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12
To Our Stakeholders
Message from the President
The Worst Net Loss in the Company’s History
The business environment in fiscal 2008 took a dev-
astating downturn in the third quarter that led
manufacturers to further curb production activity while
tightening and even freezing capital investment. These
trends deeply impacted business in our core automo-
tive, semiconductor, and liquid-crystal electronic
components industries, resulting in consolidated net
sales in fiscal 2008 falling 17.8% year on year to ¥627.2
billion. The main elements in this decline were the
sharp rise in the value of the yen combined with plum-
meting demand in the Industrial Automation Business
(IAB), Electronic Components Business (ECB), and
Automotive Electronic Components Business (AEC),
which generate over 70% of the Company’s total sales.
The decline in sales contributed to an accompanying
drop in operating income, which plunged 91.8% year
on year to ¥5.3 billion. The Company additionally booked
impairment losses for goodwill, property, plant and
equipment, and investment securities. The overall result
was a net loss of ¥29.2 billion, marking the worst loss in
Omron’s history.
Shifting to a “Revival Stage” in which Nothing
is Sacred
Fiscal 2008 was slated as the first year of the final three-
year stage of the Company’s long-term corporate
vision, Grand Design 2010 (GD2010). However, in light
of the dramatic changes in the operating environment
we have revised our initial plan, in which we had aimed
to accelerate growth. The revised plan comprises two
strategic phases both commencing in February 2009.
The first is “Emergency Measures,” covering the 14-
month period to March 2010, and the second is
“Revival Stage (Structural Reform)”spanning the 26-
month period to March 2011.
This revision to our medium-term management
plan was ultimately necessitated by the subprime loan
crisis and the so-called Lehman Shock. Although we
repeatedly acknowledged the need to become “lean-
er,” the dramatic change in the external business
conditions has made it clear that we had gained excess
“fat” while achieving six consecutive years of
increased revenues and profits. I would like to express
my deepest apologies for not recognizing the gravity
of the situation and for our severe performance results
for fiscal 2008.
IAB
ECB
AEC
SSB
HCB
Others
HQ Cost/Elimination
Total
51.9
12.6
1.4
7.0
9.4
0.1
-17.1
65.3
FY2007
(Billions of yen)
20.5
-2.0
-6.4
5.4
4.8
0
-17.0
5.3
FY2008
Business
FY2007
Actual
(Billions of yen)
Consolidated Operating Income Analysis (Year-on-Year)
FY2008
Actual
65.3
5.3
-59.2
-17.1
+1.1
+8.8
+6.6
+0.4
-0.6
Operating income down ¥60.0 bn
(Exchange loss: ¥8.3 bn)
Gross profit down ¥74.8 bn
Sales down,
product mix
Exchange
loss
M&A gain
Material
costs down
SG&A, R&D:
Exchange gain
SG&A, R&D
down
SG&A, R&D:
M&A
Consolidated Operating Income by Segment