Management Plans for the 3 rd Stage of GD2010

Transcription

1 Management Plans for the 3 rd Stage of GD Strengthening Core Businesses and Aiming for Global No. 1 - January 10, 2008 OMRON Corporation President & CEO Hisao Sakuta

2 GD2010: Omron s Long-term Corporate Vision Using sensing and control technology to to anticipate social needs Omron sees itself as a group of business units that are global leaders in their respective industries GD2010 Management objective: Long-term maximization of corporate value By 2010 Achieving profit-driven growth GD st -stage (Apr Mar. 2004) goal Establishing a profit structure, achieving ROE of 10% Achieved ROE of 10.2% in March 2004 ROE 10.2% marked in FY03 GD nd -stage (Apr Mar. 2008) goal Balancing growth and profits, doubling business value - Business value 1 projected to double - Earnings per share (EPS) projected to increase from 108 yen (FY03) to 200 yen (FY07) 2 1. Based on internal calculations made during the 2 nd stage 2. These projections were announced with FY07 interim results in October

3 GD2010 Performance (Sales and Profits) Sales, profit increased during 1 st st and 2 nd nd stages Sixth consecutive year of sales/profit growth projected for FY07 1 st Stage 2 nd Stage 3 rd Stage 2001 Establishing a Balancing growth and profits profit structure Achieving a growth structure March 2011 (Billions of yen) 800 Sales Fifth consecutive year of increase Sixth consecutive year of increase (projected) 200 (Billions of yen) Operating income Operating profit margin 9.1% 9.9% 8.6% 9.0% FY01 FY02 FY03 FY04 FY05 FY06 FY07 (forecast) 2

4 GD2010 Performance (EPS, ROE, Dividends) EPS, dividend (yen) EPS Dividend ROE Dividend Maintained ROE of of 10% in in the 2 nd nd stage EPS expected to increase by 85% 2 EPS ROE % 0.2% % 10.7% EPS to increase by 85% 34 Approx % 11.5% (TBD) FY01 FY02 FY03 FY04 FY05 FY06 FY07 (projected) 1 st Stage 2 nd Stage ROE (%) * Figures complying with SFAS. Past figures including discontinued operations have been adjusted to meet FY07 classifications. * FY07: official forecast as of Oct 30,

5 Management Plans for the 3 rd Stage of GD2010 (April 2008 March 2011) 4

6 GD rd -stage Mid-term Goal Raise business value by an annual average of at least 10% Raise business value by an annual average of at least 10% 1 st Stage (3 years) 2 nd Stage (4 years) 3 rd Stage (3 years) Apr Establishing a profit structure Apr Balancing growth and profits Apr Achieving a growth structure Mar GD rd -stage Mid-term Goal Raise business value by an annual average of at least 10% Performance Indicators ROIC (Return on Invested Capital): 12% or more ROS (Return on Sales): Approx. 10% Capital efficiency: 10% ROIC Improvement 5

7 Ideal Image for the Omron Group in the 3 rd Stage Dreams, Pride and Confidence Omron will strive to to be a company that is is recognized around the world Innovation driven by social needs Dreams Pride Confidence Working for the benefit of society Continued profit generation 6

8 How Omron Calculates Business Value Present business value (PV) = Total current value of future free cash flow (FCF) generated by each business Terminal value In order to increase business value PV =? {FCF / R*} *R= Reduction rate (capital cost) DCF: Current value of FCF FCF Increase in FCF Decrease in reduction rate (capital cost) PV FYn, n+1,... FY20xx Increase in profits Decrease in working capital Increased capital efficiency 7

9 Scenario for Achieving 3 rd -stage Mid-term Goal Strengthen existing businesses and expand new businesses to achieve sustainable growth Mid-term goal Avg. BV growth per year = 10% BV gain breakdown (2) Expand new businesses (1) Strengthen existing businesses Measures (1) Core sensing and control technology (2) Anticipate new social needs in the areas of security/safety, healthcare and environmental preservation Work to increase: (1) Business value of key businesses in each business segment (2) Sales in Greater China PV FY07 Operating margin and EPS indicators JPY 71 bn OM OM FY07 (forecast)* Approx. 200 yen EPS FY10 FY10 JPY bn Approx. 260 yen EPS Higher business value through improved profitability, coming mainly from reinforced existing businesses *official forecasts as of Oct 30,

10 1-1 Strengthening Existing Businesses (Key Measures by Segment) Existing Businesses Boost business value of key businesses in each business segment Boost business value of key businesses in each business segment Industrial Automation Business (IAB) Electronic Components Business (ECB) Automotive Electronic Components Business (AEC) Focus on the security/safety and environment-related applications domain in factory automation (FA). Prioritize high value-added businesses such as safety, QLM 1 and micro PLC businesses. Improve profitability in the electromechanical business 2 by enhancing production capacity. Work to expand the LCD backlight business in the microelectronics business 3. Aim to become no. 1 in the electric power steering (EPS) market through profitable business expansion. Relay Business Aim for global no. 1 share by maximizing relay manufacturing expertise and enhancing profitability. Social Systems, Solutions and Service Business (SSB) Healthcare Business (HCB) Stabilize profitability and expand applications in the railway station management and traffic management businesses. Realize both earnings and growth by building up the lifestyle-related disease prevention and treatment business. 1 QLM business: A business centered around the provision of solutions that both equip machines with quality inspection capabilities comparable with those of human experts, and enable efficient and effective quality control/ improvement. 2 Electromechanical business: Existing electronic components businesses (relays, switches, etc.). 3 Microelectronics business: Electronic components business in the advanced technology domain (LCD backlights, etc.) 9

