Integrated Report 2016
Year ended March 31, 2016
The Omron Value Creation Story
Omron is guided by the Omron Principles. We reflect these principles in how we create
numerous products and services that anticipate the needs of society, solving a variety of social
issues. Omron will continue to improve lives and contribute to a better society through our
businesses, generating sustainable corporate value.
Automated Train Station System
▶ Reducing congestion at
stations
Blood Pressure Monitors
▶ Better health through blood
pressure monitoring at home
Sensing and Control Equipment
▶ Improved manufacturing
productivity and quality
Electronic Power Steering Controllers
▶ Improved gas mileage
Image Sensing
▶ Secure, safe living
Safety Equipment
▶ Production floor safety
PV Inverters
▶ Renewable energy
1933 Established
1948 Incorporated
FY
1960
1970
1980
1973 Developed Digital Blood Pressure Monitor
1972
Developed “SYSMAC” Programmable
Sequence Controller
1970 Announced the SINIC Theory
1967 Developed World’s First Automated Train Station System
1964 Developed World’s First Automated Traffic Signal
1960 Developed World’s First Non-Contact Switch
1959 Established Corporate Motto
1990
1988
Mass Produced Electronic
Power Steering
Controller
1987
Developed World’s First
Ultra-High-Speed Fuzzy
Logic Controller
G'90s
2000
2010
2020
GD2010
VG2020
1996 Developed “VT-WIN” Printed Circuit
Board Inspection System
1995 Developed “OKAO® Vision” Image Sensing
Technology
1990 Changed Corporate Name to Omron Corporation
2015 Revised Omron Principles
2011 Introduced “Sysmac NJ” Integrated Machine Automation Controller
2011 Introduced PV Inverters with “AICOT®” Technology
Long-Term
Management
Strategy
2007 Wide-Scale Rollout of Production Floor Safety Business
1983 Introduced Digital Thermometer
s
e
u
s
s
i a l I
S o l v i n g S o c
Technology Supporting
Technology Supporting
Healthy Living
Healthy Living
Technology Contributing
Technology Contributing
to the Prevention of
to the Prevention of
Global Warming
Global Warming
Technology Revolutionizing
Technology Revolutionizing
Manufacturing
Manufacturing
Technology Assuring Safety
Technology Assuring Safety
Target
Net sales
¥1 trillion
¥500 billion
Omron Principles
Automated Train Station System
▶ Reducing congestion at
stations
Blood Pressure Monitors
▶ Better health through blood
pressure monitoring at home
Sensing and Control Equipment
▶ Improved manufacturing
productivity and quality
Safety Equipment
▶ Production floor safety
PV Inverters
▶ Renewable energy
Electronic Power Steering Controllers
▶ Improved gas mileage
Image Sensing
▶ Secure, safe living
1933 Established
1948 Incorporated
FY
1960
1970
1980
1973 Developed Digital Blood Pressure Monitor
1972
Developed “SYSMAC” Programmable
Sequence Controller
1970 Announced the SINIC Theory
1967 Developed World’s First Automated Train Station System
1964 Developed World’s First Automated Traffic Signal
1990
1988
Mass Produced Electronic
Power Steering
Controller
1987
Developed World’s First
Ultra-High-Speed Fuzzy
Logic Controller
1960 Developed World’s First Non-Contact Switch
1959 Established Corporate Motto
1983 Introduced Digital Thermometer
S o l v i n g S o c
s
e
u
s
s
i a l I
Technology Contributing
Technology Contributing
to the Prevention of
to the Prevention of
Global Warming
Global Warming
Technology Supporting
Technology Supporting
Healthy Living
Healthy Living
Technology Revolutionizing
Technology Revolutionizing
Manufacturing
Manufacturing
Technology Assuring Safety
Technology Assuring Safety
Target
G'90s
2000
GD2010
2010
VG2020
2020
Net sales
¥1 trillion
¥500 billion
Long-Term
Management
Strategy
1996 Developed “VT-WIN” Printed Circuit
Board Inspection System
1995 Developed “OKAO® Vision” Image Sensing
Technology
1990 Changed Corporate Name to Omron Corporation
2015 Revised Omron Principles
2011 Introduced “Sysmac NJ” Integrated Machine Automation Controller
2011 Introduced PV Inverters with “AICOT®” Technology
2007 Wide-Scale Rollout of Production Floor Safety Business
Integrated Report 2016
1
Contents
1 The Omron Value
Creation Story
4 Message from
the CEO
11 Material Management
Issues and Major Initiatives
12 Message from
the CFO
About the Cover
We are all charged with the task of ensuring the sustainability of our precious planet. Our
cover concept this year imagines the Earth as a complex puzzle. Each puzzle piece is a
solution to a social need. Team Omron is committed to innovation driven by social needs and
to meeting all challenges with passion and courage.
About Omron
Where We’re Headed
Corporate Value Initiatives
Corporate Value Foundation
16 Board of Directors and Auditors
18 Making the World Smaller through
Sensing and Control + Think Technologies
20 Business Model
22 Omron Products
(Market Share and Sales by Product)
26 The Year in Review
28 Financial Highlights
30 Non-Financial Highlights
32 11-Year Financial and Non-Financial
Highlights
34 Special Feature: 1
Evolution of
Our Technology
CTO Message
42 Factory Tour
56 Management Compass: The SINIC Theory
Healthcare Business Matsusaka Factory
58 Sustainability Management
44 At a Glance
46
Industrial Automation Business (IAB)
48 Electronic and Mechanical Components
60
TOPICS
Integrated Risk
Management
37
Intellectual Property Strategy
Business (EMC)
38 Special Feature: 2
Manufacturing
Capability
Editorial Policy
The scope of this report covers the 185 companies of the Omron Group, consisting of 168
consolidated subsidiaries and 17 nonconsolidated subsidiaries and affiliates accounted for
under the equity method (as of March 31, 2016).
Omron Corporation contributes to the creation of a sustainable society by offering solutions
Caution Concerning Forward-Looking Statements
Statements in this integrated report with respect to Omron’s plans and strategies as
well as other statements that are not historical facts, are forward-looking statements
involving risks and uncertainties. Important factors that could cause actual results to
differ materially from such statements include, but are not limited to, general economic
to social issues through our business and by engaging in responsible environmental, social,
conditions in Omron’s markets, which are primarily Japan, the Americas, Europe,
and governance (ESG) initiatives.
Greater China, and Asia Pacific; demand for and competitive pricing pressure on
We voluntarily disclose the details of our business and ESG activities to our stakeholders.
Omron’s products and services in the marketplace; Omron’s ability to continue to win
This integrated report conforms to the integrated reporting frameworks recommended by
acceptance for its products and services in these highly competitive markets; and
the International Integrated Reporting Council and the World Intellectual Capital Initiative.
ESG-related disclosures have been written with reference to the G4 Sustainability
Reporting Guidelines (core). See our CSR website for a comparative table.
http://www.omron.com/about/sustainability/guide_line/
movements of currency exchange rates.
2
49 Automotive Electronic Components
Business (AEC)
50 Social Systems, Solutions and Service
Business (SSB)
51 Healthcare Business (HCB)
52 Other Businesses
Environmental Solutions Business, Backlights
Business, Electronic Systems & Equipment
Business, and Micro Devices Business
53 Sustainability Topics
64 Human Resources Management
68
TOPICS
Driving Business Growth with
Information Technology
70 Corporate Governance
76 Cultivating Strong Relationships through
Responsible Engagement
78 Directors, Audit & Supervisory Board
Members, Honorary Chairman,
and Executive Officers
Financial Section
82 Financial Section (U.S. GAAP)
Corporate Information/
Other Information
OMRON Corporation
1 The Omron Value
Creation Story
4 Message from
the CEO
11 Material Management
Issues and Major Initiatives
12 Message from
the CFO
About the Cover
We are all charged with the task of ensuring the sustainability of our precious planet. Our
cover concept this year imagines the Earth as a complex puzzle. Each puzzle piece is a
solution to a social need. Team Omron is committed to innovation driven by social needs and
to meeting all challenges with passion and courage.
About Omron
Where We’re Headed
Corporate Value Initiatives
Corporate Value Foundation
16 Board of Directors and Auditors
34 Special Feature: 1
18 Making the World Smaller through
Sensing and Control + Think Technologies
20 Business Model
22 Omron Products
Evolution of
Our Technology
CTO Message
(Market Share and Sales by Product)
37
Intellectual Property Strategy
26 The Year in Review
28 Financial Highlights
30 Non-Financial Highlights
32 11-Year Financial and Non-Financial
Highlights
38 Special Feature: 2
Manufacturing
Capability
Editorial Policy
Caution Concerning Forward-Looking Statements
The scope of this report covers the 185 companies of the Omron Group, consisting of 168
Statements in this integrated report with respect to Omron’s plans and strategies as
consolidated subsidiaries and 17 nonconsolidated subsidiaries and affiliates accounted for
well as other statements that are not historical facts, are forward-looking statements
under the equity method (as of March 31, 2016).
involving risks and uncertainties. Important factors that could cause actual results to
Omron Corporation contributes to the creation of a sustainable society by offering solutions
differ materially from such statements include, but are not limited to, general economic
to social issues through our business and by engaging in responsible environmental, social,
conditions in Omron’s markets, which are primarily Japan, the Americas, Europe,
and governance (ESG) initiatives.
Greater China, and Asia Pacific; demand for and competitive pricing pressure on
We voluntarily disclose the details of our business and ESG activities to our stakeholders.
Omron’s products and services in the marketplace; Omron’s ability to continue to win
This integrated report conforms to the integrated reporting frameworks recommended by
acceptance for its products and services in these highly competitive markets; and
the International Integrated Reporting Council and the World Intellectual Capital Initiative.
movements of currency exchange rates.
ESG-related disclosures have been written with reference to the G4 Sustainability
Reporting Guidelines (core). See our CSR website for a comparative table.
http://www.omron.com/about/sustainability/guide_line/
42 Factory Tour
Healthcare Business Matsusaka Factory
56 Management Compass: The SINIC Theory
58 Sustainability Management
44 At a Glance
46
Industrial Automation Business (IAB)
48 Electronic and Mechanical Components
Business (EMC)
49 Automotive Electronic Components
Business (AEC)
50 Social Systems, Solutions and Service
Business (SSB)
51 Healthcare Business (HCB)
52 Other Businesses
Environmental Solutions Business, Backlights
Business, Electronic Systems & Equipment
Business, and Micro Devices Business
53 Sustainability Topics
TOPICS
60
Integrated Risk
Management
64 Human Resources Management
TOPICS
68
Driving Business Growth with
Information Technology
70 Corporate Governance
76 Cultivating Strong Relationships through
Responsible Engagement
78 Directors, Audit & Supervisory Board
Members, Honorary Chairman,
and Executive Officers
Financial Section
82 Financial Section (U.S. GAAP)
Corporate Information/
Other Information
3
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Message from the CEO
4
OMRON Corporation
Achieving growth through
a stronger earnings structure.
Solving social issues through
new technologies and
innovative concepts.
Yoshihito Yamada
President and CEO
July 2016
Integrated Report 2016
5
Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section 1. Fiscal 2015 Review and Issues
For fiscal 2015, Omron Corporation
recorded net sales of ¥833. 6 billion,
operating income of ¥62. 3 billion, net
income of ¥47. 3 billion, and operating
income margin of 7.5%. This marked the
first time in seven years that Omron
Corporation reported year-over-year
declines in revenues and profit, owing
mainly to a slowing Chinese economy, a
drop in oil prices, and other factors beyond
what we anticipated. We saw a particularly
sharp decrease in revenues for our
Backlights Business and our PV Inverter
Business, overseen by our Other
Businesses segment. Declines in these and
other businesses particularly sensitive to
■ Fiscal 2014 / 2015 Earnings and Fiscal 2016 Plans
Net Sales
Gross Profit
(Gross Profit Margin)
Operating Income
(Operating Income Margin)
Net Income Attributable to
Shareholders
USD Rate (¥)
EUR Rate (¥)
■ Management Indicators
Gross Profit Margin
Operating Income Margin
ROIC
ROE
EPS (¥)
■ Dividends
Payout Ratio
(Dividends per Share (¥))
6
FY2014
847.3
332.6
(39.3%)
86.6
(10.2%)
62.2
110.0
138.7
FY2014
39.3％
10.2％
13.4％
13.5％
283.9
FY2014
25.0％
（71.0）
changes in the external environment had an
overall negative impact on corporate
earnings. During the second half of the
year, we reviewed our fixed costs and
investments, while also taking other
actions to improve our earnings structure
for these business lines. We are aware that
we could not anticipate the changes in the
external environment on time.
Meanwhile, we made two acquisitions in
our Industrial Automation Business (IAB),
securing advanced robotics and motion
control technologies. We believe these
acquisitions will provide an even stronger
foundation for growth in our IAB.
FY2015
833.6
320.8
(38.5%)
62.3
(7.5%)
47.3
120.2
132.2
FY2015
38.5％
7.5％
9.7％
10.1％
219.0
FY2015
31.1％
（68.0）
(Billions of yen)
FY2016 plan
820.0
322.0
(39.3%)
63.0
(7.7%)
47.5
110.0
125.0
FY2016 plan
39.3％
7.7％
10％
10％
222.2
FY2016 plan
30.6％
（68.0）
OMRON Corporation 2. Fiscal 2016 Policies and Plans
Given the projected slowdown in the
Chinese economy, Britain’s exit from the
EU, and a strong Japanese yen, the global
economy for fiscal 2016 does not inspire
an overly optimistic outlook. We have set
fiscal 2016 goals of ¥820 billion in net
sales, ¥63 billion in operating income, and
¥47.5 billion in net income (assuming
exchange rates of ¥110 to the U.S. dollar
and ¥125 to the Euro). For fiscal 2015, our
dividend payout ratio rose to 30%. We
intend to maintain this level for fiscal 2016
as well.
Our corporate focus for fiscal 2016 is to
rebuild our earnings structure and create an
engine for self-driven growth. Learning
from the lessons of last year, we will keep
a close watch on the external environment,
preparing for risks, while investing in
growth for the future.
First, we will create a complete structure
to strengthen our earnings ability. We are
also determined to increase profits through
organization-wide initiatives to revise our
fixed cost structure and improve gross
profit margins. In addition to company-wide
cost-saving initiatives, we plan to grow
sales in our high-profit businesses and
related products. Further, we will embark
on rebuilding our operating structure, which
will include reorganizing smaller
subsidiaries and locations.
At present, we are reviewing our
business portfolio based on ROIC
indicators. In May, we sold all shares of
Omron Oilfield & Marine, Inc. (North
American subsidiary providing control
systems for oil excavation equipment) to
Schlumberger Limited, a global leader in oil
field services. We recently announced a
business tie-up with Fukuda Denshi Co.,
Ltd., a leading manufacturer of medical
equipment in Japan, in the fields of home-
use healthcare and nursing care products*1.
In conjunction with this tie-up, we decided
to sell all shares in Omron Colin Co., Ltd.
(Healthcare Business subsidiary dealing in
medical equipment) to Fukuda Denshi.
As we rebuild our earnings structure
through improved gross profit margins,
restructured operations, and a review of our
business portfolio, we will create new
resources. With these new resources, we
will reinvest in future growth. Despite
challenges in the external environment, we
plan to continue concentrated investment
in our Industrial Automation and Healthcare
Businesses, where we expect to see future
growth. Investment in these businesses
and leading-edge technology development
will help create an engine for self-driven
growth.
*1 Signed a concurrent business tie-up agreement to build a cooperative structure
for product development, manufacturing, sales, and maintenance. The
companies will establish a mutually beneficial relationship moving forward.
7
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section 3. Medium- and Long-Term Growth
The advent of the Internet of Things (IoT)*2 is
changing manufacturing in a major way. As
represented in the concepts underlying Industry 4.0,
the manufacturing line is becoming more
computerized, more networked, and more
roboticized. The manufacturing industry itself is
changing and evolving. These changes represent an
enormous opportunity for our Industrial Automation
Business. Having added computer functions
necessary for all devices, we have set our sights on
computerizing the manufacturing line itself, working
to create new value that responds to these changes.
We are facilitating innovative manufacturing through
new, unique automation technology that integrates
robots and machine control. We call this concept
innovative-Automation.
Under innovative-Automation, we are moving
the manufacturing industry forward in the following
three areas.
❶ Evolution in control: Simple automation of
ultra-high-precision processing, ultra-high-
precision assembly, and ultra-high-speed
delivery.
❷ Intelligence developed through ITC: Sensors
located throughout the manufacturing floor
collect and analyze an enormous volume of
data. The results lead to new ideas and
expertise in productivity and quality not obvious
to even the most experienced production
engineers.
❸ New harmonization between humans
and machines: Side-by-side interaction
between humans and robots to foster flexibility
and productivity.
Further technology innovation is required to make
this evolution possible. One such example is the
need for advancement in biological information
sensing technology on the manufacturing floor.
Biological information sensing is technology that
captures the health and activity status of human
beings. This is truly critical technology for humans
and robots to work together safely. In the course of
growing our Healthcare Business, we have
developed a number of biological information
sensing technologies. Today, we are working to
prevent diseases that affect the brain and
cardiovascular system. We have made progress and
continue to innovate in beat-by-beat blood pressure
monitoring technology*3 for use in wearable blood
pressure monitors. We are devising ways to use
this technology on the manufacturing floor and in a
number of other fields. In this way, we are
expanding across a number of markets, combining
different technologies and expertise in a way few
companies can. In these and other core
technologies, we will strive for advancement in
Sensing & Control + Think*4, enhancing our ability
to compete.
*2 Adding communications functions not only to computers and information
devices, but also in all manner of objects, creating two-way communication
via the Internet for recognition, automation, remote measurements, etc.
*3 First-of-its kind wearable technology allowing continuous measurement of
blood pressure for each heartbeat, taken from the wrist.
*4 Definition of the evolution in Omron core technologies adding “Think” (human
intelligence) to Sensing & Control technologies.
■ Innovating Manufacturing Sites Through the Three “I”s
Concept
innovative-Automation
Innovating manufacturing through solutions unique to Omron
Evolution in control
Direction of
Evolution
Intelligence developed through ITC
New harmonization between humans and machines
integrated
intelligent
interactive
8
OMRON Corporation Testing blood pressures at a
health center
Employees from the Healthcare Business (Philippines) sharing their experience at the TOGA Global Conference
4. Practicing Our Principles
The Omron Principles bind us together and serve
as the driving force behind our growth. To
strengthen our global implementation of these
principles, we continue to hold The Omron Global
Awards (TOGA). Through TOGA, we share
examples of the Omron Principles put into action
by our employees worldwide, celebrating our
victories over daunting challenges. This year,
employees from around the world submitted a
total of 38,100 entries to TOGA (16% increase
over last year), with 4,173 different entry
categories (14% increase). The cumulative
number of participants now numbers close to our
total employee workforce, and each year the
entries are more impressive than ever. In May,
we held the global TOGA conference in Kyoto to
highlight the best cases, selected from around
the world. Allow me to share one example here
today. This example comes out of Healthcare
Business in the Philippines.
