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Outlook for Fiscal 2016
Consolidated Earnings
While the global economy is expected to gradually
improve during fiscal 2016, we believe our business
will continue to face challenges in the external
environment. These challenges include the
continued slowdown in Chinese economic growth
and the impact of the strong yen on our domestic
businesses. Based on these assumptions, the
Omron Group has enacted a company-wide policy to
rebuild our earnings structure and create an engine
for self-driven growth. While we are engaged in
improving our earnings structure, we will also be
active in using our capital for growth investments,
pushing forward to create an engine for self-driven
growth. We have set fiscal 2016 targets for net
sales and operating income growth at 4% and 23%
(excluding foreign exchange adjustments). We will
accomplish this by continuing to invest in growth
and rebuild our earnings structure. Considering the
impact of foreign exchange and recent currency
trends, however, we have forecast fiscal 2016 net
sales of ¥820.0 billion, a 1.6% decrease compared
to fiscal 2015. We estimate operating income of
¥63.0 billion (1.1% increase year on year) and net
income attributable to shareholders of ¥47.5 billion
(0.4% increase). By rebuilding our earnings
structure, we believe we will improve gross profit
margin to 39.3% (0.8-point increase), while setting
a target for ROIC and ROE, two of our major
management indicators, to 10%. These
improvements will be the result of dedicated
company-wide efforts.
The IAB forecasts (Note 1) overall fiscal 2016 segment
net sales of ¥336.0 billion (level with fiscal 2015)
and operating income of ¥46.5 billion (3.0%
decrease year on year). Domestically, we expect
continued strong demand for capital investment in
automobile-related industries to drive revenue
growth. Overseas, we project steady demand for
capital investment, as well as demand for
automation and labor-saving systems. However, the
likely negative impact of foreign exchange has led us
to forecast lower revenues for the year compared to
fiscal 2015. Our continued commitment to
investing in future growth will be reflected in
higher research and development expenses,
leading to a fiscal 2016 operating income
forecast lower than fiscal 2015 results.
The EMC forecasts overall fiscal 2016 segment
net sales of ¥100.0 billion (3.6% decrease year
on year) and operating income of ¥10.0 billion
(17.7% increase). Domestically, we forecast
slight gains of 1.1% to ¥23.5 billion. While we
expect demand for consumer and commercial
products to weaken, demand among automobile-
related industries should continue to be strong.
Overseas, we forecast net sales of ¥76.5 billion,
a 4.9% year-on-year decrease. Despite the
positive impact of introducing new products to
the Chinese automobile-related industries, slower
growth will likely drive lower demand for
consumer and commercial products. The
negative impact of a strong yen in major markets
such as the Americas and Europe is another
factor we considered in our revenue forecast.
Despite downward pressure on revenues, we
forecast higher profits due to cost reductions and
productivity improvements.
The AEC forecasts domestic and overseas net
sales of ¥17.5 billion (17.1% decrease year on
year) and ¥112.5 billion (5.4% decrease). We
expect operating income for the segment as a
whole to amount to ¥6.5 billion (11.5% decrease).
Domestically, we expect net sales to
underperform prior year due to a slowdown in
demand for mini vehicles (kei cars). Despite
continued strength in the North American market
slowing growth among the emerging economies
and the negative impact of the strong yen have
(Note 1) Fiscal 2016 forecasts do not include the impact of
the May 31, 2016 sale of Omron Oilfield and Marine, Inc. in
North America.
Electronic and Mechanical Components
Business (EMC)
Automotive Electronic Components
Business (AEC)
Industrial Automation Business (IAB)
90 OMRON Corporation