand business for mobile phoneswith cameras by adding new buyerswith cameras by adding new buyers

Expand supplies to other business areas (Security business, in-car components field, etc.)

Concentrate on advanced CCD, lens, and mounting technologies

Further strengthen Fujifilm Group’s proprietary technologies and develop differentiated productsKey device technologies (Super CCD, Fujinon Lens)Image processing technology (Image Intelligence™)High-density mounting and assembly technology

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6

Flat Panel Display (FPD) Materials BusinessFlat Panel Display (FPD) Materials Business

Seek to establish a materials supply system to handle all types of FPDs, centered on liquid crystal modesSeek to establish a materials supply system to handle all types of FPDs, centered on liquid crystal modes

¥200 billion

Target for the yearending Mar. 31, 2009Target for the year


Revenue

¥136 billion

Target for the yearending Mar. 31, 2007Target for the year


¥70 billion

Outlook for the yearending Mar. 31, 2004Outlook for the yearending Mar. 31, 2004

Four main products:

Strengthen R&D systemsEstablished FPD Materials Division and Laboratory (December 2003)

Increase capital investmentCumulative April 2004 – March 2007 total: Approx. ¥110 billion)

FUJITAC Anti-reflection (CV) filmWide View Film Transer

Growth and enlargement of liquid crystal monitorsSpread and expansion of liquid crystal TVsGrowth and enlargement of liquid crystal monitorsSpread and expansion of liquid crystal TVs

Rapid expansion of demandDiversification of needsRapid expansion of demandDiversification of needs

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Document Solutions BusinessDocument Solutions Business

Office Services business: Promotion of a comprehensive documentation outsourcingservice business for the office market

Production Services business: Offering of high-value-added services in digital printing marketthrough print on demand

Printer business: Global growth centered on color laser printersCopying Machine business: Maintaining of earnings base by shifting to color/multifunction

machines

Office Services business: Promotion of a comprehensive documentation outsourcingservice business for the office market

Production Services business: Offering of high-value-added services in digital printing marketthrough print on demand

Printer business: Global growth centered on color laser printersCopying Machine business: Maintaining of earnings base by shifting to color/multifunction

machines

Cultivate new growing businesses andfocus resources on more profitable areas in existing businessesCultivate new growing businesses andCultivate new growing businesses andfocus resources on more profitable areas in existing businessesfocus resources on more profitable areas in existing businesses

Broaden sales channels in China

Reorganize domestic sales companies

Strengthen marketing capabilities of solution businesses

Broaden sales channels in China

Reorganize domestic sales companies

Strengthen marketing capabilities of solution businesses

Reorganize and strengthen sales andmarketing organizationReorganize and strengthen sales andReorganize and strengthen sales andmarketing organizationmarketing organization

Strengthen organization and improve operating marginStrengthen organization and improve operating marginStrengthen organization and improve operating margin Explained in detail on slide 18 (Pursue Structural Reforms)

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Expand growing businesses by concentrating management resourcesSustain consumer imaging products and

ensure a culture of photography Create new businesses to support the futureExpand business development in China

Expand growing businesses by concentrating management resourcesSustain consumer imaging products and

ensure a culture of photography Create new businesses to support the futureExpand business development in China

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Photographic color film (including QuickSnap) and color paperPhotographic color film (including QuickSnap) and color paper

Specific measuresDevelop new, distinct products through full use of silver halide technology

Ultrasensitive film that approximates human vision

Evolve QuickSnapIncrease sales in emerging markets

Maintain revenue

Maintain profitability through structural review of production, sales, and R&DThorough cost reductions, including review of production systemsReview of domestic and overseas sales systems Select R&D themes

カラーフィルム

Decrease in total demandfor photographic color filmDecrease in total demand

for photographic color film Increase in number of total shotsIncrease in number of total shots

Expansion of potentialprint demand

Expansion of potentialprint demand

Photographic color filmPhotographic color film

Increase in the number of shotsfrom digital cameras andresulting digital prints

Specific measuresIncrease digital minilab salesStrengthen Internet print servicesReinforce digital camera printcampaigns

By increasing the number of digital camera prints, expand and turn around demand

Color paper and chemicalsColor paper and chemicals

Rapid spread of digital cameras and mobile phones with camera functions

Rapid spread of digital cameras and mobile phones with camera functions

Sustain Consumer Imaging Products and Sustain Consumer Imaging Products and Ensure a Culture of PhotographyEnsure a Culture of Photography

Sustain consumer imaging materials and ensure a culture of photography0

6

18

2004 2007

Change in total number of shots and resulting color prints(domestic market)

12

(Unit: Billion shots)

Color prints

Photographiccolor film

Photographiccolor film

Digital camera prints

Digital camera prints

Home printsHome prints

Image not saved, not printed

Image not saved, not printed

Year ending Mar. 31

6


Expand growing businesses by concentrating management resources Sustain consumer imaging products andensure a culture of photographyCreate new businesses to support the futureExpand business development in China


11

Create New Businesses to Support the FutureCreate New Businesses to Support the Future