As a nation, the Philippines struggles with high
mortality rates associated with high blood
pressure. As digital blood pressure monitors are
not popular, citizens have few opportunities or
facilities for checking blood pressure, and
awareness of high blood pressure is low. Our
employees in the Philippines have been engaged
in activities to educate the nation through free
blood pressure testing at temporary clinics held
in 300 communities so far. The government of
the Philippines has recognized our efforts, which
has resulted in Omron becoming a trusted
9
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section partner in health policies for the nation, and we
have had the opportunity to bid on Department of
Health projects. As of this writing, we have
installed 126,000 digital blood pressure monitors
in nearly 44,000 health centers across the
country. In many regions, citizens can now test
their own blood pressure. This has raised
awareness of high blood pressure and health in
the Philippines, helping put the nation on a path
toward solving this health issue.
This is just one example of how practicing the
Omron Principles in our business leads to new
solutions that improve lives and contribute to a
better society.
5. Building Greater Corporate Value
Omron Corporation is committed to fulfilling our
duties in corporate governance, balancing
management integrity and sustainable growth.
In particular, we intend to practice ROIC
management over the upcoming year to put
Omron back on a path to growth, rebuilding our
earnings structure while also making the
investments required for future growth. The
Omron Principles serve as the starting point of
our management. I believe that putting these
principles into practice will help to solve social
issues, to grow our business, and to overcome
the challenges that lie ahead. We will work for
long-term growth, with each Omron employee
taking positive action on their own initiative. I will
take the lead myself, taking on new challenges,
while at the same time determined to engage in
improving corporate value.
Look forward to a brighter future, as Omron
improves lives and contributes to a better
society. Thank you for your continued support.
10
OMRON Corporation Material Management Issues and Major Initiatives
▶Materiality Identification Process
In light of our long-term strategies, and after
considerable discussion at board meetings and
other venues, we determine our most pressing
issues with respect to our Growth Power,
Earning Power, and Power to Deal with Change.
More specifically, we identify materiality in terms
of everything from the Omron Principles,
corporate governance, globally integrated risk
management, long-term vision, and technology
*1 Convocation Notice for the 79th Ordinary General Meeting of Shareholders
http://www.omron.com/about/ir/shareholder/pdfs/convocation_notice_79th.pdf
strategy to medium- and long-term business
plans and investor returns. We value the
feedback we receive from shareholders,
investors, and other stakeholders,
communicating this information throughout our
company. Every year we conduct an internal
review of important matters, disclosing our
results*1 to the public.
▶Awareness of Current Situation
In 2011, Omron published Value Generation 2020 (VG2020), a plan that outlined a 10-year vision for our
company. VG2020 put us on the path toward becoming a company that delivers global value in terms of
both volume and quality. Under this plan, we set a quantitative goal and defined specific activities to achieve
net sales of ￥1 trillion with an operating income margin of 15% for fiscal 2020.
At the same time, we are well aware that we have not yet achieved our EARTH-1 STAGE goal of
establishing a self-driven structure to grow in any operating environment. The digital revolution embodied
in AI*2, IoT, and other developments drives technological innovation that will change the current structure
of manufacturing. This change is a major opportunity for Omron. At present, we are creating our medium-
term management plan for fiscal 2017 and beyond anticipating that these changes will occur in future.
*2 Artificial intelligence
▶Issues and Initiatives
Issues
Initiatives
① Rebuild our
earnings structure
(1) Initiatives to improve gross profit margin
(2) Initiatives to improve productivity in back-office
departments
Improve Three Powers:
Growth Power, Earning
Power, Power to Deal
with Change
② Create an engine for
self-driven growth
Engage in concentrated investment in the Industrial
Automation and Healthcare businesses, which represent
our future growth drivers. This includes investment in
businesses and innovations at headquarters technology
departments that accelerate growth in Industrial
Automation and Healthcare.
11
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section Message from the CFO
Portfolio Management:
Evolution and Execution
Yoshinori Suzuki
Executive Vice President and CFO
July 2016
12
OMRON Corporation
1. Advancing Portfolio Management
1.1. Evolution
Omron has divided its organization into
approximately 90 business units, each
subject to a portfolio management system
that assesses the economic value of the
unit according to (1) ROIC and (2) sales
growth rate. In this way, Omron
management can make proper and timely
decisions related to new business entry,
growth acceleration, restructuring, or
divestiture to drive improvements in Omron
Group value.
We recognize that both economic value
and market value of a business must be
considered if we are to allocate limited
resources in an optimal manner. As such,
we incorporate a market value assessment
according to our strength as a company
(market share) and market attractiveness
(market growth rate) as supplementary
considerations in portfolio management.
This assessment system allows us to
identify the growth potential of each
business unit, making an optimal allocation
of our resources and generating greater
business growth.
■ Assessing Economic Value
■ Assessing Market Value
)
%
(
e
t
a
R
h
t
w
o
r
G
s
e
l
a
S
B
Expecting Growth
S
Investment
C
Profit Restructuring
A
Examining Regrowth
)
%
(
e
t
a
R
h
t
w
o
r
G
t
e
k
r
a
M
B
C
S
A
ROIC (%)
Market Share (%)
■ Portfolio Management Flow
STEP 1
STEP 2
STEP 3
STEP 4
STEP 5
Assess
Economic Value
Assess
Market Value
Identify Growth
Opportunities
/Issues
Investigate/
Execute
Improve
Management in
Each Field
13
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
1.2. Accelerating Business Growth
Our mid-term plan“EARTH-1 STAGE” calls
for priority allocation of resources to
accelerate growth in our Industrial
Automation and Healthcare businesses. To
set a foundation for growth, we acquired
three companies over the past two fiscal
years: NS Industria de Aparelhos Medicos
(Brazilian nebulizer manufacturer), Delta Tau
Data Systems (U.S.-based motion control
manufacturer), and Adept Technologies
(U.S.-based robot manufacturer). We intend
to leverage the synergies each company
brings to create new value for our customers
and business partners.
Incidentally, the ¥40 billion used for
these three acquisitions came entirely from
internal reserves. If Omron should require
capital in excess of cash on hand for future
mergers and acquisitions (M&A), we will
raise capital through debt financing within
a scope that allows us to maintain our
current long-term credit rating*. At present,
we estimate that our debt capacity is ¥100
billion. We will actively leverage debt
financing to pursue new growth
opportunities if we encounter a promising
investment target.
*Rating and Investment Information, Inc. rating: AA-
Standard & Poor’s rating: A
(as of July 2016)
■ Acquisitions
NS Industria
de Aparelhos
Medicos Ltda.
Year of
Acquisition
Fiscal 2014
Delta Tau Data
Systems, Inc.
Fiscal 2015
Adept
Technologies,
Inc.
Fiscal 2015
Company Overview
News Release URL
Nebulizer manufacturer with
No.1 share of the nebulizer
market in Brazil
U.S.-based manufacturer of
motion controllers offering
world-leading performance
U.S.-based manufacturer of
a wide range of industrial
robot models
http://www.healthcare.omron.co.jp/english/
news/2014/0905.html
http://www.omron.com/media/press/2015/07/c0730.
html
http://www.omron.com/media/press/2015/09/c0916.
html
1.3. Improving Capital Efficiency through Divestiture and Restructuring
Portfolio management not only accelerates
business growth, but also serves as a tool
for management decisions regarding
business divestiture or restructuring. As
CFO, I believe I should provide particular
leadership in making decisions regarding
business divestiture. Recently, we made
the decision to sell Omron Oilfield &
Marine, Inc. and Omron Colin Co., Ltd. We
announced the sale of these companies in
June 2016. In making this decision, we
made a rational assessment from a
corporate-wide perspective, projecting the
status of these businesses two-to-three
years in the future. Based on this high-
altitude view, we considered the negative
factors and the positive factors to the
company as a whole, eventually making a
decision that was best for our entire
organization. We also considered our
customers, our employees, the acquiring
companies, and a variety of other
stakeholders, reaching an optimal solution
for the benefit of all. We believe that these
transactions generated significant value for
both Omron (portfolio optimization) and the
14
OMRON Corporation purchasers (value growth).
Under our system of portfolio
management, we generally set a cut-off
term of two years for businesses we
believe are struggling with significant
issues. We begin restructuring these
businesses as we formulate a policy for the
future. In some cases, restructuring does
not result in sufficient improvements, and
synergies with other Group businesses
remain weak. If, in our judgment, selling
this business will result in greater value, we
will investigate the potential for divestiture
or other measures.
The essence of portfolio management is
to reallocate limited resources for the
purpose of maximizing overall value.
As Omron CFO, I plan to continue
promoting and exercising portfolio
management for the benefit of our
company. As we commit more resources to
growth businesses, we will also restructure
or shift resources to businesses that
struggle with certain issues. In so doing,
we will improve capital efficiency. At the
same time, structuring an optimal business
portfolio will improve the overall corporate
value of the Omron Group.
■ Divestments
Omron Oilfield &
Marine, Inc.
Omron Colin Co., Ltd.
Company Overview
News Release URL
U.S.-based manufacturer
and seller of inverter
control systems for drilling
equipment, power houses,
and related equipment
Japan-based seller of patient
monitors, non-invasive
vascular screening devices,
and other medical equipment
http://www.omron.com/media/press/2016/06/c0603.
html
http://www.omron.com/media/press/2016/06/h0609.
html
2. Improving Shareholder Returns
Following fiscal 2014, Omron conducted
another share buyback during fiscal 2015
totaling ¥15 billion. This reflects our
ongoing consideration for strengthening
shareholder returns and improving capital
efficiency. We subsequently retired all 3.44
million shares of treasury stock acquired,
leaving a balance of 150, 000 shares in
treasury stock (less than 0.1% of shares
outstanding). We are happy to announce
that we met our fiscal 2016 goal of a 30%
payout ratio one year ahead of schedule.
Our dividend payout ratio for fiscal 2015
was 31.1%, up from 25% in the prior fiscal
year. Omron improved shareholder return,
even while actively engaging in M&As and
other growth investment policies.
We intend to continue to provide stable
dividends and engage in strategic share
buybacks, balanced by considerations
related to earnings, financial status, and
growth investments.
15
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section Board of Directors and Auditors
As of June 23, 2016
Back row,
from left:
Kuniko Nishikawa
Outside Director
Personnel Advisory Committee Member
CEO Selection Advisory Committee Member
Compensation Advisory Committee Member
Corporate Governance Committee Member
Eizo Kobayashi
Kazuhiko Toyama
Outside Director
Chairman of the Personnel Advisory Committee
Chairman of the Compensation Advisory
Committee
Vice Chairman of the Corporate Governance
Committee
CEO Selection Advisory Committee Member
Outside Director
Chairman of the CEO Selection Advisory
Committee
Chairman of the Corporate Governance
Committee
Personnel Advisory Committee Member
Compensation Advisory Committee Member
Front row,
from left:
Koji Nitto
Director, Senior Managing Executive Officer
Senior General Manager, Global Strategy HQ
Compensation Advisory Committee Member
Yoshinori Suzuki
Yoshihito Yamada
Executive Vice President and CFO
Personnel Advisory Committee Member
President and CEO
16
OMRON Corporation A
b
o
u
t
O
m
r
o
n
17
Yoshifumi Matsumoto
Hideyo Uchiyama
Kiichiro Kondo
Tokio Kawashima
Audit & Supervisory Board Member
(Independent)
Corporate Governance Committee
Member
Audit & Supervisory Board Member
(Independent)
Corporate Governance Committee
Member
Audit & Supervisory Board Member
Audit & Supervisory Board Member
Fumio Tateishi
Akio Sakumiya
Chairman
CEO Selection Advisory Committee Member
Executive Vice President
Vice Chairman of the Personnel Advisory Committee
Vice Chairman of the CEO Selection Advisory Committee
Vice Chairman of the Compensation Advisory Committee
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Making the World Smaller through Sensing
Omron manufactures and sells market-leading sensing and control products in over 110
countries around the world. Our products include control equipment, electronic components,
automotive electronic components, social infrastructure, and healthcare.
Other Businesses
Identifying and developing
the next generation of
Omron businesses
Healthcare
Business (HCB)
Providing a comprehensive
lineup of healthcare
products for home and
hospital use
Eliminations and Corporate
1%
¥5.3 billion
Industrial Automation
Business (IAB)
Omron’s mainstay business;
innovating global manufacturing
through factory automation
8%
¥63.0
billion
13%
¥108.1
billion
9%
¥77. 5
billion
Fiscal 2015
Net Sales
by Segment
¥833.6
billion
40%
¥336.0
billion
17%
¥140.0 billion
12%
¥103.7 billion
Social Systems, Solutions
and Service Business (SSB)
Offering social infrastructure systems
for a safer, more comfortable society
Automotive Electronic
Components Business (AEC)
Developing new ideas in automotive electronics to make
automobiles safer and more environmentally friendly
Electronic and Mechanical
Components Business (EMC)
Providing the global market with sophisticated
components that create seamless
relationships between people and machines
■ Fiscal 2015 Earnings by Business Segment
(Billions of yen)
Business Segment
Net Sales
Operating Income Operating Income Margin
Industrial Automation Business (IAB)
Electronic and Mechanical Components Business (EMC)
Automotive Electronic Components Business (AEC)
Social Systems, Solutions and Service Business (SSB)
Healthcare Business (HCB)
Other Businesses
Eliminations and Corporate
Total
336.0
103.7
140.0
77.5
108.1
63.0
5.3
833.6
47.9
8.5
7.3
3.2
7.3
(4.1)
(7.8)
62.3
14.3%
8.2%
5.2%
4.1%
6.7%
ｰ
ｰ
7.5%
18
OMRON Corporation & Control + Think Technologies
Ratio of overseas
sales to net sales
Approx.
60%
Asia Pacific
11.0%
¥91.0 billion
Greater
China
19.6%
¥163.6
billion
Europe
Fiscal 2015
Net Sales by
Region*
¥833.6
billion
13.7%
¥114.4 billion
Americas
16.0%
¥133.8 billion
Japan
39.7%
¥330.8
billion
Ratio of overseas
employees to total
employees
Approx.
69%
Asia Pacific
15.6%
5,888
Fiscal 2015
Employee Ratio
by Region*
37, 709
Employees
Worldwide
Europe
5.7%
2,149
Greater
China
36.6%
13,792
Japan
30.7%
11,572
Americas
11.4%
4,308
* As of March 31, 2016
Note: Regional categories are defined as follows:
Americas: North America, Central America, South America
Europe: Europe, Russia, Africa, Middle East
Greater China: China, Taiwan, Hong Kong
Asia Pacific: Southeast Asia, Korea, India, Oceania
A
b
o
u
t
O
m
r
o
n
19
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Business Model
Omron uses a variety of capitals to build corporate value. These resources are a particular strength
of Omron Corporation, and they include human capital (people who share the values of the Omron
Principles), intellectual capital (leading-edge technologies), and manufactured capital (advanced
equipment and factories capable of small lot production for a wide array of products).
We use these resources to anticipate social needs and to deliver products and services that make
the world a better place. Our employees are dedicated to their work and are excited to take on new
challenges, unified by the Omron Principles. These talented professionals approach their daily
duties looking to solve the issues that stand in the way of our customers’ success. From among all
the information available to us, we extract only that which is necessary for our purposes. We use
our proprietary technologies to convert this information into smarter products and services that
Improvement
Social Issues
Businesses
Main Inputs
Omron
Plan / Develop / Manufacture / Sell
Industrial Automation
Business
Electronic and
Mechanical
Components Business
Automotive Electronic
Components Business
Social Systems,
Solutions and
Service Business
Healthcare Business
Human Capital
Intellectual
Capital
Financial
Capital
i
k
n
h
T
+
l
o
r
t
n
o
C
&
g
n
i
s
n
e
S
Other Businesses
Manufactured
Capital
Labor shortages
Factory safety
and security
Quality
Anticipate
Station
overcrowding,
traffic congestion
Lifestyle diseases
Energy shortages,
environmental
issues
20
OMRON Corporation
offer new value according to our Sensing & Control + Think value model. Where production
centers struggle with insufficient labor, we deliver sensors, controllers, products, and
technological services for automation that support more efficient, safer, higher-quality
manufacturing. Where lifestyle diseases are on the rise, we deliver highly accurate medical
devices that capitalize on our expertise gained through patented technologies and clinical
experience to contribute to a healthier, happier human race. The compensation we earn by
creating value and the knowledge we earn through our business activities are long-term
resources we use to reinvest in product development and services to provide solutions for the
next generation of social issues. Through this cycle, Omron Corporation builds corporate value,
invests efficiently in solutions for emerging social issues, and delivers new value for the world.
Accumulation & Advancement
Major
Products
FA
Equipment
Electronic
Components
Automotive
Electronic
Components
Station Equipment,
Traffic Equipment,
Maintenance
Services
Medical Equipment
Customers
Value
Social Value
Omron’s Value
Manufacturers
B to B
&
B to C
A better life through
manufacturing
Electronics
Automotive
Food/Pharma
Infrastructure,
Other
Railway/Roads
Pharmacies
r
e
s
U
d
n
E
/
r
e
m
u
s
n
o
C
Station/road
safety, security
Health
Energy efficiency
Human
Capital
Intellectual
Capital
Financial
Capital
Manufactured
Capital
PV Inverters
Other
Housing
Construction, Other
A
b
o
u
t
O
m
r
o
n
21
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Omron Products (Market Share and Sales by Product)
Industrial Automation Business
Strengths
● Extensive product lineup
● Global infrastructure and services network
Share of the
Control-Related
Equipment Market (Japan)
Approx.40 %
Source: Nippon Electric Control Equipment Industries Association
Electronic and Mechanical Components Business
Strengths
● Consultative sales approach
● Global delivery of high-quality products; superior manufacturing
capabilities
Share of the Relays
Market (Global)
Approx.20%
Source: Internal survey
Share of the Body
Control Units for Miniature
Vehicles Market (Japan)
Approx.50%
Source: Internal survey
Automotive Electronic Components Business
Strengths
● Global development and delivery of high-quality electronic components
● Trusted independent supplier to a diverse customer base
● Work with customers to develop products that anticipate
market needs
22
OMRON Corporation Omron Products (Market Share and Sales by Product)
A
b
o
u
t
O
m
r
o
n
Safety Equipment (Safety Light Curtains, etc.)
9%
Safety Controllers
Safety Light
Curtains
31%
Sensing Equipment
(Sensors, Switches, etc.)
Fiber Sensors
Vision Sensors
Power Relays for Printed Circuit Boards
Programmable
Controllers
Servomotors and
Servo Drivers
Inverters
Temperature
Controllers
Motion
Controllers
Parallel Robots
60%
Control Equipment
(Programmable Logic Controllers, etc.)
27%
Other Electronic Components
(Amusement Equipment,
Image Sensing, etc.)
Power Supply Units for
Amusement Devices
Image Sensing
51%
Other
(Passive Entry/Push-Button Engine Start
Systems, Keyless Entry Systems, etc.)
FPC Connectors
Surface-Mounted
Switches
73%
Relays, Switches, Connectors
24%
Switches
(Power Window Switches,
Power Seat Switches, etc.)
Power Window
Switches
25%
Motor Controllers
(Electronic Power Steering Controllers,
Power Sliding Door Controllers, etc.)
Electronic Power Steering Controllers
23
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Social Systems, Solutions and Service Business
Strengths
● One-stop solutions
(Component, system development, software development,
and engineering services)
Healthcare Business
Strengths
● Recognized brand, trusted by medical and research institutes
● Compliance with regulations
Other Businesses
Headquarters is responsible for overseeing business
development/support, as well as managing projects
to research and develop new businesses.
