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OMRON Reports Record Results for the Full Year Ended March 31, 2006.

Tokyo, Japan, Apr 26, 2006 - (JCN Newswire) - OMRON Corporation (TSE: 6645; US: OMRNY), a global leader in automation, sensing and control technology, has again announced record financial results for the fiscal year ended March 31, 2006. Net sales rose 3.0% year-on-year to JPY 626.7 billion, while operating income increased 10.7% to JPY 62.1 billion. Net income before taxes increased 22.5% to JPY 64.3 billion, and net income rose 18.5% to JPY 35.7 billion. Each of these figures represent record highs for the company.

In markets related to the OMRON Group, sales of factory automation control systems to domestic and overseas manufacturers were solid, supported by robust capital investment. Sales of automotive electronic components expanded due to strong unit sales of automobiles. However, sales of consumer and commerce components for IT and digital-related products were sluggish due to inventory adjustments and intensifying price competition.

In this environment, the OMRON Group made concentrated, clearly defined investments of management resources in these areas for future growth, with a fiscal year policy of "Advancing toward a Strong Profit Structure," and a basic stance consisting of 1) Milestones on the way to the realization of Stage 2 of GD2010; 2) Promotion of ongoing structural reforms; 3) Achievement of sales and profit growth; and 4) Proactively making necessary investments. In addition, OMRON moved to establish lasting efficiency gains toward the realization of its targeted profit structure.

As concrete key strategies, the OMRON Group worked to 1) implement structural reforms of selling, general and administrative expenses and production as part of its Operating Structure Reforms aimed at enhancing profits, and 2) implement its technology-driven growth strategy and expand business in China as part of Business Domain Structural Reforms, and its global-level response to the Restriction of Hazardous Substances (RoHS) in Electrical and Electronic Equipment directive in the European Union as a special theme.

In accordance with Compnay's "Basic Policy for Distribution of Profits" and in consideration of results for the fiscal year ended March 31, 2006 and the previous fiscal year, OMRON plans to pay an ordinary year-end dividend of JPY 18.00 per share. Combined with the earlier interim dividend of JPY 12.00 per share, this will bring total dividends for the year to JPY 30.00 per share, an increase of JPY 6.00 per share from the previous fiscal year.

1) Consolidated Financial Summary for the Full Year Ended March 31, 2006
 (millions yen)
 Full Year Ended Change Full Year Ended Change
 March 31, 2006 % March 31, 2005 %

Operating Results


Net Sales 626,782 3.0 608,588 4.1
Operating Income 62,128 10.7 56,111 9.2
Income Before Taxes 64,352 22.5 52,548 9.5
Net Income 35,763 18.5 30,176 12.6
EPS (basic)(yen) 151.14 126.52
EPS (diluted)(yen) 151.05 124.75


Financial Position


Total Assets 589,061 585,429
Total Sh'holders Equity 362,937 305,810
Sh'holders Equity Ratio 61.6 52.2
Shareholders EPS (yen) 1,548.07 1,284.81


Cash Flows


Net Cash from
 Operating Activities 51,699 61,076
Net Cash from
 Investing Activities (43,020) (36,050)
Net Cash from
 Financing Activities (38,320) (40,684)
Cash and Cash Equivalents
 at End of Period 52,285 80,619


2) Results by Business Segment

IAB (Industrial Automation Business)

In Japan, sales of the safety business and quality solutions business were strong, reflecting increasing quality, safety and environmental needs, a major trend in the manufacturing sector. In addition, sales in Japan exceeded the level of the previous fiscal year due to growth in sales to the automotive industry, which continued to make large-scale investments, and a rebound in sales to the semiconductor and home digital appliance-related industries, which had made inventory adjustments.

In overseas markets, in North America, sales of products to the automobile industry increased, as did sales in the oil and gas-related business. In Europe, sales increased overall amid an insufficient economic recovery, as sales of inverters, servomotors and sensor devices expanded in the emerging markets of Russia and Eastern Europe. Sales remained strong in Greater China and Southeast Asia, where high sales growth continues. In particular, sales increased substantially in China due to strengthening of OMRON's sales force, centered on full-time sales staff, and its network of sales agents.

As a result, segment sales totaled JPY 272,657 million, an increase of 8.9 percent compared with the previous fiscal year.

ECB (Electronic Components Business)

In Japan, overall sales in the first half were weak, including sales of printed circuit board relays, a core product, due to the condition of inventory adjustments in consumer and commerce industries that started in the second half of the previous fiscal year. Sales of small-size backlights for mobile phones were also weak, due in part to price competition. However, sales recovered steadily in the second half due to factors including a strong increase in sales of FPC connectors for digital home appliances and mobile devices due to brisk demand for products such as thin-screen televisions and portable music players, reflecting the economic recovery.

Overseas, sales increased strongly in China as the electronic components market continued to expand, centered on home appliances and mobile devices. Sales in the United States and Europe were solid as OMRON strengthened sales and marketing, contributing to growth in sales of products for the IT and mobile markets, which are growth areas.

