PDF 2,978kb

Financial Results for the Fiscal Year
Ended March 31, 2009 (FY08)
April 28, 2009
1
Businesses and Major Products
•
•
•
•
Displacement and measurement sensing
Temperature control
Proximity/ photoelectric/ vision sensors,
Machine control
PLCs, temperature controllers,
Vision sensing
machine safeguarding equipment, inspection systems
Relays, switches, connectors,
LCD backlights,
amusement equipment parts,
mobile equipment parts,
optical communication devices
• Inter-vehicular distance sensing
• Radio wave sensing
IAB
• Flow sensing
• Sound sensing
• Optical control
Industrial Automation
Business
AEC
Automotive
Electronic
Components
Business
ECB
Electronic
Components
Business
Keyless entry systems,
power window switches,
automotive relays, laser radar, TPMS,
EPS (electronic power steering) devices
• Bio-information
sensing
• Behavior sensing
HCB
Health & Medical
Care
Business
SSB
• Human sensing
• Traffic sensing
• IC card technology
Social Systems
Business
Automated ticket gates and ticket vending
machines, road management systems,
security management systems, face
recognition systems
Home and professional-use
digital blood pressure monitors,
body composition analyzers,
thermometers, pedometers,
nebulizers,
cardiovascular screening
monitors, vital sign monitors
Sensing
&
Control
Consolidated subsidiaries
162
Affiliates accounted for by
the equity method
18
(as of Mar. 31, 2009)
(c) Copyright OMRON Corporation. All Rights Reserved.
●2
Contents
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 47
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 fund-raising
environment, (v) tie-ups or cooperative relationships with other companies, and (vi) movements in currency exchange rates
and stock markets.
(c) Copyright OMRON Corporation. All Rights Reserved.
●3
Executive Summary
FY08 Results
•
•
•
•
Sharp YoY drop in sales and operating income due to global economic downturn.
In particular, IAB, ECB and AEC saw dramatic sales plunge beginning in Q3 as production cuts and suspension/ delay
of capital investment by manufacturers (incl. automotive, semiconductor and electronic component industries)
became more apparent.
Emergency measures and structural reform introduced in Feb. 2009 following worsening of business environment.
As a part of the structural reform plan aimed at strengthening profit base, Omron accounted for the impairment of
goodwill and fixed assets.
Consolidated
Net sales
Operating income
NIBT
Net income
Actual
¥627.2 bn
¥5.3 bn
-¥39.1 bn
-¥29.2 bn
YoY
82.2%
8.2%
---
vs. Jan 29 fcst
98.8%
76.3%
---
Margin (%)
-0.9%
---
FY09 Forecast
Omron expects drop in sales and profit, following further worsening of economy. Aims to generate profit by carrying out
emergency (crisis response) measures to secure operating profit and restructure 3 control businesses as part of
medium-term structural reform plan to strengthen profit base.
Consolidated
Net sales
Operating income
NIBT
Net income
FY 09 Forecast
¥510.0 bn
¥0.0 bn
-¥3.5 bn
-¥2.0 bn
YoY
81.3%
0.0%
---
Margin (%)
0.0%
---
*Assumed exchange rates for FY09: 1USD = ¥95; 1EUR = ¥125
(c) Copyright OMRON Corporation. All Rights Reserved.
●4
Results for the Fiscal Year Ended March 31, 2009 (FY08)
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 47
(c) Copyright OMRON Corporation. All Rights Reserved.
●5
Consolidated P/L
Sales: ¥627.2 bn; operating income: ¥5.3 bn (margin: 0.9%), far below FY07.
In addition, loss in NIBT and net income due to increase in non-operating
loss.
(Billions of yen)
P/L
Net sales
Gross profit
SG&A
R&D
Operating income
Non-operating loss, net
NIBT
NIAT
FY08
Actual (1)
627.2
218.5
164.3
48.9
5.3
-44.4
-39.1
-29.2
FY07
Actual (2)
763.0
293.3
176.6
51.5
65.3
-1.1
64.2
42.4
FY08/FY07
(1)/(2)
82.2%
74.5%
93.0%
94.9%
8.2%
ー
ー
ー
EUR
98.8%
99.3%
100.2%
99.8%
76.3%
ー
ー
ー
(1JPY)
<Exchange Rates>
USD
vs. Jan 29 fcst
100.7
144.5
114.1
161.9
(c) Copyright OMRON Corporation. All Rights Reserved.
-13.4
-17.4
+1.2
+1.9
●6
Non-operating Loss Breakdown
Omron accounted for the impairment of goodwill and fixed assets in order to
accelerate business structure reform while at the same time working to
ensure sound management and fair valuation of assets.