解像度不足（92dpi）
24
Share of the Station
Equipment Market (Japan)
Approx.45%
Source: Internal survey
Share of the Home-Use
Blood Pressure Monitors
Market (Global)
Approx.50%
Source: Internal survey
Share of the Residential-Use
PV Inverters Market (Japan)
Approx.40%
Source: Internal survey
OMRON Corporation Other (Software Development, etc.)
8%
Automated
Ticket Gates
31%
Ticket Vending
Machines
Public Transportation
(Automated Ticket Gates,
Ticket Vending Machines)
54%
Engineering, Environmental Solutions
7%
Road Traffic
(Road Traffic Management Systems, etc.)
24%
Other
(Activity Trackers, etc.)
5%
Patient
Monitors
Body
Composition
Monitors
5%
6%
Thermometers
50%
Blood Pressure
Monitors
10%
Nebulizers
Environmental Solutions
PV inverters and other products for
energy generation, storage, and
savings
Backlights
LCD backlights for smartphones and
other devices
Hybrid Storage System for Solar Power
LCD Backlights
Electronic Systems and Equipment
Micro Devices
Uninterruptible power supply units for
providing electricity during power
outages or other emergencies
Micro electro mechanical systems
(MEMS) for emerging applications
Uninterruptible Power Supply Units
MEMS Pressure Sensors
A
b
o
u
t
O
m
r
o
n
25
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
The Year in Review
For Omron, fiscal 2015 was a year for accelerating our goal of maximizing the
Industrial Automation Business, one of our EARTH-1 STAGE basic strategies. Our progress
included the acquisitions of motion control and robotics manufacturers in the United States.
For the first time in nine years, we revised the Omron Principles to support our goals of sustainable
corporate value growth and stronger management.
Manage-
ment and
Business
May 2015
Revised the Omron Principles in
support of sustainable corporate
value growth and stronger
management
http://www.omron.com/media/
press/2015/05/c0508.html
September 2015
Acquired U.S.-based Delta Tau Data Systems,
Inc., a world-leading developer and manufacturer
of motion controllers
See P47 for more.
April 2015
Omron received the Minister of
Economy, Trade and Industry
Award for Achievement in the Field
of Intellectual Property
http://www.omron.com/media/
press/2015/04/c0410.html
2015
June 2015
Established the Omron Corporate Governance
Policies—Seeking Sustainable Enhancement
of our Corporate Value
http://www.omron.com/media/press/2015/06/
c0624.html
April−May
June
July
August
September
October
November
December
January
February
March
April
Products
and
Services
September 2015
Introduced a new network
camera sensor to the market;
detects human activity and sends
the results wirelessly to a smartphone or
other connected device
October 2015
Delivered the latest in automated
ticket gate technology for the Kita
Kyushu Urban Monorail; allows
use of both QR code and IC card tickets
Awarded the Health Medical Science
2015 Award for our upper arm blood
pressure monitor series
26
OMRON Corporation Industrial Automation Business (IAB)
Electronic and Mechanical
Components Business (EMC)
Automotive Electronic
Components Business (AEC)
Social Systems, Solutions and
Service Business (SSB)
Healthcare Business (HCB)
Other Businesses
October 2015
Acquired U.S.-based Adept Technologies, Inc.,
a leader in industrial robot control and vision
sensor technologies
See P47 for more.
October 2015 - January 2016
Stock buyback (3.44 million shares for ¥15 billion); retired
all repurchased shares in January
http://www.omron.com/about/ir/irlib/news/
pdfs/20151201e.pdf
March 2016
Established an open innovation
venture fund in partnership with
several companies
April−May
June
July
August
September
October
November
December
January
February
March
April
2016
November 2015
February 2016
Developed 3D safety sensing technology for
production floor safety
Awarded the 2015 Nikkei
Business Daily Award for
Superiority, Superior Products
and Services category for the NX701
Machine Automation Controller
April 2016
Introduced the KPT-A□
three-phase rooftop PV
inverter for industrial
solar power generation
Developed a camera to detect in real-time the
direction of a driver’s face, their line of sight,
and whether their eyes are open or closed
Introduced the HV-F320
electronic pulse massager;
warms and uses low frequency
vibrations to relieve pain
A
b
o
u
t
O
m
r
o
n
27
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Financial Highlights
■ Gross Profit Margin
Gross profit margin
Selling, general and administrative
expenses ratio
(excluding R&D expenses)
R&D expenses ratio
Operating income margin
38.5%
■ ROIC
Return on invested capital (ROIC)
ROIC=
Net Income
Invested Capital*
(Net Assets + Interest-Bearing Debt)
* Invested capital represents the average of prior year-end
result and current year quarterly results
35.135.135.1
25.425.425.4
(%)
40
32
24
16
8
0
37.537.537.5
36.836.836.8
37.137.137.1
38.538.538.5
39.339.339.3
38.538.538.5
23.023.023.0
23.523.523.5
23.423.423.4
23.523.523.5
23.423.423.4
7.27.27.2
2.52.52.5
FY
09
7.87.87.8
6.76.76.7
10
6.86.86.8
6.56.56.5
11
7.07.07.0
6.76.76.7
12
8.88.88.8
6.26.26.2
13
10.210.210.2
5.75.75.7
14
(%)
15
10
5
0
1.01.01.0
7.87.87.8
8.68.68.6
4.84.84.8
24.724.724.7
7.57.57.5
6.36.36.3
15
9.7%
13.413.413.4
11.311.311.3
9.79.79.7
Expected cost of
Expected cost of
Expected cost of
capital
capital
capital
6%
6%
6%
FY
09
10
11
12
13
14
15
Lower profitability due to downturns in external factors. Omron
will continue to invest for the future, including making increases to
R&D expenses.
Achieved ROIC in excess of the Company’s expected cost of capital
of 6% under EARTH-1 STAGE.
■ Ratio of Overseas Sales to Total Net Sales
Overseas total Japan
60.3%
60.160.1
60.360.3
50.750.7
49.349.3
51.451.4
52.252.2
48.648.6
47.847.8
51.151.1
48.948.9
55.455.4
44.644.6
39.939.9
39.739.7
FY
09
10
11
12
13
14
15
(%)
60
50
40
30
20
10
0
Ratio of overseas revenues continued to grow, particularly in
Southeast Asia and other emerging economies.
28
OMRON Corporation ■ EPS
■ Earnings per share
■ Cash dividends per share
Dividend payout ratio
■ Cash and Cash Equivalents
■ Cash and cash equivalents ■ Total interest-bearing liabilities
¥219.0
¥82.9billion
(Yen)
300
250
200
150
100
50
0
106.4%
106.4%
106.4%
283.9283.9283.9
209.8209.8209.8
219.0219.0219.0
137.2137.2137.2
121.7121.7121.7
37.6%37.6%37.6%
24.7%24.7%24.7%
303030
74.574.574.5
282828
16.016.016.0 171717
27.0%27.0%27.0%
25.3%25.3%25.3%
25.0%25.0%25.0%
373737
535353
717171
31.1%31.1%31.1%
686868
20
(%)
120
100
80
60
40
(Billions of yen)
120
90
60
30
74.774.774.7
55.755.755.7
45.545.545.5
45.345.345.3
51.751.751.7
36.636.636.6
18.818.818.8
102.6102.6102.6
90.390.390.3
82.982.982.9
FY
09
10
11
12
13
14
15
0
0
FY
09
5.65.65.6
0.50.50.5
0.00.00.0
0.00.00.0
10
11
12
13
14
15
Achieved a dividend payout ratio of 31.1%, up from 25.0% in fiscal
2014; reached 30% payout ratio one year ahead of plan.
Maintained a zero balance for interest-bearing debt. The Company
may use interest-bearing debt to finance future growth investments,
if necessary.
■ Capital Expenditures
■ Capital expenditures ■ Depreciation and amortization
¥36.9billion
(Billions of yen)
40
30
38.138.138.1
36.936.936.9
33.733.733.7
31.531.531.5
27.027.027.0
28.328.328.3
28.328.328.3
28.328.328.3
23.223.223.2
23.023.023.0
22.622.622.6
22.522.522.5
25.125.125.1
19.519.519.5
20
10
0
FY
09
10
11
12
13
14
15
The Company has continued to invest in infrastructure and
productivity improvements for future growth.
A
b
o
u
t
O
m
r
o
n
29
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Non-Financial Highlights
■ Ratio of Non-Japanese in Managerial Positions
Overseas*1
■ Ratio of Women in Managerial Roles
Omron Group (Japan)
46%
42
42
46
Ratio of women in managerial roles
■ No. of women in managerial roles
2.3%
(%)
(Number of Women managers)
5
4
3
2
1
0
3636
30
2727
22
23
1.8%
1.9%
1.4%
1.5%
3.0%
2.3%
5.0%
50
40
30
20
10
0
36
31
(%)
50
40
30
20
10
0
FY
11
12
13
14
15
FY
12
13
14
15
16
17
(Target)
19
(Target)
We believe that local management is the best management. This is
why we emphasize having local staff in key positions in our local
entities overseas. We will continue to train and appoint local staff to
perform managerial roles at our offices around the world.
We are well aware that the low number of women in leadership roles
in Japan is not only a critical issue, it’s also a lost opportunity. We plan
to raise the number of women in managerial roles to 3.0% by the end
of fiscal 2016 and to 5.0% by the end of fiscal 2018.
*１ A position deemed crucial for executing VG2020. The CEO must approve the
hiring/transfer of the person assigned this role.
Note: Figures represent results as of April 20.
■ Ratio of Employees with Disabilities
Employees with disabilities at Omron Corporation (Japan)
Omron Group (Japan)
Japanese national
average
Omron Corp.
(Japan)
Omron Group
(Japan)
3.14%
2.41%
2.88
2.20
3.14
3.11
2.24
2.22
3.24
2.35
3.40
2.44
1.68
1.65
1.69
1.76
1.82
3.14
2.41
1.88
(%)
5
4
3
2
1
0
FY
10
12
15
Note: Ratio of employees with disabilities (including special subsidiaries) as of
June 30 each year.
13
11
14
30
Employees of Omron Taiyo
Since founding Omron Taiyo Co., Ltd. (special subsidiary of Omron) in
1972, Omron has continued to create jobs and expand opportunities
for the disabled. Through these activities, Omron is helping to create a
society in which the disabled feel the joy and satisfaction of making a
positive contribution through work.
OMRON Corporation Note: The five non-financial indices presented here have been reviewed by Deloitte Tohmatsu Evaluation and Certification Organization Co., Ltd., an independent evaluation entity.
■ Global Net Sales to CO2 Emissions*2
■ Environmental Contribution*3
■ Environmental contribution ■ CO2 emissions of global production sites
¥3.89 ／ton-CO2
million
20% Improvement vs. 2010
(Million yen ／ ton- CO2)
4.20
3.693.69
3.73
3.783.78
3.89
3.37
3.23
5
4
3
2
1
0
508 thousand ton-CO2
Environmental Contribution > CO2 Emissions of Global Production Sites
Targets Achieved for Six Consecutive Years
（Thousand ton-CO₂）
851
661
508
313313
193
191
189
184
176
207
224
214
1,000
800
600
400
200
0
FY
10
11
12
13
14
15
20（Target）
FY
10
11
12
13
14
15
At Omron, we take pride in knowing that our businesses contribute to
a sustainable society. We track and improve global net sales to CO2
emissions and environmental contribution as two important indicators
of corporate value.
*2 Global Net sales to CO2 emissions = Global Net sales per one ton of CO2 emissions
A decrease in sales of power conditioners for solar power generation
led to a 508 thousand ton-CO2 reduction in environmental contribution.
However, this year marked the sixth consecutive year in which
Omron’s environmental contribution exceeded the CO2 emissions of
the Group’s global manufacturing centers (214 thousand ton-CO2).
*3 Environmental Contribution = Volume of CO2 emissions reduction contributed by
society’s use of the Omron Group’s energy generation and savings products and
services. As we have changed our method for calculating Environmental
Contribution, we revised figures from prior years for purposes of comparison.
See our website for more about how we calculate these figures.
▶ Environmental Contribution
http://www.omron.com/about/csr/environ/eco_products/eco_contribution/
▶ CO2 Emissions of Global Production Sites
http://www.omron.com/about/csr/environ/eco_fac_off_lab/co2_discharge/data_co2exhaust_volume.html
■ Environmental Management at Omron
Contributing to the Global Environment through Business Activities
Maximize the Effective Use of
All Management Resources
(Improve energy, resource productivity)
Products and Services
Useful to Society
(Grow our businesses that have a positive
impact on the global environment)
Greater
Efficiency
Reduce Our
Environmental Impact
Greater Volume of
Environmental Contribution
Greater
Contribution
A
b
o
u
t
O
m
r
o
n
31
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
11-Year Financial and Non-Financial Highlights
OMRON Corporation and Subsidiaries (As of and for the years ended March 31)
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Operating Results:
Net sales
Gross profit
Selling, general and administrative expenses (excl. R&D expenses)
R&D expenses
Operating income (Note 1)
EBITDA (Note 2)
Net income (loss) attributable to shareholders
Cash Flows:
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow (Note 3)
Net cash provided by (used in) financing activities
Financial Position:
Total assets
Cash and cash equivalents
Total interest-bearing liabilities
Total shareholders’ equity
¥616,002
248,642
149,274
50,501
60,782
91,607
35,763
51,699
(43,020)
8,679
(38,320)
589,061
52,285
2,468
362,937
¥723,866
278,241
164,167
52,028
62,046
95,968
38,280
40,539
(47,075)
(6,536)
(4,697)
630,337
42,995
19,988
382,822
¥762,985
293,342
176,569
51,520
65,253
101,596
42,383
68,996
(36,681)
32,315
(34,481)
617,367
40,624
18,179
368,502
165.0
1,660.7
34.0
20.6%
151.1
1,548.1
30.0
19.9%
185.9
1,662.3
42.0
22.6%
Per Share Data:
Net income (loss) attributable to shareholders (EPS)
Shareholders’ equity
Cash dividends (Note 4)
Dividend payout ratio
Financial Indicators:
Gross profit margin
Operating income margin
EBITDA margin
Return on invested capital (ROIC)
Return on equity (ROE)
Ratio of shareholders’ equity to total assets
Total return ratio (Note 5)
Capital expenditures
Depreciation and amortization
Ratio of overseas sales
Non-Financial Data
Number of employees
Ratio of overseas employees to total employees
Number of patents held (Note 6)
Environmental contribution (thousand ton-CO2) (Note 7)
CO2 emissions of global production sites (thousand ton-CO2) (Note 8)
Notes: 1. Operating income for fiscal 2005 includes an ¥11,915 million gain recorded on the return of pension assets to the government.
40.4%
9.9%
14.9%
10.1%
10.7%
61.6%
47.8%
40,560
30,825
43.4%
38.4%
8.6%
13.3%
9.9%
10.3%
60.7%
49.7%
44,447
33,922
47.3%
38.4%
8.6%
13.3%
10.4%
11.3%
59.7%
74.7%
37,072
36,343
52.1%
32,456
64.9%
5,206
35,426
65.7%
5,717
27,408
61.1%
4,538
¥627,190
218,522
164,284
48,899
5,339
38,835
(29,172)
31,408
(40,628)
(9,220)
21,867
538,280
46,631
52,970
298,411
(132.2)
1,355.4
25.0
ー
34.8%
0.9%
6.2%
(7.6%)
(8.7%)
55.4%
ー
36,844
33,496
49.7%
32,583
63.4%
5,205
2. EBITDA = Operating income + Depreciation and amortization
3. Free cash flow = Net cash provided by operating activities + Net cash used in investing activities
4. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the fiscal year.
5. Total return ratio = (Total dividends paid + Amount of shares repurchased) / Net income (loss) attributable to shareholders (does not include repurchases of
less than one trading unit)
