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Financial Results for the fiscal year
ended March 31, 2006 (FY2005)
Business plan for the year
ending March 31, 2007(FY2006)
April 27, 2006
OMRON Corporation
1
Contents
1. Executive Summary
P 4
2. Results for the Fiscal Year Ended March 31, 2006
P 7
3. Business Plan for the Year Ending March 31, 2007
P 20
4. Basic Policy on Distribution of Profits
P 41
Notes:
1. The financial statements are prepared in accordance with U.S. GAAP.
2. Includes 144 consolidated subsidiaries and 17 affiliated companies accounted for by the equity method.
3. Projections of results and future developments are based on information available to the Company at the
present 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) the economic conditions surrounding the Company's businesses in Japan and
overseas, (ii) demand trends for the Company's products and services, (iii) the ability of the Omron Group
to develop new technologies and new products, (iv) major changes in the fund-raising environment, (v) tie-ups or
cooperative relationships with other companies, and (vi) movements in currency exchange rates and stock
markets.
2
Main Business Areas
Business
Business Name
Abbrev.
Business Description
Industrial Industrial Automation
Automation Business
IAB
Manufacturing and sales of control
systems , equipment and components for
factory automation, etc.
Electronic Electronic Components
Components Business
ECB
Manufacturing and sales of electronic
components for home appliances,
communications, mobile devices, etc.
Automotive
Electronics
Automotive Electronic
Components Business
AEC
Manufacturing and sales of electronic
components for automobiles
Social
Systems
Social Systems Business
SSB
Manufacturing, sales and services for
public transportation (automated
passenger gates, etc.) and traffic and
road management systems
Healthcare Business
HCB
Manufacturing and sales of medical
devices (digital blood pressure monitors,
etc.)
Others
Exploration of new businesses,
developing businesses that are not
included in above
Healthcare
Equipment
Others
Business Development
Group/Others
The ATM businesses were transferred to Hitachi-Omron Terminal Solutions, Corp.(Joint Venture company: HITACHI:55% OMRON 45% ) on October 1, 2004
3
Executive
Summary
1. Executive Summary
4
Executive
Summary
Executive Summary
The year ending March 31, 2006 is the 2nd year of Stage II (Apr. 2004 to March 2008) of Grand Design 2010 (GD2010)
“Achieving a robust profit structure” as a milestone toward the achievement of Stage II targets
Results for FY2005
Nearly achieved the original sales and income target, which grew for 4 consecutive years.
Set new records for sales and income.
Consolidated
Result
vs. same period in prev. year vs. original target
103.0%
Net sales
¥626.8 billion
100.3%
110.7%
Operating income
¥62.1 billion
95.6% (Operating margin 9.9%)
122.5%
NIBT
¥64.4 billion
102.1% ( NIBT margin
10.3%)
118.5%
5.7%)
Net income
¥35.8 billion
99.3% ( NI margin
(1) Net sales:
Largely as planned. 3.0% increase over previous year due to strong performance by Industrial Automation
Business (IAB), Automotive Electronic Components Business (AEC) and Healthcare Business (HCB)
(2) Operating income:
Product mix was the main factor of 4.4% decrease against the original target (Refer to P.12)
10.7% increase over previous year due to return of substitutional portion of pension fund (Refer to P.11)
(3) NIBT:
22.5% increase over previous year due to gain on sales of marketable securities
(4) Business summary:
Sales were strong except for Electronic Components Business (ECB). For Operating income, ECB
and AEC faced difficult conditions
Plan for FY2006 and Key Points
Focus on investment for income growth to achieve March 2008 income forecast while aiming growth in sales
and income for the 5th consecutive year.
Consolidated
Net sales
Operating income
NIBT
Net income
Year ending March 31, 2007
vs. same period in prev. year
¥700.0 billion
111.7%
101.4% (Operating margin 9.0%)
¥63.0 billion
¥65.0 billion
101.0% (NIBT margin
9.3%)
104.9% (NI margin
¥37.5 billion
5.4%)
*Assumption: The PL influence of the announced two M&A are not included.
Progress of Mid-term Management Plan
Total business value at the end of March 2006 was approx. ¥940b under Omron’s preliminary calculation.
This amount is on track for the target of the end of March, 2008.