Non-operating loss, net
(billions of yen)
Breakdown
Impairment of goodwill
16.8
Impairment of fixed assets
21.2
Additional impairment of investment securities
5.4
Others
1.0
Total
(c) Copyright OMRON Corporation. All Rights Reserved.
44.4
●7
Consolidated Sales by Area/Segment
Large YoY drop both in Japan and overseas due to global economic
recession.
IAB, ECB and AEC were hit hardest.
(Billions of yen)
Area
FY08
Actual (1)
FY07
Actual (2)
FY08/FY07
(1)/(2)
vs. Jan 29 fcst
Japan
Overseas*
315.6
311.6
365.9
397.1
86.3%
78.5%
98.6%
98.9%
Total
627.2
763.0
82.2%
98.8%
FY08/FY07
(1)/(2)
vs. Jan 29 fcst
* Includes direct exports
Business
FY08
Actual (1)
FY07
Actual (2)
IAB
ECB
AEC
SSB
HCB
Others
262.9
124.0
82.1
79.9
63.8
14.5
328.8
154.2
107.5
85.2
71.6
15.7
80.0%
80.4%
76.4%
93.7%
89.1%
93.0%
98.1%
99.5%
97.2%
99.5%
101.3%
98.9%
Total
627.2
763.0
82.2%
98.8%
(c) Copyright OMRON Corporation. All Rights Reserved.
●8
Sales Breakdown by Area
Europe & US: Down approx. 1% pt due to sluggish sales.
Greater China: Maintaining 12.0% in spite of decrease in sales.
■ Greater China
¥91.5 bn
■ Asia-Pacific
¥46.9 bn
6.1% 3.0%
■ Exports
¥22.8 bn
6.4% 2.1%
12.0%
12.0%
13.3%
■ Americas
¥101.5 bn
48.0%
12.8%
■ Americas
¥80.4 bn
17.6%
■ Europe
¥134.5 bn
■ Asia-Pacific
¥40.4 bn
■ Greater China
¥75.2 bn
■ Japan
¥365.9 bn
■ Exports
¥12.5 bn
50.3%
16.4%
■ Europe
¥103.1 bn
■ Japan
¥315.6 bn
763.0 billion yen
627.2 billion yen
(March 2008)
(March 2009)
(c) Copyright OMRON Corporation. All Rights Reserved.
●9
Sales Breakdown by Business Segment
IAB share decreased from 43.1% to 41.9%.
IAB
ECB
41.9%
AEC
19.8%
13.1%
627.2 billion yen
(March 2009)
Others 2.3%
HCB
10.2%
12.7%
SSB
(c) Copyright OMRON Corporation. All Rights Reserved.
●10
Consolidated Operating Income by Segment
All segments saw sharp YoY decline due to sluggish sales and exchange
loss.
ECB and AEC posted operating loss.
(Billions of yen)
FY08
Actual (1)
FY07
Actual (2)
IAB
20.5
51.9
ECB
-2.0
12.6
－
－
AEC
-6.4
1.4
－
－
SSB
5.4
7.0
76.0%
111.5%
HCB
4.8
9.4
51.5%
110.0%
0
0.1
50.6%
-17.0
-17.1
5.3
65.3
Business
Others
HQ Cost/ Elimination
Total
FY08/FY07
(1)/(2)
(c) Copyright OMRON Corporation. All Rights Reserved.
39.4%
－
8.2%
vs. Jan 29 fcst
99.3%
－
－
76.3%
●11
Consolidated Operating Income Analysis (Year-on-Year)
Down sharply YoY due to net sales drop and exchange loss.
Sales down,
product mix
(Billions of yen)
-59.2
SG&A, R&D:
M&A
65.3
Exchange
loss
-0.6
+6.6
FY2007
Actual
M&A
gain
-17.1
Material
costs down
+8.8
SG&A, R&D
down
5.3
FY2008
Actual
+0.4
+1.1
SG&A, R&D:
Exchange gain
Gross profit down ¥74.8 bn
Operating income down ¥60.0 bn (Exchange loss: 8.3 bn)
(c) Copyright OMRON Corporation. All Rights Reserved.
●12
Consolidated Operating Income Analysis (vs. Jan 29 fcst)
Although exchange rates turned in favor of the yen, operating income fell
short of the previous forecast overall.
(Billions of yen)
Sales down,
product mix
SG&A, R&D:
Exchange loss
-4.1
Exchange
gain
7.0
Fixed costs
Material
down
costs down +0.5
+0.5
Fixed costs
down
-1.1
R&D down
+0.1
+0.8
+1.6
Gross profit down ¥1.5 bn
5.3
Operating income down ¥1.7 bn (Exchange gain: +0.5 bn)
FY2008
Actual
vs. Jan 29 fcst
(c) Copyright OMRON Corporation. All Rights Reserved.
