VISION-21&ACTION-21 Announcement of Second Milestone

Transcription

1 Corporate Strategy VISION-21&ACTION-21 Announcement of Second Milestone 1 May 9, 2006

2 Corporate Strategy VISION-21&ACTION-21 Review of First Milestone from FY00 to FY05 2

3 VISION-21 & ACTION-21 ( V-21 & A-21 ) Realizing Healthy & Profitable Operation Corporate Strategy Announced January 2000 Vision VISION-21 Strategy ACTION-21 Business structure reform strategy Group management reform strategy First Milestone Sales 500 billion yen Operating income 50 billion yen 3

4 Review of V-21 & A-21 First Milestone Target of of First Milestone FY05 Results Sales billion yen yen Sales billion yen yen Operating income billion yen yen Operating income 25.3 billion yen yen ROS (return on on sales) 10% ROS 6.5% 4

5 Review of Management Measures from FY00-05 Business structure reform strategy 1 2 Sale of equity stake in joint venture companies Hewlett-Packard Japan Yokogawa Johnson Controls Yokogawa Analytical Systems Acquisition of 100% equity stake in Ando Electric and integration of its operations Acquisition of high-frequency (optical) measurement technology Expansion of semiconductor tester product lineup 4 Reinforcement of global business system Establishment of Yokogawa Electric International in Singapore Establishment of Yokogawa Electric China Co., Ltd. and Yokogawa China Co., Ltd. Establishment of engineering office in Huston,USA 5 Matoi Projects Promotion for creation of new businesses and e xpanding existing businesses 3 Realignment of manufacturing facilities Realignment of manufacturing facilities in Japan from 19 factories to 4 factories Transfer of flowmeter and recorder production lines to wholly owned manufacturing subsidiary in China 6 Investment for advanced technology development Commercialization of new businesses including photonics, stage and life science businesses 5

6 Review of Management Measures from FY00-05 Group management reform strategy 1 Streamline of affiliated companies 4 Reinforcement of corporate governance Affiliated companies in Japan ( 60 companies 30 companies) Affiliated companies outside Japan (72 companies 60 companies) Appointment of external director Appointment of external corporate auditor 2 Introduction of new performance-based remuneration system 5 Reinforcement of corporate compliance system Introduction of mission standard system Standards of Business Conduct for the Yokogawa Group 3 Introduction of defined contribution pension plan Change the pension system from defined benefit pension plan to defined contribution plan 6

7 Corporate Strategy VISION-21&ACTION-21 Second Milestone from FY06 to FY10 7

8 Strategy ACTION-21 to achieve Second Milestone ACTION-21 to achieve Second Milestone Initiatives One Global YOKOGAWA Customer-centric Solutions Leading Edge Technology Realizing Healthy & Profitable Operation 8

9 Strategy ACTION-21 to achieve Second Milestone Restructuring Phase Growing Phase (Second Milestone) (First Milestone) 9

10 Management Targets of Second Milestone for Yokogawa Group FY06 FY08 FY10 (Billion ) Orders Sales Operating income ROS (return on sales) 7.6% 11.2% 12.5% 10

11 Plan for CAPEX and R&D Investment Increase in CAPEX and R&D Investment for Growing Business Areas R&D expenses 120 billion yen (FY06-08) R&D expense to sales ratio of 8.9% CAPEX 110 billion yen (FY06-08) Industrial Automation and Control Test and Measurement New and Others Investment in advanced technology development Product development with the aim of becoming the global No.1 company in the control business Reinforcement of product competitiveness and expansion of ATE business product lineup Reinforcement of photonics, advanced stage, and life science businesses Development of technologies for micro-measurement, field-ubiquitous computing, and photonic measurement 11

12 Strategies for Industrial Automation & Control Business Strategies by Region to be Global No.1 Regions where Yokogawa is already strong and the markets are growing quickly Gain the top share through active investment Markets in Europe and North America Increase market share by gaining replacement orders from new customers who use our competitors products Japanese market Expand business areas such as MES and ERP through integration of control and information businesses and gain market share to become an Enterprise Technology Solutions (ETS) Service Company 12

13 Strategies for Industrial Automation & Control Business Reinforcement of Product Development Capability to be the Global No.1 VigilantPlant for Achieving Yokogawa s Vision of the Ideal Plant Fewer surprises Minimize reactive measures, unexpected downtime, quality variations Less blind spots Avoid guesswork, instability, suboptimization Free of bottlenecks Reduce delays, lost opportunities, knowledge silos Gaining new customers through the Vigilance marketing campaign 13

14 Strategies for Industrial Automation & Control Business Three VigilantPlant Excellence Initiative VigilantPlant Roadmap Production Management Asset Management Safety Management VigilantPlant & SE launch ProSafe-RS Safety Excellence (SE) AE launch FieldMate, PRM, InsightSuiteAE ProSafe-RS on Vnet/IP Production Excellence (PE) Asset Excellence (AE) PE launch VigilantPlant Operational Excellence solution completion VigilantPlant evolution Production Excellence Asset Excellence Safety Excellence Lifecycle Excellence 14

