Omron 2009 Annual Report Download - page 38

36
Fiscal 2008 in Review
The sharp drop in automobile demand in the sec-
ond-half caused sales to plummet, resulting in an
operating loss.
AEC net sales declined 23.6% year on year to ¥82.1 billion.
After regaining profitability last year, operating income
dropped back to a ¥6.4 billion loss in fiscal 2008. Sales were
up year on year in the first half as strong demand in Japan
for electric power steering controllers and other components
more than made up for faltering vehicle production volumes
in the United States and Europe amid rising gasoline prices
and economic slowdowns. In China, newly established proj-
ects resulted in first-half in sales reaching roughly double
the level that was attained in the previous year.
In the second half, however, the United States, which
is the world’s largest automobile market, became the epi-
center for the spreading global recession, and overall
automobile demand fell vastly more than anticipated.
Demand had held firm in China and developing nations in
the first half, but souring economic conditions led to dwin-
dling demand in those markets as well. In Japan, the United
States, and Europe, demand began shifting away from mid-
and large-size vehicles to more economical small cars. AEC
sales were also deeply impacted by the large-scale inven-
tory reductions and production cuts automakers began
implementing at the start of the new calendar year. As a
result, AEC second half sales fell far below the previous
year level.
The rapid and severe changes in the economic envi-
ronment have led management to implement strict
measures to improve the efficiency of operations. In addi-
tion to eliminating unprofitable operations, management
has decided to shut down Omron Automotive Electronics
UK Ltd., which was established in 1987 to manufacture auto-
motive switches and controllers, by the end of March 2011
as a step to reorganizing the global production structure.
* FY2009 (Plan) adopted from FASB Statement No.131,
Disclosures about Segments of an Enterprise and
Related Information.
* Projections for FY2009 are based on exchange rates of ¥95/US$ and ¥125/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 head office expenses that are not apportionable.
* Projected figures for R&D costs, depreciation costs, and capital expenditures are not publicized.
AEC Results and Plans
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses*
Depreciation and amortization*
Capital expenditures*
77.6
27.2
50.4
28.8
6.2
15.1
0.1
0.0
(2.0)
—
6.7
7.0
11.2
2005
93.3
26.1
67.2
37.9
9.8
16.2
1.4
2.0
(1.2)
—
7.1
8.1
8.9
2006
107.5
28.0
79.5
42.4
13.9
18.3
3.1
1.9
1.4
1.3%
8.3
8.0
9.1
2007
82.1
25.0
57.1
27.9
9.0
12.5
4.7
3.0
(6.4)
—
7.3
5.4
5.6
2008
60.0
24.5
35.5
21.8
1.5
8.0
4.0
0.2
0.0
0.0%
2009
（Plan）
Fiscal Year
% of Net Sales
13%
AEC is restructuring to improve the profitability of its operations and
enhancing the value-added features of its products to keep pace with
the rapidly evolving needs of the car electronics market.
Automobile production output
declined sharply, particularly in the
United States and European mar-
kets, beginning in the second half
of fiscal 2008.
Analysis of external environment
(Millions)
0
1
2
3
4
5
6
Worldwide automobile
production
1Q2Q3Q4Q1Q 2Q 3Q 4Q
FY2007 FY2008
Source: CSM Worldwide, Inc.
China
Japan
North
America
EU
Middle East, Africa
South
America
Asia
（Billions of yen）
Segment Information
AEC AUTOMOTIVE ELECTRONIC COMPONENTS BUSINESS
Manufacture and sales of electronic components for automobiles
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