As a result, segment sales were JPY 97,699 million, a decrease of 3.4 percent compared with the previous fiscal year.

AEC (Automotive Electronic Components Business)

Global automobile production volume during the period was strong overall, although there were differences by manufacturer and country and the industry was faced with destabilizing factors such as operating deficits at automobile manufacturers and large component manufacturers in North America. In addition, needs are increasing for car electronics for automobile safety and environmental friendliness, and OMRON released products that meet those needs to match customer manufacturers' new vehicle investment, which contributed to improved sales results in all areas of the world.

In Japan, a recovery among major customers contributed to solid sales. Sales increased strongly in overseas markets due to factors including the launch of new products in the United States, the acquisition of a subsidiary in Europe in the previous fiscal year, and solid sales to major customers in Asia.

By product, sales of products including laser radar devices, electric power steering controllers and wireless control devices increased steadily.

As a result, segment sales were JPY 77,593 million, an increase of 20.2 percent compared with the previous fiscal year.

SSB (Social Systems Business)

In the public transportation systems business, there was a reactive decline from the renewal and conversion demand for ticket vending machines and other equipment associated with the issue of newly designed currency bills in the previous fiscal year. However, factors such as demand for equipment conversion in connection with the shift to IC cards for railway tickets, equipment upgrades at major customers, and a large-scale project in tandem with the opening of a new train line contributed to favorable sales.

The traffic and road management systems business faced a difficult business environment due to heightened competition in the traffic control market.

In other businesses, sales increased substantially in the new businesses of security solutions and IC card and mobile solutions. In related maintenance businesses, sales grew strongly in IT-related businesses such as office automation systems, and in maintenance and repair of other companies' products.

However, sales in this segment totaled JPY 91,804 million, a decrease of 20.3 percent, due largely to the transfer of the ATM and other information equipment business to an equity affiliate in the previous fiscal year.

HCB (Healthcare Business)

During the fiscal year, the domestic and overseas markets expanded, supported by increasing needs for prevention of lifestyle-related diseases and government measures to restrain healthcare costs. In this market environment, OMRON took steps to maintain and expand its share in markets where it competes with other companies.

By product type, sales of blood pressure monitors, a core product, remained favorable on a global basis. Sales of body composition monitors were also favorable, due in part to the effect from television commercials.

In addition, during the fiscal year, OMRON acquired Colin Medical Technology Corporation, a medical equipment manufacturer, in June 2005, and now has a full line of medical devices for hospital and home use, including blood pressure monitors (bio-information monitors) and measurement equipment for arteriosclerosis and other conditions. With this acquisition, OMRON broadened the scope of this business from healthcare equipment mainly for home use to equipment for use in medical institutions.

As a result, segment sales were JPY 61,090 million, a decrease of 20.8 percent compared with the previous fiscal year.


Among existing businesses, in the entertainment business, although competition continued to intensify for commercial game machines, overall sales increased substantially over the same period in the previous fiscal year due to steadily expanding sales of content for cellular phone and other new businesses.

In the computer peripheral business, sales of broadband routers, uninterruptible power supplies and other products increased strongly. Sales of the radio frequency identification (RFID) business also increased. However, in the wireless sensing business, sales of simple anti-theft devices for automobiles and the commissioned software business declined.

As a result, segment sales were JPY 25,939 million, a decrease of 3.2 percent compared with the previous fiscal year.

3) Outlook for the Fiscal Year Ending March 31, 2007

Looking at the economic environment for the fiscal year ending March 31, 2007, elements of uncertainty regarding the outlook will remain, including pressure on corporate profits due to high oil and raw material prices, the impact of further interest rate hikes in the United States and Europe on corporate activities, and trends in exchange rates. Overall, however, moderate growth is projected to continue in each area, as consumer spending and corporate capital investment are expected to remain solid.

In this environment, from the standpoint of doubling its business value by promoting ongoing structural reforms that balance profit and growth, a goal of Stage 2 of GD2010, OMRON has set the policy for the fiscal year of "Accelerating growth while securing profit increase - advancing toward FY07 targets by front -loading growth." OMRON will make the necessary investments to achieve the goals of Stage 2 of GD2010, and will promote lasting efficiency gains aimed at realizing its envisioned profit structure.



(yen millions)

Interim Ending Year Ending

Sept. 30, 2006 March 31, 2007


Net Sales 320,000 700,000

Income Before Income Taxes 22,000 65,000

Net Income 12,500 37,500



Specifically, OMRON will implement as priority items:

1) Investment for continued business growth and creation of a robust business infrastructure in China;

2) Prioritized investment in projects that contribute strongly to new growth markets with designated core technologies as a technology-driven growth strategy; and

3) Implementation of ongoing operating structural reforms aimed at the targeted profit structure.

In addition, as special priority themes, OMRON will continue to work toward the complete elimination of regulated chemical substances and take measures to enhance technology for quality improvements.

