Omron 2002 Annual Report Download - page 25

Electronic Components Company
Net sales for the Electronic Components Company,
excluding intercompany transactions, declined 1.0 per-
cent year-on-year to ¥128.2 billion, and accounted for 24.0
percent of net sales. In Japan, deterioration in IT indus-
tries resulted in lower demand for Omron’s consumer
and commerce (C&C) components. This decline was par-
tially offset by growth in sales of amusement compo-
nents and automotive electronic components. In North
America, the economic slowdown and the effects from
the September 11 terrorist attacks resulted in a large
decline in sales to manufacturers as well as the electrical
appliance and telecommunications industries. In
Southeast Asia, the impact from the slowdown in the U.S.
economy, intensifying price competition with manufac-
turers in China and lower sales to the telecommunica-
tions industry resulted in an overall decline in sales.
Social Systems Business Company
Net sales for the Social Systems Business Company,
excluding intercompany transactions, declined 12.2 per-
cent year-on-year to ¥124.6 billion, and accounted for 23.4
percent of net sales. In the electronic fund transfer sys-
tems sector, the absence of special demand for equip-
ment to handle a new currency note and coin, which con-
tributed to sales in the previous fiscal year, resulted in a
decrease in equipment investment among customers,
particularly financial institutions. The bankruptcies of
major retailers also contributed to a challenging business
environment. However, Omron maintained stable sales
by meeting current market needs such as ATMs for con-
venience stores and conducting aggressive marketing for
new types of ATMs, automated loan application
machines and other products. In the public transportation
systems sector, sales of equipment to railway companies
declined substantially, reflecting the large-scale demand
in the previous year due to implementation of the
PassNet System in the Kanto region. Sales in the traffic
control and road information systems business decreased
because of budget tightening by local governments.
Healthcare Company
Net sales for the Healthcare Company, excluding inter-
company transactions, increased 3.3 percent year-on-year
to ¥40.6 billion, and accounted for 7.6 percent of net
sales. In Japan, Omron strengthened sales expansion
efforts and introduced innovative new products.
However, weak consumer spending and a deflationary
trend resulted in a decrease in domestic sales. Overseas,
the depreciation of the yen had a positive effect, and
sales were generally solid in Europe, North America and
Asia. In the healthcare services sector, a new business,
Omron worked to create a new business model centered
around the Kenko Tatsujin series.
Others
Net sales of other divisions decreased 4.2 percent year-
on-year to ¥53.5 billion, and accounted for 10.0 percent of
total net sales. Demand for the consulting and outsourc-
ing businesses of the Creative Service Company benefit-
ed from structural reforms by corporations.
Sales of photo-sticker machines increased substantially,
while demand in the automated answering system busi-
ness expanded in areas such as call centers for financial
institutions. However, sales of PC peripheral equipment
declined due to the market slump and falling prices, as
well as lower-than-expected store sales of ADSL
modems.
Increase (Decrease) in Sales of Internal Business Companies
2002 2001 2000
Industrial Automation ............. (17.9)% 11.2% (0.9)%
Electronic Components ........... (1.0) 7.5 20.6
Social Systems Business ........ (12.2) 10.4 (5.4)
Healthcare ................................ 3.3 (7.8) (2.5)
Others ....................................... (4.2) (6.0) (1.3)
Note: The increase or decrease in sales for 2000 and 2001 is based on the amounts
previously reported for the respective years, prior to the reclassifications made
in the following year.
Review of Operations by Region
Japan
Japanese companies substantially reduced capital
expenditures following rapidly declining profits due to
slow growth in production and exports and weak person-
al consumption. Added to an increasingly difficult
employment situation, Japan’s economy remained mired
in recession.
In the markets where Omron conducts business,
demand for the Company’s products fell significantly, due
to restrained capital expenditures in the semiconductor
and IT-related industries, lower profits in the electrical
machinery and electronics industries and reduced spend-
Omron Corporation 23