1. Orientation of new technologies and new businesses

Highly functional materialsInformation on environment and life sciences

Optical devices/systemsOptics-related businesses

Precision assembly technologyNano technology

Organic synthesis technology

Lens technology

CCD technology

Laser technologyDigital image processingSoftware technology

～Image IntelligenceTM～

Miniature fabricationprocessing technology

Polymer technology

Digital imagingImage information systems and solutions businesses

Organic and inorganic pigmentation technology

Silver-halide technologyImage design evaluation

technologyThin multilayer

coatings technologyOptical designing

techniques

Xerography technology

Optical elementtechnology

Fujifilm’s technologicaladvantages =

materials technologiesto freely control the

characteristics of light

Also actively promote M&A and alliances with other companies

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12


Management of Technology DivisionManagement of Technology Division

Business Development DivisionBusiness Development Division

Intellectual Property DivisionIntellectual Property Division

Advanced Core Technology LaboratoriesAdvanced Core Technology Laboratories

Life Science Research LaboratoriesLife Science Research Laboratories

Imaging Software Technology CenterImaging Software Technology Center

Materials Research DivisionMaterials Research Division

Production Engineering & Development Division

Production Engineering & Development Division

Recording Media Products LaboratoriesRecording Media Products Laboratories

Product Planning & Development DivisionProduct Planning & Development Division

Printpix Division Technology GroupPrintpix Division Technology Group

President & CEOPresident & CEO

Equipment Development and Production Division

Equipment Development and Production Division

R&D Management HeadquartersR&D Management Headquarters

Recording Media Products DivisionRecording Media Products Division

Electronic Imaging Products DivisionElectronic Imaging Products Division

Printpix Products DivsionPrintpix Products Divsion

New businessexpansion

Newly established R&D overview function

Establish new R&D overview function for the entire GroupSet up three laboratories to support new business expansion Focus on review of intellectual property strategyStrengthen manufacturing technologies

Establish new R&D overview function for the entire GroupSet up three laboratories to support new business expansion Focus on review of intellectual property strategyStrengthen manufacturing technologies

2. Restructuring of research and development

FPD Materials Research LaboratoryFPD Materials Research LaboratoryFPD Materials DivisionFPD Materials Division

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¥200 billion¥175 billion

Outlook for the year ending Mar. 31, 2004 Outlook for the year ending Mar. 31, 2004 Target for the year ending Mar. 31, 2007 Target for the year ending Mar. 31, 2007

3. Breakdown of investment in R & D

2004 outlook 2007 target

Percentage of research anddevelopm

ent investment

40

30

20

10

0

Consumer imaging products

New products

28

65

2115

50

70

0%

5%

10%

15%

20%

25%

35%

16%

33%

12%

60 30%

8%8%

(Unit: Billions of yen)

2.3 times

30% reduction

Year ending Mar. 31

8




15

　

Build future production system

Transfer all copying machine and printer mass production functions

Aim to attain leading market share for the FUJIFILM brand by providing total solutions in the digital imaging sector

Aim to attain leading market share for the FUJIFILM brand by providing total solutions in the digital imaging sector

Strengthen China head office functionsand enhance sales systemsBuild and expand production bases

Business development focused on digital cameras, consumer imaging products, documents, graphic arts systems, medical imaging, and optical electronic components

Business development focused on digital cameras, consumer imaging products, documents, graphic arts systems, medical imaging, and optical electronic components

Build and expand production base

Beijing

ShanghaiSuzhou

Tianjin

Fuji Photo Film Group ChinaHead Office

Transfer all copying machine andprinter mass production functions

Expand digital camera production

CTP (computer-to-plate)Expand production line

Optical electroni c ComponentsExpand production (digital camera lenses, lens units for mobile phones)

FUJIFILM STARLIGHTFUJIFILM STARLIGHTFUJIFILM STARLIGHT

Fuji Photo Film (China)Investment

Fuji Photo Film (China)Fuji Photo Film (China)InvestmentInvestment

Fuji Xerox (Shanghai)Fuji Xerox (Shanghai)Fuji Xerox (Shanghai)

FUJIFILM ImagingSystems (Suzhou)

FUJIFILM ImagingFUJIFILM ImagingSystems (Systems (SuzhouSuzhou))

Fuji Xerox of ShenzhenFuji Xerox of ShenzhenFuji Xerox of Shenzhen

Fuji Photo Optical(Tianjin)

Fuji Photo OpticalFuji Photo Optical((TianjinTianjin))

Shenzhen

Digital imaging related equipment, materials, etc.

