Results for the Nine Months Ended December 31, February 1, OMRON Corporation

Transcription

1 1 Results for the Nine Months Ended December 31, 2004 February 1, 2005 OMRON Corporation

2 Contents 1. Results for the Nine Months Ended December 31, Forecast for the Twelve Months Ending March 31, Long-Term Management Plan GD2010, Medium-Term Goals for 2nd stage 4. Approach to CSR and Challenges for 2010 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 141 consolidated subsidiaries and 17 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. 2

3 Main Business Areas Business Business Name Abbreviation Business Description Industrial Automation Industrial Automation Business IAB Manufacture and sale of control components for factory automation, etc. Electronic Components Electronic Components Business ECB Manufacture and sale of electronics components for home appliances, communications, mobile devices, etc. Automotive Electronics Automotive Electronic Components Business AEC Manufacture and sale of electronic components for automobiles Social Systems Social Systems Business* SSB Manufacture, sale and services for public transportation (automated passenger gates, etc.) and traffic and road management systems Healthcare Equipment Healthcare Business HCB Manufacture and sale of medical devices (digital blood pressure monitors, etc.) Others Business Development Group/Others Others Exploration of new businesses, businesses not included in above * Financial equipment business, such as ATMs, was transferred to "Hitachi-Omron Terminal Solutions, Corp." on October 1,

4 1. Results for the Nine Months Ended December 31,

5 Nine months ended December 31, 2004 Consolidated Statements of of Income Net Net sales: 449.6b (108% YOY change), Operating income: 45.8b (123% YOY change), both both in in line line with with our our previous forecasts* Statements of Income (billion yen) 9 months 9 months Change from 9 months Change from ended ended last year ended Previous 12/ / /2004 forecasts* Previous Actual(1) Actual(2) (2)/(1) forecasts*(3) (2)/(3) Net sales % % Gross profit % % SG&A expense % % R&D expense % % Operating income % % NIBT % % NIAT % - - Exchange Rate (yen) US$ EUR *Previous forecasts released on October 29,

6 Nine months ended December 31, 2004 Breakdown of of Sales by by Region and Business YOY sales sales growth continues high, but but the the growth rate rate gets gets smaller. 9 months results falls falls below the the previous forecasts in in IAB IAB and and ECB ECB By Region 9 months 9 months Change from 9 months Change from ended ended last year ended Previous 12/ / /2004 forecasts* Previous Actual(1) Actual(2) (2)/(1) forecasts*(3) (2)/(3) Japan % % Overseas** % % Total % % **Overseas includes direct exports By Business (billion yen) Previous Actual(1) Actual(2) (2)/(1) forecasts*(3) (2)/(3) IAB % % ECB % % AEC % % SSB % % HCB % % Ohters % % Total % % *Previous forecasts released on October 29,

7 Nine months ended December 31, 2004 Breakdown of of Operating Income Operating Income increases in in all all business segments except HCB However, IAB IAB and and ECB s falls falls short from the the previous forecasts By Business (billion yen) 9 months 9 months Change from 9 months Change from ended ended last year ended Previous 12/ / /2004 forecasts* Previous Actual(1) Actual(2) (2)/(1) forecasts*(3) (2)/(3) IAB % % ECB % % AEC SSB % % HCB % % Others % % HQ Cost/Elimination % % Total % % *Previous forecasts released on October 29,

8 Nine months ended December 31, 2004 Breakdown of of Changes in in Operating Income Sales growth was the major factor in in gross profit increase; 8.5b YOY increase in in operating income Sales increase Product mix Cost reductions 1.2 Exchange losses -1.2 Rise of the cost of materials -0.5 Increase in SG&A expenses ( +1.1b), R&D expenses ( +3.8b) (billion yen) 37.3 Change in gross profit Change in SG&A expenses, R&D expenses 45.8 Operating income for nine months ended December 31, 2003 Operating income for nine months ended December 31,

