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Financial Results for the Nine Months
Ended December 31, 2006
January 31, 2007
OMRON Corporation
OMRON Corporation Investor Relations
Contents
1. Executive Summary
2. Results for the Nine Months Ended December 31, 2006
3. Forecast for the Full Year Ending March 31, 2007
4. Progress of Key Strategic Themes
Notes:
1. Quarterly financial information is not audited or reviewed by an auditing corporation.
2. The financial statements are prepared in accordance with U.S. GAAP.
3. Includes 158 consolidated subsidiaries and 22 affiliated companies accounted for by the equity method.
4. 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.
OMRON Corporation Investor Relations
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Main Business Areas
Industrial Automation
IAB
：Sensing Devices, Control Devices, Safety Devices,
Inspection Systems, etc.
Ele ctronic compone nts
ECB
：Relays, Switches, Connectors, Micro Lens Arrays,
Backlights for LCD, Optical Communications Devices, etc.
Automotive Electronics
AEC
：Keyless Entry System, Power Window Switches, Automotive relays
Components, Laser Radars, TPMS etc.
Social Syste ms
SSB
：Passenger Gates, Ticket Vending Machines, Road Management System,
Security Management Systems, Face Recognition Systems, etc.
Healthcare Equipment
HCB
：Digital Blood Pressure Monitors, Body Composition Analyzers
Nebulizer, etc.
Othe rs
Others
：Personal Computer Peripherals, RFID Systems,
Commercial Game Machines, etc.
SSB
12%
HCB
9%
Others
4%
Net sales 520.2 billion yen
IAB
43%
Results for the Nine Months
FY2006
AEC
13%
ECB
19%
OMRON Corporation Investor Relations
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1. Executive Summary
OMRON Corporation Investor Relations
4
Executive Summary
The Year ending March 2007 is the final milestone toward achieving 2nd phase objectives of Grand Design 2010
“Accelerating growth while securing profit increase advancing toward FY07 targets by front-loading growth”
9 months Results and Key Points
■ Net sales, operating income, NIBT, Net income all exceeded for 9 months original targets
Consolidated
Net sales
Operating income
NIBT
Net income
(1) Net sales :
(2). .Operating income :
(3) NIBT:
(4) Business summary:
Result
vs. same period in prev. year vs. original target
¥520.2 billion
117.5%
103.1%
¥42.4 billion
96.4%
107.4% (Operating margin 8.2%)
¥49.3 billion
104.7%
118.7% ( NIBT margin
9.5%)
¥27.4 billion
104.6%
114.1% ( NI margin
5.3%)
18% year-on-year increase, mainly due to foreign exchange gains and sales increase from M&A
4% year-on-year decrease; but 32% increase excluding ¥11.9 billion gain on return of substitutional
portion of pension fund ‘Daikohenjyo‘ in previous year.
7% increase over target mainly due to foreign exchange gains, reduction of R&D expenses.
19% increase over target due to operating income plus non-operating income from factors including
gain on establishment of retirement benefit trust
Sales were solid. In Operating income, AEC showed recovery trend in 3rd quarter.
Full-Year Forecasts and Key Points
■ Unchanged from figures announced on October 30, 2006
Consolidated
Net sales
Operating income
NIBT
Net income
Year ending March 31, 2007
¥740.0 billion
¥63.0 billion
¥65.0 billion
¥37.5 billion
vs. same period in prev. year
118.1%
101.4%
101.0%
104.9%
(Operating margin 8.5%)
(NIBT margin
8.8%)
(NI margin
5.1%)
*Assumption: The PL influence of the announced two M&A is included.
OMRON Corporation Investor Relations
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2. Results for the Nine Months
Ended December 31, 2006
OMRON Corporation Investor Relations
6
Nine Months ended
Dec. 31, 2006
Consolidated Statements of Income
Sales: ¥520.2b ; Operating margin : 8.2%
Operating income exceeded target due to foreign exchange gains
and decrease in R&D expenses.
