Financial Results for the Fiscal Year Ended March 31, 2013 (FY12) April 26, 2013 OMRON Corporation © Omron Corporation Contents 1. FY12 Results P. 3 2. FY13 Forecast P. 10 3. VG Strategies Higher Corporate Value P. 19 4. References P. 32 © OMRON Corporation 2/36 FY12 Results © OMRON Corporation 3/36 Consolidated P/L Sales and OP as planned thanks to steady implementation of VG2020 measures. (Billions of yen) FY2012 FY2012 Fcst vs. Fcst (fcst = 100%) 650.0 243.5 (37.5%) 46.0 (7.1%) +100.1% (-0.4% pt) (%) 650.5 241.5 (37.1%) 45.3 (7.0%) NIBT 41.2 Net income attributable to shareholders FY2011 Y/Y (+0.3% pt) (-0.1% pt) 619.5 227.9 (36.8%) 40.1 (6.5%) 43.0 +95.9% 33.5 +22.9% 30.2 28.5 +106.0% 16.4 +84.3% 1USD (JPY) 83.2 82.6* +0.6 79.3 +3.9 1EUR (JPY) 107.6 107.1* +0.5 110.3 -2.7 686 680* +6 738 -52 83,042 81910* +1,132 92,379 -9,337 Net Sales Gross Profit (%) Operating Income Copper (JPY/kg) Silver (JPY/kg) +99.2% +98.6% +5.0% +6.0% +13.0% (+0.5% pt) *Jan. 30 fcst © OMRON Corporation 4/36 Operating Income Analysis, Y/Y OP up ¥5.2 bn Y/Y due to sales increase and well-managed general costs, while steadily carrying out strategic investments. (Billions of yen) Sales increase, product mix -0.9 Forex, Raw material costs 40.1 +11.9 Fixed manufacturing costs increase SG&A increase -5.8 +XX R&D increase -1.2 45.3 (incl. strategic investments increase) +1.2 Gross profit up ¥11.0 bn (excl. forex & raw materials) Operating income increase ¥5.2 bn FY2011 Actual © OMRON Corporation FY2012 Actual 5/36 Consolidated B/S Inventory well managed at FY11 year-end level. (without forex impact, inventory down ¥8.6 bn to ¥83.7 bn) (Billions of yen) Mar. 31, 2013 Assets Cash and cash equivalents Notes and accounts receivable - trade Inventories Deferred income taxes, other current assets Property, plant and equipment Investments and other assets Liabilities Short-term debt Long-term debt Notes and accounts payable - trade Termination and retirement benefits Other liabilities Net Assets Common stock and retained earnings Accumulated other comprehensive income (loss) Treasury stock Non-controlling interests Total Liabilities and Shareholders’ Equity © OMRON Corporation Mar. 31, 2012 Ref. Dec. 31, 2012 573.6 537.3 559.5 55.7 156.9 91.0 30.1 126.8 113.1 45.3 141.1 92.3 29.5 120.7 108.5 54.7 138.7 101.5 30.1 124.7 109.8 204.9 215.6 209.9 5.6 0.0 75.6 56.9 66.8 18.8 0.0 79.3 60.4 57.1 19.7 0.0 77.1 57.0 56.1 368.8 321.7 349.6 427.7 -44.3 -16.4 1.8 433.8 -68.4 -44.5 0.8 451.4 -59.0 -44.5 1.7 573.6 537.3 559.5 6/36 Consolidated Cash Flows FCF up Y/Y due to increased operating activities, with steady implementation of investments for growth. (Billions of yen) FY2012 FY2011 Operating activities 53.1 31.9 Investing activities -28.5 -26.5 24.6 5.4 -18.6 -33.5 4.4 -1.4 Net increase/decrease in cash and cash equivalents 10.5 -29.5 Cash and cash equivalents at end of the period 55.7 45.3 Capital expenditures 28.3 28.3 Depreciation and amortization 22.5 22.6 Free cash flow Financing activities Effect of exchange rate changes on cash and cash equivalents © OMRON Corporation 7/36 Sales by Segment Five business segments up Y/Y. Four of which posted double-digit increases. (Billions of yen) FY2012 Jan. 