Segment Information Automotive Electronic Components Business (AEC) Ratio of Total Sales Market Share (FY2014) (FY2014) Development, manufacture, and sales of on-board automobile electronic components Body Control Units for Miniature Vehicles (Japan) 16% Approx. 50% Source: Internal survey Fiscal 2014 in Review Strong earnings in North America; growth in China / Asia despite economic slowdown Revenues in Japan were down year on year, mainly due to higher consumption taxes and slow demand among certain customers. Overseas, favorable exchange rates contributed to sharply higher earnings compared to the prior fiscal year. A strong U.S. economy drove revenues in North America, while a more gradual recovery in Europe still supported revenue growth in that region. We found revenue gains in China and the nations of Asia, pushed by slightly weaker —but still positive— economic growth. Revenue growth and the weakness of the yen were two major factors contributing to significant operating income gains overseas. Fiscal 2015 Forecast and Strategies Focus on North America and emerging economies; new business projects for greater growth We have set a target of ¥140 billion for fiscal 2015 net sales (1.5% year-on-year growth), with operating income scheduled to reach ¥9.3 billion (0.8% growth). We expect domestic revenues to decline, mainly due to bearish automobile demand. Looking overseas, we forecast overall growth, supported by strong North American markets. At the same time, it is difficult to predict the direction of the economies of China and other Asian nations with any certainty. To drive growth under the EARTH-2 STAGE (FY2017-2020) plan, we will focus on developing products that solve new needs arising in our car society. We will also look beyond products that answer the stated needs of our clients, actively seeking answers to future car society issues. We intend to answer the challenges presented by s long-term vision (VG2020), the goals set in Omron’ winning new projects and building a foundation for a new stage of growth. ■ Earnings and Projections ■ Worldwide Automobile (Billions of yen) FY2011 FY2013 FY2014 FY2015 (Forecast)* Net sales 85.0 97.6 126.6 137.9 140.0 Japan 28.9 30.2 28.4 25.9 20.0 Overseas 56.1 67.4 98.2 112.0 120.0 21.5 25.0 33.3 39.3 42.5 2.4 2.8 3.3 3.6 4.0 Americas Europe 16.2 19.5 29.2 32.2 34.0 Greater China 9.5 13.9 25.4 29.9 32.0 Direct Exports 6.5 6.2 7.2 7.1 7.5 2.7 5.0 9.1 9.2 9.3 3.2% 5.1% 7.2% 6.7% 6.6% R&D expenses 6.6 7.0 8.2 8.5 Depreciation and amortization 2.1 2.4 3.4 4.7 Asia Pacific Operating income Operating income margin Capital expenditures * See notes on P. 43. 48 FY2012 OMRON Corporation 5.2 5.5 6.7 6.5 Production (Millions of units) 30 China 25 Europe 20 North America 15 Asia 10 Japan Korea South America Other 5 0 (FY) 14 15* 16* 17* 18* * Forecast (as of May 2015) Source: IHS Automotive We expect notable growth in China. 19* 20* Stable growth in automobile demand; higher installation rates of electronic automotive components in emerging markets ● Increase in electronic automotive components for safety and environmental impact reduction ● Market Growth Drivers Strengths ● % to 10% 5Fuel efficiency gains A more environmentally responsible car society Idle-off for better fuel efficiency from idle-off technology Other (Passive Entry/Push-Button Engine Start Systems, Keyless Entry Systems, etc.) Financial Section 52% 23% Switches (Power Window Switches, Power Seat Switches, etc.) Corporate Value Foundation ■ Sales by Product (Fiscal 2014) Corporate Value Initiatives Stricter CO2 laws and rising consumer awareness of their own carbon footprint have driven improvements in automobile fuel efficiency. One example is the popular idle-off function that has become a more visible feature over the past few years. This function reduces the use of fuel when a driver stops their car, leading to expected fuel efficiency gains of 5% to 10%, depending on individual driving patterns. However, electric vehicles and hybrids can experience a dramatic drop in voltage once the car is restarted. This can interfere with car audio and other electrical systems. To solve this problem, we invented a compact, high-function DC/ DC converter that provides stable voltage when starting after idle-off. Our business also produces a number of other products that contribute to fuel efficiency and smaller carbon footprints, including electronic power steering controllers, fuel pump modules, high-output DC/DC converters for hybrid vehicles, and more. Where We’ re Headed We Solve Societal Issues About Omron Development and production delivering high-quality electronic components Relationships of trust with a wide range of customers as an independent supplier ● Ability to work closely with customers to plan and develop products that anticipate future car society needs ● Power Window Switches Electronic Power Steering Controllers 25% Motor Controllers (Electronic Power Steering Controllers, Power Sliding Door Controllers, etc.) Integrated Report 2015 49