（ billion yen ）
P/L
9 months
ended
12/2005
9 months
ended
12/2006
Change from
last year
9 m onths
Ch ange from
ended
O ri ginal
12/2006
targe t
O rigi nal
Actual(1)
Net sales
Gross profit
S G&A expense
R&D expense
'Daiko-henjyo'
Operating income
NIBT
NIAT
US D
EUR
442.8
179.4
111.0
36.3
11.9
44.0
47.1
26.2
112.2
137.3
Actual(2)
520.2
201.9
122.6
36.9
(2)/(1)
target(3)
117.5%
112.5%
110.4%
101.6%
-
(2)/(3)
504.5
204.5
123.0
42.0
103.1%
98.7%
99.6%
87.9%
39.5
41.5
24.0
107.4%
118.7%
114.1%
42.4
49.3
27.4
116.3
148.2
96.4%
104.7%
104.6%
4.1
10.9
OMRON Corporation Investor Relations
110.0
135.0
（ yen ）
6.3
13.2
7
Nine Months ended
Dec. 31, 2006
Breakdown of Sales by Region and Business
Sales results were basically as planned in Japan and overseas.
By segment, sales of ECB and AEC exceeded original targets.
（ billion yen ）
9 months
ended
9 months
ended
12/2005
12/2006
C hange from
last year
9 months
ended
C han ge from
12/2006
targe t
O ri gi nal
Original
Japan/Overseas
Actual(1)
248.2
194.6
442.8
Japan
Overseas*
Total
Actual(2)
271.4
248.8
520.2
(2)/(1)
109.4%
127.8%
117.5%
* Overseas includes direct exports
By business
270.4
234.1
504.5
(2)/(3)
100.4%
106.3%
103.1%
Original
(1)
IAB
ECB
AEC
SSB
HCB
Others
Total
target(3)
199.0
72.0
55.6
52.2
44.9
19.1
442.8
(2)
222.3
101.2
67.3
60.6
48.3
20.5
520.2
(2)/(1)
111.7%
140.5%
121.1%
116.1%
107.6%
107.5%
117.5%
target(3)
OMRON Corporation Investor Relations
222.5
86.0
66.0
63.5
49.0
17.5
504.5
(2)/(3)
99.9%
117.7%
102.0%
95.5%
98.6%
117.1%
103.1%
8
Nine Months ended
Dec. 31, 2006
Breakdown of Operating Income
Generally
Generallyexceeded
exceededoriginal
originaltargets
targets(except
(exceptfor
forAEC).
AEC).
（ billion yen ）
9 months
9 months
C hange from
9 months
Change from
ende d
e nded
l ast year
ended
O rigi nal
12/2005
12/2006
12/2006
target
O riginal
By Business
IAB
ECB
AEC
SSB
HCB
Others/HQ Cost Elimination
'Daiko-henjyo'
Total
Actual (1)
31.2
8.4
-1.1
-2.6
6.4
-10.2
11.9
44.0
Actual(2)
35.2
9.9
-1.4
2.4
5.9
-9.6
42.4
(2)/(1)
target(3)
112.9%
117.6%
92.4%
96.4%
OMRON Corporation Investor Relations
35.2
9.4
1.4
0.7
5.7
-12.9
39.5
(2)/(3)
100.0%
105.0%
104.4%
107.4%
9
Nine Months ended
Dec. 31, 2006
Breakdown of Changes in Operating Income
(comparison to previous year)
Operating
Operatingincome
incomeincreased
increasedfrom
fromprevious
previousyear
yearsubstantially,
substantially,32%
32%increased
increased
excluding
return
of
substitutional
portion
of
employees’pension
fund
‘Daiko
excluding return of substitutional portion of employees’pension fund ‘Daikohenjyo’.
henjyo’.
Exchange M&A
profit
+2.5
Sales increase
and Product mix +4.2
Raw
material
-4.5
Increase in
manufacturing
fixed cost
‘Daiko
Daiko
henjyo’
henjyo
Effect of
exch.
rate in
SG&A
（ billion yen ）
-5.0
-2.6
M&A
-2.0
+25.3
Increase in
SG&A
Increase in
-7.0
R&D
-11.9
-0.6
44.0
Change in gross profit
+22.5b
42.4
Change in operating income -1.6 b
(Effect of exch. rate in Op Income: +1.6b)
Dec. 2005
Dec. 2006
10
Nine Months ended
Dec. 31, 2006
Breakdown of Changes in Operating Income
(comparison to original target)
Operating
Operatingincome
incomeexceeded
exceededoriginal
originaltarget
targetdue
duetotodecreased
decreasedR&D
R&Dexpenses
expensesand
and
exchange
gains
that
covered
rising
cost
of
raw
materials.
exchange gains that covered rising cost of raw materials.
