Olympus 2012 Annual Report Download - page 23

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The key point of the new medium-term vision can be summed up as a “focus on core business
domains.” That is to say, we have embarked on fundamental reforms that extend to cost structures
and production structures and involve the clear redefinition of our chosen business domains, the rebuilding
of the business portfolio, and optimal allocation of management resources. Such reforms, beginning with the
business structure, will stabilize and solidify Olympus foundation over the medium to long term as they are
fundamentally different from the short-term profit improvement measures implemented up until now.
As the results for fiscal 2012, the year ended March 31, 2012, indicate, Olympus faces a crisis
situation in every aspect of financial performance: declining profitability, balance sheet results, and equity
ratio. I believe that unless we overcome this adverse situation as soon as possible and achieve a financial
performance level on a par with competitors, we will be unable to compete effectively, or to revitalize
Olympus, or achieve further growth.
The Medium-Term Vision: Back to Basics formulated in light of these circumstances, summarizes in a
five-year plan starting in fiscal 2013, a vision for the rebirth of Olympus to which all Olympus employees
worldwide should aspire and a methodology for the realization of that vision. It is a critically important plan
for the revitalization of Olympus.
We will monitor the implementation of this plan and the results and evaluate our progress toward the
achievement of the medium-term vision using four performance indices: return on invested capital (ROIC)2,
operating margin, free cash flows, and the equity ratio. Our targets for these performance indices are an
ROIC and an operating margin of 10% or more, free cash flows of ¥70.0 billion or more, and an improvement
in the equity ratio to 30% or more.
Q2
How does the newly established
Medium-Term Vision: Back to
Basics differ from past medium-
term plans?
2 ROIC is a financial indicator that
expresses how efficiently the capital a
company invests in its businesses
generates profits. Because assets
from which profit cannot directly be
expected are excluded, ROIC enables
more accurate measurement of the
efficiency of a company’s core
business.
A
Performance Indices and Targets
Return on invested capital (ROIC) 2.7% 10% or more
4.2% 10% or moreOperating margin
Results
(FY ended March 2012)
Performance Indices Targets
(FY ending March 2017)
-¥4.8 billion ¥70.0 billion
or more
Free cash flows
(Cash flow from operating activities +
cash flow from investing activities)
4.6% 30% or moreEquity ratio
OLYMPUS 󱚈 Annual Report 2012 21