Omron 2007 Annual Report Download - page 26

25
half, delayed productivity improvements at our North American
manufacturing facility, higher raw material costs and other fac-
tors resulted in our third consecutive year of operating losses.
Our fiscal 2007 full-term forecast looks for net sales of
¥100 billion (up 7.2% year on year) and a return to the black
with operating income of ¥1.4 billion. Despite potential risk fac-
tors such as poor performance among the Big Three in North
America and slumping sales of new cars in the Japanese mar-
ket, we anticipate a rise in automobile production in China,
India, Central and Eastern Europe, South America and other
new markets. Moreover, we expect stronger demand for such
strategic products as laser radars, tire pressure monitoring sys-
tems and electric power steering controllers in light of expand-
ed use of AEC products in new models scheduled to be
launched by Japanese and non-Japanese automobile manu-
facturers. As for earnings prospects, AEC’s own efforts to
improve its manufacturing efficiency should of course help, as
will working with IAB and ECB to share product platforms for
relays and other products and lower R&D costs. In taking these
steps we are determined to return to profitability. (See P13 for
profitability recovery initiatives)
MEASURES FOR ACCELERATING GROWTH
Greater TPMS Marketing in North America in
Response to New Safety Requirements
In 2000 inadequate tire pressure was pointed out to be
one of the causes of a series of automobile tire failure acci-
dents in the United States. As a result, automobile safety leg-
islation, known as the TREAD Law*, was passed that requires
all automobiles sold in the United States from September 2007
to be equipped with a TPMS** device to warn of inadequate
tire pressure. TPMS is an alarm system that uses a wireless
central processing unit with a high-frequency receiver to
receive information from sensors attached to each of the four
wheels of an automobile. The driver of an automobile receives
data on tire pressure and internal temperature of the tire and
will be alerted to an abnormal condition. AEC has already intro-
duced products for TPMS systems using electronic frequency
sensing technology to the North American market from fiscal
2005, based on which it will expand the business to promote
installation in new model vehicles.
*TREAD Law: Transportation Recall Enhancement, Accountability and
Document Act
**TPMS: Tire Pressure Monitoring System
AEC RESULTS AND PLANS Billions of yen
2007 Plan
100.0
25.5
74.5
41.9
12.8
17.3
2.4
0
1.4
1.4%
8.0
6.0
YoY
120.3%
95.7%
133.5%
131.5%
157.9%
106.8%
1032.4%
—
—
—
106.9%
116.9%
79.6%
2005
77.6
27.2
50.4
28.8
6.2
15.1
0.1
0
(2.0)
—
6.7
7.0
11.2
2004
64.6
26.0
38.6
21.0
5.4
11.9
0
0.3
(0.9)
—
6.4
3.3
7.6
*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
58.8
24.8
34.0
20.9
4.0
8.8
0
0.3
1.0
1.7%
5.2
3.0
9.0
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
93.3
26.1
67.2
37.9
9.8
16.2
1.4
2.0
(1.2)
—
7.1
8.1
8.9
AUTOMOTIVE ELECTRONIC COMPONENTS BUSINESS (AEC)
Smart Entry
Portable devices that transmit signals to automatically lock
and unlock doors. It also features enhanced security func-
tions for authorizing engine start-up, increasing the owner’s
peace of mind.
Laser Radar
Measures the distance to the vehicle up ahead using a sensitive
wide-field laser to contribute to realizing a driving control sys-
tem. In addition to automobiles, bicycles and other objects are
also detectable.
Electric Power Steering Controller
Compared with conventional oil pressurization, electric (motor-
ized) power steering leads to improved fuel efficiency.
Consequently, adoption of electric power steering controllers is
rapidly expanding in new automobile models.