9 Nine months ended December 31, 2004 Segment Information IAB (Industrial Automation Business) Manufacture and sale of control systems and equipment for factory automation and production machinery Industrial Components (Temperature Controllers, Relays, Switches, Timers, counters, etc.) System Components (Programmable Logic Controllers, Motion Controllers, etc.) Sensors (Photoelectric/Proximity Sensors, Base Inspection Systems, etc.) Net Net sales: sales: 187.6b; Operating income income ratio: ratio: 17.1%; 17.1%; Growth rate rate is is getting getting lower lower because of of slowdown specially in in China China market market IAB (billion yen) 9 months 9 months Change from ended ended last year 12/ /2004 Actual(1) Actual(2) (2)/(1) Japan % Overseas % North Americ % Europe % Asia % China % Exports % Total % * * Digital Panel Meter Programmable Logic Controller Base Inspection System Operating income % *Figures for Korean sales subsidiary moved to exports (in 1 st half 9

10 Nine months ended December 31, 2004 Segment Information ECB (Electronic Components Business) Manufacture and sale of electronic components for home appliances, communications, mobile phones, amusement components, OA Relays, Switches, Connectors, Sensors, Micro Lens Arrays, Customized ICs, IC Coins, Optical Communications Devices, etc. Net Net sales: sales: 76.1b; 76.1b; Operating income income ratio: ratio: 16.0%; 16.0%; Although over over 10% 10% growth growth is is continued, the the results results did did not not reach reach the the previous forecasts ECB (billion yen) 9 months 9 months Change from ended ended last year 12/ /2004 Actual(1) Actual(2) (2)/(1) Japan % Overseas % North Americ % Europe % Asia % China % Exports % Total % FPC Connector Relay, Switch B-MLA Operating income % 10

11 Nine months ended December 31, 2004 Segment Information AEC (Automotive Electronic Components Business) Manufacture and sale of automotive electronic components Automotive Relay Automotive Relays, Sensors, Laser Radars, Power Window Switches, Keyless Entry Systems, ECU, etc. Net Net sales: 47.2b; Operating loss; loss; Europe and and Asia Asia business continue strong AEC (billion yen) 9 months 9 months Change from ended ended last year 12/ /2004 Actual(1) Actual(2) (2)/(1) Japan % Overseas % North Americ % Europe % Asia % China Exports % Total % Keyless Entry System Automotive Laser Radar Operating income

12 Nine months ended December 31, 2004 Segment Information SSB (Social Systems Business*) Manufacture and sale of equipment/modules, and provision of solutions and services to the fields of finance, public transportation and traffic/road management Finance: ATMs, Cash Dispensers, Automated Bill Changers, etc. Public Transportation : Passenger Gates, Ticket Venders, Fare Adjustment Systems, etc. Traffic/Road Management: Signal Controllers, Road Management Devices, etc. Net Net sales: sales: 80.0b; 80.0b; Operating Operating income income ratio: ratio: 6.2%; 6.2%; Sales Sales decrease decrease due due to to ATM ATM business business transfer transfer to to JV; JV; Special Special demand demand for for new new bank bank notes notes continues continues in in railway railway business business SSB (billion yen) 9 months 9 months Change from ended ended last year 12/ /2004 Actual(1) Actual(2) (2)/(1) Japan % Overseas % North Americ % Europe % Asia % China % Exports % Total % Automatic Gate Ticket Vending Machine Traffic/Road Management System Operating income % *Financial equipment business, such as ATMs, is included in results until September 30,