6. Patent information is as of March 15.
Long-Term Management Strategy
Grand Design 2010 （GD2010）
FY2001 – FY2003
1st Stage Establish a Profit Structure
Concentrate on cost structure reform and
restructure the Company as a profit-generating
business
Achievements
• ROE of 10%
• Withdrew from unprofitable business, spun off
Healthcare Business
• Raised the level of corporate governance to the
global standard
32
FY2004 – FY2007
FY2008 – FY2010
2nd Stage Balance Growth and
Earnings
Reinforce business foundations through
aggressive investment in growth areas,
including M&A, and cost reduction
Achievements
• Increased earnings per share from ¥110.7
(FY2003) to ¥185.9 (FY2007)
3rd Stage Achieve a Growth
Structure
Fortify growth businesses (high profitability)
Revival Stage (February 2009 to March 2011)
Revised 3rd-stage targets due to an abrupt
change in the business environment, implement-
ed cost reductions, and spun off Automotive
Electronic Components Business and Social
Systems, Solutions and Service Business
¥524,694
184,342
133,426
37,842
13,074
40,088
3,518
42,759
(18,584)
24,175
(20,358)
532,254
51,726
36,612
306,327
16.0
1,391.4
17.0
106.4%
35.1%
2.5%
7.6%
1.0%
1.2%
57.6%
106.7%
19,524
27,014
50.7%
36,299
68.1%
5,218
¥617,825
231,702
142,365
41,300
48,037
71,021
26,782
41,956
(20,210)
21,746
3,333
562,790
74,735
45,519
312,753
121.7
1,421.0
30.0
24.7%
37.5%
7.8%
11.5%
7.8%
8.7%
55.6%
25.2%
23,192
22,984
51.4%
35,684
67.8%
5,452
193
191
¥619,461
227,887
145,662
42,089
40,136
62,753
16,389
31,946
(26,486)
5,460
(33,492)
537,323
45,257
18,774
320,840
74.5
1,457.5
28.0
37.6%
36.8%
6.5%
10.1%
4.8%
5.2%
59.7%
37.7%
28,341
22,617
52.2%
35,992
67.7%
5,959
189
184
¥650,461
241,507
152,676
43,488
45,343
67,795
30,203
53,058
(28,471)
24,587
(18,550)
573,637
55,708
5,570
366,962
137.2
1,667.0
37.0
27.0%
37.1%
7.0%
10.4%
8.6%
8.8%
64.0%
27.0%
28,285
22,452
51.1%
35,411
67.4%
6,448
313
176
¥772,966
297,208
181,225
47,928
68,055
93,144
46,185
79,044
(31,125)
47,919
(16,298)
654,704
90,251
488
430,509
209.8
1,956.1
53.0
25.3%
38.5%
8.8%
12.1%
11.3%
11.6%
65.8%
25.3%
33,653
25,089
55.4%
36,842
69.1%
6,635
661
207
¥847,252
332,607
198,103
47,913
86,591
114,930
62,170
77,057
(39,517)
37,540
(29,303)
711,011
102,622
0
489,769
283.9
2,254.4
71.0
25.0%
39.3%
10.2%
13.6%
13.4%
13.5%
68.9%
49.1%
38,143
28,339
60.1%
37,572
69.7%
7,194
851
224
(Millions of yen)
(Yen)
¥833,604
320,812
205,735
52,790
62,287
93,747
47,290
84,207
(67,116)
17,091
(31,550)
683,325
82,910
0
444,718
219.0
2,080.0
68.0
31.1%
38.5%
7.5%
11.2%
9.7%
10.1%
65.1%
62.7%
36,859
31,460
60.3%
37,709
69.3%
7,686
508
214
OMRON Corporation Operating Results:
Net sales
Gross profit
R&D expenses
Operating income (Note 1)
EBITDA (Note 2)
Selling, general and administrative expenses (excl. R&D expenses)
Net income (loss) attributable to shareholders
Cash Flows:
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow (Note 3)
Net cash provided by (used in) financing activities
Net income (loss) attributable to shareholders (EPS)
Financial Position:
Total assets
Cash and cash equivalents
Total interest-bearing liabilities
Total shareholders’ equity
Per Share Data:
Shareholders’ equity
Cash dividends (Note 4)
Dividend payout ratio
Financial Indicators:
Gross profit margin
Operating income margin
EBITDA margin
Return on invested capital (ROIC)
Return on equity (ROE)
Ratio of shareholders’ equity to total assets
Total return ratio (Note 5)
Capital expenditures
Depreciation and amortization
Ratio of overseas sales
Non-Financial Data
Number of employees
¥616,002
248,642
149,274
50,501
60,782
91,607
35,763
51,699
(43,020)
8,679
(38,320)
589,061
52,285
2,468
362,937
151.1
1,548.1
30.0
19.9%
40.4%
9.9%
14.9%
10.1%
10.7%
61.6%
47.8%
40,560
30,825
43.4%
27,408
61.1%
4,538
¥723,866
278,241
164,167
52,028
62,046
95,968
38,280
40,539
(47,075)
(6,536)
(4,697)
630,337
42,995
19,988
382,822
165.0
1,660.7
34.0
20.6%
38.4%
8.6%
13.3%
9.9%
10.3%
60.7%
49.7%
44,447
33,922
47.3%
32,456
64.9%
5,206
¥762,985
293,342
176,569
51,520
65,253
101,596
42,383
68,996
(36,681)
32,315
(34,481)
617,367
40,624
18,179
368,502
185.9
1,662.3
42.0
22.6%
38.4%
8.6%
13.3%
10.4%
11.3%
59.7%
74.7%
37,072
36,343
52.1%
35,426
65.7%
5,717
¥627,190
218,522
164,284
48,899
5,339
38,835
(29,172)
31,408
(40,628)
(9,220)
21,867
538,280
46,631
52,970
298,411
(132.2)
1,355.4
25.0
ー
34.8%
0.9%
6.2%
(7.6%)
(8.7%)
55.4%
ー
36,844
33,496
49.7%
32,583
63.4%
5,205
Ratio of overseas employees to total employees
Number of patents held (Note 6)
Environmental contribution (thousand ton-CO2) (Note 7)
CO2 emissions of global production sites (thousand ton-CO2) (Note 8)
FY2008 – FY2010
A
b
o
u
t
O
m
r
o
n
11-Year Financial and Non-Financial Highlights
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
(Millions of yen)
¥524,694
184,342
133,426
37,842
13,074
40,088
3,518
42,759
(18,584)
24,175
(20,358)
532,254
51,726
36,612
306,327
16.0
1,391.4
17.0
106.4%
35.1%
2.5%
7.6%
1.0%
1.2%
57.6%
106.7%
19,524
27,014
50.7%
36,299
68.1%
5,218
¥617,825
231,702
142,365
41,300
48,037
71,021
26,782
41,956
(20,210)
21,746
3,333
562,790
74,735
45,519
312,753
121.7
1,421.0
30.0
24.7%
37.5%
7.8%
11.5%
7.8%
8.7%
55.6%
25.2%
23,192
22,984
51.4%
35,684
67.8%
5,452
193
191
¥619,461
227,887
145,662
42,089
40,136
62,753
16,389
31,946
(26,486)
5,460
(33,492)
537,323
45,257
18,774
320,840
74.5
1,457.5
28.0
37.6%
36.8%
6.5%
10.1%
4.8%
5.2%
59.7%
37.7%
28,341
22,617
52.2%
35,992
67.7%
5,959
189
184
¥650,461
241,507
152,676
43,488
45,343
67,795
30,203
53,058
(28,471)
24,587
(18,550)
573,637
55,708
5,570
366,962
137.2
1,667.0
37.0
27.0%
37.1%
7.0%
10.4%
8.6%
8.8%
64.0%
27.0%
28,285
22,452
51.1%
35,411
67.4%
6,448
313
176
¥772,966
297,208
181,225
47,928
68,055
93,144
46,185
79,044
(31,125)
47,919
(16,298)
654,704
90,251
488
430,509
209.8
1,956.1
53.0
25.3%
38.5%
8.8%
12.1%
11.3%
11.6%
65.8%
25.3%
33,653
25,089
55.4%
36,842
69.1%
6,635
661
207
¥847,252
332,607
198,103
47,913
86,591
114,930
62,170
77,057
(39,517)
37,540
(29,303)
711,011
102,622
0
489,769
283.9
2,254.4
71.0
25.0%
39.3%
10.2%
13.6%
13.4%
13.5%
68.9%
49.1%
38,143
28,339
60.1%
37,572
69.7%
7,194
851
224
(Yen)
¥833,604
320,812
205,735
52,790
62,287
93,747
47,290
84,207
(67,116)
17,091
(31,550)
683,325
82,910
0
444,718
219.0
2,080.0
68.0
31.1%
38.5%
7.5%
11.2%
9.7%
10.1%
65.1%
62.7%
36,859
31,460
60.3%
37,709
69.3%
7,686
508
214
7. Environmental contribution = Volume of CO2 emissions reduction contributed by society's use of the Omron Group's energy-generation or saving products and services.
The calculation method has been revised since fiscal 2016. Accordingly, the figures for fiscal 2015 and prior years have been restated.
8. CO2 emissions volumes calculated based on fuel consumption and electricity purchase volumes by the Company.
Operating Income
Omron applies the single step presentation of income under U.S. GAAP (that is, the various levels of income are not presented) in its consolidated statements of income.
For comparison with other companies, operating income is presented as gross profit less selling, general and administrative expenses and research and development expenses.
Discontinued Operations
Figures for FY2006 and prior years have been restated to account for businesses discontinued in FY2007.
Value Generation 2020 （VG2020）
FY2011 – FY2013
GLOBE STAGE
Establishment of profit and growth structures
on a global basis
Net sales
Operating income
Gross profit margin
Operating income margin
ROE
*1 Announced July 2011
Initial Target*1 FY2013 Result
¥773.0 billion
¥68.1 billion
38.5%
8.8%
11.6%
¥750.0 billion
¥100.0 billion
42.0%
13.3%
over 15%
FY2014 – FY2016
EARTH-1 STAGE
Establish self-driven growth structure
FY2017 – FY2020
EARTH-2 STAGE
Net sales
Gross profit margin
Operating margin
ROIC
ROE
EPS
Initial Target*2
over ¥900 billion
over 40%
over 10%
approx. 13%
approx. 13%
approx. ¥290
FY2016 Plan*3
¥820 billion
39.3%
7.7%
10%
10%
¥222.2
*2 Announced April 2014
*3 Announced April 2016
FY2020
Targets*4
● Net sales over ¥1 trillion
● Operating profit margin15%
*4 Announced July 2011
33
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Special Feature: 1
Evolution of Our Technology
CTO Message
I was named the first Chief Technology Officer (CTO) at Omron Corporation when it
instituted the position in April 2015. As Omron CTO, my main role is to plan and execute
our technology strategy from a management standpoint. Beyond strengthening our core
technologies, my responsibilities include building value for our future through new
technologies stemming from open innovation and cross-organizational initiatives.
1. The CTO and the Role of the Technology & Intellectual Property HQ
Particularly after adopting an internal company
Property HQ, I am responsible for this cross-
system in 1999, Omron pursued corporate
organizational strategy. I am also responsible
technology strategy on a division-by-division
for seeing future opportunities through the lens
basis. We experienced a significant jump in the
of technology over a frame of reference even
sophistication of our division technologies under
longer than that addressed in our divisions. Since
this structure. However, we realized that adapting
assuming my current position, I have been working
to a rapidly changing world required more flexibility.
to formulate medium- and long-term technology
We needed to be able to uncover needs that
strategies and manage cross-organizational
existed in the spaces between the borders of our
initiatives that encompass the entire Omron
businesses. We needed a company-wide, cross-
Group. In performing these duties, I will continue
organizational approach to technology strategy.
to promote open innovation through cooperative
As CTO and head of the Technology & Intellectual
relationships between Omron and outside entities.
Short-term projects
Medium- and long-term projects
Technology & Intellectual Property HQ perspective
Anticipate future opportunities
■ Technology & Intellectual
Property HQ Projects
l
e
v
e
l
-
n
o
i
s
i
v
i
D
e
v
i
t
c
e
p
s
r
e
p
Industrial Automation
Electronic Mechanical
Automotive Electronic Components
Social Infrastructure
Healthcare
Environmental, etc.
34
OMRON Corporation
Evolution of Our Technology
W
h
e
r
e
W
e
’r
e
H
e
a
d
e
d
Kiichiro Miyata
CTO and Senior General Manager,
Technology & Intellectual Property HQ
July 2016
2. Evolving Core Technologies
To date, our core technologies have focused on
Sensing & Control. The idea of this concept is to
use technology to detect the status of a situation,
process that information, and then perform an
appropriate control. At present, we are evolving
this concept by adding Think. This Think represents
human intelligence.
In humans, intelligence is gained by analyzing
volumes of information (data) and learning. In the
market today, we see a flood of new business
models that use IoT, AI, or other mechanisms
to analyze and learn from a cumulative store
of data. Adding Think to Sensing & Control will
make a significant contribution to the growth of
these business models. For example, we can
incorporate the concept of Think into controllers for
manufacturing equipment and robots in factories.
This takes us beyond giving instructions for pre-
programmed routine movements into a world of
systems that combine machine tasks with the
condition of experienced human workers on the
production floor. Another example is from the
healthcare field. Here, Think means that we can
do more than simply measure someone’s blood
pressure. When an irregularity is detected, we
can provide more health-related indicators and
important information that the individual may want.
By strengthening our core technologies, we can
produce even greater technological growth over
the medium and long term in our businesses.
Integrated Report 2016
35
Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
3. Creating Value for Our Future
Today, our technology development work looks
ahead to the year 2030. Our major fields of focus
are in manufacturing, healthcare, and mobility. By
operating a multiple number of businesses, we
have created a large storehouse of technologies
across a variety of specialty fields. Cross-
organizational initiatives between and among our
business divisions generates amazing technology
and application synergies. Allow me to introduce
some specific examples.
At Omron, we have an initiative to redesign
production by combining manufacturing and
healthcare technologies. Under this project, we
are working to integrate manufacturing technology
and expertise with biological information sensing
technologies from our healthcare business.
The integration of these technologies allows
manufacturing equipment to sense the health
and movement of their human partners, providing
appropriate controls in response. In this way, we
provide an environment in which humans can
work safely and efficiently in harmony with robots.
Through systems like this, we can eliminate human
error (careless mistakes, unplanned production
stoppages, etc.) and offer greater efficiency for
production activities.
Another initiative is our work in developing
■ Cross-Organizational Initiatives
new technologies in the growing field of driver
assistance and sensing. During fiscal 2016, we
developed an on-board sensor equipped with
technology that senses the degree of driver
concentration and determines whether the driver
is capable of safely operating the vehicle*1. This
system combines first-of-its kind image sensing
technology with leading-edge AI technology
(time-series deep learning*2). Integrating biological
information sensing technologies from our
healthcare business will allow us to go even
further in sensing detailed information about
a driver’s state of health and consciousness.
Omron will continue to conceive and develop
new technologies in the large and growing field of
automated driving.
Look for even more innovations from Omron in
the future, as we continue to integrate expertise
and technology to create new and surprising value.
*1 Related news release:
http://www.omron.com/media/press/2016/06/c0606.html
*2 Time-series deep learning: A type of deep learning technology. In general, deep
learning technology has demonstrated extremely high performance in
recognizing static images, while experiencing degraded performance in
recognizing time-series events. Omron has successfully introduced
independent improvements to Recurrent Neural Network technology, a
mechanism that retains past information internally. This modified technology is
capable of detecting the status of a driver and other time-series information
with high precision.
Eliminate human error from
the production floor
Driver assistance and sensing
with high precision
Industrial Automation
Business
Healthcare Business
Automotive Electronic
Components Business
Manufacturing
Healthcare
Mobility
36
OMRON Corporation
Intellectual Property Strategy
Omron Wins the 13th Distinguished Service in Industry Award
Omron was awarded the 2016 Distinguished
Service in Industry Award by the Intellectual
Property Association of Japan (IPAJ). Each year,
the IPAJ gives this award to an organization that
demonstrates outstanding achievement in the
field of intellectual property (IP). Omron was
recognized for our IP activities*¹, our successful
efforts under ROIC Management 2.0*² to focus
on and invest in IP, and our effective program of
external communications related to IP.
*¹ IP activities under unified business and technology programs
*² Investing in patent applications and IP education for engineers to make IP a tool for
business growth.
See our website for ROIC 2.0:
http://www.omron.com/about/ir/irlib/pdfs/ar15e/ar15e_17.pdf
Building an Advantage through Intellectual Property by the Year 2030
Strategies for Using IP as a Global Competitive Advantage
Omron IP activities reflect an integration of
business, technology, and IP strategies.
Today, we look across the landscape toward the
year 2030, anticipating future technologies that
carry beyond our current business framework. We
envision a number of technology scenarios for that
future, creating and protecting medium-, long-term,
and core technologies that align with our vision.
Omron is pushing forward to build a stronger
capacity for IP creation both today and tomorrow.
Toward further globalization, we are stepping up
our program of IP rights acquisition in countries
that represent our most important markets. This
program will secure greater degrees of freedom
for our businesses in our major markets around the
world.
Finally, Omron will be tenacious in protecting our IP
rights, defending and enhancing the Omron Brand.
■ Worldwide Intellectual Property Rights
■ Intellectual Property Data (No. of Patents)
Trademark Rights
11%
Design Rights
12%
Patent Rights
Utility Model Rights
29%
FY
2012
2013
2014
2015
Applications
1,084
1,040
1,129
1,108
Overseas
Total No. of
Intellectual Properties
55%
12,837
(As of March 31, 2016)
45%
Japan
Approvals
1,172
949
856
866
Patents held
6,448
6,635
7,194
7,686
Patent Rights
Utility Model Rights
32%
Design Rights
9%
Trademark Rights 7%
W
h
e
r
e
W
e
’r
e
H
e
a
d
e
d
37
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Special Feature: 2
Manufacturing
Capability
Linking Strong Manufacturing
Capability to Sustainable Gross
Profit Margin Growth
Kiyoshi Yoshikawa
Managing Executive Officer
Senior General Manager, Global Manufacturing Innovation HQ
We view gross profit margin (a measure of our
ability to earn) as one of our most important
key performance indicators. We implemented
cost reduction activities and other internal
measures between fiscal 2011 and 2014 to
improve our gross profit margin. Owing to
these measures and favorable foreign
exchange, we raised our gross profit margin
to 39.3%. Unfortunately, gross profit margin
decreased to 38.5% for fiscal 2015, mainly
due to a slowing Chinese economy, foreign
exchange fluctuations, and other external
■ Net Sales, Gross Profit Margin
■ Net Sales
Gross Profit Margin
(Billions of yen)
900
800
700
600
500
400
300
200
100
0
847.3
39.3%
833.6
773.0
619.5
650.5
38.5%
38.5%
37.1%
36.8%
FY
2011
2012
2013
2014
2015
(%)
39.5
39.0
38.5
38.0
37.5
37.0
36.5
36.0
35.5
factors that drove down revenues. To achieve
our VG2020 goals for fiscal 2020, we must be
able to withstand external influences to create
sustainable growth in gross profit margin.
Here, we plan to improve our overall Group
business mix, restructure variable costs,
restructure fixed manufacturing costs, and
strike a balance in our currency composition.
As the lead of Omron manufacturing, we
believe that stronger manufacturing capabilities
translate directly to an improved ability to earn.
■ Major Initiatives for Improving Gross
Profit Margin
Improve Business Mix
businesses
・ Portfolio management
・ Accelerate growth of highly profitable
Restructure Variable
Costs
・ Promote component standardization
Restructure Fixed
Manufacturing Costs
・ Improve productivity at overseas
production bases
Balance Currency
Composition
・ Balance currency composition to sales,
purchase costs
38
OMRON Corporation 1. Strong Manufacturing Capabilities
At Omron, we have a three-part definition for
strong manufacturing capabilities: (1) Capability to
integrate value; (2) Capability to deliver value; and
(3) Capability to respond to changes in the
business environment. As our businesses grow
globally, we believe that our capability to deliver
value to our customers is particularly important.
We do this through optimal procurement of
components and materials, optimal manufacturing
processes, and optimal logistics. We have two
specific measures to increase our capability in
these areas. The first is to restructure our variable
costs, mainly through standardized components.
The second is to restructure our fixed
manufacturing costs to improve productivity for
optimal production processes and logistics. These
■ Strong Manufacturing Capabilities
Technology
Capability to
integrate value
Product Planning
❶
Product Design
Production Design
Procurement
Manufacturing
Sales
Needs
Materials
❷ Capability to deliver value
Customers
❸
Capability to respond
to changes in the
business environment
Business
Environment
changes
measures will allow us to strengthen our
capability to deliver value, improving our gross
profit margin at the same time.
2. Restructuring Variable Costs
Improving Component Standardization
To date, we have made progress in standardizing
parts, mainly in general electronic components.
In the future, we plan to adopt standardization for
more components in other product lines for resin
molded components, printed circuit boards, and
more. Naturally, we select standard components
based on cost and quality. However, we also
promote standardization by using the Omron
Master Guide. This guide provides rules enforced
during the design phase, as well as guidelines for
component specifications. Under these measures,
we are at nearly 100% adoption of standard
components for new products. As our products
advance along their lifecycles, we project an
increase in purchases of standard components
(as a percentage of materials costs) to rise from
■ Benefits of Standard Materials/Components
15% in fiscal 2015 to 60% by fiscal 2020. We
plan to accelerate corporate-wide initiatives to
achieve this goal by working closely with our
business divisions, convincing them of the
importance of this target.
Costs and quality are not the only factors that
influence our decision when selecting standard
components. Our first priority is to determine
whether the supplier is a potential long-term
partner for Omron. Once that decision is made,
then we look at cost and quality. Standard
components offer several advantages compared
to non-standard components. These advantages
include cost savings, lower defect rates, and
higher on-time delivery, among others. We also
find another number of benefits by working
Cost
Quality
Delivery
Environment
Services
Technology
Indicator
Standard Components
Non-Standard Components
Cost Reduction Ratio
Defect Rate
On-Time Delivery Rate
High
Low
High
Low
High
Low
Regulated Chemicals/Environmental
Management
Reduce environmental risk based on guarantees related to environmentally hazardous
substances
Payment Terms
Cash flow improvement through standard payment terms
Advanced Technology Exchange
Coordinate technology road maps, perform joint development
W
h
e
r
e
W
e
’r
e
H
e
a
d
e
d
39
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
closely in partnership with our suppliers. Strong
relationships reduce environmental risk by
promoting the proper management of regulated
chemical substances, improve cash flow based
on standard payment terms, and allow joint
development through sharing the latest
technologies.
