Can a Spinoff Rescue Fujifilm After Its Worst Day Ever on the Japanese Market?

Fujifilm Holdings shares crashed by a record margin on Friday, after first-quarter earnings fell far short of analyst estimates.

The stock fell as much as 18%, the steepest drop on record for the company. Fujifilm is now weighing a partial spinoff of a unit that generates over a third of its sales.

Why Fujifilm's Earnings Fell Short

Fujifilm posted operating income of 51.2 billion yen ($323 million) for the quarter ended June. That figure came in far below the average analyst estimate of 77.1 billion yen, according to Bloomberg.

Higher raw material costs and one-off expenses weighed on the result. Underlying profit also weakened in the healthcare and business innovation segments, Jefferies Japan analysts wrote in a note.

Jefferies analysts, including Masahiro Nakanomyo, told Bloomberg the numbers point to a longer road back to profitability.

"First-quarter results showed further deterioration" in the profitability of Fujifilm's development and production business, making it "difficult to envisage a sharp recovery" toward the fiscal year ending March 2028.

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