13 Nine months ended December 31, 2004 Segment Information HCB (Healthcare Business) Manufacture and sale of home and professional healthcare equipment Digital Blood Pressure Monitors, Digital Thermometers, Pedometers, Body Composition Analyzers (Body-fat Analyzers), Electronic Pulse Massagers, Chair Massagers, etc. Net Net sales: sales: 38.6b; 38.6b; Operating income income ratio: ratio: 15.5%; 15.5%; Slowdown in in China, China, but but sales sales of of blood blood pressure monitors continues very very strong strong in in other other area area HCB (billion yen) 9 months 9 months Change from ended ended last year 12/ /2004 Actual(1) Actual(2) (2)/(1) Japan % Overseas % North Americ % Europe % Asia % China % Exports % Total % Blood Pressure Monitor Body Composition Monitor Portable Electrocardiograph Operating income % 13

14 2. Forecast for the Twelve Months Ending March 31,

15 12 months ending March 31, 2005 Forecast of of Consolidated Income Statements Full Full year year forecasts revised downward due due to to slowdown specially in in China; YOY sales sales and and profits growth maintained high, and and profits expected to to set set new new records Statements of Income 12 montshs 12 months Change from 12 months Change from ended ending last year ending Previous 03/ / /2005 forecasts* Previous Actual(1) Forecasts(2) (2)/(1) forecasts*(3) (2)/(3) Sales % % Gross Profit % % SG&A expenses % % R&D expenses % % Operating income % % NIBT % % NIAT % % Exchange Rate ROE=10.6%, EPS=about 130(Forecast) US$ EUR *Previous forecasts released on October 29, 2004 (billion yen) (yen) Record high 15

16 12 months ending March 31, 2005 Sales Forecast by by Region and Business Forecasts in in Japan unchanged, but but decreased in in overseas from previous one; one; IAB IAB and and ECB ECB segment will will fall fall short from previous forecasts By Region 12 montshs 12 months Change from 12 months Change from ended ending last year ending Previous 03/ / /2005 forecasts* Previous Actual(1) Forecasts(2) (2)/(1) forecasts*(3) (2)/(3) Japan % % Overseas** % % Total % % **Overseas includes direct exports By Business (billion yen) Previous Actual(1) Forecasts(2) (2)/(1) forecasts*(3) (2)/(3) IAB % % ECB % % AEC % % SSB % % HCB % % Other % % Total % % *Previous forecasts released on October 29,

17 12 months ending March 31, 2005 Forecast of of Consolidated Operating Income New New records expected though revised forecast gets gets shy shy from previous one; one; IAB/ECB/HCB expect high high growth but but AEC/SSB decrease on on YOY basis By Business (billion yen) 12 montshs 12 months Change from 12 months Change from ended ending last year ending Previous 03/ / /2005 forecasts* Previous Actual(1) Forecasts(2) (2)/(1) forecasts*(3) (2)/(3) IAB % % ECB % % AEC % % SSB % % HCB % % Others % % HQ Cost/Eliminations % % Total % % *Previous forecasts released on October 29,

18 3. Long-Term Management Plan GD2010 Medium-Term Goals for 2 nd stage 18

19 GD2010, Medium-Term Goals for 2 nd stage Vision of of GD2010 (Long-Term Management Plan) Small but Global Omron should be be recognized as as a global leading company GD2010 Management Objectives: Maximizing long-term corporate value By FY2010 To become a high-growing company with rigid profitability base Goal in the 1 st stage To establish a structure of high profitability, and achieve ROE 10% as of 03/2005 ROE 10.2% was achieved as of 03/

20 GD2010, Medium-Term Goals for 2 nd stage Positioning of of the 2 nd nd stage 2001 Balancing sales growth & earnings, Implementing constant structural reforms Establish a profit structure 2004/03 Balancing growth & earnings 2008/03 Achieve a growth structure stage 2 nd stage 3 rd stage 2010 Implement Constant Structural Reforms Structural reform not ended at the 1st Stage but continues in the 2nd Stage and after [Operational structural reform] To enhance capabilities to respond quickly to changes in the business environment and create a strong structure of high profitability [Business domain structural reform] To expand geographical area and business domain with our core technology to get higher growth 20

