Fujitsu Ltd

I would like to explain our company progress in FY23, the status of how we are progressing against our major initiatives and our targets for FY24 with respect to the medium-term management plan, which I announced in May 2023. First, I would like to start with the Fujitsu Group purpose, which is to make the world more sustainable by building trust in society through innovation. All of our corporate activities are designed to achieve this purpose, which gives meaning to our existence and what we aim to be. The FUJITU way, which all FUJITU Group employees must abide by, sets out the three important values of aspiration, trust, and empathy, as well as the code of conduct, which are all anchored in our purpose. I would now like to explain our approach to value creation for 2030. We have established a vision for 2030, being a technology company that realizes net positive through digital services. FUJITU's vision for achieving a net positive is defined as FUJITU, which exists in society, must address the materiality of solving global environmental problems, developing a digital society, and improving people's well-being. in addition to maximizing financial returns and making a positive impact on society as a whole through technology and innovation. To realize this vision, we are focusing on four key strategies, which are business model and portfolio strategy, customer success and regional strategy, technology strategy, and people strategy. This is the management structure from fiscal year 2024. From this fiscal year, we have five corporate vice presidents. From left to right are Isobe CFO, Mahajan, CTO and CPO, Chief Technology Officer and Chief Portfolio Officer, and Takahashi, Shimazu, and Onishi, our three Chief Operating Officers, COO. Takahashi is responsible for expanding the F221's business, and Shimazu is responsible for building and strengthening the global service delivery structure, and Onishi is responsible for implementing global customer and regional strategies as COO and Chief Revenue Officer, CRO. This structure enables us to accelerate business decision-making and execution in and across each business area. Next, I will explain our company progress during FY 2023. First, I will summarize the progress status of our financial performance indicators. In FY 2023, we started transforming our business portfolio, centering our efforts on service solutions as the pillar for growth. As a result, consolidated revenue in FY 2023 was 3,756,000,000 Yen for 52 as a whole, an increase of 2.2% from the previous year. and service solutions revenue showed progressive growth, increasing by approximately 10% from the previous fiscal year to 2,137,500,000,000 yen in FY 2023. Consolidated adjusted operating profit decreased 11.6% from the previous financial year to 283.6 billion yen, largely due to the impact of business restructuring in Europe and a decline in sales demand for networks and devices. We expect device sales to recover from FY2024 and networks will remain at FY2023 levels during FY2024. As a result of our strategic initiative, Service Solutions adjusted operating profit increased 45.5% year-on-year to 237.2 billion yen in FY2023. Next is the progress status of our non-financial performance indicators. Fujitsu has set non-financial targets in the four categories of environment, customer, productivity, and people. Generally, our performance has been smoothly progressing. There are three areas I will give more details on today. We have significantly reduced our scope three greenhouse gas emissions, as shown at the bottom of the environment metrics on the far left of the slide, ahead of the 12% reduction target set for FY 2025, which was baselined against net emission volumes in FY 2020. A declining network product sales contributed to this temporary sharp drop, and we will still hold to the set target for fiscal year 2025. Secondly, third from the left on the slide is productivity per person, which has declined due to an overall reduction in company operating income. However, in service solutions, our company's growth area, productivity has increased by more than 40% compared to the previous year. Finally, on the top right-hand side of the slide, we report the employee engagement score, which remains the same as the previous year. Of the issues employees raised in the internal survey, those that are relatively easy to address have mostly been dealt with, and we are now tackling more complex issues. It will take a period of time between the issues being addressed and for employees to provide updated feedback. However, we do then expect the scores to improve. Next, I would like to give more detail on how we are progressing in the key strategic focus areas I mentioned earlier. I will focus on three specific global initiatives covering our progress during fiscal year 2023 and plans in fiscal year 2024 for each item.

First, our business model and portfolio transformation strategic initiative involves transforming both our business portfolio and our business model from traditional systems integration to an on cloud business application and cross industry businesses that is exemplified by Fujitsu events. Fujitsu Human's sales in fiscal year 2023 were 367.9 billion yen, far higher than the initial plan of 300 billion yen, and a significant increase of 84% from 200 billion yen in the previous financial year. In fiscal year 2022, sales of horizontal offerings, which provide technologies and solutions to support customer digital transformation, dominated. In fiscal year 2023, sales of vertical exceeded 30% of the U-Event's total, resulting from the strengthening of vertical cross-industry offerings in areas including sustainable manufacturing and consumer experience. Data collaboration and utilization is an important factor in cross-industry business. In fiscal year 2023, we enhanced our approach to Fujitsu U-BANs by embedding Fujitsu Kozuchi's AI engine into 22 U-BANs offerings. During fiscal year 2024, we will continue to expand our Fujitsu U-Benz offerings. In addition, as we announced in February, we will grow our business through U-Benz Wayfinders, establishing standard global consulting services with a view to full-scale global expansion. Next, I will explain our strategic initiative offering reliable support for customers as asset modernization and how we are expanding in this growing market, particularly in Japan.

In fiscal year 2023,