During the fiscal year, OMRON will increase operating income by continuing to strengthen the profit structure of existing businesses, while aggressively making growth investments in China and in new business areas. OMRON projects net sales for the fiscal year of JPY 700.0 billion, operating income of JPY 63.0 billion, income before income taxes of JPY 65.0 billion and net income of JPY 37.5 billion, the fifth consecutive year of growth in sales and profits. The assumed exchange rates are $US1 = JPY 110 and 1 Euro = JPY 135.

4) Management Policies

In fiscal 2001 (ended March 31, 2002), OMRON began implementing "Grand Design 2010" (GD2010), a vision that sets the basic policies for management of the OMRON Group for the 10 years through fiscal 2010. In accordance with these basic policies, OMRON aims to become a "21st century company" by maximizing its corporate value over the long term, based on its mission of contributing to the development of society. Aiming to be "Small but Global," as a management objective OMRON will work to be a profitable growth company that maximizes corporate value.

The goal of the first stage of GD2010, which covered the period from fiscal 2001 to fiscal 2004, was ROE of 10%. OMRON achieved this goal in fiscal 2003, one year ahead of plan.

The second stage of GD2010 covers the four years from fiscal 2004 to fiscal 2007. In working to increase corporate value, during the second stage OMRON will shift its focus to growth from its focus on creating a profit structure in the first stage. Specifically, as part of its "Business Domain Reform" aimed at identifying target growth markets and technologies to redefine its business domain, OMRON will work toward expansion of business value through sales growth in China and creation of business value in new areas centered around core technologies.

In addition, as "Operational Structural Reform," OMRON will continue to establish a profit structure appropriate for its businesses and promote reforms designed to realize a stronger profit structure. OMRON has set milestones to be reached for each of the fiscal years ending in March 2006, 2007 and 2008, and is conducting business operations aimed at these milestones.

5) Future Issues

In the second stage of GD2010, OMRON has identified the profit structure and growth structure it intends to achieve in fiscal 2007. The Company has positioned the interim years of fiscal 2005 and fiscal 2006 as milestones toward realizing the fiscal 2007 targets, and is promoting ongoing structural reforms.

In the Japanese economy during the current fiscal year (fiscal 2006), factors such as the decision to end the zero-interest-rate policy will allow deflationary concerns to be cast aside. However, growth rate, centered on capital investment and consumer spending is projected to weaken, while elements of uncertainty such as trends in commodity markets, including rising crude oil prices, also exist in overseas markets. Therefore, OMRON is in a business environment with an unclear outlook.

Thus, OMRON has set "Accelerating growth while securing profit increase - advancing toward FY07 targets by front-loading growth" as its fiscal year policy. Assuming an increase in income, OMRON will accelerate the growth of each business and make the necessary investments to ensure that the targets are reached in fiscal 2007, the final year of the second stage.

Growth in China is an effort on which the entire company is focusing, and although the slowing rate of growth is a cause for concern, China remains the world's fastest-growing market. Moreover, in addition to the entry of companies from around the world, competition with local Chinese companies is intensifying, making China a microcosm of global competition. Under these conditions, OMRON will not change its belief that the Chinese market is crucial to achieving the goals of the second stage of GD2010. China will continue to be a key area, and OMRON will strive to increase fiscal 2007 sales there by JPY 100 billion over fiscal 2003 figures by embracing new business themes and making bold, proactive investments.

For technology-driven growth, to date OMRON has set core technology and growth areas to strengthen at the corporate level, created a detailed map of technology and applications as a process for steadily developing technology, and moved toward the establishment of a profit structure for growth. OMRON will add energy, environment, security and safety as areas of focus, and has increased its fiscal 2007 target from "increasing net sales by JPY 50 billion compared to fiscal 2003 to JPY 68 billion" to "increasing net sales by JPY 64 billion compared to fiscal 2003 to JPY 82 billion," and will accelerate growth with a view toward the third stage of GD2010, lasting until 2010.

With regard to revising the earnings structure of existing businesses, OMRON will advance toward its fiscal 2007 earnings structure target by continuing to work towards structural reform of selling, general and administrative expenses and production, despite factors such as lower selling prices and higher materials prices.

For full financial information on the year ended March 31, 2006, please visit the OMRON IR website and download all earnings documentation:


Headquartered in Kyoto, Japan, OMRON Corporation is a global leader in the field of automation. Established in 1933 and headed by President and CEO Hisao Sakuta, OMRON has more than 26,000 employees in over 35 countries working to provide products and services to customers in a variety of fields including industrial automation, electronic components, social systems (ticket gate machines, ticket vending machines, and traffic control), and healthcare. The company is divided into five regions and head offices are in Japan (Kyoto), Asia Pacific (Singapore), China (Shanghai), Europe (Amsterdam) and US (Chicago). For more information, visit OMRON's website at

Source: OMRON

OMRON Corporation
Corporate Brand Communications Department
James Seddon
Takayuki Nakamura
Telephone: +81-3-3436-7202
Facsimile: +81-3-3436-7029

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Publication:JCN Newswires
Date:Apr 27, 2006
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