●13
IAB (Industrial Automation Business)
Hit by further slash in capital investment among manufacturers following global
recession.
Even Asia Pacific and Greater China, once steady, saw sudden plunge starting in Q3.
(Billions of yen)
FY08
Actual (1)
116.4
146.5
31.7
70.7
17.4
25.7
1.0
FY07
Actual (2)
144.1
184.7
35.6
92.3
16.2
34.6
6.0
FY08/FY07
(1)/(2)
80.8%
79.3%
89.3%
76.5%
106.9%
74.5%
16.3%
262.9
328.8
80.0%
vs. Jan 29
fcst
98.3%
98.0%
ー
ー
ー
ー
ー
98.1%
Operating income
20.5
51.9
39.4%
99.3%
OP margin
7.8%
15.8%
-8.0%
IAB
Japan
Overseas
North America
Europe
Asia Pacific
Greater China
Exports
Total
Sales by Area
Asia
7%
Europe
27%
China
10%
Exports
0%
+0.1%
Programmable controllers
Japan
44%
North America
12%
Safety components
(c) Copyright OMRON Corporation. All Rights Reserved.
Vision sensors
●14
ECB (Electronic Components Business)
1st half: Small-size LCD backlights and switches for mobile devices recorded strong sales.
2nd half: Sluggish overall. In addition to continued shrinking sales in semiconductor and auto
markets, ECB got hit by downturn in consumer and commercial equipment markets.
(Billions of yen)
FY08
Actual (1)
56.0
68.0
8.6
9.2
8.4
37.8
3.9
ECB
Japan
Overseas
North America
Europe
Asia Pacific
Greater China
Exports
Total
Operating income
Sales by Area
FY08/FY07
(1)/(2)
89.7%
74.0%
82.2%
74.5%
81.7%
78.3%
37.7%
80.4%
vs. Jan 29
fcst
99.1%
99.9%
ー
ー
ー
ー
ー
99.5%
124.0
154.2
-2.0
12.6
－
－
8.2%
－
－
－
OP margin
FY07
Actual (2)
62.4
91.8
10.4
12.4
10.3
48.3
10.4
Exports
3%
China
31%
MEMS microphones
Japan
45%
Asia
7%
Europe
7%
North America
7%
Compact LCD backlights
(c) Copyright OMRON Corporation. All Rights Reserved.
FPC connectors
●15
AEC (Automotive Electronic Components Business)
1st half: Hit hard by soaring gasoline prices and slowing economy.
2nd half: Hit further. Effects of financial crisis became apparent, elevating credit
crunch and job uncertainty on a global level. As a result, auto market deteriorated
further, with consumers holding back on spending.
(Billions of yen)
FY08
Actual (1)
25.0
57.1
27.9
9.0
12.5
4.7
3.0
AEC
Japan
Overseas
North America
Europe
Asia Pacific
Greater China
Exports
Total
82.1
Operating income
-6.4
－
OP margin
Sales by Area
Asia
15%
Europe
11%
FY07
Actual (2)
28.0
79.5
42.4
13.9
18.3
3.1
1.9
FY08/FY07
(1)/(2)
89.3%
71.8%
65.8%
64.7%
68.4%
153.6%
160.8%
107.5
76.4%
1.4
－
－
1.3%
－
－
China Exports
4%
6%
Electric power steering
(EPS) controllers
Japan
30%
North America
34%
vs. Jan 29
fcst
96.2%
97.6%
ー
ー
ー
ー
ー
97.2%
Passive entry systems
(c) Copyright OMRON Corporation. All Rights Reserved.
●16
SSB (Social Systems Business)
1st half: Enjoyed increased demand for train station equipment with opening of new lines.
2nd half: Struggled as sudden economic downturn led railroad operators to cut investment.
(Billions of yen)
FY08
Actual (1)
75.5
4.4
0.2
0
0
0.1
4.1
SSB
Japan
Overseas
North America
Europe
Asia Pacific
Greater China
Exports
Total
Operating income
OP margin
Sales by Area
FY07
Actual (2)
81.0
4.2
0.6
0
0
0
3.6
FY08/FY07
(1)/(2)
93.2%
105.0%
38.3%
ー
ー
ー
114.9%
79.9
85.2
93.7%
vs. Jan 29
fcst
98.7%
115.7%
ー
ー
ー
ー
ー
99.5%
5.4
7.0
76.0%
111.5%
6.7%
8.3%
-1.6%
+0.6%
Transport management
systems
Exports
5%
Japan
94%
Security systems
AFC (automatic fare collection) systems
(c) Copyright OMRON Corporation. All Rights Reserved.
●17
HCB (Health and Medical Care Business)
Japan: Sales sluggish both in healthcare and medical equipment-related markets.