5
Executive
Summary
Summary of Consolidated Net Sales and
Operating Income
Expect to achieve a growth in sales and income for the 5th consecutive year and break the sales and profit record
(billion yen)
FY2001
Net Sales
Gross Profit
Operating income
Operating income margin
Net income
EPS(Yen)
534.0
180.5
4.2
0.8%
-15.8
- 6 3 .5
<Currency Rate>
USD
EUR
800
FY2002
FY2003
535.1
207.7
32.3
6.0%
0.5
2.07
584.9
240.1
51.4
8.8%
26.8
110.66
FY2004
FY2005
608.6
249.8
56.1
9.2%
30.2
126.52
FY2006(F)
626.8
253.4
62.1
9.9%
35.8
151.14
700.0
282.0
63.0
9.0%
37.5
159.95
(yen)
125.7
110.9
Net Sales
122.1
121.1
(billion yen)
113.4
132.4
107.3
135.0
Operating income
80
113.4
138.2
(billion yen)
110.0
135.0
12.0%
10.0%
600
60
400
40
8.0%
6.0%
4.0%
200
20
0
0
FY2001 FY2002 FY2003
FY2004 FY2005 FY2006(F)
2.0%
0.0%
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006(F)
6
Results for the FY
Ended March 31, 2006
2. Results for the Fiscal Year
Ended March 31, 2006
7
Results for the FY
Ended March 31, 2006
Consolidated Income Statements
Net Sales ¥626.8B，
，Operating margin 9.9%
Net Sales matched the original target.
Operating income was higher than the previous year, but below the original target.
NIBT exceeded against both previous year and original target.
(billion yen)
Income Statement
FY2004
FY2005
YoY Change
(1)
(2)
％ (2)/(1)
FY2005
Original
target
(3)
Change from
Original
target
％
Net Sales
608.6
626.8
103.0%
625.0
100.3%
Gross Profit
249.8
253.4
101.4%
256.0
99.0%
SG&A expense
144.2
152.7
105.9%
150.0
101.8%
49.4
50.5
102.1%
50.0
101.0%
＊
-
11.9
-
9.0
132.3%
Operating income
NIBT
Net income
56.1
52.5
30.2
62.1
64.4
35.8
110.7%
122.5%
118.5%
65.0
63.0
36.0
95.6%
102.1%
99.3%
R&D expense
'Daikohenjyo'
Currency Rate
(yen)
USD
107.3
113.4
+6.1
100.0
+13.4
EUR
135.0
138.2
+3.2
130.0
+8.2
＊ ' Daikohenjyo' : Return of substitutional portion of pension fund
8
Results for the FY
Ended March 31, 2006
Breakdown of Consolidated Sales
by Region and Business
Sales results were as planned in Japan and overseas
Strong sales by each segment except for ECB
(billion yen)
FY2004
FY2005
(1)
(2)
YoY change
FY2005
Original
target
Change from
Original
target
By Region
366.1
242.5
608.6
Japan
Overseas**
Total
354.9
271.9
626.8
(2)/(1)
96.9%
112.1%
103.0%
(3)
358.0
267.0
625.0
(2)/(3)
99.1%
101.9%
100.3%
Original
target(3)
267.5
114.0
72.0
91.0
54.0
26.5
625.0
(2)/(3)
101.9%
85.7%
107.8%
100.9%
113.1%
97.9%
100.3%
**Overseas includes direct exports
By Business
(1)
IAB
ECB
AEC
SSB
HCB
Ohters
Total
(2)
250.3
101.1
64.6
115.2
50.6
26.8
608.6
272.7
97.7
77.6
91.8
61.1
25.9
626.8
(2)/(1)
108.9%
96.6%
120.2%
79.7%
120.8%
96.9%
103.0%
9
Results for the FY
Ended March 31, 2006
Breakdown of Operating Income
By Business
Operating income were as planned for IAB, but ECB faced difficult
conditions, AEC was negative due to increasing cost for production
process improvement in North America
FY2004
FY2005
(1)
(2)
YoY Change
FY2005
Original
target
(billion yen)
Change from
Original
target
By Business
IAB
ECB
AEC
SSB
HCB
Others
HQ Cost/Elimination
'Daikohenjyo'
Total
41.4
16.1
-0.9
6.4
7.6
3.8
-18.4
－
56.1
41.9
11.2
-2.0
4.4
8.7
1.7
-15.7
11.9
62.1
(2)/(1)
101.2%
69.7%
68.9%
113.5%
44.0%
85.6%
－
110.7%
(3)
42.0
16.0
2.5
3.0
8.5
2.0
-18.0
9.0
65.0
(2)/(3)
99.8%
69.9%
147.8%
101.8%
83.6%
87.3%
132.2%
95.6%
10
Results for the FY
Ended March 31, 2006
Breakdown of Changes in Operating Income
(comparison to previous year)
Operating income
income increased
increased from
from previous
previous year
year due
due to
to the
the return
return of
of substitutional
substitutional portion
portion
Operating
of pension
pension fund
fund despite
despite of
of investments
investments for
for growth
growth and
and large
large increase
increase in
in SG&A
SG&A and
and R&D
R&D
of
expenses for
for growth
growth and
and response
response to
to hazardous
hazardous chemical
chemical substance
