Omron 2007 Annual Report Download - page 21

20
MARKET ENVIRONMENT AND KEY STRATEGY
Strengthening Abilities in Aggressive Sales in the
AOI (automated optical inspection) system and the
Safety Components Businesses
In fiscal 2007 the business environment in the domestic
market for IAB is expected to continue to be strong on capital
expenditure in the automobile industry as well as the semi-
conductor and electronic components industry. In the over-
seas market, steady capital expenditure is also anticipated in the
United States and Europe, and further growth is expected in
emerging markets such as India and Russia.
On the other hand, the trend to shift production bases
overseas will accelerate as companies the world over strive to
produce goods at lower cost and with greater production effi-
ciency. Irrespective of the technical expertise of local staff,
achieving quality of the same level at every production base
at all times is essential if companies hope to increase their cor-
porate competitiveness. At the same time, securing the safety
of inexperienced local workers and putting in place production
systems that are underpinned by principles affirming a com-
mitment to global environmental protection have also become
important corporate social responsibilities. In that respect, IAB
has been developing its application business to respond to
management issues in product quality, safety and environ-
mental friendliness through technology that we have cultivated
over the years at the actual production site, and we will estab-
lish a sound revenue base by further developing ways in which
we can serve our customers in this area.
BUSINESS RESULTS AND FISCAL 2007 OUTLOOK
Completion of the 5:3:2 Earnings Structure and
Outlook for a Significant Increase in Profit
IAB finished fiscal 2006 with net sales of ¥305.6 billion (up
12.1% year on year), and operating income of ¥48.5 billion (up
15.7%). In Japan the safety components and application busi-
nesses steadily progressed. Semiconductor and digital home
electronics-related capital expenditure also remained strong, driv-
ing up sales for our mainstay FA (factory automation) control
devices. In overseas markets, sales of control devices for oil and
gas-related businesses in the United States were strong.
Moreover, a leading US manufacturer of safety devices, Scientific
Technologies Incorporated (current OSTI), which became a con-
solidated subsidiary of IAB in September 2006, also made a con-
tribution to sales (approximately ¥7.0 billion). In Europe, sales
of inverters and servo motors also showed growth.
In fiscal 2007 we are expecting net sales of ¥339.5 billion
(up 11.1% over the current year), and operating income of ¥64.6
billion (up 33.1%). As our final goal in the current medium-term
business plan, we at IAB made a commitment to establishing an
earnings structure based on a ratio of 5:3:2* for gross profit;
selling, general and administrative SG&A expenses (including
R&D expenses); and operating income respectively, and we
Fumio Tateisi, Executive Vice President
Company President, Industrial Automation Company
As the driving force behind structural reform of the Omron Group’s overall profits, IAB has
been aiming for an operating income margin of 20% for fiscal 2007 and is currently devoting
efforts to the final stages of realizing that goal. At the same time, we are focusing our
attention on the application business as an area that will contribute to promoting product
quality, safety and environmental friendliness, aspects of management that companies are
intent on improving at the production site.
INDUSTRIAL AUTOMATION BUSINESS (IAB)
Manufacturing and sales of control systems for factory automation