3. Restructuring Fixed Manufacturing Costs
Improving Global Productivity
Today we produce 40% of our total in Japan,
30% in China, 10% in Southeast Asia, and 20%
in Europe, the Americas, and other regions. We
are making advances in automating our own
production floors, particularly in China and
Southeast Asia. However, soaring labor costs
mean that improving productivity is still an
urgent issue for us (and every manufacturer). To
address this issue, we plan to accelerate
restructuring of fixed manufacturing costs,
focusing our efforts mainly in China. Specifically,
we are working toward improving productivity
through three initiatives:
❶ Quality Assurance in Manufacturing
Processes
We plan to move away from quality assurance
based on manual post-process inspection to a
system that ensures quality has been built into
the process from the beginning. Standardizing
components is one way that will help us be
more efficient in receiving inspections. We will
use information technology to share data with
our supply partners for greater visibility and
stronger relationships. We also plan to bring
more visibility to inspection data and
manufacturing process changes that affect
quality. We will incorporate more information
technology into our own production lines to
■ Initiatives for Productivity Improvements
visualize data related to process quality, quickly
identifying changes in quality on the production
floor and repeating the cycle of improvement to
continually raise the level of our manufacturing
processes.
❷ Standardizing Manufacturing Technology
Processes
We will reduce the time needed to launch mass
production by standardizing our manufacturing
technology processes in all stages, from design
to mass production. We also plan to accelerate
visibility to the production line, allowing
production floor leaders to proactively manage
equipment maintenance and other operations.
❸ Optimizing Corporate-Wide Logistics
Working from a corporate-wide perspective, we
plan to optimize the logistics networks for
products and components developed separately
under each business and division. We will also
drive greater efficiencies in warehouse
management operations as we convert from
manual processes to a digital format.
Moving forward, we will continue to strengthen
our capability to integrate value, our capability to
deliver value, and our capability to respond to
changes in the business environment. We also
plan to improve gross profit margins not impacted
by factors in the external environment.
❶ Quality Assurance in
Manufacturing Processes
Product Design
Process Design
❷ Standardizing Manufacturing Technology Processes
Component
Suppliers
Acceptance
Inspection
Assembly
Process
Inspection
Process
Shipping
Inspection
Product
Warehouses
❸ Optimizing Corporate-Wide Logistics
40
OMRON Corporation Manufacturing Policy
During fiscal 2015, we created the Omron Manufacturing Policy. This policy formalized guidelines for
practicing the Omron Principles in our manufacturing activities. As every employee involved in
manufacturing learns and practices this policy, we will create greater value for customers and better
solutions to social issues. And, as we communicate our policy to customers, suppliers, and partners,
we will create a foundation of mutual trust and understanding. These long-term mutually cooperative
relationships we build will lead to even greater advancements in our manufacturing capabilities.
1▶ Quality first
Our top priority is delivering products to customers at the promised levels of quality.
The accepted convention is that a trade-off exists between cost and quality. At Omron,
we don’t believe in trade-offs; we believe in keeping our promises and delivering
products of the highest quality to our customers.
2 ▶ 3F (Front-loading, Flowing & Flexible)
By front-loading, we mean integrating customers’ demands for value into our earliest
stages of product development. We imbue our products and services with this value,
delivering what our customers need, in the volumes they need, when they need it
(Flowing & Flexible).
3 ▶ H&E (Human-oriented & Eco-manufacturing)
We conduct Human-oriented manufacturing, rather than the type of manufacturing in
which people become subservient to machines. By seamlessly integrating the
relationship between human and machine, we create higher levels of productivity and
an advanced production floor in which everyone involved in manufacturing can
contribute their talents, intuition, and experience. Materials, water, electricity, land,
buildings, and other resources are in finite supply. Omron believes in sustainable
Eco-manufacturing that uses these resources with respect. Omron Eco-manufacturing
technology provides the world with an example of how to conserve materials and
energy, while producing high-quality products.
W
h
e
r
e
W
e
’r
e
H
e
a
d
e
d
41
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Factory Tour Healthcare Business Matsusaka Factory
The Omron Matsusaka Factory was built in Japan's Mie
Prefecture in 1973. At this factory, Omron
manufactures products that aid in the prevention,
improvement, or management of lifestyle diseases and
respiratory diseases. Products made here run the range
from blood pressure monitors, nebulizers, and other
in-home care items to medical devices for measuring
arteriosclerosis and visceral fat. In addition, the
Matsusaka Factory serves as the mother factory of the
Healthcare Business.
Delivering Health to More than 110 Countries Worldwide
■ Production Sites
China (Dalian)
Japan (Matsusaka)
Vietnam (Ho Chi Minh)
Brazil (Sao Paulo)
Through four major locations around the
globe, the Omron Healthcare Business
supplies products to more than 110
countries around the world. As the
leader of Healthcare Business
manufacturing, the Matsusaka Factory
is responsible for developing new
methods and production technologies.
These developments ensure that
production takes place at the same level
of quality and cost at any location and
for any product. The factory works in
concert with the Global Manufacturing
Innovation HQ to reduce assembly time
and the number of components
required, as well as to introduce new
automation technologies in the
assembly line.
Look at This!
Best Quality in the World
Wrist blood
pressure monitors
As a factory producing health and
medical equipment, the Matsusaka
Factory must meet the highest levels
of reliability anywhere in the world.
The factory satisfies international
standards related to quality and medical
equipment, demonstrating world-
leading levels of quality.
42
OMRON Corporation
Upper arm blood
pressure monitors
Nebulizers
The Return of “Made in Matsusaka” Blood Pressure Monitors
Fiscal 2016
plan
1,700
thousand
units
Fiscal 2013
260
thousand
units
During the 1990s, the Matsusaka Factory produced more than
1 million blood pressure monitors annually. As production
shifted to China and Vietnam, the rate of production fell to
260,000 units. More recently, however, an increase in inbound
tourist demand in Japan and a greater focus on quality both in
Japan and throughout Asia has given rise to greater demand for
products labeled “Made in Japan.” Such products include blood
pressure monitors and other health and medical equipment
where demand is high for items made in Japan.
To respond to this dramatic shift in demand, the Matsusaka
Factory has built a production system that delivers stable output.
This system features new technologies to reduce assembly
time, a higher ratio of domestic component procurement, and
other means to maintain a competitive cost structure. The
factory ramped up production during fiscal 2014, forecasting
total production of 1.7 million blood pressure monitors in fiscal
2016. This increase in production has much to do with this
year’s adoption of the world’s first automated assembly line for
blood pressure monitors. By automating processes that used to
require several people to accomplish, the factory has more than
doubled per-person productivity. In addition to adding more
manufacturing technology to increase production in Japan, the
Matsusaka Factory is training technical staff who can supervise
production overseas. These individuals will introduce
technologies proven at Matsusaka at overseas production
centers, which will lead to further productivity gains for the
Healthcare Business.
Blood Pressure Monitor Production Line
Manual Assembly
Emphasis on production efficiency for a
cost structure competitive with overseas
manufacturers. Freely changing the number of
workers and processes allows the factory to handle
changes in product type and production numbers.
Automated Assembly
Advances in technology led to the world’s first
automated assembly line for blood pressure
monitors. Robots replace human workers to deliver
greater productivity and quality in component,
module, and finished product assembly.
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
Integrated Report 2016
43
Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
200
100
60
40
20
0
At a Glance
Industrial Automation
Business (IAB)
Electronic and Mechanical
Components Business (EMC)
Automotive Electronic
Components Business (AEC)
■ Net Sales/Operating Income/
Operating Income Margin
■
■ Net Sales/Operating Income/
Operating Income Margin
■ Net Sales/Operating Income/
Operating Income Margin
(Billions of yen)
400
300
263.0
291.7
331.8
336.0
336.0
13.3%
11.9%
16.5%
14.3%14.3%
15
13.8%13.8%
10
31.3
38.8
54.6
47.9
46.5
0
FY
12
13
14
15
16
5
0
(%)
20
(Billions of yen)
120
97.7
90
84.1
(%)
12
103.9
103.7
100.0
10.0%10.0%
9
8.9%
9.8%
8.2%8.2%
60
30
0
FY
5.2%
4.4
8.7
10.2
8.5
10.0
12
13
14
15
16
6
3
0
(Billions of yen)
(%)
12
9
6
160
120
80
40
0
FY
126.6
137.9
140.0
130.0
97.6
7.2%
5.1%
6.7%
5.2%5.2%
5.0%5.0%
5.0
9.1
9.2
7.3
6.5
12
13
14
15
16
3
0
(Forecast)
(Forecast)
(Forecast)
■ Ratio of Net Sales by Region
■ Ratio of Net Sales by Region
■ Ratio of Net Sales by Region
(%)
100
Direct Exports
Asia Pacific
80
Greater China
Europe
Americas
0.2
9.4
15.0
19.2
12.0
Japan
44.2
0.2
11.0
17.4
20.6
12.0
38.8
Direct Exports
Asia Pacific
1.7
8.4
Greater China
29.2
Europe
Americas
13.4
15.6
Japan
31.7
(%)
100
80
60
40
20
0
0.5
10.0
32.4
15.5
19.2
22.4
(%)
100
80
60
40
20
0
Direct Exports
Asia Pacific
Greater China
Europe
Americas
6.3
20.0
14.2
2.9
25.6
Japan
31.0
5.2
22.8
19.6
3.3
34.0
15.1
FY
12
15
FY
12
15
FY
12
15
■ Capital Expenditures/
Depreciation and Amortization
■ Capital Expenditures/
Depreciation and Amortization
■ Capital Expenditures/
Depreciation and Amortization
Capital expenditures
Depreciation and amortization
Capital expenditures
Depreciation and amortization
Capital expenditures
Depreciation and amortization
(Billions of yen)
(Billions of yen)
(Billions of yen)
6.0
4.5
3.0
1.5
0
FY
5.3
4.0
4.2
3.5
3.5
2.8
3.6
3.3
12
13
14
15
12
9
6
3
0
FY
10.9
7.8
8.9
7.4
9.5
8.0
8.9
8.3
12
13
14
15
8
6
4
2
0
FY
6.5
4.7
6.9
5.3
6.7
3.4
5.5
2.4
12
13
14
15
■ R&D Expenses
■ R&D Expenses
■ R&D Expenses
(Billions of yen)
(Billions of yen)
6.0
(Billions of yen)
20
15
10
5
0
FY
16.5
15.7
15.3
18.2
12
13
14
15
6.0
4.5
3.0
1.5
0
FY
5.2
5.4
4.9
12
13
14
15
10.0
7.5
5.0
2.5
0
FY
44
8.2
8.5
9.3
7.0
12
13
14
15
Net sales ■ Operating incomeOperating income margin■ Net sales ■ Operating incomeOperating income margin■ Net sales ■ Operating incomeOperating income marginOMRON Corporation Notes: 1. During fiscal 2013, certain divisions of the EMC were included in the IAB due to a change in management categorizations.
Segment information for fiscal 2012 and earlier has been restated to reflect this change.
2. Fiscal 2016 forecasts are those as originally disclosed on April 27, 2016.
3. For more information about net sales by region, please refer to Page 85- 88.
Social Systems, Solutions and
Service Business (SSB)
Healthcare Business (HCB)
Other Businesses
■ Net Sales/Operating Income/
Operating Income Margin
■
■ Net Sales/Operating Income/
Operating Income Margin
■ Net Sales/Operating Income/
Operating Income Margin
(%)
10
(Billions of yen)
120
(%)
12
108.1
108.0
(Billions of yen)
11.0%
(Billions of yen)
100
75
68.8
82.7
80.4
77.5
70.0
6.7%
5.7%5.7%
4.2%
6.2%
4.1%4.1%
2.9
5.6
5.0
3.2
4.0
12
13
14
15
16
50
25
0
FY
8
6
4
2
0
90
60
30
0
FY
100.6
89.3
71.5
6.2%
8.5%
6.5%
6.7%6.7%
7.4%7.4%
4.4
7.5
6.5
7.3
8.0
9
6
3
0
(%)
12
9
6
87.4
9.6%
63.0
78.9
71.0
8.7
8.4
2.1%
3
1.5
0
-4.1
100
75
50
25
0
-25
59.2
4.3%4.3%
2.5
(Forecast)
(Forecast)
(Forecast)
■ Ratio of Net Sales by Region
■ Ratio of Net Sales by Region
■ Ratio of Net Sales by Region
12
13
14
15
16
FY
12
13
14
15
16
(%)
100
Direct Exports
Greater China
0.3
0.1
1.6
0.7
(%)
100
Direct Exports
Asia Pacific
Greater China
Japan
99.6
97.7
80
60
40
20
0
80
60
40
20
0
1.0
5.0
15.5
22.3
Europe
Americas
15.0
Japan
41.2
0.5
8.2
23.5
17.7
21.3
28.8
Direct Exports
2.5
Greater China
27.6
3.0
27.1
Japan
69.9
69.9
(%)
100
80
60
40
20
0
FY
12
15
FY
12
15
FY
12
15
■ Capital Expenditures/
Depreciation and Amortization
■ Capital Expenditures/
Depreciation and Amortization
■ Capital Expenditures/
Depreciation and Amortization
Capital expenditures
Depreciation and amortization
Capital expenditures
Depreciation and amortization
Capital expenditures
Depreciation and amortization
(Billions of yen)
(Billions of yen)
(Billions of yen)
2.0
1.5
1.0
0.5
0
FY
1.5
1.5
1.1
1.2
1.7
1.4
1.5
1.2
12
13
14
15
6.0
4.5
3.0
1.5
0
FY
3.9
2.3
3.9
3.3
3.7
2.8
3.1
1.9
12
13
14
15
8
6
4
2
0
FY
2.5
1.4
12
6.9
2.5
5.3
3.1
14
15
4.0
2.0
13
■ R&D Expenses
■ R&D Expenses
■ R&D Expenses
(Billions of yen)
(Billions of yen)
(Billions of yen)
4
3
2
1
0
FY
2.5
2.2
2.1
2.2
12
13
14
15
8
6
4
2
0
FY
5.0
5.2
6.1
5.5
12
13
14
15
6.0
4.5
3.0
1.5
0
FY
5.5
4.3
4.6
3.0
12
13
14
15
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
45
Net sales ■ Operating incomeOperating income margin■ Net sales ■ Operating incomeOperating income margin■ Net sales ■ Operating incomeOperating income marginIntegrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Business Segment
Industrial Automation Business
(IAB)
Manufacture and sales of factory automation equipment
Vision
Bring Innovation to Manufacturing by Automation to Enrich the
Lives of People All over the World
The Industrial Automation Business leverages
Omron technologies to create innovations in
manufacturing. These innovations advance the
world’s manufacturing industry and improve
productivity on the production floor.
Our mission, today and tomorrow, is to
contribute to better living standards in the world
through manufacturing. In accomplishing this
mission, we combine our lineup of unique
products in creative ways to provide industry
solutions that cannot be imitated by our
competitors.
Yutaka Miyanaga
Senior Managing Executive Officer
Company President
Industrial Automation Company
Toward Sustainable Growth
Accelerating “innovative-Automation”
To achieve sustainable growth, we focus
our efforts in markets most likely to
experience major growth in the future.
These markets include automobiles,
smartphones and other digital devices, food
and beverages, social infrastructure. We
rely on our global sales organization to
continue making inroads in these large and
growing sectors.
To show the entire world Omron’s unique
solutions and to maximize our growth
potential, we are accelerating innovative-
Automation to introduce new products and
solutions to the market.
In April of this year, we released 49 new
robot models to the market. The Industrial
Automation Business regularly introduces
new sensors and high-performance
controllers. These products incorporate
communications devices that answer
today’s rising needs for using Big Data
analysis and the IoT on factory floors
around the world.
We will continue to create new
innovations in industrial automation,
growing as a business as we provide
solutions to save labor and create harmony
between humans and machines—solutions
only Omron can deliver.
46
OMRON Corporation Business Acquisitions
During fiscal 2015, Omron acquired Delta Tau Data Systems, Inc. and Adept
Technologies, Inc. In so doing, Omron has obtained access to motion controllers for
high-speed, high-precision equipment and robotics that will play a major role on
production floors in the future. We will add these technologies to our existing lineup of
products, continuing to introduce innovations to manufacturing as a true automation
company in every sense.
Delta Tau Data Systems, Inc.
Founded in 1976 in the U.S., Delta Tau Data Systems is a leading provider of high-performance motion
controllers. Delta Tau’s controllers are used by thousands of manufacturers and research institutes in
applications ranging from semiconductor production equipment, to medical devices, packaging
equipment, and more. Delta Tau continues to develop technologies that help customers secure
competitive advantage in their respective markets.
Motion Controllers
Built-In Driver Model
Motion Controllers
Circuit Board Model
Adept Technologies, Inc.
Adept Technologies, founded in the U.S. in 1983, has become a leading provider of industrial robots.
The company’s innovative robots are used in a variety of manufacturing applications, including
inspection and assembly. More recently, Adept Technologies has designed products tailored to
human movement, resulting in automated transport robots capable of easy adoption across a wide
range of industries.
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
Parallel Robots
Automated Mobile Robots
47
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Business Segment
Electronic and Mechanical
Components Business (EMC)
Manufacture and sales of electronic components for consumer electronics,
automobiles, mobile devices, and amusement equipment
Vision
Enhancing the Quality and Lifestyle of People in the World by
Providing Components that Satisfy Customer Needs
The Electronic and Mechanical Components
Business produces relays and switches for use
in finished products such as home appliances,
automobiles, communications equipment,
machine tools, and more. The finished products
we support now reach markets throughout the
world with the growth of the emerging
economies.
We listen to our customers and observe social
issues to uncover needs, creating components
that help improve the value of finished products.
Kenji Matsunami
Managing Executive Officer
Company President
Electronic and Mechanical Components Company
Toward Sustainable Growth
Contributing to the Development of Smarter Societies
As our smartphones, smart cars, and other devices
become even smarter,* components used in these
products must provide ever-higher levels of
performance and electronic sophistication. We view
this social change as a market need. As such, we
offer components that leverage both mechanical
technologies and sensing technologies (sensing
people, things, and the environment), contributing to
the development of the smart society.
As one example, we are involved in smart energy
projects to bring better efficiency to electric power
industries in Asia and other emerging countries. In
India, which is beset by chronic power shortages,
electricity theft and the illegal use of electricity is a
major social issue. This issue has a tremendously
negative impact on India’s national economy.
Combining a number of different Omron
technologies, we have developed a sensor that
detects electricity theft. Now, we are working with
the government and power companies to spread
adoption of this sensor.
We will continue to accelerate our initiatives in
renewable energy and electric vehicles for use in
housing and automotive markets. We also intend to
engage in growth fields, where we will contribute
solutions for the Earth’s environmental issues.
＊Embedding communications technology to facilitate advanced information
processing and management.
48
OMRON Corporation Business Segment
Automotive Electronic
Components Business (AEC)
Development, manufacture, and sales of on-board automobile electronic components
Vision
Solving the Social Needs of the Car Society
Today, we see significant and growing needs for
new technologies spurred by the rising popularity of
electric vehicles, advancements in autonomous
driving, and the integration of communications
technologies. Here, we are using Omron’s core
technologies to contribute solutions for these needs.
We view these changes as an opportunity to meet
the challenge to create solutions answering new
social needs in the car society. We will base our
efforts on technologies related to smart entry systems
and other radio wave mechanisms, body cooperative
control systems, electronic power steering and anti-
pinching power window control systems, and other
motor control technologies.
Katsuhiro Wada
Managing Executive Officer
President and CEO
OMRON Automotive Electronics Co., Ltd.
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
Toward Sustainable Growth
Seamless Interaction between Humans and Cars
Over the past few years, the relationship between
humans and cars has undergone an amazing
change. Very soon, car society will enter a dramatic
period of transition. The speed of change is
remarkable, and automotive component makers
must demonstrate both foresight in anticipating the
evolution of car society and technological capabilities
for guiding and executing on market opportunities.