30 fcst vs. Jan fcst 263.0 267.0 -1.5% 270.8 -2.9% 84.1 87.5 -3.9% 83.0 +1.3% 97.6 95.0 +2.8% 85.0 +14.8% 68.8 66.0 +4.2% 57.2 +20.2% 71.5 69.5 +2.9% 62.4 +14.5% Other 59.2 59.0 +0.4% 53.5 +10.7% Eliminations & Corporate 6.3 6.0 +4.4% 7.6 -16.2% 650.5 650.0 +0.1% 619.5 +5.0% FY2012 IAB Industrial Automation FY2011 Y/Y EMC Electronic & Mechanical Components AEC Automotive Electronic Components SSB Social Systems, Solutions & Service HCB Healthcare Total © OMRON Corporation 8/36 Operating Income by Segment Four business segments up Y/Y. Profit structure improvements showing results in each segment. (Billions of yen) FY2012 FY2012 Jan. 30 fcst vs. Jan fcst FY2011 Y/Y IAB 29.5 33.5 -4.0 33.3 -3.9 Industrial Automation (11.2%) (12.5%) (-1.3% pt) (12.3%) (-1.1% pt) 6.2 8.0 -1.8 7.2 -1.0 (7.4%) (9.1%) (-1.7% pt) (8.7%) (-1.3% pt) 5.0 5.0 +0.0 2.7 +2.3 (5.1%) (5.3%) (-0.2% pt) (3.2%) (+1.9% pt) 2.9 2.5 +0.4 0.1 +2.8 (4.2%) (3.8%) (+0.4% pt) (0.2%) (+4.0% pt) 4.4 4.5 -0.1 2.9 +1.5 (6.2%) (6.5%) (-0.3% pt) (4.7%) (+1.5% pt) 2.5 -0.5 +3.0 -3.6 +6.1 EMC Electronic & Mechanical Components AEC Automotive Electronic Components SSB Social Systems, Solutions & Service HCB Healthcare Other Eliminations & Corporate Total (4.3%) (-) -5.2 45.3 -7.0 46.0 +1.8 -0.7 -2.5 40.1 -2.7 +5.2 (7.0%) (7.1%) (-0.1% pt) (6.5%) (+0.5% pt) (%): Operating income/External sales © OMRON Corporation 9/36 FY13 Forecast © OMRON Corporation 10/36 FY13 Policy Policy Complete the GLOBE Stage! Complete the transformation to a stronger Omron with greater growth, profitability and adaptability to change. Action Plans Complete VG GLOBE Stage action plans as scheduled. 1. Reinforcement of IA business 2. Growth in emerging markets 3. Focus on Environmental Solutions Business 4. Profit structure reform 5. Global human resources © OMRON Corporation 11/36 Conditions for FY13 External Environment The global economy will remain uncertain, with signs of recovery except for Europe. Japan: Recovery in Q2 at the earliest. Overseas: Europe will remain sluggish. US capital investments will be firm especially in the automotive industry. China will still be uncertain but gradually show signs of recovery. Emerging markets will enjoy steady growth and increases in consumer spending and capital investments. Conditions: Exchange rates & raw material costs Exchange rates 1 USD = ¥90; 1 EUR = ¥120 Raw material costs Silver = ¥88,500/kg; Copper = ¥770/kg ¥1 fluctuation impact (full-year, approx) Silver & copper price change impact (full-year, approx) USD EUR © OMRON Corporation Sales ¥3.1 bn ¥0.8 bn OP ¥0.5 bn ¥0.4 bn Silver Copper Price change ¥1,000/kg ¥10/kg OP ¥100 mil ¥100 mil 12/36 FY13 Consolidated P/L Targeting ¥710 bn sales, 39% gross profit margin, ¥58 bn OP and ¥40 bn net income. (Billions of yen) FY2013 forecast FY2012 actual Y/Y Net Sales 710.0 650.5 +9.2% Gross Profit 277.0 241.5 +14.7% (39.0%) (37.1%) (+1.9% pt) 171.0 152.7 +12.0% R&D 48.0 43.5 +10.4% Operating Income 58.0 45.3 +27.9% (8.2%) (7.0%) (+1.2% pt) 1.5 4.1 -63.5% NIBT 56.5 41.2 +37.0% Net Income attributable to shareholders 40.0 30.2 +32.4% 181.71 137.20 +32.4% (%) SG&A (%) Non-operating Income (loss), net EPS (JPY) © OMRON Corporation 13/36 