Omron 2013 Annual Report Download - page 47

90 Omron Corporation Integrated Report 2013 91
Financial Section
Overview of Consolidated Results and Financial Condition
Note: Segment operating income is prepared using the single-step method (which does not show individual income levels) based on U.S. GAAP. For an easier
comparison with other companies, operating income represents gross profi t minus selling, general and administrative (SG&A) expenses and research and
development (R&D) expenses.
In this market environment, the Omron Group’s consolidated
net sales for fi scal 2012 rose 5.0% year on year, to ¥650.5
billion. This increase was due to strong sales in the Automo-
tive Electronic Components Business (AEC), the Social
Systems, Solutions and Service Business (SSB), and the
Healthcare Business (HCB). Due to higher sales as well as the
benefi ts of improved effi ciency with regard to fi xed costs and
reduced variable expenses in all segments, operating income
was up 13.0%, to ¥45.3 billion; income before income taxes
rose 22.9%, to ¥41.2 billion; and net income attributable to
shareholders soared 84.3%, to ¥30.2 billion. In this manner,
all income fi gures showed substantial increases.
Total assets rose 6.8% from the end of the previous fi scal
year, to ¥573.6 billion, largely due to increased notes and
accounts receivable—trade and cash and cash equivalents.
Total shareholders’ equity was up 14.4%, to ¥367.0 billion, as
a result of foreign currency translation adjustments and
treasury stock cancelation. This led to a rise in the share-
holders’ equity ratio, to 64.0%, from 59.7% at the end of the
previous fi scal year.
Return on equity (ROE) stood at 8.8%, and return on
invested capital (ROIC) was 8.6%, both percentages up from
5.2% and 6.9%, respectively, in the previous fi scal year.
Review and Analysis of the Statements of Income
Net Sales
In fi scal 2012, the Group implemented measures targeting
the reinforcement of the Industrial Automation (IA) business,
sales expansion in emerging markets centered on Asia, and
the expansion of sales in the environmental solutions
business through the development of a strong business
model. These measures proved to be successful, and net
sales were up ¥31.0 billion year on year, or 5.0%, to ¥650.5
billion, as a result.
By region, sales in Europe declined 3.7% year on year,
primarily as a result of the persisting fi nancial crisis. Regard-
less, sales were up 6.8% in Japan, 7.5% in the Americas,
5.2% in the Greater China region, and 4.7% in the Asia Pacifi c
region. Performance in the Greater China region continued to
lead other overseas segments in terms of both net sales and
operating income.
Cost of Sales and SG&A Expenses
Cost of sales increased 4.4% year on year following higher
net sales, and the cost of sales ratio declined 0.3 percentage
point, to 62.9%. In fi scal 2012, the average price per kilogram
of silver was ¥83,042, lower than the level of ¥92,379 seen in
the previous fi scal year. The average price per kilogram of
copper likewise declined, to ¥686 from ¥738 in fi scal 2011.
However, the prices of these raw materials began rising once
again in conjunction with yen depreciation in the latter half of
fi scal 2012, and it will be necessary to carefully monitor these
trends going forward.
SG&A expenses increased ¥7.0 billion, or 4.8%, from the
previous fi scal year, but the SG&A-to-sales ratio declined 0.1
percentage point, to 23.4%. At the same time, R&D expenses
were up ¥1.4 billion, or 3.3%, but the R&D-to-sales ratio was
relatively unchanged from the previous fi scal year’s 6.8%,
at 6.7%.
Other Expenses
Other expenses decreased ¥2.5 billion year on year, to ¥4.1
billion, due to improvement in foreign exchange loss, net.
Income before Income Taxes, Net Income Attributable
to Shareholders, and Profi t Distribution
As a result of the above, income before income taxes and
equity in loss (earnings) of affiliates amounted to ¥41.2 billion,
up ¥7.7 billion from the ¥33.5 billion recorded in the previous
fiscal year. Likewise, net income attributable to shareholders
was ¥30.2 billion, up ¥13.8 billion from the previous year’s
¥16.4 billion. Basic net income attributable to shareholders per
Segment Information
Note: Segment operating income is prepared using the single-step method (which does not show individual income levels) based on U.S. GAAP. For easier
comparison with other companies, operating income represents gross profi t minus SG&A expenses and R&D expenses.
Note: In segment information, sales represent sales to external customers and exclude intersegment transactions. Conversely, operating income includes income
from intersegment transactions before deductions of headquarters expenses and other non-apportionable amounts.
1. Review of Operations by Business Segment
Industrial Automation Business (IAB)
IAB net sales decreased 2.9% year on year, to ¥263.0 billion.
Operating income dropped 11.6%, to ¥29.5 billion, as a result
of the lower sales, which offset the benefi ts of efforts to
improve effi ciency with regard to fi xed costs. In Japan, sales
were lower than seen in the previous fi scal year, when we
recorded temporary sales increases following the Great East
Japan Earthquake and fl oods in Thailand. Further, capital invest-
ment demand in the automobile industry was unchanged from
the previous fi scal year, while demand was sluggish in the
electronic component industry and particularly low in the
semiconductor industry. Overseas, demand in the automobile
industry of the Americas was solid as was overall demand in
China and ASEAN countries. Regardless, the impacts of the
economic recession in Europe and limited capital investment
in South Korea’s semiconductor industry were heavy.
