Omron 2010 Annual Report Download - page 40

40
Segment Information
IAB INDUSTRIAL AUTOMATION BUSINESS
Manufacturing and sales of control systems and components for factory automation and industrial equipment
Fiscal 2009 in Review
Substantial declines in sales and earnings reach
bottom, Greater China sales rebound
IAB net sales fell 24.2% year on year to ¥206.2 billion, and
operating income declined 23.5% to ¥13.9 billion in fiscal 2009.
In Japan the strong impact from curbs in production
activity and capital expenditures by the Japanese manu-
facturing industry in the second half of fiscal 2008 led to a
further decline in demand in the first quarter of fiscal 2009.
However, recovering production activity centering on our
customers in the automobile and electronic components
industries helped demand to begin rising in the second
quarter, notably for sensor products.
In the third quarter, a sustaining demand recovery trend
took hold for IAB products as production activity picked up
in the semiconductor industry, and sales also began grow-
ing for safety products, power conditioners for solar power
generation systems, and other energy-related products.
Overseas sales benefited from Chinese government
policies to stimulate domestic demand that boosted
domestic capacity utilization rates and increased capital
investment, which generated growing demand for the
Company’s products that ultimately raised sales in China
above the level in fiscal 2008 on a local currency basis.
Sales in Europe were affected by the slow economic recov-
ery in the Company’s key markets in southern Europe.
Sluggish conditions in the oil-related and automobile indus-
tries impacted sales in North America. However, sales
results began gradually improving in both regions in the
third quarter.
Despite the improving trends as the year progressed,
the impact from sluggish conditions in the first half caused
domestic sales to fall 25.5% year on year to ¥93.5 billion
and overseas sales to decline 23.0% to ¥112.7 billion for
the fiscal year. The profit structure reform and emergency
measures to cut costs made the operating income posi-
tive from the second quarter.
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
IAB is strengthening links between its sales, service, development, and
production networks worldwide to enhance its “full lineup of control equip-
ment” and “ultra-high-speed, high-precision machine automation” and
to create products that contribute to fulfilling the need for ongoing improve-
ment in production site “quality, safety, and the environment.”
IAB Results and Forecast
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
305.6
140.8
164.8
34.8
81.3
14.0
28.8
5.8
48.5
15.9%
18.1
11.2
13.7
2006
328.8
144.1
184.7
35.6
92.3
16.2
34.6
6.0
51.9
15.8%
19.5
11.7
8.4
2007
272.0
125.5
146.5
31.6
70.7
17.4
25.7
1.0
18.2
6.7%
18.2
10.1
8.9
2008
206.2
93.5
112.7
18.9
51.2
16.8
25.5
0.3
13.9
6.7%
11.4
5.4
2.0
2009
271.0
126.0
145.0
23.5
55.0
23.5
41.5
1.5
40.0
14.8%
2010
(Forecast)
(Billions of yen)
Fiscal Year
% of Net Sales
39%
Check it out!
IAB sales trends move on a slight
time lag to indices for industrial pro-
duction and machinery orders.
Analysis of external environment
*(Billions of yen)
0
50
100
150
0
30
60
90
1Q2Q3Q4Q1Q 2Q 3Q 4Q
FY2008 FY2009
Indices of industrial production
and machinery orders,
IAB sales
Index of Industrial Production*
(Seasonally adjusted) [left axis]
Machinery orders* [left axis]
*Source: The Ministry of Economy, Trade and
Industry and the Cabinet Office,
Government of Japan
IAB sales [right axis]