Increase in
Raw manufacturing
Decrease in
fixed cost
R&D
Sales decrease
M&A material
Effect of
and Product mix Exchange
exch.
profit
+2.5
rate in Decrease in +5.2
-2.9
SG&A
SG&A
-6.7
+4.7
-0.3
-3.2
+5.5
-2.0
39.6
Change in gross profit
-2.7b
M&A
（ billion yen ）
42.4
Change in operating income +2.8b
(Effect of exch. rate in Op Income: +1.5b)
Dec. 2006
Actual
Dec. 2006
Original target
OMRON Corporation Investor Relations
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Nine Months ended
Dec. 31, 2006
IAB (Industrial Automation Business)
Sales
Sales::¥222.3b
¥222.3b;;Operating
Operatingmargin
margin::15.8%
15.8%
Sales
Salesbasically
basicallyininline
linewith
withoriginal
originaltarget
target, ,with
withcontinued
continuedstrength
strengthinin
North
NorthAmerica
Americaand
andEurope
Europe
（ billion yen ）
IAB
Japan
Overseas
North America
Europe
Asia
China
Export
Total
Operating income
Operating income ratio
ended
12/2005
ended
12/2006
Actual(1)
99.6
99.4
18.1
50.4
9.1
18.2
3.6
199.0
Actual(2)
103.1
119.2
24.8
58.6
10.1
21.3
4.4
222.3
(2)/(1)
103.5%
119.9%
137.2%
116.3%
110.7%
116.8%
121.8%
111.7%
31.2
15.7%
35.2
15.8%
112.9%
China
10%
Sales by region
Asia
5%
Europe
26%
last year
ended
12/2006
Original
target(3)
106.0
116.5
22.0
53.5
10.5
25.5
5.0
222.5
35.2
15.8%
Original
target
(2)/(3)
97.3%
102.3%
112.7%
109.5%
96.0%
83.4%
88.3%
99.9%
100.0%
Export
2%
Japan
46%
North America
11%
OMRON Corporation Investor Relations
12
Nine Months ended
Dec. 31, 2006
ECB (Electronic Components Business)
Sales
Sales::¥101.2
¥101.2bb;;Operating
Operatingmargin
margin::9.7%
9.7%
Sales
Salesofofrelays
relaysand
andswitches
switcheswere
weresolid.
solid.
Growth
in
Greater
China
and
exports
mainly
Growth in Greater China and exports mainlydue
duetotoM&A.
M&A.
（ billion yen ）
ECB
Japan
Overseas
North America
Europe
Asia
China
Export
Total
Operating income
Operating income ratio
Change from
9 months
ended
12/2005
9 months
ended
12/2006
Actual(1)
34.9
37.1
7.2
9.1
4.5
10.2
6.1
72.0
Actual(2)
43.3
57.9
8.3
8.7
6.2
24.2
10.5
101.2
(2)/(1)
124.1%
156.1%
116.0%
94.5%
137.8%
237.9%
172.0%
140.5%
8.4
11.6%
9.9
9.7%
117.6%
last year
Change from
9 months
ended
Original
12/2006
target
Original
target(3)
(2)/(3)
40.0
108.3%
46.0
125.8%
8.1
102.9%
7.9
108.8%
5.2
119.9%
18.4
131.7%
6.4
164.0%
86.0
117.7%
9.4
10.9%
105.0%
Export
10%
Sales by region
Japan
43%
China
24%
Asia
6%
Europe
9%
North America
8%
OMRON Corporation Investor Relations
13
Nine Months ended
Dec. 31, 2006
AEC (Automotive Electronic Components Business)
Sales
Sales: :¥67.3b;
¥67.3b;Operating
Operatingincome
incomewas
wasnegative.
negative.