Electronic and Mechanical Components Business (EMC)
EMC net sales increased 1.3% year on year, to ¥84.1 billion.
However, operating income declined 13.8%, to ¥6.2 billion, due
to the impacts of the euro depreciation that continued
throughout the fi scal year and a decrease in internal sales. In
Japan, during the fi rst half of the year under review, demand in
the automobile industry recovered from the slump seen
following the Great East Japan Earthquake. In the second half
of the year, we saw recovery of demand in the infrastructure,
offi ce equipment, and mobile device industries. Overseas, the
impacts of the recession in Europe persisted, but these impacts
were offset by brisk demand for automobile-related products in
the Americas and environment-related products in China.
Automotive Electronic Components Business (AEC)
AEC net sales increased 14.8% year on year, to ¥97.6 billion.
Operating income grew 86.1%, to ¥5.0 billion, as a result of
the rise in sales as well as the rebound from the previous
fi scal year’s period of temporary production adjustment. In
Japan, demand for the Company’s products was strong
throughout the entire fi scal year. The number of new automo-
biles sold in Japan rose for the fi rst time in two years. This
was because demand benefi ted from government measures
to promote eco-friendly automobiles during the fi rst half of
the year and the popularity of small vehicles in the second
half of the year. Overseas, sales suffered from the impacts
of the economic recession in Europe and the sudden drop
in sales of Japanese automobiles in China. However, sales
in emerging countries and other regions were for the most
part favorable.
Social Systems, Solutions and Service Business (SSB)
SSB net sales increased 20.2% year on year, to ¥68.8 billion.
share rose from ¥74.5 in fiscal 2011 to ¥137.2 in fiscal 2012.
The Company’s basic policy for dividend payments is to
secure sufficient internal capital resources for future growth
while maintaining a minimum 20% dividend payout ratio,
targeting a 2% dividend on equity (DOE) ratio, and returning
profits to shareholders to the greatest extent possible after
these conditions are met. Beginning in fiscal 2013, the
Company will raise the defined minimum for the dividend
payout ratio to 25% and will issue dividends in accordance
with that policy going forward.
For fiscal 2012, the Company issued a commemorative
dividend of ¥5.0 per share to show its appreciation for its
shareholders on the 80th anniversary of the founding of
Omron on May 10, 2013. Combined with the regular dividend
payment, this made for a total annual cash dividend of ¥37.0
per share, ¥9.0 per share higher than in the previous fiscal
year. The consolidated dividend payout ratio was 27.0%, and
the DOE ratio was 2.4% in fiscal 2012.
Costs, Expenses, and Income as Percentages of Net Sales
FY2009 FY2010 FY2011 FY2012
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 64.9 62.5 63.2 62.9
Gross profi t 35.1 37.5 36.8 37.1
Selling, general and administrative expenses 25.4 23.0 23.5 23.4
Research and development expenses 7.2 6.7 6.8 6.7
Other expenses, net 0.6 1.1 1.1 0.7
Income before income taxes and equity in loss (earnings) of affi liates 1.9 6.7 5.4 6.3
Income taxes 0.7 2.3 2.9 2.2
Net income 0.7 4.3 2.6 4.6
Net Sales and Income (Loss) before
Income Taxes
Net Income (Loss) Attributable to
Shareholders and ROE
Shareholders’ Equity and Ratio of
Shareholders’ Equity to Total Assets
Dividends per Share
08 09 10 11 12 (FY)
Net sales [left axis]
Income (loss) before income taxes [right axis]
* Figures have been restated to account for businesses
discontinued in FY2007.
–200
0
200
400
600
800
–40
0
40
80
120
160
(Billions of yen) (Billions of yen)
(FY)
Net income (loss) attributable to shareholders
[left axis]
ROE [right axis]
(Billions of yen) (%)
08 09 10 11 12
–50
–25
0
25
50
–20
–10
0
10
20
08 09 10 11 12 (FY)
Shareholders’ equity [left axis]
Ratio of shareholders’ equity to
total assets [right axis]
0
100
200
300
400
0
20
40
60
80
(Billions of yen) (%)
Consolidated Operating Income Analysis (YoY)
Billions of yen
(FY)
2011
Actual
2012
Actual
Forex, raw
material costs
Sales increase,
product mix
Fixed
manufacturing
costs increase
SG&A
increase R&D increase
(including
strategic
investment
increase)
Gross profit up
¥11.0 billion
(excluding forex
and raw materials)
Operating income increase
¥5.2 billion
40.1
+1.2 +11.9 –0.9 –5.8
–1.2
45.3
08 09 10 11 12 (FY)
0
10
20
40
50
30
(Yen)