Our commitment is to work closely with customers
from the earliest stages of internal planning,
uncovering social issues quickly, and creating
solutions that answer customer needs.
One example is related to the recent dramatic rise
in demand for automated driving and advanced
driving support systems. Integrating Omron face
detection, AI, and biological information sensing
technologies, we are leading the world in
developing an advanced sensor module capable
of sensing the status of a driver. Beyond
automobile driving support, we believe this
technology will have applications in preventing
accidents arising from driver health issues or
driver error (more frequently, error on the part of
senior drivers).
We will spare no effort to develop products
that answer the future needs of the car society,
providing seamless interaction between humans
and cars.
49
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Business Segment
Social Systems, Solutions and
Service Business (SSB)
Solutions and services for a safer, comfortable, more secure society
Vision
Creating the Future
We have continued to anticipate and solve numerous
social needs, just as when we introduced the world’s
first automated traffic signal. Our automated passenger
ticket gates and other station systems have resulted in
the safe and comfortable use of train stations by
hundreds of millions of passengers. In the future, an
increasing number of visitors from around the world
coming to the Tokyo Olympics, Paralympics, and other
events will experience these systems for themselves.
We have developed new services and equipment that
guide passengers smoothly through stations.
We will continue to offer solutions that integrate
equipment and support to solve future issues and create
a new future in transportation.
Toshio Hosoi
Managing Executive Officer
President and CEO
OMRON SOCIAL SOLUTIONS Co., Ltd.
Toward Sustainable Growth
Contributing to Safe, Secure Social Infrastructure
In addition to our storehouse of technological assets
and expertise, we aim to leverage the IoT to make
even greater contributions to safe, secure social
infrastructure.
Our work in predictive controls is one such
example. The Social Systems, Solutions and Service
Business has developed predictive controls that
reduce the risk of traffic accidents. These controls
use advanced sensing technology to capture real-
time information about unusual pedestrian or road
conditions, analyzing conditions in correlation with
data based on past information.
If the results of this analysis indicate a potential
accident, traffic signal controls and other measures
are used as needed to avoid dangerous conditions.
The world still struggles with the social issues of
traffic congestion and accidents. Our mission is to
develop solutions to these issues for a safer, more
secure society. There are still many social needs
that have yet to be identified.
The Social Systems, Solutions and Service
Business is committed to discovering these needs
and offering solutions through unique technologies.
We invite you to watch as we take on new and
important challenges to improve lives and
contribute to a better society.
50
OMRON Corporation Business Segment
Healthcare Business
(HCB)
Manufacture, sales, and services related to home-use /
institutional healthcare and medical devices
Vision
All for Healthcare. To Help Realize Healthy and Comfortable Lives for
People around the World
The Healthcare Business enjoys the No. 1 share of the
global blood pressure monitor market (internal survey). We
deliver these and other products and services to the world
to help prevent, improve, and manage lifestyle diseases.
As the world has become wealthier, the number of
people suffering from lifestyle diseases has started to
skyrocket. This trend is particularly remarkable among
the emerging economies.
Through advanced sensing technologies and many
years of clinical research, we have gained the trust of
numerous medical and research institutes. Leveraging
this trust, we will continue to create innovative products
and services to help realize healthy and comfortable lives
for people around the world.
Isao Ogino
Managing Executive Officer
President and CEO
OMRON HEALTHCARE Co., Ltd.
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
Toward Sustainable Growth
Imagine a World with Zero Heart Attacks, Zero Strokes
Death due to heart attack and stroke caused by high
blood pressure is on top of the list. In many cases,
the onset of these diseases have a major impact on
healthy life expectancies, reducing patients to bed
confinement, causing speech impediments, or even
worse. Accordingly, detecting and preventing the
onset is an extremely important mission. We are
engaged in business realizing zero cerebral and
cardiovascular events.
Accurate blood pressure monitoring is a critical
part of detecting the risk of disease onset. To allow
as many people as possible access to blood pressure
monitors, we are expanding our sales network
among emerging economies. As more people
track their blood pressure, we will begin to see
more details about types of high blood pressure
(e.g. rapid increase of blood pressure in the
morning). We believe this information will lead to
better drug management, dosage timing, and
even lifestyle recommendations tailored more
specifically to each individual.
We plan to accelerate the speed of our projects to
eradicate the onset of cerebral and cardiovascular
disease, growing our businesses by helping
realize healthy and comfortable lives for people
around the world.
51
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Business Segment
Other Businesses
Our Environmental Solutions and Backlights businesses experienced a significant decline in
sales for the year, mainly due to major changes in the business environment. We reallocated
resources to new growth fields within these businesses, rebuilding our earnings structure.
While the business environment is expected to remain challenging throughout fiscal 2016,
we will continue to reform our business structure for growth and profit.
Review of Operations
Environmental Solutions Business
Backlights Business
Hybrid Storage System for Solar Power
LCD Backlights
● Fiscal 2015: Slack demand in the solar power
generation market led to a significant decrease
in revenues.
● Fiscal 2015: Decrease in demand in the
Chinese smartphone market resulted in sharply
lower revenues.
● Fiscal 2016: We forecast higher revenues
driven by demand for both existing products
and new systems that integrate storage
batteries.
● Fiscal 2016: Despite slowing growth in the
smartphone market, we forecast higher
revenues as we capture demand by responding
to changes in customer needs.
Electronic Systems and Equipment Business
Micro Devices Business
Uninterruptible Power Supply Units
MEMS Pressure Sensors
● Fiscal 2015: Higher revenues due to strong
● Fiscal 2015: Decrease in demand for
demand for uninterruptible power supply units
and contract development and production
services for electronic devices.
● Fiscal 2016: We forecast higher revenues as
we expand our lineup of uninterruptible power
supply units.
smartphone microphones resulted in lower
revenues.
● Fiscal 2016: We forecast revenue growth due
to expected demand for smartphone
microphones and absolute pressure sensors.
52
OMRON Corporation Sustainability Topics
Electronic and Mechanical Components Business × Network Camera Sensors
500Million Licenses
OKAO® Vision Shipments
Expanding IoT through Image Sensing Technologies
In 1995, Omron began development on our proprietary OKAO® Vision image sensing
technology. This technology uses facial recognition to detect detailed changes in expression
and mannerisms to estimate the gender and age of a person. As IoT connects all manner of
objects through networks, we will begin to use this technology to create new social needs.
Simple Image Sensors Anyone Can Use
In September 2015, Omron introduced a
consumer product using network camera sensors*1
equipped with OKAO® Vision. This marked the
advent of user-friendly image sensors—technology
that used to require a high level of skill and
knowledge to operate.
Now, families can use this product to remotely
monitor children, grandparents, pets, and more.
Businesses can use this technology in marketing,
hospitals, nursing care, and even simple security
applications.
Open Innovation
Developers who have purchased this product for
personal or commercial use have free access to
the Sensing Egg Project*2, Omron’s open
innovation website. This platform offers a variety of
information necessary for application development.
User needs are becoming more varied and diverse.
As manufacturers shift to developing applications
and systems from the user’s perspective, we will
see an amazing leap forward in the potential for
new uses of image sensors.
■ The Expanding Role of Omron Image Sensing Technologies in Society
Protecting Families
(Children, Grandparents, Pets)
Family Security
and Safety
Marketing, Monitoring
in Hospitals and
Nursing Care
Business
Solutions
13 Sensing Functions
OKAO® Vision 11 Types of Detection/
Estimation
Face
Detection
Body
Detection
Hand
Detection
Age
Estimation
Gender
Estimation
Expression
Estimation
age 25
male
happiness
Face Direction
Estimation
Gaze
Estimation
Blink
Estimation
*1 Network Camera Sensor Human
Vision Components (HVC-C2W)
Right 30°
Right 30°
Face
Recognition
Pet Detection
Open Innovation
Mr. Alex
Motion
Detection
Sound
Detection
Development of New
Applications
*2 Sensing Egg Project Website
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
53
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Sustainability Topics
More than180Million Units
Helping Prevent Cerebral and Cardiovascular Diseases
Cumulative No. of Blood Pressure Monitors Sold Over the Past 43 Years
Healthcare Business × Lifestyle Diseases
Estimates suggest that nearly 1 billion people–or roughly 13% of the planet’s population*1
have high blood pressure. In 2012, 17.5 million people*2 died from cerebral and cardiovascular
diseases caused by high blood pressure. Omron is applying our unique technologies in a new
fight to realize zero cerebral and cardiovascular events.
Technology that Measures Blood Pressure
with Every Heartbeat
Our blood pressure goes through significant
changes throughout the day. To fully understand
our risk of disease, we must monitor our blood
pressure on a continual basis. Traditional blood
pressure monitors squeeze the upper arm or
wrist tightly, temporarily stopping the flow of
blood. This discomfort associated with
measuring blood pressure makes it difficult for
users to measure with frequency.
To resolve this issue, Omron developed the
world’s first wrist-wearable blood pressure
monitor that uses the tonometry method*3. With
this technology, patients only need place the
monitor on their wrist to measure their blood
pressure health. If this type of comfortable
blood pressure monitor becomes a practical
everyday product, users will be able to track
blood pressure variations in a way not possible
with current monitors. In particular, this
development will allow users to monitor their
blood pressure during sleep. Dramatic spikes in
blood pressure during sleep have been tied to
an increased risk of heart attacks and strokes.
Continuously measuring blood pressure at every
heartbeat lets a user track variations in blood
pressure that could indicate the onset of
cerebral and cardiovascular diseases. This in
turn can aid in preventing sickness, as users can
be prompted to take measures against lifestyle
diseases and high blood pressure.
New Technology Creates New Value in the
Blood Pressure Business
Using this technology, our first step is to create
a product for clinical use by the end of 2017. At
present, blood pressure monitors account for
50% of the ¥100 billion in annual Healthcare
Business sales. We will deliver new value to
customers, who will be able to predict their risk
of heart attacks and strokes by detecting
fluctuations in their blood pressure. At the same
time, this new technology will serve as the
foundation for our sustainable growth over the
next 10 to 20 years.
*1 Source: WHO 2013 Report
*2 Source: WHO 2015 Report
*3 Method to measure blood pressure by pressing a pressure sensor on the radial artery.
† News release: http://www.healthcare.omron.co.jp/english/news/2016/0418.html
■ Blood Pressure Varies Widely throughout the Day
Temperature
Stress
Night (sleep)
Early morning
(waking up)
Meals (salt intake)
Exercise/activity
Sleep apnea (snoring)
■ Diagram of Blood Pressure Monitor Using
New Technology (on Radial Artery)
Pressure sensor
54
Radial artery
OMRON Corporation Sustainability Topics
Social Systems, Solutions and Service Business × Railroad Infrastructure
Nearly 50Years
A Half-Century of Train Station Solutions
Evolving as a Pioneer in Train Station Solutions
In 1967, we developed the world’s first automated train station system, combining automated
ticket vending machines with automated ticket gates. In nearly 50 years since that time, we
have evolved our train station systems to meet the needs of railroad companies, passengers,
and society at large.
In 2015, we delivered a new automated ticket gate
system to Kitakyushu Urban Monorail Co., Ltd.
(Kitakyushu Monorail). This system allows the use
of both QR Code tickets* and IC card tickets.
Responding to the Changing Times
Omron established a position as a leader in high-
precision mechatronics for moving magnetic
tickets quickly and smoothly through automated
ticket gates. As the use of IC card tickets has
become widely popular, we developed non-
contact ticket gates that do not involve
complicated mechanical movements. At the same
time, many passengers still prefer not to use IC
card tickets for their travel. These customers
require automated ticket gates that still work with
paper-based magnetic tickets.
The automated ticket gate we delivered for the
Kitakyushu Monorail uses QR Code tickets, rather
than magnetic tickets. This eliminates the need
for complex mechanics inside the ticket gate.
QR Code tickets, however, demand new answers
for security, which we solved by developing new
technologies. Specifically, we created a multi-
layered security system to prevent copying or
counterfeiting QR Codes. This is an issue
because QR Code technology is widely available
to the public. We also created a system that can
determine whether a particular QR Code has
been used, preventing unauthorized access to
the train platforms.
Eco-Friendly Tickets
Magnetic tickets are coated with iron powder on
one side, which means these tickets must be
painstakingly separated from other trash before
recycling. In contrast, QR Code tickets need no
magnetic processing, making them easily
recyclable and eco-friendly.
We will continue to anticipate new social
needs in the future, creating new products and
services for a more secure, safer, more
comfortable society.
* Paper ticket with a printed QR code (2D code).
QR Code is a registered trademark of Denso Wave Incorporated.
t
C
o
r
p
o
r
a
e
V
a
u
e
I
n
l
i
t
i
a
t
i
v
e
s
Tap QR Code Ticket
Tap IC Card Ticket
† Image courtesy of Kitakyushu
Urban Monorail Co., Ltd.
■ Benefits of QR Code Tickets to Railroad Companies
① Reduced investment in station equipment, lower
maintenance costs, and less incidence of equipment
failure
② Eco-friendly (easily recyclable)
55
New Automated Ticket Gate System
Compatible with both QR Code tickets and IC card tickets
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Management Compass
The SINIC Theory
Our founder, Kazuma Tateishi, believed that to solve social issues through business and create a
better society required the ability to anticipate future social needs. He believed that a company
needed a compass to help predict the future. As our compass, Mr. Tateishi formulated the SINIC
predictive theory, which projects the future based on the cycle of interrelationships between Science,
Technology, and Society. Omron first announced this predictive theory to the world at the
International Future Research World Congress in 1970. Since then, the SINIC Theory has been our
compass for projecting into the future.
Note: See http://www.omron.com/about/principles/sinic/ for more.
From an Optimization Society to an
Autonomous Society
According to the SINIC Theory, we are presently
living in the Optimization Society*1. In the
preceding Industrial Society, the world
emphasized the values of efficiency,
productivity, physical goods, and groups. The
Autonomous Society is the next stage in which
the world values higher-level pursuits of spiritual
and emotional development. These values focus
on contentment and individual lifestyle.
The Optimization Society is a repeated cycle
of destruction and creation in the gaps that exist
between these two social values. Today, we are
experiencing a period of chaos in the
advancement of optimization. We predict that
the Autonomous Society will arrive in 10 years
or so. This society will be a more mature one in
which individuals can experience the joy of
self-actualization, deciding their own values and
living their own lifestyle without outside
interference.
Over time, we will experience a shift away
from physical goods toward an increase in
collective wisdom, emotional intelligence, and
the capacity to concern ourselves with others.
These changes will require advancements in
science and technology related to human
intellect, sensitivity, and other human virtues.
The Internet of Things and Artificial Intelligence
are ushering in the Fourth Industrial Revolution,
a development that confirms the predictive
model of the SINIC Theory.
The Evolving Relationship between
Humans and Machines
This change in society is inextricably tied to the
changing nature of the relationship between
humans and machines. The relationship
between humans and machines develops
across three stages. The first stage is one of
separating humans and machines, having the
machine take over certain tasks from the
human. This was the beginning of automation:
using machines to replace humans to do work
that does not require human intervention. The
Omron history mirrors this history, as we
introduced factory automation, automated ticket
gates, and other inventions.
The second stage in this relationship is one of
connecting humans and machines in a
cooperative relationship. An example of this is a
56
OMRON Corporation 1876～
1945～
1974～
2005～
2025～
2033～
Industrial Society
Mechanization
Society
Automation
Society
Cybernation
Society
*1
Optimization
Society
Autonomous
Society
Natural
Society
Second Industrial
Revolution
Societal emphasis on
production efficiency
IT Revolution
Shift in values from
material goods to
spiritual pursuits
Harmony between individual
and society, humans and nature,
humans and machines
Sustainable society
incorporating advanced
biomechanisms
Automatic
Control Technics
Electronic
Control Technics
Biologic
Control Technics
Psycho-Biologic
Technics
Meta-Psychologic
Technics
[Harmonize]
Machines enhance the capabilities of humans
[Connect]
Humans cooperate with machines
Humans Machines
[Separate]
Machines replace humans
Humans
Machines
Humans
Machines
*1 While this addresses the period of change coming to advanced nations in the future, the pace of change among emerging nations
will be much faster and far more dramatic.
production line where humans and robots work
together, each performing the most suitable
task to increase productivity. Another example is
the Omron collision-prevention technology that
supports our vision of a collision-free mobile
society. Here, humans and machines work
together to ensure peace of mind, safety, and
comfort.
The third stage in this relationship is harmony
between humans and machines. Here, harmony
enhances the capabilities of the human worker.
As machines become a more integral part of
society, humans will enjoy machine support in a
number of new and different ways that extend
the potential of human capabilities. We are
already seeing the practical implementation of
these technologies. Wearable devices that
monitor human biological information and robot
suits that detect and aid human intent are just a
few examples.
Automating Our Way to the Future
Looking forward to a new future in human and
machine interaction, Omron is taking up the
challenge to create new forms of automation in
this era of the Internet of Things. More
specifically, our approach to automation will
follow three concepts: (1) Evolution in control
(integrated); (2) Intelligence developed through
ICT (intelligent); and (3) New harmonization
between humans and machines (interactive).
Our sights are set beyond industrial applications,
as we look to introduce automation in the
agricultural and services industries as well. To
accomplish our goals, we are developing new
technologies for use in applications such as
cognitive sciences, neuroscience, and artificial
intelligence.
Since our founding, we have continued to
anticipate social needs, develop technologies to
solve social issues, and contribute to a better
society through our businesses. The good we
have brought to society is based on the future-
predictive SINIC Theory and our basic founding
philosophy: “To the machine, the work of the
machine; to humankind, the thrill of unfettered
creativity.” Guided by our vision of the future of
automation, Omron will continue to develop
technologies and carry out businesses that
contribute to a better society.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
57
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Sustainability Management
Supporting International Initiatives
In 2008, we declared our support for the Ten
Principles of the United Nations Global Compact
(UNGC). These are universally accepted
principles for human rights, labor, environmental
impact, and anti-corruption practices. Currently,
Omron is a member of the local UNGC chapters
in Japan and China.
In September 2015, the United Nations
adopted Transforming our world: the 2030 Agenda
for Sustainable Development. This agenda
includes 17 goals and 169 associated targets,
described as Sustainable Development Goals.
Omron is determined to promote the
achievement of these goals through our
businesses.
We intend to continue to support this and
other international initiatives, contributing to the
creation of a sustainable society through
responsible engagement with our stakeholders.
Fumio Tateishi
Chairman
July 2016
58
OMRON Corporation Environmental, Social, and Governance
Initiatives
Omron is an active agent for sustainable
business through environmental, social, and
governance initiatives (ESG). Supporting this
stance, we announced the formation of a
platform to incorporate and practice ESG
policies within the fiscal 2016 policy for the
operation of the Board of Directors.
At present, we are identifying ESG issues and
starting programs in areas likely to directly affect
sustainable growth at Omron.
■ Important ESG Issues
ESG
Issue
Important Initiatives
Related Pages
Social
Diversity
● Educating the next generation of top-rank managers
KPI: Ratio of non-Japanese in managerial positions overseas
● Promoting career advancement for women
KPI: Ratio of women in managerial roles
Non-Financial
Highlights
P30-P31
Environ-
ment
Eco-Manu-
facturing
● Providing products and services that contribute to the
global environment
KPI: Environmental contribution
● Adopting measures to combat global warming
KPI: Global net sales to CO2 emissions
Target: 30% improvement by fiscal 2020 (fiscal 2010 baseline)
Non-Financial
Highlights
P30-P31
Corporate
Governance
● Strengthening systems to improve transparency,
fairness
(Board diversity, compensation)
Gover-
nance
Risk Man-
agement
● Adopting measures against significant Group risks
Corporate
Governance
P70-P75
Compliance and
Risk Management
P60-P63
Coverage in Socially Responsible
Investment Indexes
Recognizing our commitment to sustainability,
several socially responsible indexes (SRIs) now
include Omron as a constituent member.