21 GD2010, Medium-Term Goals for 2 nd stage Goal of of the 2 nd nd stage The The 2 nd nd stage goal goal is is directly linked to to maximizing corporate value :: Double the Total Business Value GD2010 Long-Term Management Objectives Maximizing long-term corporate value Medium-Term Management Goal (FY07) Double the Total Business Value of FY03 Enhancing brand value Business C value Corporate expenses Brand value Total business value Corporate value Business B value Total business value Corporate value Business A value FY2003 FY

22 GD2010, Medium-Term Goals for 2 nd stage Definition of of Business Value Omron defines business value as as the the total of of present values of of future FCF (Free Cash Flow) generated by by each business unit New Technological Fields Simulate 10-year FCF based on five-year plan Stabilize FCF with lasting value after 11 years Existing + China Market Simulate 3-year FCF Stabilize FCF with lasting value after 4 years Lasting value Lasting value DCF present value of FCF FCF DCF present value of FCF FCF 1 2 Business Value FY11 & after Business Value FY4 & after 22

23 GD2010, Medium-Term Goals for 2 nd stage One scenario to to Double the Total Business Value A business value of of 250b is is created in in new new technological fields, and and the the business value in in existing fields increases to to 950b FY 2003 Total business value: 600b FY 2007 Total business value: <Scenario for New Technological Fields> Generate 250b business value 1,200b <Scenario for Existing + China Market> Increase business value to 950b (1.6 times that of FY2003) Establish new business areas that generate over 68b sales and over 20% FCF growth (Structural Reform in Business Domains Refer to the page 24 Refer to the page 28 Sales expansion over 100b in Greater China area= Structural Reform in Business Domains Profitability improvement in existing area by executing of Operational Structural Reform Refer to the page 29 23

24 GD2010, Medium-Term Goals for 2 nd stage One One scenario for for New New Technological Fields Generate additional 250B business value Establishing new new technological fields that that may may be be expected to to grow at at 20% 20% annually over over ten ten years, with with anticipated sales sales of of over over 68b 68b in in FY07 (Structural Reform #1 #1in in Business Domain) Sales/FCF increase plan Sales 18b Business value simulation in New Technological Fields in FY2007 FY2003 FCF Lasting value Increasing sales 50b Sales 68b+ Business Value 250b FCF 20% growth FY2007 FCF FY18 & after 24

25 GD2010, Medium-Term Goals for 2 nd stage New Technological Fields Growth strategy based on on technology Aiming at at 50b 50b sales sales increase from FY03 based on on our our unique technologies and and products, most most of of which are are already launched in in the the market and and established a track record (billion yen) Businesses in development Others 68b+ New Technological Fields WDS: Waveform Analysis, Diagnosis and Solution Developed businesses WDS/LR/ RF/MEMS AOI/ LCD BL Over 50b+ increase 18b LR: Laser radars for automobiles RF: Passive Keyless entry for automobiles MEMS: Micro electro mechanical systems AOI: Automated optical inspection 0 FY03 FY04 (Actual) (Forecast) FY07 (Planned) LCD BL: Liquid crystal backlight 25

26 GD2010, Medium-Term Goals for 2 nd stage New Technological Fields High Growth Potential Products Products anticipating a high growth rate in in IAB/ECB/AEC (three core businesses) IAB AOI: Automated Optical Inspection system for PCB Assembly Line ECB LCD BL: LCD Backlight Units for Mobile Phones AEC L/R: Automotive Laser Radar for Anti-collision (World First Reversible Type) WDS: Waveform Analysis, Diagnosis and Solution Optical Communication Device TPMS: Tire Pressure Monitoring System 26

27 GD2010, Medium-Term Goals for 2 nd stage One One scenario for for Existing + China Market Increase Business Value to to 950b Generate additional about 25b 25b OP OP by by achieving 100b sales sales growth in in Greater China and and by by improving margin ratio ratio in in the the existing domain Sales/FCF increase plan Sales about 570b Business value simulation in Existing + China Market in FY2007 FY2003 FCF Increasing sales 110b or more Sales about 680b+ Business Value 950b FY2007 FCF FY11 & After 27