substance regulations
regulations
expenses
＋4.6
Exchange
profit
(transfer of ATM business)
Operating income
-5.8
（billion yen）
）
（excluding ATM Business)
Product mix
Substitutional
potion of
pension fund
-11.2
+14.0
-4.0
+11.9
Increase in SG&A
expenses
Sales increase
(excluding ATM
Business and
exchange profit)
-3.5
Increase in
R&D expenses
62.1
56.1
Change in gross profit
+12.8b
Change in SG&A expenses
and R&D expenses -14.7b
Change in operating income
+6.0b
FY2004
FY2005
11
Results for the FY
Ended March 31, 2006
Breakdown of Changes in Operating Income
(comparison to original target)
Operating income
income fell
fell below
below original
original target
target as
as return
return of
of substitutional
substitutional portion
portion
Operating
did not
not cover
cover lower
lower gross
gross profit
profit due
due to
to decreased
decreased sales
sales and
and price
price reductions
reductions
did
Exchange
profit
-3.0
-9.3
（billion yen）
）
Product mix Increase in
SG&A
expenses
-2.7
+9.7
Increase in
R&D
expenses
-0.5
Substitutional
potion of
pension
+2.9
Sales decrease
(excluding
exchange profit)
65.0
62.1
Change in gross profit
-2.6b
Change in SG&A expenses
and R&D expenses
-3.2b
Change in operating income
-2.9b
FY2005 Original target
FY2005 Results
12
Segment Information
IAB (Industrial Automation Business)
Results for the FY
Ended March 31, 2006
Manufacturing and sales of control systems and equipment for factory
automation and production machinery
Smart Sensor
Sensing Devices (Photoelectric/Proximity Sensors, AOI, etc.)
Control Devices (Programmable Logic Controllers, Relays, Timers, etc.)
Safety Devices (Safety sensors, Safety switches, etc.)
Sales: ¥272.7b
¥272.7b ;; Operating
Operating margin
margin 15.4%
15.4%
Sales:
Japan was
was as
as original
original budget,
budget, U.S.
U.S. remained
remained strong,
strong,
Japan
Greater China
China isis on
on aa gradual
gradual recovery
recovery trend
trend
Greater
Programmable Logic
Controller
(billion yen)
IAB
Japan
Overseas
North America
Europe
Asia
China
Exports
Total
Operating income
FY2004
FY2005
(1)
(2)
YoY Change
130.2
120.1
20.3
65.6
10.4
19.5
4.3
250.3
136.2
136.5
25.4
69.6
12.7
24.0
4.8
272.7
(2)/(1)
104.6%
113.6%
125.0%
106.1%
122.3%
122.9%
112.1%
108.9%
41.4
41.9
101.2%
FY2005
Original
target
(3)
Change from
Original
target
135.5
132.0
21.1
70.3
11.5
24.8
4.3
267.5
(2)/(3)
100.5%
103.4%
120.4%
99.0%
110.4%
96.6%
112.5%
101.9%
42.0
99.8%
AOI
(Automated Optical
Inspection System)
13
Segment Information
ECB (Electronic Components Business)
Results for the FY
Ended March 31, 2006
Manufacturing and sales of electronic components for home appliances,
communications, mobile phones, amusement components, OA
Connector
Relays, Switches, Connectors, Sensors, Micro Lens Arrays, Customized ICs, IC Coins,
Optical Communications Devices, etc.
Sales: ¥97.7b
¥97.7b ;; Operating
Operating margin
margin :: 11.5%
11.5%
Sales:
LCD Backlight
Backlight and
and Amusement
Amusement business
business faced
faced difficult
difficult
LCD
conditions, overseas
overseas sales
sales was
was not
not achieved
achieved vs.
vs. original
original budget
budget also
also
conditions,
Relay
(billion yen)
ECB
Japan
Overseas
North America
Europe
Asia
China
Exports
Total
Operating income
FY2004
FY2005
(1)
(2)
YoY Change
51.8
49.3
9.5
12.0
5.6
11.6
10.7
101.1
45.0
52.7
9.9
12.5
6.3
14.5
9.5
97.7
(2)/(1)
86.9%
106.7%
104.3%
104.5%
112.3%
125.7%
88.1%
96.6%
16.1
11.2
69.7%
FY2005
Original
target
(3)
Change from
Original
target
55.0
59.0
10.1
13.3
6.4
18.5
10.7
114.0
(2)/(3)
81.9%
89.3%
98.0%
94.1%
98.0%
78.5%
88.5%
85.7%
16.0
69.9%
B-MLA
14
Results for the FY
Ended March 31, 2006
Segment Information
AEC (Automotive Electronic Components Business)
Automotive Relay
Manufacturing and sales of automotive electronic components
Automotive Relays, Sensors, Laser Radars, Power Window Switches,
Keyless Entry Systems, ECU, etc.
