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65
Financial Section (U.S. GAAP)
Fiscal 2009 Management's Discussion and Analysis
Note: The business divisions are presented using their abbreviated names. Industrial Automation Business (IAB), Electronic & Mechanical Components
Business (EMC), Automotive Electronic Components Business (AEC), Social Systems Solutions Business (SSB), Healthcare Business (HCB).
Market Environment
1. Macroeconomic Environment
Domestic Macroeconomic Environment
The prolonged global recession, the likes of which are said
to occur only once in a 100 years, created extremely severe
business conditions in the first half of fiscal 2009. The glob-
al economy finally started to turn in autumn when the
effects of economic measures implemented in countries
around the world began gradually appearing.
In these conditions, real domestic GDP growth in Japan
slowed to 5.2% shrinkage on a calendar-year basis and a
1.9% fiscal year contraction, marking the second straight
year of negative growth. Nevertheless, this rate of nega-
tive growth slowed from the 3.7% contraction in the
previous fiscal year. The Japanese economy moved into
a gradual recovery trend in the second half, largely driven
by import demand from China, which was among the first
major economies to rally back.
%
Real Private Capital Investment
Note: Seasonally adjusted
Source: Cabinet Office, Government of Japan
-10
-5
0
5
Q1 Q4Q2 Q3
2008 2009
Q1 Q4Q2 Q3
(FY)
Billions of yen %
Machinery Orders (Manufacturing)
Note: Seasonally adjusted
Source: Cabinet Office, Government of Japan
Orders［left axis］
Change from the previous quarter［right axis］
0
500
1,000
1,500
2,000
-40
-30
-20
-10
0
10
20
Q1 Q4Q2 Q3
2008 2009
Q1 Q4Q2 Q3
(FY)
Indices of Electronic Parts and Devices
(Seasonally adjusted indices, 2005 average =100)
Source: Ministry of Economy, Trade and Industry
Productions Shipments Inventory
50
100
150
200
250
06 07 0908
Yen/kg Yen/kg
Silver and Copper Prices
Silver［left axis］
Copper［right axis］
0
300
600
900
1,200
1,500
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
06 07 08 09
80
90
100
110
120
130
140
150
160
170 Yen
Exchange Rates
US$
EUR
06 07 08 09
Growth Rates of Real GDP for Each Country/Region (Calendar-year basis)
2008
2009
2010 Estimates
Source: IMF “World Economic Outlook,” July 2010
Note: Fiscal-year basis for figures marked with asterisk (*)
Japan
*
-3.7
*
-1.9
-1.2
-5.2
2.4
U.S.
0.0
-2.6
3.3
EU
0.6
-4.1
1.0
China
9.6
9.1
10.5
Brazil
5.1
-0.2
7.1
Total
3.0
-0.6
4.6
India
6.4
5.7
9.4
Demand for factory automation (FA) equipment, a core
product of the Omron Group, continued low into the first
quarter of the fiscal year amid a general sense of excess
production capacity that produced a declining trend in
demand for investment in equipment.
Beginning in the second quarter, the major fiscal and
monetary policies, environment-themed policies to stim-
ulate consumption, and other measures implemented by
governments around the world generated growing demand
centered on consumer and environment-related products,
leading to gradually improving equipment investment
demand from the manufacturing industry, the Group’s core
customer base.
While demand conditions improved, revenues were
constricted by the appreciating yen, whose average
exchange rates rose to ¥92.9 versus the U.S. dollar, up
¥7.8 from the previous fiscal year, and to ¥130.3 versus
the euro, a ¥14.2 year-on-year rise.
2. The Omron Group Market Environment