Omron 2010 Annual Report Download - page 44

44
Segment Information
AEC AUTOMOTIVE ELECTRONIC COMPONENTS BUSINESS
Production and sales of electronic components for automobiles
Fiscal 2009 in Review
Profitability attained from the second quarter
through cuts in fixed costs and restructuring of
production operations
AEC net sales declined 8.5% year on year to ¥75.2 billion,
while operating income came to ¥1.7 billion in fiscal 2009,
compared with a loss of ¥7.1 billion in the previous fiscal year.
Automobile sales remained sluggish in the fiscal first-
half, as the worldwide recession persisted. While
consumption in Japan remained low amid continuing inse-
curity regarding employment and personal income,
government policies, such as tax breaks for eco car pur-
chases, helped spur demand for automobiles beginning in
the third quarter. The ensuing pick-up in auto production
activity led to increasing demand for AEC products.
Domestic sales fell below the previous-year level, declining
4.4% year on year to ¥23.9 billion. However, signs of
improvement appeared near the end of the term, which
prevented an even greater decline in sales.
Overseas sales fell 10.2% year on year to ¥51.3 billion,
largely due to the substantial impact from the failure of
major automobile manufacturers in North America, the pri-
mary market for AEC products. However, prompt action
by the United States government to provide public sup-
port to restructure the troubled automakers and measures
initiated in several countries to stimulate automobile sales
resulted in a gradual improvement in overseas demand for
AEC products beginning in the third quarter. In particular,
sales in Greater China grew 32% year on year, boosted by
the region’s expanding market.
The consolidation and streamlining of overseas facto-
ries as part of the restructuring of production, the transfer
of a portion of the relay unit production operations to the
EMC segment, and the reduction of fixed costs helped
AEC regain profitability in 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.
AEC 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
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
(7.1)
—
7.3
5.4
5.6
2008
75.2
23.9
51.3
24.0
2.0
13.1
6.3
5.9
1.7
2.3%
5.0
2.1
3.6
2009
81.5
28.5
53.0
22.5
3.5
12.5
8.0
6.5
2.5
3.1%
2010
(Forecast)
Fiscal Year
% of Net Sales
14%
AEC conducts business operations catering specifically to the auto-
motive electronics field, and produces technologies and products
designed to create “the best match between people and automobiles.”
Various countries’ government
policies to promote auto pur-
chases in fiscal 2009 contributed
to a recovery in demand. China
and other emerging economies
showed remarkable growth.
Analysis of external environment
(Millions)
0
1
2
3
4
5
6
1Q2Q3Q4Q1Q 2Q 3Q 4Q
FY2008 FY2009
China
Japan
North
America
EU
Middle East, Africa
South
America
Asia
Worldwide automobile
production
Source: CSM Worldwide, Inc.
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