Sales :: ¥77.6b
¥77.6b ;; 20%
20% increase
increase YoY
YoY Change,
Change, but
but
Sales
Operating income
income was
was negative
negative due
due to
to increasing
increasing cost
cost for
for
Operating
production process
process improvement
improvement in
in North
North America
America
production
Switch for Power Windows
(billion yen)
AEC
FY2004
FY2005
(1)
(2)
FY2005
Original
target
YoY Change
Japan
Overseas
North America
Europe
Asia
China
Exports
Total
26.0
38.6
21.0
5.4
11.9
0.0
0.3
64.6
27.2
50.4
28.8
6.2
15.1
0.1
0.0
77.6
(2)/(1)
104.8%
130.6%
136.9%
115.7%
127.6%
15.7%
120.2%
Operating income
-0.9
-2.0
-
(3)
Change from
Original
target
28.0
44.0
24.4
6.4
13.1
0.1
0.0
72.0
(2)/(3)
97.3%
114.4%
118.1%
97.4%
115.5%
132.0%
107.8%
2.5
-
Automotive Laser Radar
15
Segment Information
SSB (Social Systems Business) *
Results for the FY
Ended March 31, 2006
Manufacturing and sales of equipment/modules, and provision of
solutions and services in the fields of public transportation
and traffic/road management
Automated Passenger Gates
Public Transportation : Passenger Gates, Ticket Vending machines, etc.
Traffic/Road Management, Signal Controllers, Road Management Systems, etc.
Sales :: ¥91.8b
¥91.8b ;; Operating
Operating margin
margin :: 4.8%
4.8%
Sales
Both sales
sales and
and operating
operating income
income exceeded
exceeded original
original target
target
Both
Ticket Vending Machine
(billion yen)
SSB
Japan
Overseas
North America
Europe
Asia
China
Exports
Total
FY2004
FY2005
(1)
(2)
108.6
6.6
0.2
0.4
0.0
0.0
6.0
115.2
90.5
1.3
0.2
0.0
0.0
0.0
1.1
91.8
YoY Change
(2)/(1)
83.3%
20.3%
96.4%
0.0%
19.1%
79.7%
FY2005
Original
target
(3)
Operating income
6.4
4.4
68.9%
*Results for the year ended 3/2005 include an actual performance of the ATM business.
Change from
Original
target
88.0
3.0
0.9
0.0
0.0
0.0
2.1
91.0
(2)/(3)
102.8%
44.5%
20.6%
54.4%
100.9%
3.0
147.8%
Traffic/Road
Management System
16
Segment Information
HCB (Healthcare Business)
Results for the FY
Ended March 31, 2006
Manufacturing and sales of home and professional healthcare
equipment
Blood Pressure Monitor
Digital Blood Pressure Monitors, Digital Thermometers, Pedometers, Body Composition
Analyzers (Body-fat Analyzers), Electronic Pulse Massagers, Massage Chairs, etc.
Sales :: ¥61.1b
¥61.1b ;; Operating
Operating margin
margin :: 14.2%
14.2%
Sales
Main factor
factor increasing
increasing sales
sales isis merger
merger of
of
Main
CMT(COLIN Medical
Medical Technologies)
Technologies) **
CMT(COLIN
Body Composition Analyzer
(billion yen)
HCB
Japan
Overseas
North America
Europe
Asia
China
Exports
Total
Operating income
FY2004
FY2005
(1)
(2)
YoY Change
23.1
27.5
14.6
8.9
1.4
2.6
0.1
50.6
30.3
30.8
15.4
10.6
1.6
2.9
0.2
61.1
(2)/(1)
131.6%
111.7%
105.6%
119.4%
116.3%
114.1%
180.8%
120.8%
7.6
8.7
113.5%
FY2005
Original
target
(3)
Change from
Original
target
25.0
29.0
15.0
8.9
1.5
3.3
0.3
54.0
(2)/(3)
121.3%
106.1%
102.7%
118.9%
108.7%
88.1%
78.3%
113.1%
8.5
101.8%
*Results for the year ended 3/2006 include an actual performance of the CMT (9 months July, 2005 – March, 2006).
Portable ECG
17
Results for the FY
Ended March 31, 2006
Consolidated Balance Sheet
Duetotoreturn
returnofofsubstitutional
substitutionalportion,
portion,other
otherliabilities
liabilities(including
(includingtermination
terminationand
andretirement
retirement
Due
benefit)substantially
substantiallydecreased
decreasedand
andshareholders’
shareholders’equity
equityincreased.
increased.
