Omron 2016 Annual Report Download - page 40

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Net Sales, Gross Profit Margin
Major Initiatives for Improving Gross
Profit Margin
We view gross profit margin (a measure of our
ability to earn) as one of our most important
key performance indicators. We implemented
cost reduction activities and other internal
measures between fiscal 2011 and 2014 to
improve our gross profit margin. Owing to
these measures and favorable foreign
exchange, we raised our gross profit margin
to 39.3%. Unfortunately, gross profit margin
decreased to 38.5% for fiscal 2015, mainly
due to a slowing Chinese economy, foreign
exchange fluctuations, and other external
factors that drove down revenues. To achieve
our VG2020 goals for fiscal 2020, we must be
able to withstand external influences to create
sustainable growth in gross profit margin.
Here, we plan to improve our overall Group
business mix, restructure variable costs,
restructure fixed manufacturing costs, and
strike a balance in our currency composition.
As the lead of Omron manufacturing, we
believe that stronger manufacturing capabilities
translate directly to an improved ability to earn.
619.5 650.5
773.0
847.3 833.6
36.8%
37.1%
38.5%
39.3%
38.5%
2011FY 2012 2013 2014 2015
(%)
(Billions of yen)
■ Net Sales Gross Profit Margin
0
100
200
300
400
500
600
700
800
900
35.5
36.0
36.5
37.0
37.5
38.0
38.5
39.0
39.5
Improve Business Mix
・
Accelerate growth of highly profitable
businesses
・
Portfolio management
Restructure Variable
Costs ・
Promote component standardization
Restructure Fixed
Manufacturing Costs
・
Improve productivity at overseas
production bases
Balance Currency
Composition
・
Balance currency composition to sales,
purchase costs
Special Feature: 2
Manufacturing
Capability
Linking Strong Manufacturing
Capability to Sustainable Gross
Profit Margin Growth
Kiyoshi Yoshikawa
Managing Executive Officer
Senior General Manager, Global Manufacturing Innovation HQ
38 OMRON Corporation