Overseas, we have been included for the sixth
consecutive year in the Dow Jones
Sustainability Asia/Pacific Index. We have also
been included for the second consecutive year
in the MSCI Global Sustainability Indexes, and
have been newly selected this year for inclusion
in the FTSE4Good Index Series. In Japan, we
are covered under the Morningstar Socially
Responsible Investment Index.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
FTSE4Good is an investment index
designed to promote investment in
corporations meeting global ESG
standards.
59
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
TOPICS
Integrated Risk Management
Engaging in more global, speedier activities to contribute to the Group’s ability
to respond to change
Omron Risk Management Activities and Annual Cycle
At the time we launched our Long-term Vision
VG2020 business plan in 2011, we also took
the opportunity to review our risk management
activities. As a result of this review, we initiated
a program of integrated risk management.
At the time, our president charged us with
two tasks: (1) Identify global risks to be able to
respond with speed, and (2) Have every
employee in the Group view risk as a seed of
opportunity and seize upon these opportunities
for growth. With these instructions, we
established three main activities related to
integrated global risk management.
❶ Conduct an annual global risk analysis to
identify important risks and establish
appropriate responses
❷ Establish crisis response measures when a
risk is identified
❸ Promptly report and share important risk
information among affected parties (risk
information management)
Shuji Tamaki
Executive Officer
Senior General Manager
Global Risk Management and
Legal HQ
60
OMRON Corporation Integrated Risk Management
■ Integrated Risk Management Framework
Definitions of Concepts and Terms
Basic Policy
Organizational Structure
【Group Management PDCA】
【Front-Line PDCA】
We view compliance with laws and statutes as
a legal risk, which is included in our integrated
risk management program.
We have clearly defined our activity framework
to promote efficiency and effectiveness in our
global activities. This framework is formalized in
the Omron Group Rules for Integrated Risk
Management.
This activity cycle for integrated risk
management begins every autumn with a risk
analysis. The Executive Council (consisting of the
president and division managers) determines
important risks, while the Board of Directors
evaluates these activities. Next, risk response
plans are determined and related budgets are
set. Finally, these measures are carried out
and the results are published through our
integrated report and website.
■ Activity Cycle for Integrated Risk Management
Corporate Ethics &
Risk Management Committee
・ Determine risk response plan for the
upcoming year
・ Determine budgets for the upcoming
year
Plan
Do
Execute Plan
・ Share/report information related to
important risks
・ Conduct activities based on the plan
・ Corporate ethics month
Board of Directors
・Annual activity review
Act
Check
・ Headquarters, regional headquarters, divisions
Analyze Global Risk
Executive Council
・ Report the progress of activities for the
current year
・ Report results of global risk analysis
・ Determine important Group risks for the
upcoming year
Corporate Ethics & Risk
Management Committee
・ Annual activity review
・ Share analysis of risks
・ Select important Group risks (draft)
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
Publish Results of Activities
(Business report, securities report, integrated report, website)
61
Management ReviewWhistle-Blower HotlineInternal AuditDevelopment of Professional FunctionsCrisis ManagementRisk Analysis and CountermeasuresRisk Information ManagementInternal Rules and ProceduresCrisis ManagementRisk Analysis and CountermeasuresRisk Information ManagementIntegrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Omron Group Important Risks and Risk Information Management
We assign a rank of “S” to the most critical
management risks that threaten the existence
of the Group or call into question important
issues of corporate social responsibility. We
assign a rank of “A” to risks that may impede
important Group goals. These ranks are
determined annually by the Executive Council
after discussion in the Corporate Ethics & Risk
Management Committee.
We have selected nearly 100 sources of
information from within Japan and around the
world to monitor important trends in external
risk. Each day we check risk information,
promptly sharing any important developments
with the appropriate individuals.
As a rule, important risks identified within the
Group are reported to headquarters within 24
hours. In the event of a major disaster or
accident, for example, we will immediately
confirm the safety of local Group employees.
The results of this investigation are immediately
forwarded to the Global Risk Management and
Compliance Initiatives
One example of our compliance structure is our
whistleblower hotline, an effective means to
prevent corruption within the Group. We are
setting up this program at regional headquarters
throughout the world, with systems already
completed in Japan, the Americas, Europe,
Asia, and China. During fiscal 2012, we
received six reports with the only overseas
hotline existing in the Americas (compared to
20 reports in Japan). In fiscal 2015, we
received 21 reports across the five regions
Legal HQ by telephone or email.
Our network of employees and their response
to risk management play a critical role in
accomplishing this task. For this reason, risk
managers are selected within each
headquarters department, each business
division, each overseas region, and within each
Group company.
■ Omron Group Important Risks
Frequency
Very High
High
Medium
Low
h
c
a
E
n
i
s
k
s
i
R
t
n
a
t
r
o
p
m
I
s
s
e
n
i
s
u
B
k
s
i
R
k
n
a
R
A
-
k
s
i
R
k
n
a
R
S
-
C
B
A
S
t
c
a
p
m
I
f
o
e
e
r
g
e
D
listed above (31 reports in Japan). With the
consultation of attorneys, we discreetly
investigated each report, taking measures to
prevent recurrence when necessary.
Every October, we hold the Corporate Ethics
Month in Japan. During this month, we conduct
training, publish a special message from the
president, and conduct other activities.
Beginning this year, the Corporate Ethics
Month will be a global event for Omron.
62
OMRON Corporation
Risk Management and ESG
In our global risk analysis last autumn, we noted
rising demands for ESG, and concluded that an
improper response to ESG matters could result
in a number of issues. Emerging economies in
particular have started to introduce stricter
laws as they struggle with national issues
related to pollution, bribery and corruption, and
labor conditions. Early on, we identified Group
risks related to the environment, labor safety,
Business Risk and Operating Risk
We defined comparatively short-term financial
risks as business risk and longer-term non-
financial risks related to earnings and corporate
value as operating risk. The activities we have
described thus far have mainly been related to
operating risk.
In addition to risk management, I also have
responsibility for legal affairs, which relates to
business risk in terms of important contracts and
issues arising during the course of conducting
our business. In these cases, I communicate
with business divisions about both legal risks
and important business risks, offering advice
regarding any needed measures. However, I
believe we must look for risk and provide advice
much earlier in the business process, during
product development, individual business and
Future Issues and Initiatives
and corruption. Although we have measures in
place to respond to these risks, we believe we
must strengthen related activities. For
example, we have held regular training related
to corruption prevention at our locations
throughout the world. Moving forward, we plan
to introduce more detailed controls according
to the situation within each Group company.
transaction planning, and so forth.
In our M&A activity as well, we must instill in
our new members a commitment to the
Omron Principles, our rules, and our integrated
operations aligned with business strategy. I am
convinced that failure to do so will mean failure
of the acquisition. I believe this is a clear
example of business risk, as well as active risk
management in the integration post-merger/
acquisition. We studied the risks involved in the
companies we acquired during fiscal 2014 and
2015, taking steps to address the risks
identified in our integration plan. We must raise
our skill level in analyzing risk and planning
efficient/effective measures if we are to
respond correctly to M&A involving any type of
company in any country around the world.
As discussed above, we plan to instill an
understanding of risk management in each Group
company as we engage in more activity across
the world. Our vision is that each locale becomes
capable of analyzing their own risks, taking
effective action quickly while the risks are still
small and manageable. This will accelerate the
speed of our business at the Group company
level, as well as for the Omron Group as a whole.
We are committed to advancing integrated
risk management activities that promote
greater globalization and speed, helping
strengthen the ability of the Omron Group to
respond to change.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
63
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Human Resources Management
Promoting Greater Roles for Women
Diversity drives Omron growth.
President and CEO
At Omron, Respect for All is an important part of
how we define Our Values included in the
Omron Principles.
We strive to be a company that allows
individuals from a variety of backgrounds the
chance to express their individuality and talents
without regard to nationality, religion, marriage
status, gender, sexual orientation, or disabilities.
I sincerely believe that a diverse employee
base working as one can generate amazing and
creative innovations that solve social issues
through our businesses.
To be a company valued by the people of the
world, Omron must continue to be active in
promoting diversity.
Expanding the Role of Women in Japan
Participation in the Council of Male Leaders Promoting Women’s Roles in Society
our company. Moving forward, I will continue to
take opportunities to spread the message of
diversity both inside our company and in public. I
hope to help foster an environment in which
every individual can exercise their own initiative
and develop their own potential.
In May 2016, I began participating in the
Council of Male Leaders Promoting Women’s
Roles in Society, sponsored by the Cabinet
Office. Promoting the active role of women in
Japan is one of the most important issues
facing Japan. At the same time, women are an
indispensable part of the Omron push for
diversity. The Council issued a declaration based
on three concepts: (1) Taking the lead in
promoting the role of women; (2) Disrupting the
status quo; and (3) Developing networks of
like-minded leaders. This declaration closely
resembles how Omron is supporting diversity in
64
OMRON Corporation
Action Plan for Promoting the Role of Women
The Act on Promotion of Women's Participation
and Advancement in the Workplace came into
effect on April 1, 2016. In response, Omron
created a set of specific goals and an action plan
for promoting the role of women, based on the
circumstances within each Omron Group
company. We have formally published these
goals and our action plan for public reference.
Through this initiative, we hope to further
expand the role of women within the Omron
Group. At the same time, we hope to foster an
awareness and build a culture in which any
employee can excel, growing as an individual
together with the Omron Group.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
Integrated Report 2016
65
Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Human Resources Management
Promoting Diversity and Team Management
The Omron Principles include the idea of Respect for All. We recognize that it benefits both our
company and our people when a diverse base of employees can express their personalities and
talents freely without regard to nationality, gender, or disabilities. Our nearly 38,000 employees
worldwide are what support sustainable growth at Omron.
Each Person Plays a Starring Role
The Joy and Satisfaction of Making a Positive Contribution through Work
Omron Taiyo* manufactures electronic
components. Among its workforce, the
company includes 32 individuals with varying
degrees of disabilities. To offer more
opportunities for the disabled, this
manufacturing plant strives to provide a work
environment in which anyone can accomplish
tasks tailored to their temperament and
capabilities. For example, the plant has
improved the picking process to make in-plant
delivery of components much easier.
In the past, the plant had used a set allotment
system to deliver only the necessary components
in the necessary numbers to a work station. At
first, management attempted to make the set
allotment system more efficient by providing
easy-to-see information about which
components stored on which racks should be
delivered to which production lines. They soon
understood, however, that certain disabilities
prevented individuals from dealing effectively
with large integers, detailed fractions, or
complex computer operations.
In response, management shifted to the
kanban method, which provided instructions for
replacing a supply of components after a certain
volume has been used. This method relies more
on rounded numbers (for example, units of
500), eliminating the need for detailed counting.
In the past, picking work required significant
time as disabled workers read part numbers out
loud several times to verify they were retrieving
the correct components. The new kanban
system incorporates bar codes and bar code
readers, making part number verification a
matter of seconds. This has resulted in much
greater efficiency for our disabled workers and
the virtual elimination of part picking mistakes.
Omron will continue to use our creativity and
imagination to build accessible work
environments in which any employee can be
proud to work side by side, without regard to
disability or capability.
* Omron Taiyo: Located in Oita Prefecture, the company employs a total
of 61 workers (as of March 2016).
Omron Taiyo introduced barcode readers for more efficient part picking
66
OMRON Corporation Team-Based Solutions
Delivering Pharmaceutical Serialization Solutions
OMRON Electronics GmbH (OEE-D) sells
control equipment in Germany. More recently,
this company has been creating solutions for
pharmaceutical serialization* to fight counterfeit
medicines and the potential harm these illegal
substances can cause.
According to the World Health Organization,
as much as 24% of pharmaceutical drugs on
the global market are counterfeit. Each year,
counterfeit medicines cost the lives of 1 million
people. The EU has put regulations into place
requiring serial numbers to be printed on the
exterior of pharmaceutical packaging to help
identify genuine products.
The OEE-D is working with packaging
companies, printing companies, equipment
vendors, and data processing companies to
deliver a solution to trace the movement of
medicine through the entire supply chain, from
manufacturer to end consumer. This solution
incorporates the use of a drug verification
database provided by the EU government. This
system, which relies on Omron image sensors,
is a product of the combined efforts of our
sales, marketing, and application development
professionals. The OEE-D also turned to the
European product support team and the
development division at Japan’s Kusatsu Plant
to round out the project team.
This serialization system has promising
applications in other industries as well,
including foods, beverages, and cosmetics.
Other nations and regions around the world are
also looking to introduce regulations for tracking
the movement of medicines. These include
Russia, Brazil, the United States, Saudi Arabia,
and South and Central America.
We believe there are a number of other
business opportunities ahead for expanding this
solution to neighboring industries.
* Serialization Solution: System for managing the flow of individual
products throughout an entire supply chain
Mandated serial number display on
exterior packaging for medicines
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
67
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
TOPICS
Driving Business Growth with Information Technology
Global IT Strategy 2020
Through fiscal 2014, our IT strategy in support of the Omron VG2020 long-term vision
consisted mainly of restructuring enterprise applications. At the same time, however, we
recognized that most of these initiatives were the adoption of IT tools having little connection
to management strategy or business process improvements. To address this situation, we
created the Global IT Strategy in fiscal 2015. Under this strategy, we will make more effective
use of strategic information and strengthen our IT governance.
■ Global IT Strategy 2020 Overview
OMRON GLOBAL IT STRATEGY 2020
Strategic Information as the Driver of Global Growth
Existing
Businesses
Strategic Marketing and Business Management Model
(Based on Projections via Leading Indicators)
VG2020
Basic Strategy
Super-Global
Growth
Structure Cross-Division Platform for Greater Efficiencies
New Businesses
Create New Businesses Using IoT
Strengthen IT Governance to Support Global Management
Unify Global Codes for Better Use of Information
Optimize IT Investment/Costs Based on ROI
Business Process Restructuring through Information Technology
We intend to use IT to restructure our sales
processes in a way that automates a seamless
flow of information throughout our organization
without the need for a formal report chain. We
believe this restructuring will lead to improved
accuracy in projecting global trends, letting
Omron take decisive action while others wait.
This new system will reduce the current lead
time required for information to pass through
our reporting chain, moving information quickly
from the front lines of our business up to our
decision makers.
We also plan to leverage IT to give us a
competitive advantage in our sales activities.
Using IT to visualize market and customer
information in each sector, we can perform
cross-region analyses to avoid missed sales and
identify new sales opportunities on a global
scale. For example, we could take successful
solutions for customers in Europe and
implement them for customers in Asia through
cross-region collaboration.
To achieve this goal, we plan to accelerate our
adoption of a unified code system to create a
master customer database. By managing
customers through a unified global code
system, we can cross-reference manufacturing
processes and issues across our entire
customer base. This will allow us to strategically
approach customers based on region, as well as
potential products and services, leading to much
more effective business development.
68
OMRON Corporation ■ Global IT Strategy 2020 Framework
Long-Term Vision VG2020
Existing
Businesses
Super-Global
Growth
New Businesses
Management
Customers
Identify Information Necessary
for Decision-Making, Link to
Immediate Action
Seamless Information Flow
(no Formal Reporting Chain Needed)
Market/Production Floor Data
(Front-Line, Granular)
Unified Global Codes
Value-Added
Information (Insight)
Analytics
Information
Data (Extract, Combine, Sort, Compare)
Market/
Customer Data
Enterprise Data
M2M Data
Codes/Master
Processes
Applications
IT Infrastructure
IT Investment/Costs
HR/Organization/Mindset
Information
Utilization
Concept
IT Governance
MES*1 as Global Standard for Production Floor Visibility
At Omron, we developed a proprietary
manufacturing execution system (MES) in use
at 13 factories worldwide. Greater visibility to
the production floor is driving productivity
improvement at each of these factories. The
Kusatsu Factory*2 provides one case in point.
Here, we have seen productivity gains by
combining real-time production line information
with greater visibility. Sequential analysis of
production line variables, such as labor hours,
production volume, and defects provides a clear
picture of the impact that variances in labor
hours by station and product have on
productivity. Now, managers can identify areas
for improvement without having to rely on the
intuition and experience of floor workers. Since
adopting this system in 2011, we have
achieved an 80% improvement in productivity
(as of fiscal 2015).
Future plans include incorporating IoT
technology to capture an even wider range of
production data. Using our own factories as a
test bed, we plan to create new value by
providing managers with production floor
information that even the most experienced
workers would not be able to identify or
communicate efficiently.
*1 MES: Manufacturing Execution System. Information system for
capturing and managing manufacturing process information,
providing guidance and support to floor workers.
*2 Kusatsu Factory: Manufacturing facility for the Industrial Automa-
tion Business and Social Systems, Solutions and Service
Business. IAB manufactures FA controllers and other products.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
Total visibility on one screen. See production line information at a
glance. Red line indicates production line delays.
69
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Corporate Governance
Omron continually reviews and improves our corporate governance structures supporting
sustainable value creation
Basic Stance for Corporate Governance of the Company
At the OMRON Group, corporate governance is defined as the system of processes and practices
based on the Omron Principles and the Omron Management Philosophy. The system is intended to
ensure transparency and fairness in business and speed up management decisions and practices. This
is done by connecting the entire process from oversight and supervision all the way to business
execution in order to boost the OMRON Group’s competitive edge. Omron’s corporate governance
also involves building such a system and maintaining its proper function. The ultimate objective is to
achieve sustained enhancement of corporate value by earning the support of all stakeholders.
Omron Corporate Governance Policies
Omron Corporation established the Omron
Corporate Governance Policies based on the
Basic Stance for Corporate Governance. Since
establishing the Management Personnel
Advisory Committee in 1996, we have spent
nearly 20 years in formalizing and strengthening
our systems of corporate governance. We
intend to continue our pursuit of ongoing
corporate governance improvement as we
develop our own unique vision of governance.
OMRON Corporate Governance Policies
http://www.omron.com/about/governance/governance/pdfs/20160329_
governance_policies_e.pdf
■ Corporate Governance Initiatives
1999
2003
2011
President
1987: Yoshio Tateishi
2003: Hisao Sakuta
2011: Yoshihito Yamada
Chair of the Board
of Directors / CEO
Separation of
management
oversight and
business execution
President served as both
Chairman serves as chair of the Board of Directors;
president serves as CEO
1999: Revised articles of incorporation, setting number of board members to 10 or fewer
30 directors
1999: Adopted executive officer system
Advisory Board
1999: Advisory Board
Outside Directors
2001: One
outside director
2003: Two outside directors
(seven directors)
2015: Three outside
directors (eight directors)
Audit & Supervisory
Board (Outside Members)
1998: One
member
1999: Two members
2003: Three members
(four auditors)
2011: Two members
(four auditors)
1996: Management Personnel
Advisory Committee
2000: Personnel Advisory Committee
2003: Compensation Advisory Committee
Advisory and Other
Committees
Corporate
Philosophy
1959:
Corporate
Motto
Omron Corporate
Governance Policies
1990: Omron
Principles
1998: Revised
2006: CEO Selection Advisory Committee
2008: Corporate Governance Committee
2006: Revised
2015: Revised
2015 Established
70
OMRON Corporation Corporate Governance Framework
Omron has elected to be a company with an Audit
& Supervisory Board under the provisions of the
Companies Act.
