Omron 2014 Annual Report Download - page 11

During the GLOBE STAGE, we focused on
uniting Omron to boost growth potential,
profitability, and responsiveness to change.
We targeted the maximization of the Industrial
Automation (IA) business, the expansion of
sales in emerging countries, and the creation
of new business opportunities, with an
emphasis on the environmental solutions
business. Other endeavors included advancing
management based on return on invested
capital (ROIC) and the global vertical-horizontal
management system.
As a result, in fiscal 2013, the GLOBE
STAGE’s final year, net sales totaled ¥773.0
billion and operating income amounted to
¥68.1 billion, setting new records for both
figures for the first time in six years. As we
were able to quickly identify market changes
as opportunities, double-digit growth rates in all
businesses were achieved. ROIC and return on
equity (ROE) also improved substantially.
All in all, fiscal 2013 was a year in which
we made great progress in transforming
Omron into a solid company with high growth
potential, improved profitability, and an astute
ability to respond to change in the pursuit
of enhanced corporate value. In regard to
growth potential, sales increased greatly in
targeted areas, such as emerging countries
and environmental fields. Furthermore, the
Automotive Electronic Components Business
(AEC), the Social Systems, Solutions and
Service Business (SSB), the Healthcare
Business (HCB), and the backlight business
all recorded impressive sales growth. We also
focused on improving the gross profit margin,
one of the most crucial performance indicators,
and, as a result, profitability increased across
all businesses. We reinforced our resilience to
foreign exchange fluctuations by accelerating
overseas production and procurement. As a
result, we were able to reduce the negative
impact on operating income from a foreign
exchange fluctuation of ¥1 to the US$ from
¥900 million in 2011 to ¥400 million at the end
of March 2014. I am also proud to say that our
We aim to create a
“self-driven growth
structure” in the EARTH-1 STAGE
The first three years of the EARTH STAGE have
been defined as the EARTH-1 STAGE, with
the remaining four years being designated the
EARTH-2 STAGE.
A main objective of the EARTH-1 STAGE
is the establishment of a
“self-driven growth
structure.” During the GLOBE STAGE, we
grew rapidly by taking advantage of tailwinds
in China, other emerging countries, and the
environmental solutions business. In the
EARTH-1 STAGE, we plan to build a “self-
driven growth structure” that enables business
to grow with or without tailwinds; Omron’s
“Sensing and Control” technologies are
core to this undertaking. These technologies
are expected to strengthen business
competitiveness and to become a driving force
for growth in a manner that also contributes to
society by resolving social issues. For example,
the spread of production site automation in
1. Review of the GLOBE STAGE (Fiscal 2011 – Fiscal 2013)
2. Strategies of VG2020’s EARTH-1 STAGE (Fiscal 2014 – Fiscal 2016)
■ GLOBE STAGE: Management Indicators
Omron formulates a management strategy every 10 years with the objective of achieving
sustainable improvements in corporate value from a long-term perspective. When I became
president in 2011, we launched our third long-term management strategy, Value Generation 2020
(VG2020). Fiscal 2013 marked the end of the GLOBE STAGE, the first three-year period of VG2020,
and, in April 2014, we entered the EARTH STAGE. In recognition of this milestone, I would like to
begin by looking back on the past three years and then to explain our future strategies. In the latter
part of my message, I would like to share my views on management in the context of pursuing the
long-term enhancement of corporate value.
■ EARTH STAGE Scenario
FY2011 FY2014 – FY2016 FY2020
Net sales
GLOBE STAGE EARTH-1 STAGE EARTH-2 STAGE
Global HR strategy
Existing business strategy
Super-global growth strategy
Profit structure reform
FY2013 (Actual) FY2010 (Actual)
Net sales ¥773.0 billion ¥617.8 billion
Operating income ¥68.1 billion ¥48.0 billion
Gross profit margin 38.537.5
Operating income margin 8.87.8
ROIC 11.37.8
ROE 11.68.7
USD1¥100
EUR1¥134
USD1¥86
EUR1¥114
management capabilities have improved, with
more emphasis being placed on ROIC-based
management and the global vertical-horizontal
management system. In emerging countries, for
example, business activities have become more
efficient due to the increased cross-functional
support provided by corporate headquarters
functions, such as financial, administration, or
legal services, to the business divisions. The
establishment of regional head offices in India
and Brazil, making for a total of seven regional
headquarters, made it possible to achieve our
goal of improved business efficiency.
Of the targets initially laid out for fiscal 2013,
which were established in fiscal 2011, we
successfully exceeded the net sales target of
¥750.0 billion. However, there are still tasks
that remain. We fell short of our targets for
the gross profit margin, the operating income
margin, and ROE, which were 42.0%, 13.3%,
and over 15.0%, respectively. I believe these
are all crucial indicators, and I am committed
to improving them going forward. As for
other tasks, building growth structures in
the IA business is still a work in progress. In
addition, we could have grown more through
coordination with external organizations, such
as through industry-academia collaboration and
M&As. We are determined to improve upon
these areas in the coming EARTH STAGE.
New business strategy for the optimization societyNew business strategy for the optimization society
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