15 Strategies for Industrial Automation & Control Business Strategic R&D and Reinforcement of Engineering Capabilities Building new engineering Office in Houston, USA Reinforcement of engineering capability in Korea Establishment of Singapore Development Center Establishment of engineering offices in the UAE and Bahrain 15

16 Strategies for Test and Measurement Business ATE Reinforcement Reinforcement of of Product Product Competitiveness Competitiveness and and R&D R&D (Memory (Memory tester/ tester/ LCD LCD driver driver tester/ tester/ SOC SOC tester) tester) Establishment Establishment of of Semiconductor Semiconductor Test Test Solution Solution Business Business Front-end Front-end Memory Memory Tester Tester MT6121 MT6121 LCD LCD Driver Driver Tester Tester ST6730 ST6730 Flash Flash Memory Memory Tester Tester Next Next SOC SOC Tester Tester Back-end Back-end Memory Memory Tester Tester Next Next LCD LCD Driver Driver Tester Tester Test Test Solutions Solutions for for Semiconductor Semiconductor

17 Strategies for Test and Measurement Business ATE Reinforcement of of Sales Sales Network for for Global Market Expansion Establishment of sales network to meet each customer s s needs Expanding business into the large USA market Cultivation of high-growth-potential Chinese market 17

18 Strategies for Test and Measurement Business Communication and Measuring Instrument Measures for for Three Three Important Business Areas Areas Mechatronics and Energy Markets Electronics and Semiconductor Markets Communications and Network Markets Providing Solutions in the BOX to support automotive and alternative energy development Providing combined analysis tools for development of CPU-equipped devices such as information appliances Providing optical measuring instrument and IP measuring instruments for next-generation optical IP networks that are expected to take off around

19 Strategies for New and Other Businesses Photonics Establishment Establishment of of a Backbone Backbone Optical Optical Communications Communications Business Business Creation Creation of of an an Optical Optical Packet Packet Network Network Market Market Gain high market share in the backbone optical communications market with optical communication modules and subsystems that use our most-advanced compound semiconductor technology Create from the ground up and take a leading position in the high-growth-potential optical packet network using our unique technologies 19

20 Strategies for New and Other Businesses Advanced Stage Engagement in in the the Large Large and and Ultra-precise Stage Stage Business Key Technologies Control technologies for ultra-precise positioning (actuator technology) ±0.25μm positioning precision Function for conveyance of LCD flat panels High-performance control technology Image quality testing algorithm technology Covering 8th generation of mother glass panels 2,160mm 2,400mm 20

21 Strategies for New and Other Businesses Life Science Concentration of ofresource Brain Brain Science and and Genome Science Brain science Genome science Establishment of bioinstrumentation business Establishment of confocal scanner business Establishment of a compound drug screening device business for the drug discovery Magnetoencephalographs Confocal Scanners Drug Screening Devices 21

22 Corporate Strategy VISION-21&ACTION-21 Supplemental Information 22

23 Review of V-21 & A-21 First Milestone Targets for Income Statement Targets of of First First Milestone FY05 FY05 Results Sales Sales billion yen yen Operating income 50 50billion yen yen Sales Sales billion billion yen yen Operating Income billion billion yen yen ROS ROS (return on on sales) sales) 10% 10% ROS ROS 6.5% 6.5% ROA ROA 5% 5% ROA ROA 5.3% 5.3% ROE ROE 10% 10% ROE ROE 11.0% 11.0% 23

24 Review of V-21 & A-21 First Milestone Targets for Balance Sheet Targets of of First First Milestone FY05 FY05 Results Equity Equity ratio ratio over over 50% 50% Equity Equity ratio ratio 53.7% 53.7% Total Total assets assets billion billion yen yen Total Total assets assets billion billion yen yen Turnover Turnover of of total total assets assets over over Turnover Turnover of of total total Assets Assets Interest-bearing Interest-bearing liabilities liabilities under under billion billion yen yen Interest-bearing Interest-bearing liabilities liabilities billion billion yen yen Debt/equity Debt/equity ratio ratio under under 40% 40% Debt/equity Debt/equity ratio ratio 27% 27% 24

25 Review of V-21 & A-21 First Milestone Trend of Sales and Operating Income Trend of Sales Trend of Operating Income (Billion ) (Billion ) FY00 FY01 FY02 FY03 FY04 FY

26 ACTION-21 to achieve Second Milestone Targets for Yokogawa Group FY06 FY08 FY10 (Billion ) Orders Sales Operating income ROS (return on sales) 7.6% 11.2% 12.5% Total asset turnover Debt/equity ratio 23% 18% 15% 26

27 ACTION-21 to achieve Second Milestone Targets by segment Orders Sales Operating Income Control Measurement N ew & others Control Measurement N ew & others Control Measurement N ew & others (Billion ) (Billion ) (Billion ) (4.6) FY06 FY08 FY06 FY08 FY06 FY08 27

28 Disclaimer The information pertaining to our business plans and forecasts that has been provided in this presentation and at analyst meetings contains forward-looking statements that are based on our management s current knowledge and require the making of assumptions about future events. As such, it cannot be guaranteed that these statements will not differ materially from actual results. 28