North
American
operations
returned
to
profitability
North American operations returned to profitabilityinin3Q
3Q(Oct.-Dec.),
(Oct.-Dec.),
reflecting
reflectingproductivity
productivityimprovements.
improvements.
（ billion yen ）
9 months
ended
12/2005
AEC
9 months
ended
12/2006
Actual(1)
Japan
20.1
Overseas
35.5
North America
20.2
Europe
4.5
Asia
10.9
China
0.0
Export
0.0
Total
55.6
Operating income
Operating income ratio
Sales by region
Actual(2)
20.8
46.5
27.3
7.0
11.6
0.6
0.0
67.3
-1.1
-1.4
-
Change from
last year
(2)/(1)
103.7%
130.8%
135.2%
156.3%
106.4%
121.1%
9 months Change from
ended
Original
12/2006
target
Original
target(3)
(2)/(3)
20.0
104.0%
46.0
101.0%
26.1
104.5%
7.4
94.9%
11.9
97.1%
0.6
103.5%
0.0
66.0
102.0%
-
Asia
17%
China
1%
Europe
10%
1.4
2.1%
-
Japan
31%
North America
41%
OMRON Corporation Investor Relations
14
Nine Months ended
Dec. 31, 2006
SSB (Social Systems Business)
Sales
Salestotaled
totaled¥60.6b,
¥60.6b,below
belowtarget
targetdue
duetotodelays
delaystotothe
the4Q.
4Q.
Operating
income
well
above
target
due
to
effect
of
structural
Operating income well above target due to effect of structuralreforms.
reforms.
（ billion yen ）
SSB
Japan
Overseas
North America
Europe
Asia
China
Export
Total
Operating income
Operating income ratio
Sales by region
9 months
ended
12/2005
9 months
ended
12/2006
Actual(1)
51.5
0.7
0.1
0.0
0.0
0.0
0.6
52.2
Actual(2)
59.2
1.4
0.3
0.0
0.0
0.0
1.1
60.6
-2.6
-
2.4
3.9%
North America
1%
Change from
last year
(2)/(1)
114.9%
201.8%
219.3%
198.3%
116.1%
Change from
9 months
ended
Original
12/2006
target
Original
target(3)
(2)/(3)
61.2
96.7%
2.3
63.4%
0.3
102.3%
0.0
9.0
10.0
2.0
57.6%
63.5
95.5%
-
0.7
1.1%
340.6%
Export
2%
Japan
97%
OMRON Corporation Investor Relations
15
Nine Months ended
Dec. 31, 2006
HCB (Healthcare Business)
Sales
％
Sales: :¥48.3
¥48.3bb; ;Operating
Operatingmargin
margin: :12.3％
12.3％
％
Overseas
sales
were
solid
due
to
sales
growth
in
Europe
Overseas sales were solid due to sales growth in Europeand
andAsia.
Asia.
（ billion yen ）
HCB
Japan
Overseas
North America
Europe
Asia
China
Export
Total
Operating income
Operating income ratio
Sales by region
Change from
9 months
ended
12/2005
9 months
ended
12/2006
Actual(1)
23.2
21.6
11.0
7.2
1.2
2.1
0.1
44.9
Actual(2)
24.9
23.4
9.9
9.4
1.4
2.5
0.2
48.3
(2)/(1)
107.1%
108.3%
90.5%
131.7%
110.8%
120.1%
103.4%
107.6%
6.4
14.3%
5.9
12.3%
92.4%
Europe
20%
Asia
3%
last year
Change from
9 months
ended
Original
12/2006
target
Original
target(3)
(2)/(3)
25.7
96.8%
23.3
100.5%
11.4
87.1%
7.7
122.6%
1.0
137.5%
2.9
86.8%
0.3
50.0%
49.0
98.6%
5.7
11.6%
104.4%
China
5%
Japan
51%
North America
21%
OMRON Corporation Investor Relations
16
Nine Months ended
Dec. 31, 2006
Consolidated Balance Sheet
Increase
Increaseinintotal
totalassets
assetsdue
duetotoincrease
increaseininreceivables,
receivables,increase
increaseinininventories
inventories
from
business
acquisitions
and
exchange
rate
effect,
etc.
from business acquisitions and exchange rate effect, etc.
