Omron 2007 Annual Report Download - page 24

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in the Chinese market, one of our priority areas, we are cap-
turing demand for products for consumer electronics and mobile
devices and we increased our sales significantly. In addition,
the backlight business of Pioneer Precision Machinery
Corporation (currently Omron Precision Technology Co., Ltd.,
hereafter “OPT”), which became a consolidated subsidiary in
August 2006, also made contributions to sales (approximately
¥26 billion, for eight months). Also, the optic communications
business of NHK Spring Co., Ltd., was transferred to Omron in
November 2006, and we have made efforts to beef up that
business (see the special feature on P35).
In fiscal 2007 we are expecting net sales of ¥180.5 billion
(up 30.5% over the current period) and an operating income of
¥15.3 billion (up 16.8%). Raw material prices such as copper
and silver remain high and will continue to place pressure on
earnings, but we expect the demand environment to remain
favorable. In terms of anticipated performance for specific prod-
ucts, we expect an increase in demand for flexible printed circuit
connectors for mobile devices, combination jog switches, and
hinges. In addition, we anticipate an increase in demand for
relays for communications equipment in Europe and the United
States. Furthermore, OPT will contribute to earnings for the full
year for small to medium-size backlights, and we can also expect
a rise in demand for large-size backlights as the popularity of
large flat-screen TVs accelerates.
MEASURES FOR ACCELERATING GROWTH
Strengthening Existing Areas and the Backlight
Business through Expansion of Our Facilities in China
At ECB we are making plans to put in place a cost structure
that will enable us to stand up to strong competition inside and
outside China. At the same time, we are currently undertaking ini-
tiatives to strengthen our existing business (relays, switches,
and connectors) in China and to boost our production capacity in
backlights so that we can remain in close contact with major
local manufacturers to respond to their requests promptly. As
part of this initiative, we have already started construction on
the third phase of our production subsidiary OMZ, which was
established as a core base for our existing business areas in
June 2006, and we plan to establish a framework for accom-
modating a double-digit increase in demand by 2010. In the back-
light business, following on from the start of operations of a
new large-scale liquid crystal backlight plant in Changshu, Jiangsu
Province in December 2006, we commenced operations in April
2007 at a second plant of an existing production subsidiary for
small-size liquid crystal backlights with a monthly production
capacity of 8,000,000 units, in the province.
ECB RESULTS AND PLANS Billions of yen
2007 Plan
180.5
75.5
105.0
12.2
12.6
9.3
61.2
9.7
15.3
8.5%
10.0
15.0
YoY
141.6%
130.5%
151.1%
110.9%
96.2%
136.5%
245.4%
130.8%
116.9%
(2.0% pt.)
103.5%
108.0%
181.4%
2005
97.7
45.0
52.7
9.9
12.5
6.3
14.5
9.5
11.2
11.5%
7.8
8.4
7.1
2004
101.1
51.8
49.3
9.5
12.0
5.6
11.6
10.7
16.1
15.9%
7.9
5.8
9.1
*Projections for FY2007 are based on exchange rates of ¥115/US$ and ¥150/Euro.
*The sales figures given indicate sales to external customers and exclude inter-segment transactions. Operating income indicates income including internal income prior to
the deduction of amounts such as inter-segment transactions and headquarters expenses that are not apportionable.
*Projections for depreciation and amortization are not publically released.
2003
89.0
47.5
41.5
10.5
10.4
5.0
9.1
6.6
14.6
16.4%
6.7
5.9
7.1
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
138.4
58.8
79.6
11.0
12.0
8.6
35.7
12.4
13.1
9.5%
8.1
9.0
12.8
ELECTRONIC COMPONENTS BUSINESS (ECB)
Combination Jog Switch
A customized jog device that contributes significantly in the
area of design, the switch enables the fabrication of more com-
pact and flatter mobile devices.
MEMS Microphone Chip
Measuring only 1.2 x 1.3 x 0.4mm, a super miniature micro-
phone chip developed using the latest MEMS* technology and
is among the smallest microphone chips in the world.
* MEMS (Micro Electro Mechanical System)
Using semiconductor processes, production technology for
precise structures and devices.
OKAO Vision Facial Image Sensing
Software with a range of functions such as exposure correc-
tion in cameras, brightness correction in photo printing, and
personal identify verification of the owners of mobile phones,
OKAO recognizes with high accuracy facial images and can
estimate age and determine sex.