benefit)
Shareholders’equity
equityratio
ratioincreased
increasedfrom
from52.2%
52.2%at
atprevious
previousyear-end
year-endto
to61.6%
61.6%
Shareholders’
(billion yen)
Consolidated B/S
Total Assets
Cash and cash equivalents
Notes and accounts receivable - trade
Inventories
Other current assets
Other assets
Total Lliabilities
Short-term debt
Long-term debt
Other liabilities
Shareholders' Equity
As of
3/31/2004
592.3
95.1
122.1
70.3
28.8
276.0
317.6
45.5
11.2
260.9
274.7
As of
3/31/2005
585.4
80.6
121.7
68.6
25.0
289.5
279.6
22.9
1.8
254.9
305.8
As of
3/31/2006
589.1
52.3
136.3
75.0
28.8
296.7
226.2
2.8
1.0
222.4
362.9
18
Results for the FY
Ended March 31, 2006
Consolidated Statements of Cash Flows
Netcash
cashused
usedin
ininvesting
investingactivities
activitiesincreased
increased¥6.9b
¥6.9bfrom
fromthe
theprevious
previous
Net
fiscalyear
yeardue
dueto
toinvestments
investmentsfor
forthe
thefuture
futureand
andbusiness
businessacquisitions
acquisitions
fiscal
(billion yen)
As of
3/31/2004
Net cash provided by operating activities
As of
3/31/2005
As of
3/31/2006
80.7
61.1
51.7
-34.5
-36.1
-43.0
46.2
25.0
8.7
-28.1
-40.7
-38.3
Effect of exchange rate changes
-2.9
1.2
1.3
Net increase (decrease)
15.1
-14.4
-28.3
Cash and cash equivalents at end of the period
95.1
80.6
52.3
Net cash used in investing activities
Free cash flow
Net cash used in financing activities
19
Business Plan for Year
Ending March 31, 2007
3. Business Plan for the year Ending
March 31, 2007
20
Business Plan for Year
Ending March 31, 2007
Fiscal Year 2006
Management Policy
FY 2006 Policy
“Accelerated Growth with an Upswing in Income:”
Closing in on March 2008 growth target ahead of schedule
Basic stance
● Year ending March 2007 is final milestone toward achieving 2nd phase
objectives of Grand design 2010 (GD2010)*
*
● Steadily make necessary investments to achieve GD2010 objectives,
premised on absorbing impact of gain on return of substitutional
portion of pension fund and securing increased income
Results scenario for March 2008 : Net sales ¥750 b or more; Operating income ¥75b or more
*Grand Design 2010 (GD2010) : Long-term management vision for the 10 years from April 2001 to March 2011
21
Business Plan for Year
Ending March 31, 2007
Milestones for GD2010 2nd stage
Slight slowdown in operating income growth due to continuation of investments for
growth, including one-time expenses of structural reforms, heading toward
the final year of the 2nd phase of GD2010
Operating income
Scenario for
ＧＤ２０１０
ＧＤ２０１０ 2nd stage
75.0
(billion yen)
Approx.
5.0
Steadily make necessary investments
to achieve objectives!
63.0
62.1
56.1
51.4
Investment for growth to achieve the scenario of GD2010 2nd stage
(1) Infrastructure maintenance for growth since GD2010 3rd stage
-HCB: Cost for integration with CMT, etc.
(2)One-time costs including structural reforms (production, etc.)
-Production structural reforms and base maintenance, etc. for
IAB and others
FY2003
FY2004
FY2005
FY2006
FY2007
(Result)
(Result)
(Result)
(Forecast)
(Scenario)
22
Business Plan for Year
Ending March 31, 2007
Operating Environment Assumption
Operating Environment
IAB
・No major change in auto industry’s desire to invest. Continued expectation of aggressive investment by
IT-related industries
・Increased investment to upgrade existing facilities. Growth expected due to quality, safety and
environment-related issues.
ECB
・Industrial components sector firm overall, with growth expected for flat-screen TVs in consumer and
commerce sector
・Communications strong in Europe and U. S. , mobile phone-related growth in Chinese market, market
stimulation in Japan with terrestrial digital TV, etc.
AEC
SSB
・Global trend toward increase of production quantity and electronics content ratio in automobiles
・Expected growth of module business with safety, reliability as keywords
・Sales growth forecast for public transportation business with full-scale standardization of IC cards in
Kanto area in Japan
・Expected expansion in new business fields such as security
・Substantial growth expected for blood pressure monitors in Japan, Europe and China
HCB
・Substantial growth expected from body composition analyzers, growth expected for new categories
(Portable ECG, etc.)
23
Business Plan for Year
Ending March 31, 2007
Forecast of Consolidated
Statements of Operations
Aiming to set new records for net sales and income with fifth consecutive annual increase in
sales and income, focusing investment on growth to achieve March 2008 income forecast
(billion yen)
Assumption: The PL influence of two M&A matters already announced isn’t included
FY2004
Net sales
Gross profit
SG&A
R&D
'Daikohenjyo'
Operating income
Non-operating profit and loss
NIBT
NIAT
ROE
<Currency Rate>
USD
EUR
FY2005
56.1
3.6
52.5
30.2
626.8
253.4
152.7
50.5
11.9
62.1
-2.2
64.4
35.8
FY2006
Forecast
700.0
282.0
163.5
55.5
-63.0
＊
-2.0
65.0
37.5
YoY Change
%
111.7%
111.3%
107.1%
109.9%
-101.4%
90.9%
101.0%
104.9%
10.4%
10.7%
11.0%
+0.3
107.3
135.0
113.4
138.2
110.0
135.0
-3.4
-3.2
608.6
249.8
144.2
49.4
--
*Non-operating profit and loss: Including profit and loss as follows
(1) Profit from establishing securities-based employee retirement benefit trust (¥10.1b) -> Refer to next page
(2) Cost from transferring capital asset of Tokyo headquarters and sales office
24
Business Plan for Year
Ending March 31, 2007
Projected Changes in
Consolidated Balance Sheets
Take investment securities off balance sheet with establishment of retirement benefit trust.