Overseas: First half saw rise in sales to major N. American retailers and growth in blood
pressure monitor business in emerging markets. Second half turned challenging with
economic recession and effects of strong yen.
(Billions of yen)
FY08
Actual (1)
28.3
35.5
12.0
14.3
2.1
6.7
0.4
HCB
Japan
Overseas
North America
Europe
Asia Pacific
Greater China
Exports
Total
Operating income
OP margin
Sales by Area
China
Asia 11%
3%
FY07
Actual (2)
35.0
36.6
12.5
15.9
2.1
5.5
0.7
63.8
71.6
89.1%
vs. Jan 29
fcst
101.2%
101.3%
ー
ー
ー
ー
ー
101.3%
4.8
9.4
51.5%
110.0%
-5.5%
+0.6%
7.6%
13.1%
Exports
1%
Europe
22% North America
19%
FY08/FY07
(1)/(2)
81.0%
96.9%
96.3%
89.8%
100.4%
122.5%
59.4%
Body composition monitors
Japan
44%
Digital blood pressure
monitors
(c) Copyright OMRON Corporation. All Rights Reserved.
Non-invasive vascular
screening devices
●18
Consolidated B/S
Accounts receivable and inventories were down due to sales drop and exchange loss.
Equity ratio down to 55.4% due partly to valuation loss on foreign assets converted to
yen and losses in fixed assets and equity.
(Billions of yen)
Consolidated B/S
Mar. 2009
Total Assets
Cash and cash equivalents
Notes and accounts receivable, trade
Inventories
Other current assets
Property, plant and equipment
Investments and other assets
Total Liabilities
Short-term debt
Long-term debt
Other liabilities
Minority Interest
Shareholders' Equity
Common stock and retained earnings
Accumulated other comprehensive loss
Treasury stock
Liabilities, Minority Interest & Shareholders' Equity Total
(c) Copyright OMRON Corporation. All Rights Reserved.
538.3
46.6
111.0
84.7
33.7
132.5
129.8
238.3
33.5
21.4
Mar. 2008
617.4
40.6
164.7
95.1
29.6
152.7
134.7
246.9
18.3
1.5
183.4
227.1
1.6
298.4
403.6
-60.7
-44.5
538.3
2.0
368.5
438.2
-28.2
-41.5
617.4
●19
Consolidated Cash Flows
Decrease in free cash flow was covered partly by debts. Year-end cash and
cash equivalents ended up at FY07 level.
(Billions of yen)
Mar. 2009
Mar. 2008
Operating activities
31.4
69.0
Investing activities
-40.6
-36.7
Free cash flow
-9.2
32.3
Financing activities
21.9
-34.5
Effect of exchange rate changes
-6.6
-0.2
6.0
-2.4
Cash and cash equivalents at end of period
46.6
40.6
Depreciation and amortization
33.5
36.3
Capital expenditures*
36.8
37.1
Consolidated C/F
Net increase/decrease
* The figures for capital expenditures given here differ from the figures given on the Statement of Cash Flows.
(c) Copyright OMRON Corporation. All Rights Reserved.
●20
FY09 Forecast
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 47
(c) Copyright OMRON Corporation. All Rights Reserved.
●21
Economic Indicators
Industrial Production Index and Machinery Orders kept decreasing.
Shipment of electronic components also went down on a global basis (upward trend for
the past few months except in the Americas).
Industrial Production (a)
and Machinery Orders (b)
160
140
120
Shipment of Electronic Components
(Year on Year)
100
80
60
140.0
40
(a)
20
(b)
120.0
100.0
Japan
60.0
Americas
Europe
40.0
China
20.0
Asia/Others
02
12
09/01
11
10
09
08
07
06
05
04
03
02
12
08/01
11
10
09
08
07
06
05
04
03
0.0
02
*Source:
(a) Ministry of Economy, Trade and Industry
(b) Economic and Social Research Institute Cabinet Office
Total (global)
80.0
07/01
09/01
08/08
08/3
07/5
07/10
06/12
06/07
06/02
05/09
05/04
04/11
04/06
04/01
03/08
03/03
02/10
02/05
01/12
01/07
01/02
00/09
00/04
0
Source: Japan Electronics and Information
Technology Industries Association
(c) Copyright OMRON Corporation. All Rights Reserved.
●22
Basis for FY09 Forecast
External Environment
Further worsening of business environment is likely in FY09, but gradual recovery is projected in
the second half.
Increasingly severe operating environment expected as a result of the global recession.
Semiconductor, electronic component and automotive industries will likely be most challenging.