11 1-2 Strengthening Existing Businesses Re-positioning ourselves as global no. 1 Existing Businesses Increasing business value by focusing on certain businesses Company-wide efforts to strengthen business in eight areas Strategy: Shift to global no. 1 Enhance the value of each business through portfolio management. Omron wants to be seen as a group of business units, each of which is a global leader in its market sector. Relays QLM (automated optical inspection systems) Safety equipment Micro PLCs Growth stability LCD backlights Safety equipment Relays Blood pressure monitors LCD backlights EPS EPS QLM Blood pressure monitors Body composition monitors Body composition monitors Micro PLCs Profit stability Note: We will also keep working to strengthen existing business units that are already global no. 1 (e.g. photoelectric/ proximity sensors) 10

12 1-2 Strengthening Existing Businesses (Growth in Greater China) Existing Businesses Projecting average annual growth of 20% or more In In the 3 rd rd stage, we must work to to secure return on investments made in in the 2 nd nd stage Sales in China Net sales (USD millions) Growth of 30% or More Growth of 20% or more 1008 Approx FY03 FY04 FY05 FY06 FY07 (forecast) FY10 (projected) 11

13 2-1 Expanding New Businesses Existing Businesses Anticipating social needs in in the areas of of security/safety, healthcare and environmental preservation New businesses to account for 15% of consolidated sales in FY20 Domain/ Contribution Security/safety: Industry (Improved quality, efficiency) Security/safety: Society (Security) Healthcare (Home medical care) Environment/energy (Energy/resource saving) Theme(s) Including: Laser microfabrication MEMS Face recognition systems Social sensors 1 Online healthcare management Energy consumption measurement Solar power conditioners 2 1 These sensors are expected to contribute to security/safety in society by accurately reading and analyzing the movement of people, cars and other objects on display, along with other tracking information 2 Devices that convert solar-generated DC power into AC power for use in the home Approach to new business development in the 3 rd stage: Aim for growth over the next 10 years and beyond New businesses in 3 rd stage Approx. 15 Target growth for new businesses in the 3 rd stage New businesses in 3 rd stage Approx. 7% Net sales FY07 FY10 FY20 12

14 2-1 Expanding New Businesses Application (1/3) New Businesses Using our our core core sensing sensing and and control control technology, technology, we we will will create create new new Using businesses with with an an eye eye to to the the future future or or more more years years from from now now businesses l Example of new business application in the 3rd stage: Security/safety Security: Face recognition systems Security/safety at stores, stations, factories and more Improved security/safety Surveillance Improved comfort/convenience Improvement & Face Body Bodyand face image sensing Image Sensing Customer Customer marketing Marketing Service Marketingservice Service Monitor suspicious people and behavior in order to help prevent crimes Monitor customer trends (e.g., number, sex, age) in order to provide better service Ease Easepublic Publicfear Fear Provide valuable info Target detection Target Person Detection Customer data analysis Crime prevention/identification of repeat customers Numerical analysis 300 天井カメラ 250 不明 女性 人数 60 男性 59女性 男性 39女性 39男性 19女性 男性 Server 時間 ＤＢ ＤＢ 10 Jan C)OMRON Corporation Suspicious detection Suspiciousbehavior Behavior Detection Behavior/trend analysis Crime Prevention prevention Purchasing behavior monitoring/analysis 13

15 2-1 Expanding New Businesses Application (2/3) New Businesses Using our core sensing and control technology, we will create new businesses with an eye to the future 10 or more years from now Example of new business application in the 3 rd stage: Healthcare Home healthcare management: Online healthcare management Total solutions for lifestyle-related disease prevention/treatment Biology/behavior info. sensing Blood pressure Lifestyle-related disease prevention/ treatment service package Report/ recommendations Blood sugar DB Body composition Algorithm Steps walked Targets Patients/ consumers Private companies Insurers/ employers Medical institutions 14

16 2-1 Expanding New Businesses Application (3/3) New Businesses Using our core sensing and control technology, we will create new businesses with an eye to the future 10 or more years from now Example of new business application in the 3 rd stage: Environmental preservation Energy: Energy Consumption Measurement In response to Japan s new energy-saving law (energy consumption management by site/product) Ethernet Central monitor/analysis software Fieldbus Serial communication or Ethernet Site/production line Base Wireless transmission Power measurement sensors Power measurement sensor (e.g. power consumption, takt time) Remote facilities Omron must develop technology that better identifies and addresses energy consumption issues Highly accurate measurement + Telecommunication (e.g. wireless, power line-dependent) 15

17 Strengthening Core Technology for a Stronger Business Base Existing Businesses New Businesses Use semiconductor technology to strengthen sensing and control technology MEMS (Micro Electro Mechanical Systems) OMRON SEMICONDUCTORS Co., Ltd. (OSC) Shiga Prefecture, Japan RF (Radio Frequency) MEMS switch on a wafer Site area: 42,000m 2 Floor area: 39,900m 2 MEMS microphone chip 16

18 Increasing Business Value by an Annual Average of at Least 10%: Indicators Performance indicators for FY10 Performance indicators for FY10 Net Sales Operating Income Operating Margin Earnings per Share (EPS) JPY 1 trillion JPY billion Approx. 10% Approx. JPY

19 Notes Projected results and future developments are based on information available to the Company at the time of writing, 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, economic conditions affecting the Company's businesses in Japan and overseas, demand trends for the Company's products and services and movements in currency exchange rates and stock markets, among others. 18

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