Fuji Xerox banks on exports, services

By Nathan Layne

TOKYO (Reuters) - Fuji Xerox, the office equipment unit of Fujifilm Holdings (4901.T: Quote, Profile, Research, Stock Buzz), said that sales in Japan are a bit below its target as companies rein in spending but that exports to Asia and growth in services are picking up the slack.

Fuji Xerox President Tadahito Yamamoto told the Reuters Global Technology, Media and Telecoms Summit that he had no plans to raise product prices to offset the higher cost of raw materials weighing on profits across the industry.

He also said that orders from two big customers it supplies office equipment to on an original equipment manufacturer (OEM) basis had recovered after a drop-off last year. He declined to name the customers.

"They have recovered and they asked us to give them the new product lines," said Yamamoto, who joined Fuji Xerox in 1968 and took the helm about one year ago. "I think this year we will recover the last year's worries."

Fuji Xerox is owned 75 percent by Japan's Fujifilm and 25 percent U.S. office equipment giant Xerox (XRX.N: Quote, Profile, Research, Stock Buzz). It handles sales for the Xerox group in Asia and competes with the likes of Ricoh (7752.T: Quote, Profile, Research, Stock Buzz) and Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz).

Fuji Xerox does not make public its own profit forecasts. It posted a 42 percent rise in operating profit to 86.7 billion yen for the business year ended March 31, accounting for about 40 percent of Fujifilm's group profit.

Yamamoto said its profits were in line with its target so far in April and May as growing exports to China and other fast-growing Asian economies offset a slight shortfall in Japan, where companies are becoming more cautious as the economy slows.

A Reuters survey earlier this week showed that Japanese manufacturers turned pessimistic for the first time in five years in May in the face of soaring raw material costs and signs the U.S. economy is struggling.

"Most of the presidents have expressed concerns," said Yamamoto of the clients he visited this year.

But there could be a silver lining in any economic downturn as it could encourage corporations to outsource more of their operations such as document management in a bid to save costs.

Generating more revenues from document management and other services that go beyond the simple sale of a copier or printer are key to Fuji Xerox's goal of raising its overall sales by 9 percent to 1.3 trillion yen in two years.

"If the major account customers decide to cut more costs they will think about outsourcing," Yamamoto said. "We are hoping to get those business opportunities."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Nathan Layne and Kentaro Hamada; Editing by Louise Heavens)