Improve balance sheet by reducing total group assets and reduce pension funding shortfall
Investment
Securities
TO <after establishment>
Liabilities
Liabilities
Total Assets
Total Assets
Consolidated B/S of OMRON
FROM <before establishment>
Shareholders’
equity
¥16.0b Contribution
Assets
Assets
Accrued retirement benefit
Accrued
retirement benefit
¥67.0b
B/S of Pension Fund
Savings shortage
¥65.2b
Unrecognized
debt
Accrued
retirement benefit
¥62.7b
Assets
of Pension Fund
¥89.3b
Shareholders’
equity
¥51.0b
Reduction
圧縮
-¥4.3b(*)
-¥4.3b(*)
Unrecognized
debt
Savings shortage
¥49.2b
Accrued retirement benefit
¥46.7b
Projected
Benefit Obligation
¥154.5b
(*) Excluding the influence of consolidated subsidiaries which are unjoining the pension system
Retirement
benefit trust
¥16.0b
Assets
of Pension Fund
¥89.3b
Projected
Benefit Obligation
¥154.5b
25
Business Plan for Year
Ending March 31, 2007
Forecast for Capital Expenditures
and Depreciation
Strengthening of core businesses including IAB.
Aggressive investment in ECB, which has many growth areas
(billion yen)
FY2004
IAB
ECB
AEC
SSB
HCB
FY2005
FY2006
8.8
9.1
7.6
4.1
2.1
5.8
10.2
7.2
11.9
4.3
1.5
6.0
11.0
12.0
9.0
4.0
2.0
7.0
Total capital
expenditures
37.4
41.1
45.0
Depreciation
28.6
30.8
33.0
Other
26
Business Plan for Year
Ending March 31, 2007
Sales Forecast by Region and Business
Growth rate 112% (106% in Japan; 119% overseas)
By segment, ECB and AEC expected to grow more than 10%
(billion yen)
FY2004
By Region
Japan
Overseas**
Total
FY2005
366.1
242.5
608.6
354.9
271.9
626.8
FY2006
Forecast
376.5
323.5
700.0
FY2004
250.3
101.1
64.6
115.2
50.6
26.8
608.6
FY2005
272.7
97.7
77.6
91.8
61.1
25.9
626.8
FY2006
298.0
121.5
91.0
99.0
66.5
24.0
700.0
YOY Change
%
106.1%
119.0%
111.7%
%
109.3%
124.4%
117.3%
107.8%
108.9%
92.5%
111.7%
**Overseas includes direct exports
By Business
IAB
ECB
AEC
SSB
HCB
Others
Total
27
Business Plan for Year
Ending March 31, 2007
Consolidated Operating Income Forecast
(by Business)
IAB to remain strong, earnings of ECB and AEC to recover
Aim to set new record
(billion yen)
FY2004
By Business
IAB
ECB
AEC
SSB
HCB
Others
HQ Cost/Eliminations
'Daikohenjyo'
Total
41.4
16.1
-0.9
6.4
7.6
3.8
-18.4
-56.1
FY2005
41.9
11.2
-2.0
4.4
8.7
1.7
-15.7
11.9
62.1
FY2006
YoY Change
Forecast
%
48.0
114.5%
14.5
129.6%
3.0
6.0
135.3%
8.5
98.2%
0.5
29.9%
-17.5
111.4%
--63.0
101.4%
28
Business Plan for Year
Ending March 31, 2007
Breakdown of Increase in Operating Income
(by Business)
Aggressive sales forecast for each segment.
Within range of March 2008 target of ¥750b
(billion yen)
SSB
+8%
The PL influence of M&A in FY2006
isn’t included
AEC
+17%
ECB
+24%
IAB
+9%
HCB
+9%
+5.4
Other
-1.9
+7.2
+13.4
+23.8
750.0
+12%
700.0
+25.3
～
～
626.8
～
～
FY2005
+73.2
FY2006
29
Business Plan for Year
Ending March 31, 2007
Sales growth by Business
By Business
IAB
ECB
AEC
SSB
HCB
・Strengthen proposal-based sales capability. Particular focus on AOI (Automated Optical Inspection),
safety components and application sensor businesses. By region, full-fledged growth expected in China.
