Global GlobalConsolidated revenue in this segment declined 12.2% year on year to ¥605.4 billion, despite higher sales of color paper on the back of increased market share and other factors. The overall decrease was primarily attributable to lower sales of color films and digital minilabs as well as of development services at photo-processing laboratories. The segment posted an operating loss of ¥42.6 billion, mainly due to structural reform charges of ¥60.1 billion. Excluding these charges, pro forma operating income grew considerably to ¥17.5 billion, a large increase of ¥15.8 billion year on year.
Demand for printing photos from film is falling as demand declines for film. However, the uptake of digital cameras is driving steadily rising business volume for the printing of digital camera photos.
Responding to this trend, Fujifilm has rolled out various initiatives to expand “Print at Retail,” a key strategy for the company. In combination with this, Fujifilm has expanded the infrastructure supporting the “Print at Retail” strategy, with the active launch of digital minilabs. Thanks to these actions, both sales and earnings from color paper and chemicals were up year on year. Moreover, Fujifilm estimates that it now commands a global share of around 50% in the color paper market. In photofinishing equipment, however, sales were down as large-scale retail outlets ended a cycle of new installations of digital minilabs.
The global digital camera market continued to grow, recording total shipments of 81 million units, 21% higher year on year, according to statistics released by Camera & Imaging Products Association (CIPA) for the year ended March 31, 2007. On the other hand, price competition intensified as differences in basic specifications among camera manufacturers became blurred.
In this market, the FinePix F31fd, a compact digital camera boasting a maximum sensitivity of ISO 3200, and the stylishly slim FinePix Z5fd sold strongly. In addition to the high sensitivity and high image quality for which Fujifilm is well known, these digital cameras feature the world's fastest*1 Face Detection technology*2. Despite a rise in shipments to 6.6 million units, however, sales in electronic imaging declined overall, the result of persistently stiff price competition centered on entry-level models.
In the fiscal year under review, sales of color films declined in a contracting market. On a more positive note, however, Fujifilm increased its market share thanks to the success of a sales strategy that seeks to take advantage of the exit from the market of competing companies. Moreover, Fujifilm continued to generate earnings by reducing fixed costs, raising prices and taking other actions to combat falling sales volume and soaring prices of silver and other main raw materials.
Fujifilm's exhibit at PMA 2007, one of the largest trade shows for the photo-related industry in the U.S., carried the slogan, “Fujifilm. Expand the World of Imaging.”
In the Imaging field, Fujifilm continues to put in place a framework capable of consistently generating earnings, having completed structural reforms initiated in the previous fiscal year. As it does so, the competitive landscape is undergoing major change with the withdrawal of competing companies from the market.
Amid this backdrop, Fujifilm aims to increase the uptake of “Print at Retail” services, which are defined by the “easy, beautiful, long lasting” characteristics of the photos produced. This is part of Fujifilm's ongoing response to customer demands for making digital camera prints that don't compromise on picture quality.
Using its alliance with Noritsu Koki Co., Ltd. in product development and after-sales services, Fujifilm is also developing a new series of digital minilabs and taking other actions as it steps up its response to diversifying demand for photographic prints, with the aim of improving profitability.
Fujifilm expects the digital camera market to grow at a slightly slower rate in the year ahead, while competition remains as fierce as ever. In this market environment, Fujifilm aims to grow sales by bolstering its lineup of distinctive products and, at the same time, make greater strides in transitioning to a cost structure that can withstand intense competition.
