Olympus 2013 Annual Report Download - page 11

18 OLYMPUS Annual Report 2013 19OLYMPUS Annual Report 2013
President’s Message
2. Our Growth Strategies
Accomplishment of Medium-Term Vision Goals and Further Forward-Looking Growth
in the Medical Business
The medium-term vision describes the measures we will
implement to regain the trust of our stakeholders. Therefore,
accomplishing the goals of this vision over the next four years
will be of fi rst and foremost importance. However, I believe we
must also turn our attention toward farther down the line. In
order to ensure that the growth of the Medical Business, a
major earnings driver, continues to accelerate after the vision’s
completion, it will be essential to develop strategies that take
us a step further. This will be one of our main tasks going
forward, and one that we must address with both caution and
speed. To support efforts to this end, it will be crucial to
develop a robust fi nancial base that will suffi ciently enable
us to invest in growth stably and fl exibly, even in an ever
changing and consistently opaque operating environment.
149.1
44.8
112.5
155.7
103.5
10.0 14.1 11.0 4.6
15.5
2009/3 2010/3 2011/3 2012/3 2013/3 2017/3
(Target)
0
100
200
300
400
0
10
20
30
40
50
60
560.4
642.4
648.8
661.5
642.8
2009/3 2010/3 2011/3 2012/3 2013/3 2017/3
(Target)
0
200
400
600
800
Equity / Equity Ratio
(¥ Billion)
Interest-Bearing Debt
(¥ Billion)
Equity (left) Equity ratio (right)
(%)
Major Uses of Proceeds Amount
Capital expenditures at principal gastrointestinal endoscope manufacturing facilities (3 factories in Tohoku district) ¥19.7 billion
R&D expenditures in the Medical Business ¥54.0 billion
Sales promotion expenses focused on new Medical Business products ¥24.0 billion
Others ¥14.9 billion
Total ¥112.6 billion
expand into new fi elds. By introducing new products into such
fi elds, we hope to expand our earnings base. Going forward,
we will develop more robust business and earnings structures
that take advantage of our biological microscopes and our
industrial microscopes and endoscopes, all items for which
we hold the world’s leading market shares. By creating such
structures, we aim to improve performance at the earliest
possible date. At the same time, we are thoroughly revising
cost structures. In this pursuit, we have assembled a
specialized team, which is guiding us in quickly realizing
Companywide cost reductions, with a particular focus being
placed on cutting costs in indirect depertments.
In the Imaging Business, we recorded an operating loss of
more than ¥10 billion for the third consecutive fi scal year, a
fact that I fi nd most unfortunate and that represents a
pressing issue for management to address. Needless to say,
this issue was the subject of much discussion among the
board of directors. In these discussions, rather than focusing
only on numerical targets, we discussed all available options,
including the possibility of only accumulating technologies.
The end decision was the restructuring measures announced
along with our fi scal 2013 fi nancial results in May 2013.
These measures include ceasing production of low-priced
compact cameras and signifi cantly shrinking operations,
measures through which we aim to greatly reduce inventory
risks and other business risks. At the same time, we will
construct cost structures appropriate for the scale of this
business. By implementing these measures, we will fi rst work
to breakeven on the operating income level in fi scal 2014.
We will then shift to a profi table business structure over the
medium-to-long term.
In regard to our efforts to reorganize non-core businesses,
the transference of the Information & Communication Business
as well as the liquidation and sale of other businesses
progressed more quickly than expected. We were thereby
able to recover the equity ratio to around 15% on March
31, 2013, showing that our fi nancial position had grown
much sounder. In the future, we will work toward our
medium-to-long-term goal of an equity ratio of approximately
30% while targeting the quick resumption of dividend
payments and other shareholder returns.
Construction of a Robust Financial Base Allowing for Global Action
In addition to strengthening operating foundations, the
quick recovery of our fi nancial credibility is an important
management task as such credibility is inseparable from
business growth. In recognition of this fact, we reorganized
and sold non-core businesses and commenced a business
and capital alliance with Sony Corporation during fi scal
2013.Also, we worked to reduce interest-bearing debt. As
mentioned, these efforts enabled us to recover the equity
ratio. Specifi cally, we saw the ratio recover to 15.5% on
March 31, 2013, a signifi cant improvement compared with
the level of 4.6% on March 31, 2012. We thus exceeded
our short-term goal of 10% and are seeing the steady
improvement of our fi nancial base. Still, our current fi nancial
position remains insuffi cient in comparison to other globally
active medical equipment manufacturers.
One characteristic of the Medical Business is that the
development and commercialization of products requires a
great deal of time and expense. This is because of the need
to acquire approval, among other considerations. Moreover,
our Medical Business is not one of simply selling products.
Rather, operations entail ensuring the reliability of products,
which is critical considering how they can impact people’s
lives, as well as developing the necessary after-sales support
and maintenance systems. We must also continue to
supply new products and maintain effective training systems.
As such, we need a fi nancial base that can support these
activities over the long term, as well as the credibility to back
this base. Aiming to secure the funds needed to conduct
capital and R&D expenditures in the Medical Business—
a growth area for Olympus—over the next three years, the
Company procured capital to the extent of ¥112.6 billion
in July 2013 by offering new shares and existing shares of
treasury stock to overseas investors. Our present focus is
on constructing the fi nancial base needed to strengthen
the Medical Business and conducting forward-looking
investment. We expect that this will enable us not only to
meet the goals of the medium-term vision but also to
implement the strategies required to realize growth thereafter.