Expand Business Development in ChinaExpand Business Development in China

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Comprehensive Structural ReformsOver All Management Levels

Comprehensive Structural ReformsOver All Management Levels

Reorganize all production, sales and distribution, and purchasing systems, and improve efficiency Strengthen structure of Fuji Xerox

Reorganize all production, sales and distribution, and purchasing systems, and improve efficiency Strengthen structure of Fuji Xerox

17

Pursue Structural ReformsPursue Structural Reforms

The year ending March 31, 2007, cost reduction target from structural reforms: approx. ¥200 billion (compared to the year ending March 31, 2004)

The year ending March 31, 2007, cost reduction target from strucThe year ending March 31, 2007, cost reduction target from structural tural reforms: approx. reforms: approx. ¥¥200 billion (compared to the year ending March 31, 2004)200 billion (compared to the year ending March 31, 2004)

　　Reorganize all production, sales and distribution, and purchasinReorganize all production, sales and distribution, and purchasing g systems, and improve efficiency (excluding Fuji Xerox)systems, and improve efficiency (excluding Fuji Xerox)

Reorganize production systemConduct worldwide reorganization of coating and film machinesReorganize equipment production system on consolidated basis

Reform domestic sales system Fujifilm headquarters: Specialize in business planning and product planning functions Sales companies/general labs: Reorganize with goal of improving efficiency ofsales/distribution functions

Reform purchasing strategy Review and optimize purchasing processIncrease efficiency of purchasing and procurement functions for all domestic GroupcompaniesBuild global purchasing and procurement system

Cut costs by approx. ¥20 billion by the year ending March 31, 2007Cut costs by approx. ¥20 billion by the year ending March 31, 2007



10

18

Pursue Structural ReformsPursue Structural Reforms

Strengthen structure of Fuji XeroxStrengthen structure of Fuji XeroxStrengthen structure of Fuji Xerox

10%6%

Outlook for the yearending Mar. 31, 2004 Outlook for the year

ending Mar. 31, 2004 The year ending Mar. 31, 2007The year ending Mar. 31, 2007

Improve Document Solutions operating marginImprove Document Solutions operating margin

Reduce total production Shift mass production base to China, reform procurement costscosts:

Reduce maintenance and Reorganize service systems, improve reliabilityservice costs:

Cap total personnel Reform pension and retirement allowances, reform personnel system,expenses: improve ratio of direct and indirect personnel expenses

Implement cost reductions from Restructure (downsize, flatten hierarchy), increase development efficiencyother structural reforms

The year ending March 31, 2007 cost reduction target: approx. ¥45 billionThe year ending March 31, 2007 cost reduction target: approx. ¥45 billion




Seek to improve ratio of expenses to sales by 6.5 percentage points the year ending March 31, 2007 through controlling total personnel expenses and conducting other structural reforms

VISION75Enhance Consolidated Management

VISION75VISION75Enhance Consolidated ManagementEnhance Consolidated Management

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20

Strengthen Management BaseStrengthen Management Base

Enhance consolidated management and controlEnhance consolidated management and control

Build a suitable internal control systemcentered on unified strengthening and promotionof compliance and risk management

Build a suitable internal control systemcentered on unified strengthening and promotionof compliance and risk management

Further strengthen environmental managementFurther strengthen environmental management

Introduce new management indicator (EVA®)

Create IT infrastructure to support consolidated management and control

VISION75Numerical Targets

VISION75VISION75Numerical TargetsNumerical Targets

12

22

Operating Results ObjectivesOperating Results Objectives

4.8%150

8.7%270

3,100

20072007planplan

Net income marginNet income margin

Net incomeNet income

Operating marginOperating margin

Operating incomeOperating income

RevenueRevenue

3.1%80

7.0%180

2,580

20042004outlookoutlook

Year ending March 31Year ending March 31

5.1%180

10.0%350

3,500

20092009targettarget

550Capital investmentCapital investment

2005 2005 -- 2007 2007 cumulative totalcumulative totalYear ending March 31Year ending March 31

（Unit: Billions of yen)

ReferenceReference（Unit: Billions of yen)

FORWARD-LOOKING STATEMENTSThis document contains forward-looking statements. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such a forward-looking statement, Fujifilm cautions that assumed facts or bases almost always vary from the actual results, and differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, Fujifilm or its management expresses an expectation or belief as to future results, there can be no guaranty or assurance that the statement of expectation or belief will result or be achieved or accomplished. The words “forecast,” “project,”“believe,” “expect,” “estimate,” “anticipate,” and similar expressions may identify forward-looking statements.

Taking into account the foregoing, the following are identif ied as important factors, risks or uncertainties that could cause the actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, Fujifilm: competitive factors, including, without limitation, pricing, the implementation of Fujifilm’s product strategies, and economic trends in important markets worldwide.

Fujif ilm assumes no obligation to update its forward-looking statements or to advise of any changes in the assumptions and factors on which they are based.

FORWARD-LOOKING STATEMENTSThis document contains forward-looking statements. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such a forward-looking statement, Fujifilm cautions that assumed facts or bases almost always vary from the actual results, and differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, Fujifilm or its management expresses an expectation or belief as to future results, there can be no guaranty or assurance that the statement of expectation or belief will result or be achieved or accomplished. The words “forecast,” “project,”“believe,” “expect,” “estimate,” “anticipate,” and similar expressions may identify forward-looking statements.

Taking into account the foregoing, the following are identif ied as important factors, risks or uncertainties that could cause the actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, Fujifilm: competitive factors, including, without limitation, pricing, the implementation of Fujifilm’s product strategies, and economic trends in important markets worldwide.

Fujif ilm assumes no obligation to update its forward-looking statements or to advise of any changes in the assumptions and factors on which they are based.

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