Olympus 2014 Annual Report Download - page 6

Would you please provide an overview of fi scal 2014?
Looking back at your two years as president, what would you say have been the Company’s triumphs?
While the global economy presented a harsh environment, particularly with regard to conditions in Europe
and China, we realized strong income improvements in fi scal 2014, with our core Medical Business
presenting a record-breaking performance.
Guided by the medium-term vision formulated by the new management team, we pushed forward with
business initiatives based on a strong sense of commitment toward keeping the promises we had made.
Over these two years, we worked to escape a very negative situation, and I believe we made great
progress in such a short period and that our triumphs are clear.
Olympus finds its strength in its technologies, and that will not change.
We will boldly push forward with aggressive management, paving the
road toward meeting the goals of the medium-term vision, and realizing
the growth that waits beyond, with strategic measures to overcome the
obstacles placed before us.
Interview with the President
In fi scal 2014, consolidated net sales declined 4% year on
year, to ¥713.3 billion, largely as a result of the transference
of the Information & Communication Business in fi scal
2013. Operating income, however, doubled over the year,
reaching ¥73.4 billion, and ordinary income showed even
more impressive growth, climbing to ¥50.9 billion, roughly
four times the fi gure for fi scal 2013. Net income suffered,
due to losses associated with litigation and the withdrawal
from the biologics business, but still exceeded the previous
year’s level at ¥13.6 billion.
A major contributing factor to these strong improve-
ments in income was our core Medical Business.
Supported by the strong foundation of its gastrointestinal
endoscope operations, this business turned in a record-
breaking performance, posting new highs for both net
sales and operating income. The Scientifi c Solutions Busi-
ness, previously known as the Life Science & Industrial
Business, recorded increases in both net sales and operat-
ing income, and the restructured Imaging Business saw a
substantial decrease in operating loss.
Two years ago, Olympus was in a state of crisis on all
fronts. The Company suffered from issues with its corpo-
rate governance systems and its fi nances and performance
were problematic with regard to its low equity ratio, poor
balance sheet, and lacking profi tability.
Today, I believe we are receiving fewer complaints
withregard to our corporate governance systems. In terms
of performance, the Medical Business, which has been
positioned as a major earnings driver, is making massive
contributions to the overall performance of the Group.
Inaddition, the reforms described for our business portfolio
in the medium-term vision are nearly complete. The imple-
mentation of business reforms has advanced at a speed
that exceeded expectations. These reforms include the
transference of the Information & Communication Business,
the withdrawal from the biologics business, and the sale
and liquidation of subsidiaries and affi liates from which
wecould not expect synergies with core businesses.
Wealso reduced the size of compact camera operations
inresponse to rapid market contraction. Furthermore,
weaddressed the issues with our fi nancial position by
commencing a business and capital alliance with Sony,
procuring approximately ¥110 billion in capital from over-
seas markets, and reducing interest-bearing debt. As a
result, the equity ratio improved substantially, to more than
30%, at the end of March 2014. Looking at specifi c perfor-
mance indices, we accomplished our fi scal 2017 targets
forthe operating margin and the equity ratio three years
inadvance, while return on invested capital (ROIC) and
freecash fl ow are improving smoothly and are in line with
our plans.
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Hiroyuki Sasa
President and
Representative Director
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OLYMPUS Annual Report 2014
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