JPY ⇔ USD/EUR exchange rate unstable
Continued stabilization of raw material costs (silver and copper)
(see p. 48)
(see p. 49)
Basis for Forecast
Forex: 1USD = ¥95; 1EUR = ¥125
Raw material costs: Silver: ¥40,000/kg; Copper: ¥480/kg
Emergency Measures & Structural Reform
Emergency measures aimed at P/L improvement (by Mar. 2010)
Reduce fixed/ variable costs (approx. ¥60 bn)
Create cash flow (approx. ¥27 bn)
Structural reform comprising “business domain reform" and "operational structure reform" (by
Mar. 2011)
Reorganization of 3 control businesses
(1) Elimination and consolidation of production bases, (2) variable cost structure reform
(3) IT structure reform (4) head office function reform
(c) Copyright OMRON Corporation. All Rights Reserved.
●23
FY09 Forecast by Segment
IAB
Industry
Continued sluggish demand and curtailment of
capital investment in related industries incl.
automotive, electronic components and machine
tool industries.
Area
Continued severe conditions in Japan, North
America, Europe, Asia and China.
Strengthening operations in Russia, Brazil,
South Africa, etc.
AEC
Industry
Continued sluggish demand in worldwide
automotive industry.
Focusing on “green” vehicles such as hybrids
and electric cars.
Area
Continued sluggish demand in North America.
Continued weak sales of new cars in Japan.
HCB
ECB
Industry
Production of machine tools, semiconductors
and industrial machinery expected to decrease
further.
Area
Severe conditions in Japan due to continued
weak consumer spending.
Promising environmental business to be
expanded in US and Europe.
SSB
Industry
Curtailed investment due to stagnant economy,
particularly in railway and financial industries.
Strengthening appeal of “social sensors,” aiming
for long-term growth.
Industry
Continued weak consumer spending and
curtailed investment at hospitals, but health
consciousness (of lifestyle-related disease
prevention, etc.) will remain high.
Area
Continued severe conditions in developed
countries (Japan, European countries, etc.).
Strengthening sales in emerging countries.
(c) Copyright OMRON Corporation. All Rights Reserved.
●24
Projected Results for FY09
Economic downturn continues, earnings environment still severe.
Secure OP through implementation of emergency measures.
(Billions of yen)
FY09
Plan
FY08
Actual
YoY
Net sales
510.0
627.2
81.3%
Gross profit
175.0
218.5
80.1%
SG&A
135.0
164.3
82.1%
R&D
40.0
48.9
81.8%
0
5.3
－
Non-operating loss, net
-3.5
-44.4
－
NIBT
-3.5
-39.1
－
NIAT
-2.0
-29.2
－
Operating income
EPS (yen)
-9.08
-132.15
(c) Copyright OMRON Corporation. All Rights Reserved.
●25
Projected Sales (Consolidated) by Area/Segment
Severe conditions continue in each area/segment due to global decline in capex
and continuing employment instability.
Gradual recovery expected starting in the second half.
(Billions of yen)
Area
FY09
Plan
FY08
Actual
YoY
Japan
Overseas*
268.5
315.6
85.1%
241.5
311.6
77.5%
Total
510.0
627.2
81.3%
* Includes direct exports
FY09
Plan
IAB
ECB
AEC
SSB
HCB
Others
193.0
112.0
60.0
66.0
61.5
17.5
FY08
Actual
262.9
124.0
82.1
79.9
63.8
14.5
Total
510.0
627.2
Business
(c) Copyright OMRON Corporation. All Rights Reserved.
Yr/Yr
73.4%
90.4%
73.1%
82.6%
96.4%
120.4%
81.3%
●26
Projected Operating Profit by Segment
Projecting lower OP in each segment due to lower sales.
Remain in the black through implementation of emergency measures.
(Billions of yen)
FY09
Plan
Business
FY08
Actual
YoY
IAB
5.0
20.5
24.4%
ECB
3.0
-2.0
－
AEC
0
-6.4
－
SSB
4.0
5.4
74.7%
HCB
4.0
4.8
82.6%
Others
-1.0
0
－
HQ Cost/ Elimination
-15.0
-17.0
－
0
5.3
－
Total
(c) Copyright OMRON Corporation. All Rights Reserved.
●27
Capex, Depreciation and R&D Expenses
Capex:
Drastic reduction through implementation of emergency measures/
structural reform.
Depreciation: Dramatic cut by investment restriction and fixed assets impairment.
R&D expense: Drastic reduction through implementation of emergency measures.
Focus on strengthening existing businesses.
R&D at IAB:
- Low-cost PLCs for small-sized systems.
- Solar power conditioners in environment-related business.
(Developing anti-islanding control technology for solar power
generation system.)
R&D at ECB: - EMC (Electronic Mechanical Components) product development.
- Development of micro-replication processing, nano-material technology
and MEMS (Micro Electro Mechanical Systems) technology.
