Nomura Investment Forum 2010 Future Growth November 29, 2010 1
1 Results for the Second Quarter Ended September 30, 2010 (FY10/Q2) and Full-year Forecast 2 Future growth Notes 1. The consolidated statements of Omron Corporation (the Company) are prepared in accordance with U.S. GAAP. 2. Projected results and future developments are based on information available to the Company at the current time, as well as certain assumptions judged by the Company to be reasonable. Various factors could cause actual results to differ materially from these projections. Major factors influencing Omron's actual results include, but are not limited to, (i) economic conditions affecting the Company's businesses in Japan and overseas, (ii) demand trends for the Company's products and services, (iii) the ability of the Company to develop new technologies and products, (iv) major changes in the fundraising environment, (v) tie-ups or cooperative relationships with other companies, and (vi) movements in currency exchange rates and stock markets.. 2
1 Results for the Second Quarter Ended September 30, 2010 (FY10/Q2) and Full-year Forecast 3
FY10 Q2 Results Sales are almost in line with Jul 28 forecast. Results improved dramatically YoY reflecting the recovery of economic conditions. Improvement in operating income owing to efficient management of fixed costs, compared with Jul 28 forecast. < Net Sales > < Operating Income > 297.9 232.4 24.4 (Billions of yen) -7.7 FY09 Q1-Q2 Actual FY10 Q1-Q2 Actual FY09 Q1-Q2 Actual ( 億円 ) FY10 Q1-Q2 Actual <Q1-Q2 Q2 Total PL> Total P/L (cumulative) FY10 Q1-Q2 Result FY09 Q1-Q2 Result YoY Net Sales 297.9 232.4 +28.2% Operating Income 24.4-7.7 - NIBT 23.5-9.6 - Net income (attributable to shareholders) 15.0-6.9-4
Projected Results for FY10 Full Year Both sales and OP at the same level as Jul 28 forecast 524.7 < Net Sales > < Operating Income > 615.0 615.0 46.0 46.0 (Billions of yen) 13.1 FY09 Actual FY10 Jul 28 fcst FY10 Forecast FY09 Actual FY10 Jul 28 fcst FY10 Forecast Total P/L FY10 Forecast FY09 Actual FY10 Jul 28 fcst YoY vs. Jul 28 fcst Net Sales 615.0 524.7 615.0 +17.2% +0.0% Operating Income 46.0 13.1 46.0 +251.8% +0.0% NIBT 44.5 10.2 44.5 +336.5% +0.0% Net income (attributable to shareholders) 29.5 3.5 29.5 +738.5% +0.0% 5
Structural Reform Long-term Targets 1US$=JPY114.1 1EURO=JPY161.9 Net sales 763.0 750.0 (Billions of yen) Variable costs (46.0%) 61.6% 627.2 524.7 580.0 615.0 615.0 (42%) 58% Fixed manufacturing costs (15.6%) SG&A R&D Operating income 176.6 (23.1%) 51.5 65.3 (6.7%) (8.6%) 164.3 (26.2%) 48.9 5.3(0.9%) 65.2% 64.8% (18.7%) 133.4 (25.4%) (7.8%) 37.8(7.2%) 13.1(2.5%) (45.2%) (45.2%) 62.5% 62.0% (17.3%) 141.5 (24.4%) (17.3%) 144.5 (23.5%) 43.0(7.4%) 43.0(7.0%) 43.0(7.0%) 33.0(5.7%) 46.0(7.5%) 46.0(7.5%) FY07 FY08 FY09 FY10(P) FY10 (Q1E) 62.3% 143.0 (23.3%) FY10 (Q2E) (16%) 155.3 (20.7%) (21%) 60.0 (8.0%) 100.0 (13.3%) FY201X ~ 15% ~ FY202X 6
8 projects of Structural Reform Added value ratio Improvement Investments Fixed manufacturing costs Inventory Expenses Top global products Work-life balance IT IT management 7
2 Future Growth 8
Future growth <Key factors for future growth> (Existing business) Business growth in emerging economies + (New business) New businesses to meet social needs 9
Existing Business Accelerated Automation in China ¾ Higher and more diverse demand for factory automation in the transforming Chinese market environment. Automation Demand in China High speed, high accuracy Ecofriendly Energy control Safety control Risk Optimal Engineering management Equipment Programming compatibility Software/ Network Precision machinery technology processing Service & Support Ｓｅｎｓｉｎｇ Ｃｏｎｔｒｏｌ Full line-up of control components Omron s Added Value Larger production, better productivity Locally procured equipment Self-made production equipment Better rural economy, less workforce in urban areas Increased labor costs Tighter overwork rules Safe & comfortable work environment High added-value & quality 10
Existing Business IAB s Advantages in the Greater China Area IAB has constructed technical service networks and supply chains to support customers 今後数年間 中国の工場自動化市場は 従来以上に成長すると想定 around the Greater China area. Manufacturing Manufacturing / / R&D R&D (OMS) (OMS) :Shanghai :Shanghai Sales Sales : : 6 6 branch branch offices offices (Shanghai, (Shanghai, Guangzhou, Guangzhou, Beijing, Beijing, Dalian, Dalian, Xian, Xian, Wuhan) Wuhan) 35 35 sales sales office office (including (including Taiwan) Taiwan) Logistics Logistics :5 :5 sites sites (Tianjin, (Tianjin, Shanghai, Shanghai, Guangzhou, Guangzhou, Hong Hong Kong, Kong, Taipei) Taipei) Customer Customer Support Support Center Center (CSC) (CSC) :Shanghai :Shanghai SE SE Center Center :16 :16 sites sites (Shanghai, (Shanghai, Beijing, Beijing, Guangzhou, Guangzhou, and and other other 13 13 sites) sites) Distributors Distributors : : More More than than 100 100 成都 昆明 西安 重慶 北京 天津 沈阳 大連 济南青島南京郑州 武漢 長沙中山広州佛山 合肥杭州 南昌厦门 東莞深圳香港 無錫蘇州上海寧波温州 哈尔滨 福州台湾台北新竹台中 台南 11