Increase
Increaseininshort-term
short-termloans
loanstotofund
fundM&A.
M&A.
（ billion yen ）
B/S
Total Assets
Cash and cash equivalents
Notes and accounts receivable - trade
Inventories
Other current assets
Net Property, Plant and Equipment
Investments and Other Assets
Total Liabilities
Bank Loans / Current portion of L/T debt
Long-term debt
Other liabilities
Shareholders' Equity
As of
12/31/2005
557.1
49.7
112.8
81.8
23.8
163.1
125.9
194.2
14.9
1.3
178.0
362.9
As of
3/31/2006
589.0
52.3
136.3
75.0
28.8
167.6
129.1
226.1
2.8
1.0
222.3
362.9
OMRON Corporation Investor Relations
As of
12/31/2006
624.1
51.0
147.5
108.5
31.4
157.6
128.1
250.3
46.6
0.5
203.2
373.8
17
Nine Months ended
Dec. 31, 2006
Consolidated Statements of Cash Flows
Investing
Investingactivities
activitiesused
usednet
netcash
cashofof¥34.1b
¥34.1bdue
duetotothe
theacquisition
acquisitionfor
for
future
growth,
etc.
future growth, etc.
（ billion yen ）
C/F
9 months
ended
9 months
ended
(reference)
Year ended
12/2005
12/2006
3/2006
Net cash provided by operating activities
24.8
10.2
51.7
Net cash provided by (used in) investing activities
-31.3
-34.1
-43.0
-6.5
-23.9
8.7
-26.3
21.9
-38.3
1.9
0.7
1.3
Net increase (decrease)
-30.9
-1.3
-28.3
Cash and cash equivalents at end of the period
49.7
51.0
52.3
Free cash flow
Net cash used in financing activities
Effect of exchange rate changes
OMRON Corporation Investor Relations
18
Nine Months ended
Dec. 31, 2006
Current Condition of AEC and Profit Improvement
Reached
Reached4Q
4Qprojections
projectionsahead
aheadofofschedule
scheduleinin3Q
3Q
with
withprofits
profitsrebounding
rebounding
Quarterly trends in the Operating income
(billion yen)
2.0
1.5
1.0
0.5
0.0
O ri gi nal targe ts
Fore casts i n O ct.
Fore casts i n Jan.
-0.5
-1.0
-1.5
Q1
Q2
Q3
Q4
forecasts
OMRON Corporation Investor Relations
19
Nine Months ended
Dec. 31, 2006
Progress of AEC emergency action
Profit
Profitimprovement
improvementprogram
programisisprogressing
progressingas
asscheduled.
scheduled.
We
will
continue
measures
to
further
improve
We will continue measures to further improveprofits.
profits.
Progress of Emergency Action Plan in Fiscal 2006
AEC
1. Cost reduction in accordance with VA/VE
> Expect to cut costs by as much as 2/3 this fiscal year
2. Raise in price
> Secured target price increase range for fiscal year projected at end of first half
3. Production shift from North America to other regions
> Shifted production of some products to Japan and started shipping
Accelerated local productivity improvements, and will implement personnel reductions
4. Productivity improvement
> Progressing toward improvements such as meeting our planned on-time
delivery rate, and will continue making further improvements
5. Project to reestablish solid profitability base for relays
> Launched companywide P/J, began activities across business companies
Making improvements for core relays
OMRON Corp.
