Omron 2014 Annual Report Download - page 12

emerging countries could allow people to
devote their time to creative thinking. We
also expect more demand for electric vehicles
(EVs) and hybrid-electric vehicles (HEVs) due to
society’s greater concern for the environment.
Omron is contributing to the improvement
of these vehicles’ performance by providing
electric power steering controllers and the
world’s smallest and lightest DC power relay.
Our increased focus on the environmental
solutions business should provide solutions
to energy issues. In addition, there has been
growing concern for safety issues resulting
from the degradation of tunnel and bridge
infrastructure. Omron is at the forefront
of developing new technology to prevent
unexpected collapses through monitoring
vibration changes by sensors. Meanwhile,
we continue to focus on healthcare areas by
educating people on cardiovascular-related
diseases and raising awareness of the
importance of using blood pressure monitors
and other devices as more and more people are
expected to suffer from these diseases due to
aging populations.
Japan can be called a developed country
with many social issues. We plan to develop
businesses that will help resolve issues
related to such areas as energy and social
infrastructure in Japan first and then to
expand those solutions to the fast-growing
Asian countries.
Three Basic Strategies
and Operating Strategies
The EARTH-1 STAGE is a period in which we
will build on the various initiatives implemented
during the GLOBE STAGE, guided by three
Basic Strategies. Under the first of these, the
Existing Business Strategy, we will continue
to focus on strengthening the IA business.
Specifically, our plans include advancing
marketing capabilities for products launched in
the past three years and growing the business
by leveraging the Automation Centers*1 we
have established and our expanded sales
engineer staff.
Under the second strategy, the Super-
Global Growth Strategy, we will build stronger
infrastructure with the aim of achieving
dynamic business growth in
“wider Asia,”
which encompasses China and other Asian
countries. We consider growing businesses
in ASEAN countries and India as two main
business areas, in addition to our already
growing business in China. The building of
foundations for growth is essential to achieve
our goals, and we plan to enhance logistics
infrastructure and strengthen sales and
marketing efforts.
The third strategy, the New Business
Strategy for the Optimization Society, aims to
generate new businesses in fields related to the
environment, industry, society, and lifestyles. As
previously mentioned, we will continue to focus
on businesses that help resolve social issues.
■ Shareholder Value Improvement under GLOBE STAGE
3. Management Indicators, Improvement of Shareholder Value
■ EARTH-1 STAGE: Policy and Targets (Fiscal 2016)
*1 Automation Centers: Engineering centers that help realize optimal automation
Policy Establishment of a “self-driven growth structure”
Targets*3
(FY2016)
Net sales Over ¥900.0 billion
Gross profit margin Over 40%
Operating income margin Over 10%
ROIC*2Approx. 13%
ROE Approx. 13%
EPS*2Approx. ¥290
*2 Newly introduced medium-term targets
*3 Assumed exchange rates: USD1 = ¥100, EUR1 = ¥135
*4 Total shareholder return is calculated on the assumption that dividends are not reinvested in additional share purchases.
GLOBE STAGE FY2013 (Actual) FY2010 (Actual)
EPS 72¥210 ¥122
ROIC 3.5%P 11.37.8
ROE 2.9%P 11.68.7
Share Price 82¥4,260 (year-end)
Record-high ¥4,730
on January 7, 2014
¥2,338 (year-end)
Dividend Per Share 77¥53 ¥30
3-Year TSR*4 (Total Shareholder Return) 87― ―
In regard to the Operating Strategies that
support the three Basic Strategies, we will
continue to implement the Profit Structure Reform
and the Global Human Resources Strategy.
I will discuss our human resources strategy later.
Medium-Term Performance Targets
For fiscal 2016, the final year of the EARTH-1
STAGE, we are targeting more than ¥900.0 billion
for net sales, 40% or higher for the gross profit
margin, 10% or higher for the operating income
margin, and approximately 13% for ROE. As
we are mindful of the cost of capital and aim
to live up to shareholder expectations over the
medium-to-long term, we set the new targets of
approximately 13% for ROIC and approximately
¥290 for earnings per share (EPS).
All Omron businesses are positioned
in growth fields, and we have a business
foundation capable of responding to such
issues as population aging, environmental
problems, and other global issues. I am
confident in Omron’s long-term growth
potential and ability to establish a
“self-driven
growth structure” during the EARTH-1 STAGE.
Entrenchment and Advancement
of ROIC-Based Management
As I said previously, we set our first medium-
term target for ROIC of approximately 13%
to be achieved in fiscal 2016. We will work
toward realizing this goal along with our existing
target for ROE. ROIC-based management is
entrenched throughout Omron. ROIC is not only
used in the performance-linked compensation
system for senior executives, but it is also used
in managing each business by using contributing
factors shown in a Down-Top ROIC Tree as key
performance indicators. We established the
position of Chief Financial Officer (CFO) in fiscal
2013, and we will continue to work together
to improve the quality of various initiatives and
manage the cost of capital and cash flows.
Improvement of Shareholder Value
During the three years of the GLOBE STAGE,
we were able to achieve an increase in EPS,
from ¥122 to ¥210, and a great improvement
in ROE. Further, Omron’s stock price rose 82%,
with a 77% increase in dividends. Therefore,
the total shareholder return (TSR) was
87% over the three-year period. This rise is
particularly impressive when compared with the
average performance of companies listed on
the First Section of the Tokyo Stock Exchange.
During the EARTH-1 STAGE, we will continue
About Omron Where We’re Headed Corporate Value Initiatives Corporate Value Foundation Financial Section
20 Omron Corporation Integrated Report 2014 21