Existing Business Automation at IAB Shanghai Plant (OMS) Key Words 1. Automation, standardization, and quality stabilization of common 今後数年間 中国の工場自動化市場は 従来以上に成長すると想定 assembly processes 2. Best matching of machines to people 3. Non full-auto: Cost effective, partly automated production lines Manual screwing Auto Manual parts insertion Auto Manual soldering Auto Less workforce Less workforce More stable quality (Requiring less skills) 12
Business Expansion in Industrial Countries < Expand production capability > Expand production volume Improve productivity / yield ratio Continuously strive to perfect productive capability & quality 13
New Business Health Status Sensing Sensing Monitoring Simulation Blood glucose level Heart attack!? Control (Preventive advice) Surgery Blood pressure Pulse Cardiograph Weight change Medication Exercise therapy Dietetic therapy Present condition 14
New Business Solutions: Industry / Society / Lifestyle Industry Society Lifestyle Environmentally conscious cost reductions Safety and security Security, Comfort, Healthcare Sensing & monitoring of equipments conditions in production sites Airflow Pressures IAB Temperature, humidity, Illumination intensity Vibrations, microphones Safety & security, comfort, train station environment Air pressure Airflow SSB Temperature, humidity Microphones Home security, nursing & personal care, safety confirmation Microphones Temperature, illumination Pressure Temperature, humidity, Illumination Vibration, microphones HCB and others 15
New Business Necessary Conditions for Sensor Networks Miniaturization Wireless communication with controllers Lack of need for external electricity source Communication networks Low cost 16
New Business Smart Sensing Module 2010 Development of platform with sensor modules Sensor modules Temperature sensor Humidity sensor Illuminance sensor Acceleration sensor Infrared ray sensor CO2 sensor Flow sensor ON-OFF sensor Power supply module One common substrate (platform) Wireless module Up to 12 different types of sensor data measurable simultaneously Absolute pressure sensor Microphone GPS Camera module Mounted Sensors Current sensor Connected Sensors 17
New Business Smart Sensing Module Sensing Technology - MEMS/NEMS - Specialized nano-thin film Wireless Communication Technology - Ubiquitous network - Zigbee, RFID Signal processing IC High accuracy sensor Antenna RFIC Buildup multilayer memory ASIC Knowledge IC Capacitor Power generation device Integration Technology - Si penetration wiring (MEMS/MOS) - Wafer-level package - MEMS/MOS vertical integration Control Technology - Feature extraction - Inference learning - Knowledge information control Energy Technology - Compact and environment-based power generation - Mass electricity accumulation 18
New Business Vibration-driven Energy Generator Smaller and lighter: Wider application possibilities Thinner: Enable easier production line monitoring Lighter: Less effect on vibrating sources Size: 20 x 20 x 4 mm; Weight: 3.7 g 20 mm 19
New business New technology : SSM and experimental study Yasu Factory (manufacturing semiconductors) Keihanna Innovation Center Real Time Monitor Smart Sensing Module Sensing & Control Parameters :Temperature and relative humidity, airflow, vibration, human detection, air particles, currents, carbon dioxide levels, etc. Cost-cutting effect (Power bill savings ) 4mil / year (Keihanna Innovation Center) 20
New business Case Examples of SSM sensor installations Acoustic & acceleration sensors on a pump Acoustic sensor on a pump A temperature and relative humidity sensor on an exhaust air duct 21
New Business One Application for MEMS (Bridge Safety Monitoring) Experimental study on a bridge on a freeway in the Kanto district of Japan. Vibration sources : Vibration of bridge Sensors : Temperature, vibration, and weight Communications : RFID, ucode, ZigBee 22
New Business Railway Station Solution Aged people Digital signage Suspicious individuals Suspicious individuals Disabled passengers Passenger flow Congestion Trouble Unusual conditions Suspicious objects Illumination Air conditioning Temperature and humidity Air pressure Airflow Illumination intensity Congestion Station interior Platform Realization Images Appropriate control Induction 23
Shaping Our Sense of Security with Sensing and Control Technology Contact: Omron Corporation IR and M&A Planning HQ, IR Department Phone : +81-3-3436-7170 E-mail : omron_ir@omron.co.jp Website (English) : www.omron.com 24