Omron 2015 Annual Report Download - page 43

FY2010 FY2011 FY2012 FY2013 FY2014
Net sales 100.0%100.0%100.0%100.0%100.0%
Cost of sales 62.5 63.2 62.9 61.560.7
Gross profit 37.5 36.8 37.1 38.539.3
Selling, general and administrative expenses 23.0 23.5 23.4 23.523.4
Research and development expenses 6.7 6.8 6.7 6.25.7
Other expenses (income), net 1.1 1.1 0.7 0.8(0.1)
Income before income taxes and equity in earnings of affiliates 6.7 5.4 6.3 8.010.3
Income taxes 2.3 2.9 2.2 2.53.4
Net income attributable to shareholders 4.3 2.6 4.6 6.07.3
■ Costs, Expenses, and Income as Percentages of Net Sales
1. Review of Operations by Business Segment
Electronic and Mechanical Components Business
(EMC)
Industrial Automation Business (IAB)
Our Industrial Automation Business recorded net sales of
¥331.8 billion for fiscal 2014, a 13.7% gain year on year.
Higher revenues and production efficiencies resulted in a
40.9% increase in operating income, up to ¥54.6 billion.
Japan experienced a gradual economic recovery
throughout the year, with demand particularly strong
for capital investment in the automobile and electronics
components fields. Overseas, the weakened yen
contributed to greater sales in every region. Of particular
note was the growth in the Americas, supported by strong
demand in automobiles and oil and gas. Greater China
proved again to be a strong growth market for electronics
components. The segment experienced a gradual recovery
in Europe, while demand for electronics components in
Asia was strong, driven in part by the devalued yen.
The Electronic and Mechanical Components Business
recorded net sales of ¥103.9 billion, representing a 6.4%
year-on-year gain. Operating income was higher by
17.5% year on year, reaching ¥10.2 billion.
In Japan, demand in the consumer electronics market
and automobile industries was slow due to the increase
in consumption tax rates. While demand in the consumer
and commercial product industries other than consumer
electronics remained level with the prior year, net sales
decreased. Meanwhile, the weakened yen helped push
net sales overseas significantly higher. In the Americas
and Europe, demand for consumer and commercial
products was strong, while new customers in Greater
China—and our growth in consumer electronics in that
Note: Operating income
Segment operating income is prepared using the single-step method (which does not show individual income levels) based on U.S. GAAP. For inter-
company comparison, we have defined operating income as gross profit minus selling, general and administrative (SG&A) expenses and research and
development (R&D) expenses.
Note: Inter-segment transactions
The sales figure within segment information represents sales to external customers and excludes inter-segment transactions. Conversely, operating
income includes income from inter-segment transactions before deductions of headquarters expenses and other non-allocable amounts.
Segment Information
Automotive Electronic Components Business
(AEC)
The Automotive Electronics Components Business
recorded net sales of ¥137.9 billion, an 8.9% year-on-year
gain. Operating income grew 1.6% to ¥9.2 billion.
Domestically, higher consumption tax rates and
slow sales among certain customers combined to drive
sales lower year on year. Meanwhile, the weaker yen
contributed to revenue gains overseas. In particular, the
Americas reported strong sales growth, supported by
the healthy U.S. economy, most notably during the fourth
quarter. Asia and Greater China, where we continue to
build market share, also reported strong sales for the year.
The Social Systems, Solutions and Service Business
recorded ¥80.4 billion in net sales for fiscal 2014,
representing a 2.8% year-on-year decrease. Operating
income experienced a 10.1% decrease to ¥5.0 billion.
Our railway infrastructure business delivered
strong results due to railway infrastructure equipment
facility upgrades, despite the lull in sales following the
rush of purchases during the prior year in advance of
consumption tax increases. Meanwhile, our traffic control
and road control systems business underperformed the
prior year due to the lack of capital investment in traffic
control systems and other systems. Despite a decline
in customer demand during the second half of the year,
the Environmental Solutions Business was able to show
overall sales gains, buoyed by demand for solar power
generation system-related products.
Other Businesses reported net sales of ¥87.4 billion, a
year-on-year increase of 10.7%. Operating income came
in at ¥8.4 billion, which was a decrease of 3.6% year on
year, mainly due to investment activity.
Despite falling demand among certain Environmental
Solutions Business customers during the second half of
the year, increasing interest in renewable energy pushed
domestic demand for PV inverters higher, resulting in
strong demand during the year overall. The Electronic
Systems & Equipment Business experienced demand
for uninterruptible power supply units, industrial-use
computers, and development and contract production
services for electronic devices. Strong markets for
smartphone microphones also helped drive earnings
growth in our Micro Devices Business. A growing
market for smartphones in Greater China has driven
demand for thin, high-performance backlights in our
Backlights Business.
The Healthcare Business reported a 12.7% year-
on-year gain in net sales, recording ¥100.6 billion in
revenues. Meanwhile, operating income fell 13.7%
to ¥6.5 billion. This decline was mainly due to our
advance investments overseas, as well as to dramatic
fluctuations in the currency trading markets during the
second half of the year.
In Japan, higher consumption taxes and a revision
in the medical payments system combined to place
downward pressure on demand for institutional medical
devices. However, successful in-store promotions and
the introduction of new products such as massagers
served to drive higher sales for our home-use healthcare
and medical devices. Overseas, a slowing Russian
economy and the political instability in Ukraine placed a
drag on sales growth in Europe. Sales of new products,
such as TENS, in the Americas helped drive earnings,
as did strong performance of healthcare and medical
devices in China, India, and other emerging countries.
Social Systems, Solutions and Service Business
(SSB)
Other Businesses
Healthcare Business (HCB)
■ Growth in Net Sales by Business Segment
FY2012 FY2013 FY2014
IAB (2.9)% 10.9%13.7%
EMC 1.3 16.2 6.4
AEC 14.8 29.7 8.9
SSB 20.2 20.3(2.8)
HCB 14.5 24.812.7
Other 10.7 33.3 10.7
■ Composition of Net Sales by Business Segment
FY2012 FY2013 FY2014
IAB 40.4%37.7%39.2%
EMC 12.9 12.612.3
AEC 15.0 16.416.3
SSB 10.6 10.79.5
HCB 11.0 11.511.9
Other 9.1 10.210.3
Note: The composition of net sales is based on the classifications reported
under Six-Year Summary on P. 79.
market in particular—led to overall favorable results for
the segment. In Asia as well, we saw growth in demand
in the automobile-related industries.
■ Dividends per Share
(FY)
0
10
20
30
40
50
80
70
60
Yen
1410 11 12 13
71
30 28
37
53
Per-share net income attributable to shareholders
amounted to ¥283.9, an increase of ¥74.1 compared to
the prior fiscal year.
The Company’s basic policy for dividend payments is
to secure sufficient internal capital resources for future
growth while at the same time providing consistent
shareholder returns. More specifically, our target for
fiscal 2014 was a dividend payout ratio of 25% or greater.
The Group has moved the fiscal 2016 payout ratio goal
of 30% up by one year to fiscal 2015. We have left our
target ratio for dividend on equity unchanged at 2%.
Given these policies, the Group was pleased to
report an annual dividend of ¥71 for fiscal 2014, ¥18 per
share higher than the prior fiscal year. Our consolidated
dividend payout ratio was 25.0%, with a dividend on
equity result of 3.4%. We project a ¥92 per share divided
for fiscal 2015.
82 OMRON Corporation Integrated Report 2015 83
About Omron Where We’re Headed Corporate Value Initiatives Corporate Value Foundation Financial Section