6. Operational process restructuring from local to optimum production site
> Progressing basically in line with
7. Reform to product lifecycle management
> Now implementing cost reduction program
OMRON Corporation Investor Relations
20
3. Forecast for the Full Year
Ending March 31, 2007
OMRON Corporation Investor Relations
21
FY2006
Forecast of Consolidated Statements of Operations
Unchanged from figures announced on October 30th , 2006
（ billion yen）
）
C hange from
Net sales
Gross profit
SG&A
R&D
'Daikohenjyo'
Operating income
NIBT
NIAT
FY2005
FY2006
YOY
FY2006
O ri gi nal
Actual
Forcasts
Change
Original
targe t
%
target
%
626.8
253.4
152.7
50.5
11.9
62.1
64.4
35.8
740.0
286.0
171.0
52.0
63.0
65.0
37.5
118.1%
112.9%
112.0%
103.0%
101.4%
101.0%
104.9%
700.0
282.0
163.5
55.5
63.0
65.0
37.5
100.0%
100.0%
100.0%
（ yen）
）
<Currency Rate>
USD
EUR
105.7%
101.4%
104.6%
93.7%
113.4
138.2
116.0
148.6
2.6
10.4
110.0
135.0
6.0
13.6
*Assumption: The PL influence of the announced two M&A are t included.
OMRON Corporation Investor Relations
22
FY2006
Breakdown of Sales by Segment (full year)
Unchanged from figures announced on October 30th , 2006
（ billion yen）
）
Chan ge From
FY2005
Japan/Overseas
Japan
Overseas*
Total
Actual(1)
FY2006
Estimate(2)
354.9
271.9
626.8
388.0
352.0
740.0
las t year
(2)/(1)
109.3%
129.5%
118.1%
C hange From
FY2006
Original
O riginal
target(3)
(2)/(3)
376.5
323.5
700.0
target
103.1%
108.8%
105.7%
*Direct export is included in Overseas amount.
By business
(1)
IAB
ECB
AEC
SSB
HCB
Others
Total
272.7
97.7
77.6
91.8
61.1
25.9
626.8
(2)
307.5
145.5
92.5
102.5
67.0
25.0
740.0
(2)/(1)
112.8%
148.9%
119.2%
111.7%
109.7%
96.4%
118.1%
OMRON Corporation Investor Relations
Original
target(3)
298.0
121.5
91.0
99.0
66.5
24.0
700.0
(2)/(3)
103.2%
119.8%
101.6%
103.5%
100.8%
104.2%
105.7%
23
4. Progress of Key Strategic Themes
24
Progress of Key Strategic Themes
(1)Sales Growth in New Tech Fields
Nine Months ended
Dec. 31, 2006
Sharp increase over previous period due to contribution of OMRON PRECISION TECHNOLOGY Co., Ltd.
(formerly Pioneer Precision Machinery Corp.)
Expect to surpass ¥100b in final year of second stage of GD2010 (FY2007)
Estimate Over¥100b
(billion yen)
OPT
Products in New Tech Fields
90.0
IAB：Automated Optical Inspection Systems, etc.
80.0
ECB：Back light for LCD, etc.
70.0
ECB：MEMS Sensors, etc.
approx.
60.0
approx.25.0b
217%
50.0
119%
40.0
20.0
160% 28.8b
～
～
48.7b
OPT
34.3b 202％
％
Result Q3
FY2003
～
～
68.0 b
（ 16.0b）
）
24.1b
18.0b
10.0
0
FY07
Original
target
OPT
AEC：Laser radars for automobiles, etc.
30.0
(reference)
74.0b
FY2004
FY2005
Result Q3
FY2006
OMRON Corporation Investor Relations
FY2007
25
Progress of Key Strategic Themes
(2)Sales Growth in Greater China
Nine Months ended
Dec. 31, 2006
Sales of OMRON PRECISION TECHNOLOGY Co., Ltd. made strong contribution,
164% year-on-year and 103% against original target
（ MUSD)
1400
1330
OPT China
1200
1000
Q3 / FY2006 Actual
YoY Change
Change from Original target
164%
103%
800
250
184%
160%
FY2006
Projection
724
OPT China
147
176%
600
411
± ０％
400
412
OPT China
87
298
200
0
489
Q3/
FY2005
FY2004
FY2005
Q3/
FY2006
FY2006
OMRON Corporation Investor Relations
FY2007
26
Aiming for the Best Matching of
Machines to Human Beings
OMRON Corporation
-Contacting us Finance and Investor Relations Headquarters
Investor Relations Department
Phone: +81-3-3436-7170
E-mail: [email protected]
URL:
www.omron.co.jp