(Billions of yen)
FY09
Plan
Capital expenditures
Depreciation
& Amortization
R&D
FY08
Actual
YoY
25.0
36.8
67.9%
27.0
33.5
80.6%
40.0
48.9
81.8%
* The figures for capital expenditures given here differ from the figures given on the Statement of Cash Flows.
(c) Copyright OMRON Corporation. All Rights Reserved.
●28
Emergency Measures and Structural Reform
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 47
(c) Copyright OMRON Corporation. All Rights Reserved.
●29
Emergency Measures & Structural Reform: Outline
FY08
Drop in sales and operating profit due to drastic worsening of the
business environment.
FY09 (Short-term Measures)
Implementation of emergency measures to secure operating profit.
Medium-term Measures
Implementation of structural reform to strengthen profit base.
(c) Copyright OMRON Corporation. All Rights Reserved.
●30
Emergency Measures & Structural Reform: Outline
Emergency Measures & Structural Reform
Emergency Measures
Structural Reform
(Generate profit in FY09 through cost cuts)
(Strengthening of profit base over the medium term)
Profit Generation
1. Business Domain Reform
(1) Cost cutting
Advertising, R&D, indirect costs, etc.
(2) Withdrawal from underperforming
businesses
Four businesses in Japan/abroad (ECB, AEC)
(3) Reduction of other fixed costs
Return of part of directors‘, executive
officers‘ and managers' compensation, ban on
overtime work, etc.
Cash Flow Creation
• Freeze on large-scale investments
• Reduction in ordinary investments
Restructure 3 control businesses:
IAB, ECB and AEC
• IAB:
Strengthen front line and profit
base
• ECB: Re-strengthen EMC business
• AEC: Implement thorough efforts to
improve profitability
2. Operational Structure Reform
(1) Elimination and consolidation of
production bases
(2) Variable cost structure reform
(3) IT structure reform
(4) Head office function reform
(c) Copyright OMRON Corporation. All Rights Reserved.
●31
Emergency Measures & Structural Reform: Schedule
Designate the period from Feb. 2009 – Mar. 2011 as “Revival Stage,”
carry out emergency measures and structural reform
"Grand Design 2010" (GD2010)
Omron's long-term management vision
1st Stage
3rd Stage
2nd Stage
Abandon the 3rd stage and
designate 26-month period until
Mar. 2011 as "Revival Stage;"
focus on structural reform
Feb. 2009
New Long-term
Management
Vision
(Post-GD2010)
Emergency
Measures
Revival Stage
(Structural Reform Period)
Apr. 2001
Apr. 2004
Apr. 2008
Apr. 2009
Apr. 2010
(c) Copyright OMRON Corporation. All Rights Reserved.
Mar. 2011
●32
Goals of Emergency Measures: Creation of Profit & Cash Flow
Jan. 30, 2009
Map out plan to generate profit of approx. ¥40 bn based on projection that
FY08/Q4 conditions would continue into FY09.
Today (Apr. 28, 2009)
Implement further cost-cutting measures, as the business environment,
which deteriorated more severely than expected in FY08/Q4,
is likely to remain unchanged for the time being.
FY09
- Aim to improve PL by approx. ¥ 60 bn by cutting fixed and variable costs,
post operating profit.
- Create approx. ¥27 bn cash flow by reducing inventories and restraining
investments.
(c) Copyright OMRON Corporation. All Rights Reserved.
●33
Emergency Measures
(1) Cut Costs, Restrain Investment, Reduce Inventories
- Aim to improve P/L by approx. ¥ 60 bn by cutting not only fixed costs
(overhead and labor costs, investments, depreciation by impairment) but also
variable costs (better variable costs ratio).
- Create approx. ¥27 bn cash flow by reducing inventories and restraining
investments.
Improving FY09 P/L through profit creation (part of “emergency
measures”) and other measures
Reduce fixed costs
• Labor costs, overhead costs
• Depreciation (restraint on investments)
• Depreciation (impairment of fixed assets)
Reduce variable costs
• Raw material costs and others
Target value
(approx.)
¥55 bn
¥5 bn
¥60 bn
Cash flow creation (items for cash flow improvement in FY09)
Reduce inventories
• Inventories
¥15 bn
Restrain investments
• New capital investment
¥12 bn
¥27 bn
(c) Copyright OMRON Corporation. All Rights Reserved.
●34
Emergency Measures
(2) Withdraw Unprofitable Businesses
Omron will promptly withdraw unprofitable or low-profitable businesses to
generate profit
Closure of four ECB/ AEC businesses in Japan and abroad
Dissolution of Large-size Backlight Business (ECB)
Omron will dissolve subsidiary TAMA FINE OPT. and its two
subsidiaries by the end of September 2009, with liquidation to be
completed by the end of fiscal 2009. (Announced on March 10, 2009)
* Emergency measures for other businesses are to be decided and announced at a later date.