28 GD2010, Medium-Term Goals for 2 nd stage One scenario for for Existing + China Market Achieve 100b sales sales growth in in Greater China Generate additional 10b 10b OP OP by by achieving about 100b sales sales increase from FY2003 in in Greater China (Structural Reform #2 #2in in Business Domain) 1,400 million USD) 1,330 1,200 1, Over 100b (=USD 1 billion) Sales increase FY2001 Actual FY2002 Actual FY2003 Actual FY2004 Forecast FY2007 Target 28

29 GD2010, Medium-Term Goals for 2 nd stage One One scenario for for Existing + China Market Profit Structural Reform Establish a strong profit structure of of 40:30:10* in in FY2007 by by promoting further reductions in in ratios of of SG&A and and fixed manufacturing cost cost (Structural Reform in in Business Operations) (Gross Profit/Net sales 40% : SG&A+R&D/Net Sales 30% : Operating Income/Net Sales 10%) Net Sales (billion yen) Variable costs Increase variable costs ratio due to structural reform in business domains * *Increase in variable costs due to sales composition improvement of ECB and AEC Fixed Manufacturing costs R&D expenses SG&A expenses Operating Income structural reform in manufacturing costs structural reform in SG&A expenses R&D + SA&A 30% Gross Profit FY2003 Results FY2007 Target Structure Operating Income 10% 40% 29

30 GD2010, Medium-Term Goals for 2 nd stage Existing + China Market Target P/L structure of of each segment Promoting "Structural Reform in in Business Operations" to to target P/L P/L structure of of each each segment while balancing sales sales growth and and earnings IAB Achievement of ECB Achievement of AEC Milestone to ROS 10% in Cost rate SG&A+R&D/ Net Sales SSB ROS: Over 4 HCB Earnings maintenance and growth Operating Income/ Net Sales *Before reorganizing financial business in FY

31 GD2010, Medium-Term Goals for 2 nd stage Existing + China Market ROIC as as a business unit s management index Each business unit unit to to increase its its business value through ROIC improvement, with with maximizing its its profits and and improving the the efficiency of of assets utilization Business Unit Level Increase in Profit Increase in Business Value Increase in FCF Reduction of Working Capital Improvement of ROIC Final Goal Decrease in Fixed Assets Management Index Working capital BS of each Business Notes and accounts receivable Inventories Fixed assets Notes and accounts payable Invested capital ROIC = Profit Invested Capital = Profit Working Capital* +Fixed Assets *Working Capital = Notes and Accounts Receivable + Inventories - Notes and Accounts Payable 31

32 GD2010, Medium-Term Goals for 2 nd stage Existing + China Market Promoting Global Production Reform Decrease consolidated manufacturing cost cost ratio ratio by by 2% 2% through increasing of of production ratio ratio in in Greater China to to about 30% 30% in in FY2007 (Operational Structural Reform #1) #1) (billion yen) Reform in Global Production Structure Production in Greater China to increase by 4.5 times 9% 20% 30% 19% 24% For China market % 51% 0 FY2003 FY2007 Japan Overseas Production (Excluding China Area) China Area Production 32

33 GD2010, Medium-Term Goals for 2 nd stage Existing + China Market Promoting SG&A Expenses Reform Decrease SG&A expense ratio ratio by by 2% 2% in in business and and headquarters section (Operational Structural Reform #2) #2) Management resources in the group are intensively shifted to fields where high growth are expected; And SG&A expenses ratio is improved over 2% in FY2007 compared with FY2003 by control of growth rate of SG&A expenses in entire group 28% sales growth: planned 584.9b SG&A expenses ratio: controlled to 16% 750.0b Re-distribution of management resources in the entire group FY2003 FY2007 result target structure Productivity reformation mainly in business and staff department 33