Operating Income Analysis (vs. FY12) Challenging ourselves to increase OP by ¥12.7 bn, injecting VG2020 strategic investments. +25.9 -4.6 SG&A increase Fixed manufacturing costs increase -12.5 +8.1 R&D increase -4.2 Forex, Raw material costs 45.3 (Billions of yen) Sales increase, product mix 58.0 (incl. strategic investments increase) Gross profit up ¥21.3 bn (excl. forex & raw materials) Operating income increase ¥12.7 bn FY2012 Actual © OMRON Corporation FY2013 Forecast 14/36 FY13 Sales by Segment Aiming at increase in each segment. (Billions of yen) FY2013 forecast IAB Industrial Automation FY2012 actual Y/Y 282.0 263.0 +7.2% 94.0 84.1 +11.8% 108.5 97.6 +11.1% 76.0 68.8 +10.5% 82.5 71.5 +15.4% 62.0 59.2 +4.7% 5.0 6.3 -19.5% 710.0 650.5 +9.2% EMC Electronic & Mechanical Components AEC Automotive Electronic Components SSB Social Systems, Solutions & Service HCB Healthcare Other Eliminations & Corporate Total © OMRON Corporation 15/36 FY13 Operating Income by Segment Aiming at OP increase in each segment. Each segment will work on profit improvement for higher margins. (Billions of yen) FY2013 forecast FY2012 actual Y/Y IAB 36.5 31.3* +5.2 Industrial Automation (12.9%) (11.9%) (+1.0% pt) 7.0 4.4* +2.6 (7.4%) (5.2%) (+2.2% pt) 7.0 5.0 +2.0 (6.5%) (5.1%) (+1.4% pt) SSB 4.5 2.9 +1.6 Social Systems, Solutions & Service (5.9) (4.2%) (+1.7% pt) HCB 7.0 4.4 +2.6 (8.5%) (6.2%) (+2.3% pt) 3.5 2.5 +1.0 (5.6%) (4.3%) (+1.3% pt) -7.5 58.0 -5.2 45.3 -2.3 +12.7 (8.2%) (7.0%) (+1.2% pt) EMC Electronic & Mechanical Components AEC Automotive Electronic Components Healthcare Other Eliminations & Corporate Total (%): Operating income/External sales. *Differs from p.9 results. Reclassified for comparison with FY13, in which some EMC divisions are included in IAB following new management categorization. © OMRON Corporation 16/36 FY13 Business Environment by Segment Segment IAB FY13 Business Environment • Japan: Still uncertain overall. Automotive and electronic components are on the recovery trend and will pick up in Q2. Machine tools will remain flat. Semiconductors are showing signs of recovery. • Overseas: • Europe: Vulnerable in short term. Production and new investments will continue to drop, though long-term economic indicators are trending better. • Greater China: Expecting slow recovery in Q2 with better PMI. EMC • Japan: White electronic appliances will gradually go up. • Overseas: • Solid in US and Asia. • Europe and Greater China will slowly come back. AEC • Japan: Will see recovery in 2H, due to 1H demand decrease after the end of ecofriendly car subsidiaries. • Overseas: North America will be solid. Demand in emerging markets including Southeast Asia and Greater China will go up. SSB Demand for train system upgrading will remain solid. Environmental solutions will see rising demand for system engineering, repair & maintenance. HCB • Japan: Will see new business opportunities using healthcare/medical data. • Overseas: BRICs will keep growing, emerging markets will expand with rising income. Other Environmental Solutions: Power conditioner business will keep growing. Backlight business will go soft. © OMRON Corporation 17/36 R&D, Capex, and Depreciation Toward growth, Omron