(c) Copyright OMRON Corporation. All Rights Reserved.
●35
Structural Reform Goals
Strengthen Profit Base in the Medium Term
Aim to establish a business structure that generates more
than JPY 100 bn in OP at the FY07 sales level (JPY 750 bn)
through “sweeping profit structure reform.”
FY2007
(Actual)
FY2008
(Actual)
FY2009
(Planned)
FY201X
(Target)
Strengthen profit base over the medium term
763.0
750.0
627.2
510.0
Mainly through
structural reform
Mainly through
emergency
measures
65.3
(Billions of yen)
100.0
+0
5.3
Approx.
JPY 60 bn
improvement
08
Maintain BEP of approx. JPY 500 bn in
sales by restricting/offsetting fixed costs
increase and reducing variable cost ratio
(c) Copyright OMRON Corporation. All Rights Reserved.
●36
Structural Reform Goals
Improve BEP
Increasing operating profit when sales recovers, by lowering BEP
to approx. 70% with reduction of fixed costs and variable cost ratio.
FY2008 Emergency Measures
Actual
Cost
FY2009
Planned
Structural Reform
JPY 100 bn OP at
JPY 750 bn sales
Sales line
Profit
Total cost
line
Future target
Variable cost
reduction
BEP
Variable cost
BEP
Loss
Fixed cost
reduction
Fixed cost
FY08 Actual
JPY 627.2 bn
Sales
FY09 Plan
JPY 510.0 bn
70%
Approx.
JPY 750.0 bn
BEP to be maintained at JPY 500 bn
sales, by holding down of fixed cost
increase and lowering variable cost ratio
(c) Copyright OMRON Corporation. All Rights Reserved.
●37
Structural Reform
(1) Business Domain Reform - Restructuring of 3 Control Businesses
Omron will restructure its business domains into three categories:
Industry, Society and Lifestyle.
Looking to the future, Omron will implement business domain reform to
standardize the operations of its 3 control-based businesses and avoid
dispersal of resources.
From
Control
Equipment
To
IAB
Electronic
Components
ECB
Automotive
Electronic
Components
AEC
Train station/
traffic solutions
SSB
Health/
Medical care
HCB
Business
Development
Restructure
3 control
businesses
Domain expansion
Domain expansion
Establishment of Environmental
Solutions Business HQ
Industry
Restructure
According to
Strengths
Society
SSB
Lifestyle
HCB
Society
(Environment)
(c) Copyright OMRON Corporation. All Rights Reserved.
●38
Structural Reform
(1) Business Domain Reform - Restructuring of 3 Control Businesses
(Not Available Online)
(c) Copyright OMRON Corporation. All Rights Reserved.
●39
Structural Reform
(1) Business Domain Reform - Restructuring of 3 Control Businesses
Each business domain carries out its own tasks to realize mid- long-term restructuring.
IAB
ECB
AEC
FA
FA (Factory Automation) Business
Focus on general-use components in Japan
Strengthen domestic frontline staff (approx. 300 additional sales & customer
service staff)
Strengthen collaborative relationships with domestic channels (2,000 sales
staffers) to increase market coverage
Enhance production in China to become more price competitive on a global level
EMC/
ME
EMC (Electro mechanical) Business
• Strengthen productivity to raise profit (shared application of raw materials, dies, and
processing technology)
• Accelerate closure and consolidation of production sites
ME (Micro electronics) Business
Seek new applications (with MEMS) aiming at business growth
Auto
Elec.
Comp.
Automotive Electronic Components Business
Focus on target customers and products and encourage autonomous operation
Give focus on target customers and concentrate on ECU*-related business
Transfer businesses to EMC, relay business among others
Operate autonomously as a segment specialized in the auto industry
*Electronic Control Unit
(c) Copyright OMRON Corporation. All Rights Reserved.
●40
Structural Reform
(2) Closure/Consolidation of Sites
Close/consolidate approx. 30% of production sites from FY08 to FY10.
Number of
Production Sites*
Jan. 2009
Mar. 2011
49
30 – 35
* Production sites: Sites with production function and/or production management function
Sites to be closed/consolidated (decided in FY08):
• Large-sized backlight business: TFO (3 sites)
• Automotive electronic components business:
OUK (Omron Automotive Electronics UK Ltd.)
• Semiconductor business: Minakuchi factory, Japan
• FA business:
OMA (Omron Manufacturing of America, Inc., US)
(c) Copyright OMRON Corporation. All Rights Reserved.
●41
Structural Reform
(3) Variable cost structure, IT structure, and head office function reform
Variable Cost Structure Reform
Aim to improve variable costs ratio by 2.5 pt.
Establish inter-segment system of supplying common-use processed components.
Global raw-material standardization and integration.