34 GD2010, Medium-Term Goals for 2 nd stage Establishment of of Business Structure to to Cope with with Economic Fluctuations (Structural Reform Reform #3 #3 in in Business Domain) To To achieve high high growth in in ECB ECB and and AEC; Offsetting the the decrease in in SSB SSB sales* and and establishing another pillar comparable to to IAB IAB *Due to transfer of SSB financial equipment business to a joint venture company in October 2004 Achievement of Balancing sales growth & earnings HCB 8 SSB 23 AEC 10 other 4 FY2003 ECB 15 IAB 39 AEC about 13 Increasing composition ratio of HCB about 9 SSB about 11 ECB+AEC 25% about 36% other about 4 ECB about 23 FY2007 IAB about 40 34

35 GD2010, Medium-Term Goals for 2 nd stage Summary of of Consolidated PL Scenario in in FY2007 To To achieve high growth in in sales and attain over 10% of of profits margin (ROS/ROIC/ROE) through business restructuring (billion yen) 12 mounths 12 months ended ending Sales 03/ /2008 Ratio Actual Target Net sales % Gross profit % SG&A expenses % R&D expenses % Net Sales 584.9b FY b +100b Operating Income 750.0b FY b New Technological Fields China Market (billion yen) Operating income % 51.4b +24.0b Operating income increase by management structural reform and China area sales increase chiefly (billion yen) FY2003 FY

36 4. Approach to CSR and Challenges for

37 Approach to CSR and challenges for 2010 Strengthening CSR Activities and Improving Brand Value Strengthening the the area area where where business activities and and social social contribution correspond, improving the the corporate image image and and brand brand value, value, with with the the aim aim of of maximizing corporate value value Social Needs Safety, Security, Environment, Health Challenging the achievements of Safety, Security, Environment, Health as social needs, with the strengths in Sensing & Control Technology and the concept of the Best Match of Human Beings and Machines Omron s Sprit -Corporate activity with social responsibility -Anticipatory investment social contribution Public institution of business Reinforced Area Public institution in society Uniting with business Reflection in business in the future Core competence Sensing & Control 37

38 Approach to CSR and challenges for 2010 Challenges for Starting Point of of Omron - Always meeting changes in social needs Always meeting changes in social needs Industrialized Society Needs to attain material wealth High Productivity High Efficiency Society s needs also change Optimized Society Needs to attain comfort and well-being Environment Security High Productivity High Efficiency Safety 38

39 Approach to CSR and challenges for 2010 Challenges for Proposal of of New Concepts - Making machines more compatible with humans - that is, is, the Best Match of of Human Beings and Machines Past Humans adapt to machines Evolution of Sensing & Control Technology Future Machines adapt to humans Machine adjusting their functions and performance according to the user s ability level/gender/age Best Match of Human Beings and Machines 39

40 Approach to CSR and challenges for 2010 Challenges for Core competence is is Sensing & Control -- With advanced Sensing & Control, machine learns in in lieu of of humans to to achieve optimum action Sensing + Control Human (Limited to certain people) Sensing & Control Human (Anyone) Machine Machine Intelligence Sensing (Detection of presence) Control (Procedure) Objective Sensing (Recognition of conditions) Learning Control (Conditional Procedure) Action Action 40

41 Approach to CSR and challenges for 2010 Challenges for OMRON in in Omron captures the the needs of of a changing society in in advance and achieves the the maximization of of long-term corporate value in in : First Year of Optimized Society - Capture the needs of society in advance with Best Match of Human Beings and Machines : Small but Global *Management: *Business: *Individual: Management that wins the confidence of global society Business that maintains high sales growth and earnings based on its advanced technologies Autonomous specialists 41

42 Aiming at the Best Match of Human Beings and Machines OMRON Corporation - Contacting us - Corporate Planning Headquarters Investor Relations Department Phone: omron_ir@omron.co.jp URL: 42