will make proactive investments exceeding depreciation. (Billions of yen) FY2013 FY2012 Y/Y R&D 48.0 43.5 +10.4% Capex 34.2 28.3 +20.8% Depreciation 26.9 22.5 +19.6% © OMRON Corporation 18/36 VG2020 Strategies © OMRON Corporation 19/36 Updates on GLOBE STAGE Tasks Omron steadily carried out VG2020 measures in FY11 and FY12. Targeting this year to make the most of these achievements for further growth. (Billions of yen) FY2011 IA Sales (IAB & EMC) (Growth rate) FY2012 353.8 347.1 376.0 - (-2%) (+8%) (-3%) (+3%) 171.9 185.9 230.0 - (+8%) (+24%) (+4%) (+12%) 21.9 29.6 40.0 - (+35%) (+35%) 36.8% 37.1% 39% - (+0.3% pt) (+1.9% pt) (Growth rate w/o forex) Emerging Market Sales (Growth rate) (Growth rate w/o forex) Environmental Solutions Sales Gross Profit Margin © OMRON Corporation (Growth rate) (Y/Y % pt growth) FY2013 (Target) 20/36 GLOBE Stage: Strengthening of IA IAB sales coming back after bottoming out in 2H/FY11. Eyeing sales increase by making the most out of VG achievements. IAB Sales, H/H IAB Measures • Wider range of high-spec products and “global standard” products • Strengthening of sales in Greater China • Expansion of sales network in emerging markets (¥ bn) +6% 145.0 143.1 -11% 127.7 +3% +3% +2% 129.9 133.1 137.0 EMC Measures • Expansion of environmental & energy solutions businesses • Accelerating operational transfer to Shanghai plant • Promotion of factory automation at Shenzhen plant 1H 2H FY2011 © OMRON Corporation 1H 2H FY2012 1H 2H FY2013 21/36 GLOBE Stage: Growth in Emerging Markets Omron steadily carried out VG2020 measures for sales expansion in emerging markets. Targeting two-digit growth in each area this year. Sales Growth in Emerging Markets Wider range of products - “Global standard” products - Healthcare products Stronger sales & marketing - Sales network - Sales offices/staff Stronger infrastructure in emerging markets - SCM - Brand recognition © OMRON Corporation Area FY12, Y/Y FY13, Y/Y Greater China +5% +23% (w/o distributors/transaction changes) (+17%) (+18%) +14% +25% India +42% +29% Russia & East Europe +31% +23% Latin America +15% +29% Asia (excl. S. Korea) 22/36 GLOBE Stage: Profit Structure Reform Targeting FY13 gross profit margin of 39%. External factors Internal improvements Internal External improvements factors Gross profit margin 36.8% FY2011 +0.7% pt -0.4% pt 37.1% FY2012 39% +0.8% pt +1.1% pt FY2013 Sales staff’s efforts in profit improvement Smaller number of components, standardized system platform Less use of major raw materials, such as silver, copper and resin Introduction of automation in China and other Asian countries (low-cost automation) © OMRON Corporation 23/36 (Ref. P/L Breakdown, FY13 vs. FY07) Aiming at P/L structure stronger than record-high FY07. Sales 763.0 (w/o raw material costs, forex impacts) 710.0 691.5 Gross profit (%) Operating income (%) © OMRON Corporation 293.3 (38.4%) 65.3 -2.4% pt -3.4% pt 249.3 (Billions of yen) 277.0 +3.0% pt (36.0%) +3.0% pt (39.0%) 58.0 (8.6%) 36.3 (5.2%) (8.2%) FY2007 FY2007 FY2013 1 USD: ¥114 1 EUR: ¥162 Cu: ¥ 895/kg Ag: ¥53,153/kg 1 USD: ¥90 1 EUR: ¥120 Cu: ¥ 770/kg Ag: ¥88,500/kg 1 USD: ¥90 1 EUR: ¥120 Cu: ¥ 770/kg Ag: ¥88,500/kg 24/36 GLOBE Stage: Minimization of Forex Risks Omron worked on forex balance improvement and established a structure resistant to forex fluctuation. USD Sensitivity (¥1 fluctuation impact, assumption) FY11 FY12 FY13 OP ¥0.9 bn ¥0.7 bn ¥0.5bn Sales ¥2.5 bn ¥2.8 bn ¥3.1 bn Short-term Measures 1. Domestic procurement: Payment to global suppliers in JPY in USD 2. Global procurement: Payment in JPY in USD 3. USD-based cost transaction in Japan Mid-term Measures 1. Promotion of local procurement in sync with global production expansion 2. Shift of fixed costs, in sync with production function transfer to overseas © OMRON Corporation 25/36 Higher Shareholder Return © OMRON Corporation 26/36 Higher Shareholder Return FY13 Dividend Policy Minimum payout ratio revised from 20% to 25%. *FY13 interim dividend forecast at ¥18. Basic Profit Distribution Policy (effective April 1, 2013) 1. Place priority on investments for growth to maximize corporate value. 2. Enhance stable, uninterrupted profit distributions taking into consideration the consolidated performance. 3. Maintain the payout ratio at a minimum of 25% and the DOE target of 2%. 4. Systematically repurchase the Company’s stock, taking into consideration of M&A, FCF and other conditions. © OMRON Corporation 27/36 Higher Corporate Value © OMRON Corporation 28/36 Financial Indicators Management with focus on ROIC and other major indicators. Major Indicators FY12 FY13 fcst Gross Profit Margin 37.1% 39% Operating Income Margin 7.0% 8.2% ROE 8.8% >10% ROIC 8.6% >10% ROIC = Net income attributable to shareholders / invested capital © OMRON Corporation 29/36 Measures for Higher Corporate Value Indicator breakdown Segmental measures to raise ROIC. ROS Gross profit margin Further cost rate reduction Operating income margin Thorough SG&A cost management Income before tax ratio Forex fluctuation-resistant structure Better forex management Effective tax rates ＲＯＩＣ Optimum internal/external profit balance Net income attributable to shareholders, % Invested Capital Turnover Working capital turnover Optimum inventory months Minimum non-moving stock Payment site standardization Fixed assets turnover Full capex procedure management Net cash Accumulated funds Wider fund-raising measures © OMRON Corporation 30/36 Logo to commemorate Omron’s 80th Anniversary © OMRON Corporation 31/36 References © OMRON Corporation 32/36 © OMRON Corporation 2014/01 FY07 ¥114.1 2013/10 100 2013/07 2013/04 2013/01 2012/10 FY11 ¥79.3 2012/07 FY11 ¥110.3 2012/04 2012/01 2011/10 2011/07 FY10 ¥113.5 2011/04 2011/01 2010/10 2010/07 2010/04 2010/01 2009/10 2009/07 FY08 ¥144.5 2009/04 2009/01 2008/10 2008/07 140 2008/04 2008/01 2007/10 2007/07 2007/04 2007/01 2006/10 2006/07 2006/04 2006/01 2005/10 2005/07 170 2005/04 2005/01 2004/10 2004/07 2004/04 Exchange Rates (USD, EUR) 1JPY USD 160 EUR 150 FY07 ¥161.9 FY09 ¥130.3 130 FY13 ¥120.0 FY12 ¥107.6 120 110 FY13 ¥90.0 90 FY08 ¥100.7 80 FY09 ¥92.9 FY10 ¥85.8 70 FY12 ¥83.2 33/36 Raw Material Prices (Silver, Copper) Silver price quotation, JPY/kg Copper price quotation, JPY/kg 140,000 1400 Silver 120,000 Copper 1200 FY11 ¥91,854 FY13 ¥88,500 FY07 ¥916 FY12 ¥83,059 100,000 1000 FY10 ¥739 FY08 ¥657 FY09 ¥610 80,000 800 FY13 ¥770 60,000 