IT Structure Reform
Process innovation in production, sales and R&D.
Promote head office restructuring and establish global corporate governance in
accounting.
Head Office Function Reform
Visualize and streamline office staff functions that the head office and each business
segment has to optimally allocate the workforce
(c) Copyright OMRON Corporation. All Rights Reserved.
●42
Businesses and Technology Driving Future Growth
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 46
(c) Copyright OMRON Corporation. All Rights Reserved.
●43
Businesses Driving Future Growth: “Green” Business
Aiming to maximize ROC* through precise visualization and
effective reduction of CO2 emissions
Support for top
management decision making
- Facilities improvement
Create an
- Operations improvement
optimal portfolio - Emission credits
Maximization of ROC
* Return on carbon
• Precise and real-time confirmation of CO2 emissions
across all corporate activities
• Solutions for CO2 reduction
Social Requirements
Law Concerning
the Rational Use of Energy
Law Concerning the
Promotion of Measures for
Controlling Global Warming
Carbon footprint
system
(c) Copyright OMRON Corporation. All Rights Reserved.
Emissions trading
●44
Businesses Driving Future Growth: Products that Meet Environmental Needs
Environmental
Solutions Business
Remote power monitoring systems:
Visualization and reduction of CO2 emissions
(Environmental Solutions
Business HQ)
Environmental
Components
Business
(IAB)
Solar power conditioners, environmental sensors
DC power relays, capacitors
Environmental
Device Business
(ECB)
(c) Copyright OMRON Corporation. All Rights Reserved.
●45
Technology Driving Future Growth: Progress in Sensing
Strengthening core technologies of smart sensing module
as a basis of future sensor development
Sensing Technology
Control Technology
MEMS/NEMS
Specialized nano-thin film
High accuracy sensor
Feature extraction
Inference learning
Knowledge information control
Knowledge IC
Signal
Processing IC
Wireless
Communication
Technology
Antenna
Capacitor
RFIC
Buildup
multilayer
memory
ASIC
Ubiquitous network
Zigbee, RFID
Integration Technology
Energy Technology
Small and environmental
power generation
Mass electricity accumulation
Power
generation
device
Environmental vibration
power generation device
Si penetration wiring (MEMS/MOS)
Wafer-level package
MEMS/MOS vertical integration
Eco-technology that converts
Environmental vibration
energy into electricity
(Announced on November 11, 2008)
(c) Copyright OMRON Corporation. All Rights Reserved.
●46
Reference
Executive Summary
P. 4
Results for the Fiscal Year
Ended March 31, 2009 (FY08)
P. 5
FY09 Forecast
P. 21
Emergency Measures and
Structural Reform
P. 29
Businesses and Technology
Driving Future Growth
P. 43
Reference
P. 47
(c) Copyright OMRON Corporation. All Rights Reserved.
●47
Exchange Rates (USD, EUR)
Both USD and EUR plunged YoY.
1JPY
170
160
USD
EUR
150
FY07 ¥161.9/EUR
140
130
FY09 plan
¥125.0/EUR
FY08 ¥144.5/EUR
120
110
100
90
FY07 ¥114.1/USD
FY09 plan
¥95.0/USD
FY08 ¥100.7/USD
04
/0
4
07
/0
4
10
/0
4
01
/0
5
04
/0
5
07
/0
5
10
/0
5
01
/0
6
04
/0
6
07
/0
6
10
/0
6
01
/0
7
04
/0
7
07
/0
7
10
/0
7
01
/0
8
04
/0
8
07
/0
8
10
/0
8
01
/0
9
04
/0
9
07
/0
9
10
/0
9
01
/1
0
80
(c) Copyright OMRON Corporation. All Rights Reserved.
●48
Raw Material Prices
FY08 silver and copper prices dropped YoY.
Silver price quotation, JPY/kg
Copper price quotation, JPY/kg
1500
70,000
60,000
30,000
FY08 ¥46,265
1300
FY09 est:
¥40,000
March 2006
Silver: ¥40,160
Copper: ¥643
50,000
40,000
FY07 ¥53,153
Silver
Copper
1100
900
March 2003
Silver: ¥18,510
Copper: ¥240
700
FY07 ¥895
500
20,000
300
FY08 ¥657
FY09 est:
¥480
10,000
100
0
-100
03/03
09/03
03/04
09/04
03/05
09/05
03/06
09/06
03/07
09/07
03/08
(c) Copyright OMRON Corporation. All Rights Reserved.
09/08
03/09
09/09
03/10
●49
“Shaping Our Sense of Security”
with Sensing and Control Technology
Contact
Omron Corporation
IR and M&A Planning HQ, IR Department
Phone:
E-mail:
Website (English):
+81-3-3436-7170
[email protected]
www.omron.com
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