Olympus 2012 Annual Report Download - page 30

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We have defined businesses other than the Medical, Life Science & Industrial, and Imaging
businesses as non-core business domains, and will reconsider optimal measures to improve the
value of each of them. Although we have invested in wide-ranging fields for the purpose of creating new
businesses, as things now stand there are many investments that have not developed into businesses. We
recognize that stringent business selection and concentration is necessary and will decisively divest,
downsize, liquidate, or withdraw from businesses whose profitability or growth potential make continuation of
operations within the Olympus Group difficult after examining their relationship to the core business domains.
We have already begun this initiative. Specifically, we have decided to proceed with the sale or
liquidation of three companies in Japan (Altis, NEWS CHEF, and Humalabo) by the end of the current fiscal
year. In addition, Olympus Business Creation Corp., a company with more than 20 subsidiaries that engages
in wide-ranging projects related to new businesses, such as medical-related service businesses and the
construction and operation of IT infrastructure, plans to reduce the number of subsidiaries to a few
companies in the next two years. We will move steadily ahead with selection and concentration measures,
including the disposal of subsidiaries from which synergies with the core business domains cannot be
expected.
Although we have already engaged in cost-cutting initiatives, such as Cost Cutting 20, these
initiatives have stopped at cost-reduction measures, which consist only of short-term measures to
reduce expenses. The review is a more in-depth cost-reduction initiative that will transform all cost structures
through business restructuring and will reform business structures at Olympus from a medium- to long-term
perspective. It does not end with mere cost reductions. By fundamentally reviewing cost structures and
reinvesting the resulting cash flows, we seek to improve overall Group profitability in the long term.
The ratio of SG&A expenses to sales at Olympus is extremely high. Looking at the situation the other
way around, there is enormous room for improvement. By proactively accelerating cutbacks to Groupwide
SG&A expenses, which means reducing costs by restructuring production sites and reinforcing procurement
Q6
What is the future direction for
non-core business domains?
Q7
Please discuss in detail the second
strategy: the review of cost
structures. How is it different from
Cost Cutting 20, the previously
announced initiative?
SG&A Expense Reduction Activities
A
A
SG&A ratio
(Medical + Life Science & Industrial
+ Imaging + Corporate)
Medical Life Science & Industrial Imaging Corporate Total
53.2% 48.0% 46.6%
-1.8 points
-3.1 points
-1.5 points
-0.2 point
Reduction effect
-6.6 points
-6.6 points
FY2012 FY2015
(Target)
FY2017
(Target)
President Hiroyuki Sasa Discusses the Medium-Term Vision: Back to Basics
OLYMPUS 󱚈 Annual Report 2012
28