600 FY11 ¥717 40,000 FY12 ¥697 FY10 ¥66,387 FY07 ¥54,230 FY08 ¥46,265 400 FY09 ¥48,067 20,000 200 2014/01 2013/10 2013/07 2013/04 2013/01 2012/10 2012/07 2012/04 2012/01 2011/10 2011/07 2011/04 2011/01 2010/10 2010/07 2010/04 2010/01 2009/10 2009/07 2009/04 2009/01 2008/10 2008/07 2008/04 2008/01 2007/10 2007/07 2007/04 2007/01 2006/10 2006/07 2006/04 2006/01 2005/10 2005/07 2005/04 2005/01 2004/10 2004/07 2004/04 2004/01 2003/10 2003/07 0 2003/04 0 *Monthly simple moving average (SMA) of price quotations. © OMRON Corporation 34/36 Businesses and Major Products LCD backlights, semiconductors/MEMS, energy saving/environmental business, electronic systems and equipment • Electronic signal sensing • Electrical current/voltage control Relays, switches, connectors, amusement equipment parts, mobile device parts ・ Ticket gate mechanisms ・ Infrared sensing ・ Facial image sensing Other AEC EMC Automotive Electronic Components Business Electronic and Mechanical Components Business Automated ticket gates and ticket vending machines, SSB road management systems, Social Systems, security management Solutions systems, face recognition & Service systems, environmental Business solutions business © OMRON Corporation Keyless entry systems, power window switches, automotive relays, EPS (electronic power steering) • Bio-information sensing • Behavior sensing IAB Industrial Automation Business Sensing • Displacement and measurement sensing • Temperature control • Machine control • Vision sensing Proximity/photoelectric/vision sensors, PLCs, temperature controllers, machine safeguarding equipment, inspection systems • Radio wave sensing • Automotive body control Home- and professional-use digital blood pressure monitors, HCB body composition analyzers, Healthcare thermometers, pedometers, Business nebulizers, sleep sensors, patient monitors, cardiovascular screening monitors , health management service & Control Consolidated subsidiaries 153 Affiliates accounted for by the equity method 12 (as of March 31, 2013) 35/36 Notes 1. The consolidated statements of Omron Corporation (the Company) are prepared in accordance with U.S. GAAP. 2. Projected results and future developments are based on information available to the Company at the current time, as well as certain assumptions judged by the Company to be reasonable. Various factors could cause actual results to differ materially from these projections. Major factors influencing Omron's actual results include, but are not limited to, (i) economic conditions affecting the Company's businesses in Japan and overseas, (ii) demand trends for the Company's products and services, (iii) the ability of the Company to develop new technologies and products, (iv) major changes in the fundraising environment, (v) tie-ups or cooperative relationships with other companies, (vi) movements in currency exchange rates and stock markets, and (vii) accidents and natural disasters. © OMRON Corporation Contact: Investor Relations Department Investor Relations Headquarters Omron Corporation Phone: +81-(0)3-6718-3421 Email: [email protected] Website: www.omron.com *To subscribe to Omron IR email newsletters: Send us an email titled "subscribe". 36/36