・Focus on large-scale and small-scale backlight business, where strong growth is expected
・Expansion of Amusement’s systems and components business expected.
・Focus on products in new fields from the standpoint of safety. Expected growth of components in favorable
operating environment.
・Expected sales growth in China, where new production bases have been established.
・In station management field, peak year of shift to IC cards in Kanto. Sales increase forecast from
renewal/conversion of equipment, change of software.
・Focus on businesses in the new field of security.
・Focus on high blood pressure and obesity prevention and treatment business under mission of prevention
and early detection of lifestyle-related diseases.
・By area, focus on China and Russia. Substantial growth expected of blood pressure monitors in Japan,
Europe, China.
30
Business Plan for Year
Ending March 31, 2007
Breakdown of Increase in Operating Income
(by Business)
Substantial income growth for IAB, ECB and AEC.
Investment for achievement of March 2008 and securing profit increase
(billion yen)
The PL influence of M&A in FY2006
isn’t included
-0.2
+1.6
HCB
SSB -2%
AEC +35%
Net sales
750.0
Other
-70%
-1.2
HQ/Eliminations
-1.8
+5.0
+3.3
Net sales
626.8
+6.1
IAB
+15%
ECB
+30%
'Daikohenjyo' Net sales
700.0
-11.9
(Surplus)
75.0
63.0
62.1
Operating income
+0.9b
FY2005
FY2006
Operating
income
+12.0
FY2007
31
Business Plan for Year
Ending March 31, 2007
Breakdown of Increase in Operating Income
(by Item)
Large increase in SG&A and R&D expenses
due to aggressive investment for growth.
Added value increase
by sales increase
'Daikohenjyo'Added value
ratio decrease
-11.9
(billion yen)
-10.4
+41.8
Investment for growth to achieve the scenario of GD2010 2nd stage
(1) Infrastructure maintenance for growth since GD2010 3rd stage
-HCB: Cost for integration with CMT, etc.
(2)One-time costs of structural reforms (production, etc.)
-Production structural reforms and base maintenance, etc. for
IAB and others
Manufacturing fixed costs
increase
SG&A expenses
-2.7
increase
-7.0
R&D expenses
increase
investment
-3.4
for growth
Net Sales
626.8
Net Sales
700.0
-5.4
75.0
*Deduction investment for growth
from P/L numbers
63.0
62.1
～
～
Net Sales
750.0
～
～
FY2005
～
～
～
～
FY2006
FY2007
32
Business Plan for Year
Ending March 31, 2007
Aggressive Investment for Growth
(by Business)
By Business
IAB
・One-time expenses of structural reform (production consolidation), establishment of Global Service Center, etc.
・Investment in “growth” businesses (PLC, AOI, safety components, etc.)
・Expansion of China business and Connector business, etc .
ECB
・Development of connectors, optical communication devices, relays, backlights, etc.
AEC
・Strengthening development of “growth” products (laser radar devices, electric power steering controllers, etc.)
(Top priority on earnings recovery, centered on improved earnings at North American production bases)
SSB
HCB
・One-time costs of fixed-expense structural reform (employee reassignment)
(Top priority on earnings improvement)
・New category market introduction expenses, development cost etc.
・Marketing and infrastructure expenses, etc., for “growth” categories
33
Forecast of ECB Sales Growth
and Operating Income
Business Plan for Year
Ending March 31, 2007
Recovery of backlight and amusement businesses
Sales growth
approx.
+10.0
approx.
+5.0
approx.
+3.5
approx.
+5.0
(billion yen)
Amusement
Components for
mobile phones, etc.
Backlights
97.7
Electronic
components
FY2005
FY2006
Positively execute investment for growth
Factor of operating income growth
Added value increase
by sales increase
(1) Chinese business expansion
Added value
ratio decrease
(2)Development of Optical communication
devices, connector, etc.
Manufacturing fixed costs
increase
+14.2
-6.0
11.2
FY2005
121.5
-2.5
SG&A expenses
increase
-1.7
R&D expenses
increase
-0.7
Change in operating income +3.3
14.5
FY2006
34
Forecast of AEC Sales Growth
and Operating Income
Business Plan for Year
Ending March 31, 2007
Strengthening of North American production base
Sales growth
+7.7
-0.2
Japan
77.6
+4.2
+0.9
+0.8
Asia
China
Europe
(billion yen)
91.0
North
America
FY2005
FY2006
Measure of profit improvement
(1)Decrease of loss at North American production bases
(2)Sharing development and parts
(3)Business process improvement
Factor of operating income growth
Added value increase
by sales increase
Added value
ratio increase
+0.8
Manufacturing fixed costs
increase
SG&A expenses
R&D expenses
increase
increase
-1.0
+6.8
-0.6
-1.0
Change in operating income +5.0
3.0
-2.0
FY2005
FY2006
35
Progress of Key Strategic Themes
(1)Sales Growth in New Tech Fields
Business Plan for Year
Ending March 31, 2007
Raised March 2008 target to ¥82.0b from initial ¥68.0b.
