Olympus 2013 Annual Report Download - page 9

14 OLYMPUS Annual Report 2013 15OLYMPUS Annual Report 2013
Restart
Rebuilding of
Business Portfolio /
Optimizing Allocation of
Management Resources
Results and Challenges
Restoration of
Financial Health
Review and
Reduction of Costs
Back to Basics Profitable GrowthOne Olympus
Restructuring of
Corporate Governance
Olympus announced a new medium-term vision for the  ve years from the  scal year ended March 2013.
Acting in accordance with the vision’s slogan of “Back to Basics,” the Company aims to return to the basic
values it had at founding and make a fresh start in order to regain the credibility of its stakeholders, build
itself anew, and create new corporate value.
Basic Strategies Based on Corporate Management Policies
Corporate Management Policies under the New Management
Performance Indices and Targets
1. Clarifi cation of our core
businesses
2. Identifi cation and liquidation
of non-core businesses
3. Establishment of mechanisms
to drive optimal allocation of
management resources
Contribute to total
wellness of people as a
company centered on
Medical Business
Improve pro tability of the
entire Group through drastic
review of cost structures
Improve equity ratio as
soon as possible and
realize stable management
Recover trust
and improve
corporate value
1. Cost reduction
2. Signifi cant curtailment of
indirect expenses
1. Steady fl ow of profi ts from
businesses
2. Maximization of cash fl ow
3. Streamlining of assets
1. Restructuring of governance
system
2. Reinforcement of internal
controls
3. Strengthening of the compli-
ance system
Results of implementing these basic strategies will
be monitored based on four performance indices:
“return on invested capital (ROIC)*,” “operating
margin,” “free cash fl ow,” and “equity ratio.”
* Return on Invested Capital (ROIC)
ROIC is an index that measures income generated on
a company’s invested capital (IC). At Olympus, ROIC is
calculated using the following assumptions:
Return (Operating income after taxes) / IC (Shareholders’
equity + Interest-bearing debt)
* Compared with March 31, 2012
Performance Indices
FY ended March
2012
(Results)
FY ended March
2013
(Results)
FY ending March
2017
(Target)
Return on invested capital
(ROIC) 2.7% 2.7% 10% or more
Operating margin 4.2% 4.7% 10% or more
Free cash  ow
(Cash  ow from operating
activities + cash  ow from
investing activities)
¥(4.8) billion ¥58.7 billion ¥70.0 billion or
more
Equity ratio 4.6% 15.5% 30% or more
FY ending March 2015 FY ending March 2017
Previous target Revised target Previous target Revised target
Net sales ¥1,010 billion ¥760 billion ¥1,160 billion ¥920 billion
Operating income (Operating margin) ¥90 billion
9%
¥93 billion
12%
¥130 billion
11%
¥143 billion
16%
Ordinary income (Ordinary income ratio) ¥70 billion
7%
¥70 billion
9%
¥115 billion
10%
¥125 billion
14%
Net income (Net income ratio) ¥40 billion
4%
¥45 billion
6%
¥85 billion
7%
¥85 billion
9%
Notes:
1. Figures for previous targets are those from when the medium-term vision was initially announced on June 8, 2012. Revised target fi gures refl ect the revision released on May 15, 2013.
2. Previous foreign exchange assumptions called for exchanges rates of ¥80 to US$1 and ¥100 to 1 EUR. Revised assumptions projected exchanges rates of ¥90 to US$1 and ¥120 to 1 EUR.
Medium-Term Vision (Corporate Strategic Plan)
Progress during the First Year of the Medium-Term Vision and Future Challenges
Rebuilding of
Business
Portfolio /
Optimizing
Allocation of
Management
Resources
1
1 2 3 4
Medical Achieved forecast-exceeding
progress and performance
Gastrointestinal endoscope fi eld: Introduced new products,
such as EVIS EXERA III (Europe and U.S.) and EVIS LUCERA
ELITE (Japan), which contributed to increased earnings
Surgical device fi eld: Introduced the new VISERA ELITE
(Europe, U.S. and Japan) surgical video endoscopy system
Commenced business alliance with Sony Corporation and
jointly established Sony Olympus Medical Solutions Inc.
Management resource allocation: Increased production
capacity of major production sites
P. 3 0
Review and
Reduction of Costs
2Achieved certain degree of
results, however, continued
rationalization of indirect
departments needed
Made progress in stabilizing
operating foundations
Strengthened structures for
greater effectiveness
Reorganized production sites worldwide: 30 22 sites
Staff size optimization: reduced staff by approx. 6,000*
people, achieved target ahead of schedule
(includes full-time and part-time employees)
Restructuring of
Corporate Governance
4 Instituted new management system clearly separating
supervision and business execution
Security on Alert designation removed on June 11, 2013
Restoration of
Financial Health
3 Increased capital: Commenced capital alliance with Sony
Equity ratio: Improved from approx. 5% to over 15%*
Interest-bearing debt: Decreased ¥82 billion*
Imaging
Responded to rapidly changing
market conditions and
implemented drastic reform of
earnings structure
Revised product lineup: Shifted to high-value-added prod-
ucts, such as mirrorless cameras
Reorganized manufacturing systems
Implemented SG&A expense reduction measures
P. 4 2
Life Science &
Industrial
Implemented pro tability
improvement measures in
response to deterioration of
macroeconomic environment
Introduced new products in mainstay model lines on schedule
Rationalized production sites and improved operational
effi ciency by closing a site in the Philippines and consoli-
dating sites in Nagano in preparation for future growth
P. 3 8
Restructuring of
non-core
businesses
Accelerated reorganization of
non-core business domains
Transferred Information & Communication Business
(September 2012)
Liquidated / sold approx. 30 subsidiaries and affi liated
companies
Financial Plans