Omron 2009 Annual Report Download - page 16

14
President Sakuta Discusses Omron’s Future
“Downsizing for Success” and our Motto, “Change! Challenge! Create!”
Please explain the “operating income of positive zero” objective for fiscal 2009.
Q
“Operating Income of Positive Zero” is
“Downsizing for Success”
We have been aiming to achieve an operating income
margin of 10% as a validation of a solid profit struc-
ture. We saw our income margin peak at 9.9% in fiscal
2005; however, we only expect to maintain a breakeven
margin in fiscal 2009.
We have opted to refer to it as “positive zero” rather
than simply “zero” profit. The reason behind this is that
instead of becoming apathetic and randomly cutting
costs and investments to strike a balance between
income and expenses, we will maintain certain costs
and continue investing in what is necessary for the
Company’s future and to nurture our competitive mer-
its. In other words, we strongly believe we must forge
ahead with “downsizing for success.” Another aspect
of this approach is to be humble yet with a positive frame
of mind for “starting fresh from zero.”
costs, overhead costs, and other peripheral outflows
will also be limited to the bare essentials.
Also, steps taken in fiscal 2008 to lower goodwill
and property, plant and equipment are beginning to
produce results, including reducing depreciation costs.
We estimate that these measures will put us on track
to cut approximately ¥55 billion in fixed costs.
Additionally, we plan to lower variable costs by approx-
Cutting Fixed Costs by ¥55 Billion and Variable
Costs by ¥5 Billion
We are implementing emergency measures to cut
approximately ¥60 billion in costs in fiscal 2009. We
also plan to reorganize both our business domains and
management structure as part of an extensive reform
of our operating structures, with the aim of lowering
manufacturing fixed costs and variable cost ratios and
setting the foundation for fortifying our earnings base
for the medium and long term. Specific measures will
include cutting labor costs by rescinding a portion of
director compensation and management salaries, set-
ting up performance-based salary systems, and
restricting overtime work. Since the Company is essen-
tially in crisis mode, we will strictly limit spending,
including even R&D expenses, and restrain capital
investment for the future unless there is specific objec-
tive and a clear schedule for producing return. Advertising
What are the key emergency measures for achieving operating income of
“positive zero?”
Q
Hisao Sakuta,
President and CEO
FY2009: Items for Improvements in Profit & Loss Structure
Reduce fixed costs
Reduce variable costs
¥55 bn
¥5 bn
Target value
(approx.)
• Labor costs, overhead costs
• Depreciation (restraints on
investment)
• Depreciation (impairment of
fixed assets)
• Raw material costs and others
FY2008 Actual and FY2009 Plan
Net sales
Gross profit
SG&A expenses
R&D expenses
Operating income
Non-operating loss, net
Net loss before taxes
Net loss
510.0
175.0
135.0
40.0
0
-3.5
-3.5
-2.0
FY2009
Plan
627.2
218.5
164.3
48.9
5.3
-44.4
-39.1
-29.2
FY2008
Actual
(Billions of yen)