Aiming for 166% growth, which is ¥56.9b in March 2007.
GD2010 2nd stage
Target
82.0b
(billion yen)
90.0
80.0
70.0
Products in New Tech Fields
IAB: Automated Optical Inspection Systems, etc.
ECB: Back Light for LCD, etc.
ECB: MEMS Sensors, etc.
AEC: Laser radars for automobiles, etc.
144%
56.9b
60.0
166%
50.0
119%
40.0
160% 28.8b
30.0
20.0
34.3b
18.0b
10.0
0.0
FY2003
FY2004
FY2005
FY2006
FY2007
36
Progress of Key Strategic Themes
(2)Sales Growth in Greater China
Business Plan for Year
Ending March 31, 2007
FY07 target of 1,330mUSD incl. M&A unchanged
(million USD)
1,400
1330
1,200
1,000
800
Over
¥100b
(=USD 1b)
increase
676
＋65％
％
600
411
400
200
325
201
±0% 412
+27%-
246
+32%
+22%
FY01
FY02
(Actual) (Actual)
FY03
(Actual)
FY04
(Actual)
FY05
(Actual)
FY06
(Forecast)
FY07
(Target)
37
Progress of Key Strategic Themes
(3)Global Production Reform
Business Plan for Year
Ending March 31, 2007
Ongoing shift of production to Greater China to achieve targeted 15% manufacturing fixed expense ratio
Greater China production ratio continued to increase in FY2006; will reach about 30% in FY2007
Reform in Global Production Structure
(billion yen)
Production in Greater
China to increase by 4.5
times
400.0
30%
300.0
11%
9%
200.0
100.0
20%
12%
21%
23%
19%
71%
67%
65%
51%
0
FY2003
(Actual)
FY2004
(Actual)
Japan
FY2005
(Actual)
Overseas Production
(Excluding China Area)
FY2006
(Forecast)
FY2007
(Estimate)
China Area Production
38
Business Plan for Year
Ending March 31, 2007
Progress of Key Strategic Themes
(4)SG&A Expenses Reform
Continuously control
control SG&A
SG&A costs
costs at
at offices
offices and
and headquarters
headquarters
Continuously
to achieve
achieve the
the target
target of
of 22%
22% SG&A
SG&A expense
expense ratio
ratio
to
Target 28% sales growth planned
¥700.0b
¥750.0b
¥626.8b
¥608.6b
Net Sales
Increase of SG&A expenses
controlled to 16%
SG&A
Expenses
24.1％
％
FY2004
(Actual)
＊
23.8％
％
FY2005
(Actual)
＊
23.4％
％
22.0％
％
FY2006
(Forecast)
FY2007
(Target)
•Excluding extraordinary factors of ATM business and response to hazardous chemical substance regulations in FY2004
•Excluding extraordinary factor of response to hazardous chemical substance regulations in FY2005
39
Business Plan for Year
Ending March 31, 2007
Progress of Medium-Term Plan
“Double the Total Business Value”
Grand Design target in Business value (internal calculation) will be within reach
with the result of March 31, 2007
1,200.0b
(billion yen)
1,110.0b
1,200.0
850.0b
1,000.0
940.0b
240.0
250.0
210.0
800.0
600.0b
130.0
New Tech Fields
600.0
400.0
Existing Businesses
600.0
720.0
730.0
870.0
950.0
200.0
0
FY2003
(Actual)
FY2004
(Actual)
FY2005
(Actual)
FY2006
(Forecast)
FY2007
(Target)
40
4. Basic Policy on Distribution of Profits
41
Basic Policy on Distribution of Profits
Omron will
will increase
increase cash
cash dividends
dividends for
for FY
FY 2005
2005 to
to 30
30 yen
yen per
per share.
share.
Omron
Expect to
to keep
keep cash
cash dividends
dividends at
at 30
30 yen
yen per
per share
share in
in FY
FY 2006.
2006.
Expect
<Basic Policy on Distribution of Profits>
1. Place top priority internal funds for growth investments to raise corporate value
2. Return surplus earnings to shareholders as much as possible after considering the free cash
flow level
3. Target payout ratio of approx. 20% of consolidated net income for annual dividends; however,
in the event of a downturn in results, maintain a stable, long-term annual dividend of ¥10
4. Over the long-term, use retained earnings to flexibly provide returns to shareholders, including
share repurchases
Cash Generation
Free cash flow
Debt reduction
Cash into Stock
Capital with clear applications
(Capital expenditures, acquisitions, working capital, etc.)
Internal funds
Dividends
配当金
(approx.
(配当性向
配当性向20%前後
20% payout
前後)
ratio)
配当性向
前後
Retained earnings
Share repurchases
42