The Omron Board of Directors is made up of
eight members to ensure substantive discussion
and deliberation about important corporate
matters. Omron has separated the management
oversight and business execution functions within
the company, creating a system whereby the
majority of board directors are not engaged
directly in business operations. We have also
adopted a policy setting the ratio of outside
directors to at least one third of the total number
of directors on the Board.
To increase objectivity on behalf of the Board of
Directors, the titles and roles of Chairman of the
Board and President (CEO) are separated. The
Chairman serves as chair of the Board of
Directors, without direct corporate
representational authority.
Omron has established several advisory
committees to assist the Board of Directors.
These committees include the Personnel
Advisory Committee, the CEO Selection Advisory
Committee, the Compensation Advisory
Committee, and the Corporate Governance
Committee. The Personnel Advisory Committee,
the CEO Selection Advisory Committee, and the
Compensation Advisory Committee are all
chaired by outside directors, with at least half of
the committee members being outside directors.
The chair and members of the Corporate
Governance Committee are outside directors and
outside corporate auditors, which offers yet
another layer of transparency and objectivity onto
its decision-making process.
In these policies, we have created a hybrid
governance framework, combining the best
features of a Company with an Audit &
Supervisory Board and a Company with a
Nominating Committee.
■ Corporate Governance Structure
Shareholders’ Meeting
Board of Directors
Chair: Chairman of the Board
Audit & Supervisory Board
Audit & Supervisory Board Office
Accounting Auditor
Executive Organization
Board of Directors Office
President & CEO
Executive Council
Personnel Advisory Committee
CEO Selection Advisory Committee
Compensation Advisory Committee
Corporate Governance Committee
CSR-Related Committees*
Head Office Divisions
Businesses Companies
Internal Audit Division
* Includes Corporate Ethics & Risk Management Committee, Information Disclosure Executive Committee, and Group Environment Activity Committee
Board of Directors
Makes decisions related to perfor-
mance targets and strategies; over-
sees the execution of business op-
erations.
Audit & Supervisory Board
Oversees corporate governance
structure and execution business
operations; conducts audits of day-
to-day business activities, including
those performed by directors.
Personnel Advisory Committee
Sets standards and policies related to
selecting and hiring directors, Audit &
Supervisory Board members, and ex-
ecutive officers; selects candidates and
evaluates performance of current direc-
tors and executive officers.
CEO Selection Advisory Committee
Deliberates and nominates candi-
dates for corporate president & CEO;
deliberates succession candidates in
the event of an emergency.
Compensation Advisory Committee
Sets policies for director and execu-
tive officer compensation; evaluates
compensation levels, deliberates
specific compensation packages.
Corporate Governance Committee
Oversees ongoing corporate gover-
nance improvement; deliberates pol-
icies to advance management trans-
parency and fairness.
Executive Council
Deliberates and makes decisions re-
garding important operational mat-
ters within the scope of the authority
of the president and CEO.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
71
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Audit Functions
The Audit & Supervisory Board performs
compliance and validity audits related to director
performance and Board of Director supervisory
duties. The Audit & Supervisory Board works to
provide a basis for ensuring the practicability of
these audits. The Global Internal Auditing HQ,
which reports directly to the president and CEO,
periodically conducts internal audits of
accounting, administration, business risks, and
compliance in each headquarters division and
business company. Internal audits are more
than just a tool to confirm compliance; they are
also a valuable means for providing feedback
and advice for operational improvement.
Selection of Outside Directors and Auditors
The Omron Board of Directors nominates and
selects outside directors and outside Audit &
Supervisory Board members as a means to
oversee business operations as a representative
of Omron shareholders and other stakeholders.
Outside directors are selected based on
predefined standards of independence.
In addition to the requirements under the
Companies Act, Omron has established other
rules for governing the independence of outside
directors in compliance with independence
standards set by the relevant stock exchanges.
Based on these standard of independence,
three of Omron’s eight members of the Board
of Directors are outside directors, and two of
the four members of the Audit & Supervisory Board
are likewise outside members. Omron has submitted
■ Advisory Committee Composition
filings to the relevant stock exchanges
designating these individuals as outside
independent directors.
■ Number of Major Meetings Held and Rates of
Attendance (Fiscal 2015)
Meetings of the Board of Directors
Meetings of the Audit & Supervisory Board
13
13
Outside Director attendance at Board of Director Meetings
97.2%
Outside Audit & Supervisory Board member attendance at
Board of Director Meetings
100%
Outside Audit & Supervisory Board member attendance at
Audit & Supervisory Board meetings
96.2%
Title
Name
Personnel
Advisory
Committee
CEO Selection
Advisory
Committee
Compensation
Advisory
Committee
Corporate
Governance
Committee
Chairman
President and CEO
Executive Vice President and CFO
Executive Vice President
Director
Outside Director
Outside Director
Outside Director
Audit & Supervisory Board Member
Audit & Supervisory Board Member
Fumio Tateishi
Yoshihito Yamada
Yoshinori Suzuki
Akio Sakumiya
Koji Nitto
Kazuhiko Toyama†
Eizo Kobayashi†
Kuniko Nishikawa†
Kiichiro Kondo
Tokio Kawashima
□
○
□
◎
□
Audit & Supervisory Board Member (Independent)
Yoshifumi Matsumoto†
Audit & Supervisory Board Member (Independent)
Hideyo Uchiyama†
Note: ◎Chairman ○Vice Chairman □Committee Member
†Independent Officer
□
○
◎
□
□
○
□
□
◎
□
◎
○
□
□
□
72
OMRON Corporation
Financial Incentives for Directors and Audit & Supervisory Board
Members
The Company established the Compensation
Advisory Committee to enhance objectivity and
transparency related to director remuneration*. This
committee is chaired by an outside director and
consists of five directors, none of whom can be the
Company’s chairman or president.
The Compensation Advisory Committee conducts
deliberations and makes recommendations regarding
director compensation. These recommendations are
presented before the annual general meeting of
shareholders, where shareholders vote on the total
amount of compensation for members of the Board
of Directors. The Company’s Board of Directors then
determines director compensation within the scope
set by the shareholders.
The Company has introduced medium-term
performance-linked bonuses and performance-linked
stock acquisition rights in an effort to give directors
incentives to achieve medium-term management
targets and to strengthen governance over
compensation.
Under this structure, the governance system for
director compensation incorporates three
components: (1) base salary; (2) yearly
performance-linked bonuses; and (3) medium-term
performance-linked bonuses, stock compensation,
and performance-linked stock acquisition rights.
With this compensation structure, the Company
aims to motivate directors to achieve short-,
medium-, and long-term targets and to generate
sustainable corporate value.
Total compensation for members of the Audit &
Supervisory Board is determined by a vote at the
annual general meeting of shareholders. The
members of the Audit & Supervisory Board then
consult and determine their compensation within
the scope set by the shareholders.
* Compensation of Directors and Audit & Supervisory Board Members
http://www.omron.com/about/ir/shareholder/pdfs/convocation_notice_79th.pdf
（Convocation Notice for The 79th Ordinary General Meeting of Shareholders P34-36）
Evaluating the Effectiveness of the Board of Directors
The Company conducts analysis and evaluation
on the effectiveness of the Board of Directors
so that the members of the Board will enhance
the function and the effectiveness of the Board
to realize the sustained improvements in
corporate value by recognizing, sharing, and
improving the direction to be taken by the Board
and the issues arising from such direction.
Method for Evaluating the Effectiveness of the Board of Directors
Evaluation on the effectiveness of the Board of
Directors is conducted mainly by the Corporate
Governance Committee chaired by a director
(independent) and comprising directors
(independent) and Audit & Supervisory Board
members (independent).
As an initial process in evaluating the
effectiveness of the Board of Directors, all
directors comprising the Board of Directors and
Audit & Supervisory Board members were asked
to complete an anonymous self-evaluation
questionnaire. The Corporate Governance
Committee analyzed the contents of the self-
evaluation, sorted out the issues and reported
the results of evaluating the effectiveness of the
Board of Directors to the Board of Directors.
The Board of Directors verified the evaluation
results, discussed measures to enhance the
effectiveness of the Board and formulated the
Board’s operating policy for the following fiscal
year.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
73
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Fiscal 2015 Results of Evaluating the Effectiveness of the Board of Directors
As a result of analysis and evaluation on the
effectiveness of the Board, it was confirmed that
the governance system currently adopted by the
Company and the operation of the system were
appropriate. The evaluation indicated that an open
atmosphere conducive to active discussions
pervaded the Board of Directors and the Advisory
Committees and that oversight over management
in general was being appropriately conducted
through constructive discussions.
Meanwhile, the necessity to reinforce the
oversight functions of the Board of Directors
through expanded discussion of medium-to
long-term management strategies was pointed
out as an issue going forward.
Fiscal 2016 Bord of Director Operating Policy
In light of the evaluation results by the Corporate
Governance Committee as well as the recent
changes in the environment, the Board of Directors
shall continue to delegate its authorities to
executive organizations, and in addition to existing
initiatives, further expand its discussions on
medium-to-long term management strategies to
reinforce the oversight functions of the Board of
Directors through the following initiatives.
・ The Board of Directors shall expand discussions
of the medium-term management plan based on
medium-to long-term management strategies in
preparation for the formulation of the next
medium-term management plan for fiscal 2017
forward, as well as to enhance its oversight
functions.
・ As ESG has become a topic of growing interest
among institutional investors and society in
general, the Board of Directors shall coordinate
ESG policies (from a standpoint of meeting
social responsibilities) and build a system to put
these policies into practice.
・ The Board of Directors shall continue to
delegate its authorities related to the execution
of measures for short-term issues to the
executive organizations and build a structure to
reinforce oversight function for medium-to
long-term management issues.
■ Initiatives towards Improving the Effectiveness of the Board of Directors
Evaluation
Determination
of the operating
policy
Execution
Evaluation
Determination
of the operating
policy
Execution
Analyze and
evaluate the
effectiveness of
the Board
Determine
Board of Director
operating policy
for the following
fiscal year based
on evaluation
results
Implement
measures
to improve
effectiveness
through Board
of Director
meetings
Analyze and
evaluate the
effectiveness of
the Board and the
execution status
of measures
Determine
Board of Director
operating policy
for the following
fiscal year based
on evaluation
results
Implement
measures
to improve
effectiveness
through Board
of Director
meetings
Implemen-
tation
bodies
Corporate
Governance
Committee
Board of Directors
Corporate
Governance
Committee
Board of Directors
74
OMRON Corporation Message from an Outside Director
Evaluating the Effectiveness of the
Board of Directors
In launching this initiative, we began building a framework based on discussions within
the Corporate Governance Committee, which is made up of outside directors. These
discussions addressed by whom and how such evaluations would be conducted, as well
as how we would link the results of evaluations to improving the effectiveness of the
Board of Directors.
While objectivity is important, evaluations that solely emphasize form and numerical
data will not lead to substantial and autonomous improvements in effectiveness. To
ensure both effectiveness and objectivity, we asked all members of the Board of Directors
to complete a self-evaluation. Based on the results of these evaluations, the Corporate
Governance Committee performed an evaluation of the effectiveness of the Board. This
evaluation focused on areas having room for reform and improvement.
The committee then submitted a report to the Board of Directors. This report included
frank opinions and proposals for solving the issues. The report was framed as the result
of an evaluation from outside directors and auditors familiar with Omron and intimately
involved in Omron management oversight. As such, we believe our Board of Directors
accepted the feedback earnestly and
sincerely.
After receiving the evaluation results,
the Board of Directors promptly set about
implementing operating policies. I believe
that this evaluation of the effectiveness
of our Board of Directors has served
as an impetus for change, and that the
Board of Directors will serve as an even
more robust platform for decision-making,
which will be proven as the Corporate
Governance Committee continues to
gauge our progress.
Kazuhiko Toyama
Outside Director
Chairman of the Corporate Governance Committee
President and CEO, Industrial Growth Platform, Inc.
July 2016
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
75
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Cultivating Strong Relationships through
Omron furthers mutual understanding with our stakeholders through engagement conducted
by management and division representatives. We incorporate the feedback received through
engagement to improve our management, our transparency, and our reliability. We will continue
to engage responsibly with our stakeholders, reflecting our interactions through improved
corporate value.
Engagement with Shareholders and Investors
General Meeting of Shareholders
The 78th Ordinary General Meeting of Shareholders
Institutional Investors
Beyond interviews and teleconferences with
global institutional investors, Omron also
sponsors factory tours and technology
seminars throughout the year.
During fiscal 2015, Omron held an investor
relations event in Chicago that combined a
presentation on business strategy with a
factory tour.
A technology seminar was also held, where
attendees were able to inspect factory
automation equipment of the Industrial
Automation Business. The seminar helped
investors understand more about the
superiority of our products, which translates
into competitive market advantage for the
Industrial Automation Business.
■ Fiscal 2015 Engagement
Direct Talks
941times
At our last general meeting of shareholders,
President Yamada addressed our progress
toward our long-term vision. President
Yamada and Omron executives then
provided thoughtful answers to shareholder
questions related to cooperative
relationships with other companies, policies
for appointing non-Japanese and women
employees to management positions, and
numerous other topics.
■ The 78th Ordinary General Meeting of
Shareholders (June 23, 2015)
Attendees
822
Ratio of Voting Rights Exercised 82.0%
Individual Investors
Omron holds a number of information
sessions during the year, providing
opportunities to engage directly with many
individual investors. We are also unique in
that we hold joint information sessions with
other companies.
■ Fiscal 2015 Engagement
No. of Events
Total No. of Participants
10
566
Event for institutional investors in
North America
Factory automation technology
seminar
A joint information session with another company (for individual investors)
76
OMRON Corporation Responsible Engagement
Engagement with
Customers
Engagement with
Suppliers
We engage with numerous customers
through our technology and products. At
CEATEC JAPAN 2015, we let customers
experience the latest in Omron
technologies through our exhibit, “Omron:
An Evolution in Harmony between Humans
and Machines.”
Each year we invite major suppliers to
discuss our purchasing policies. Suppliers
are an important part of our success, and
it is important that they understand our
purchasing policies and long-term
strategies.
CEATEC JAPAN 2015
Discussing purchasing policies with suppliers
Engagement with
Communities
Engagement with
Employees
Omron engages with communities
through activities deeply rooted in local
traditions. For instance, as a company
headquartered in Kyoto, Omron has been
a special sponsor of the Kyoto Marathon
since its inception. Omron employees
volunteer at water stations, cheer runners
along the course, and do other work to
make the Kyoto Marathon a success for
participants and fans alike.
Omron executives travel hundreds of
thousands of miles every year to meet
with employees around the globe. This
kind of in-person engagement is
invaluable for creating a shared sense of
purpose and understanding of the Omron
Principles among global employees.
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
Kyoto Marathon 2016
President Yamada visiting a production plant in Shanghai
77
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Directors, Audit & Supervisory Board
As of June 23, 2016
Directors
Chairman Fumio Tateishi
Aug. 1975 Joined Omron
Jun. 1997 Director
Jun. 1999 Managing Executive Officer
Jun. 2001 Senior General Manager, Corporate Strategy
Planning HQ
Jun. 2003 Executive Officer and Executive
Vice President; President,
Industrial Automation Company
Jun. 2008 Executive Vice Chairman
Jun. 2013 Chairman (to present)
President and CEO Yoshihito Yamada
Apr. 1984 Joined Omron
Jun. 2008 Executive Officer; President and CEO,
OMRON Healthcare Co., Ltd.
Mar. 2010 Senior General Manager,
Corporate Strategy
Planning HQ
Jun. 2010 Managing Executive Officer
Jun. 2011 President and CEO
(to present)
Executive Vice President and CFO
Yoshinori Suzuki
Apr. 1975 Joined Omron
Jun. 2003 Executive Officer and Senior General Manager,
Corporate Strategy Planning HQ
Jun. 2006 Managing Executive Officer
Mar. 2007 President, Automotive Electronic Components
Company
May 2010 President and CEO, OMRON Automotive
Electronics Co., Ltd.
Apr. 2013 Senior Managing Executive
Officer and CFO
Jun. 2013 Senior Managing Director
and CFO
Jun. 2014 Executive Vice President
and CFO (to present)
Executive Vice President Akio Sakumiya
Apr. 1975 Joined Omron
Jun. 2003 Executive Officer; President and CEO,
OMRON Ichinomiya Co., Ltd. (now OMRON
Amusement Co., Ltd.)
Mar. 2009 President, Electronic and
Mechanical Components
Company
Jun. 2010 Managing Executive Officer
Jun. 2011 Senior Managing Director
Jun. 2014 Executive Vice President
(to present)
78
Director, Senior Managing Executive Officer Koji Nitto
Apr. 1983 Joined Omron
Mar. 2011 Senior General Manager, Global Resource
Management HQ
Jun. 2011 Executive Officer
Mar. 2013 Senior General Manager, Global SCM and IT
Innovation HQ
Apr. 2013 Managing Executive Officer
Mar. 2014 Senior General Manager,
Global Strategy HQ (to present)
Apr. 2014 Senior Managing Executive
Officer (to present)
Jun. 2014 Director (to present)
Outside Director Kazuhiko Toyama
Apr. 1985 Joined Boston Consulting Group, Inc.
Apr. 1986 Established Corporate Direction Co., Ltd.
Mar. 1993 Director, Corporate Direction Co., Ltd.
Apr. 2000 Managing Director, Corporate Direction Co., Ltd.
Apr. 2001 President and CEO, Corporate Direction Co., Ltd.
Apr. 2003 COO & Executive Managing Director,
Industrial Revitalization
Corporation of Japan (IRCJ)
Apr. 2007 President and CEO, Industrial
Growth Platform, Inc.
(to present)
Jun. 2007 Outside Director,
Omron (to present)
Outside Director Eizo Kobayashi
Apr. 1972 Joined ITOCHU Corporation
Jun. 2000 Executive Officer
Apr. 2002 Managing Executive Officer
Jun. 2003 Representative Director and Managing
Director
Apr. 2004 Representative Director and Senior Managing
Director
Jun. 2004 President and CEO
Apr. 2010 Chairman and Representative
Director
Jun. 2011 Chairman
Jun. 2013 Outside Director, Omron
(to present)
Jun. 2016 Chairman, ITOCHU
Corporation (to present)
Outside Director Kuniko Nishikawa
Apr. 1986 Joined Citibank N.A.
Feb. 1996 Joined A.T. Kearney, Inc.
Sep. 2000 President and CEO, Supernurse Co. Ltd.
Aug. 2010 Established Firststar Healthcare Co. Ltd.,
President & CEO (to present)
Jun. 2013 President, Benesse MCM Corp.
(to present)
Jun. 2015 Outside Director,
Omron (to present)
OMRON Corporation Members, and Honorary Chairman
Audit & Supervisory Board Member (Independent)
Yoshifumi Matsumoto
Apr. 1989 Registered as attorney with the Osaka Bar
Association; joined Miyake Law Office (now
Miyake & Partners)
Jan. 1996 Partner, Miyake & Partners (to present)
Jun. 1997 Registered as patent attorney
with the Japan Patent
Attorneys Association
Jun. 2013 Audit & Supervisory Board
Member (Independent),
Omron (to present)
Audit & Supervisory Board Member (Independent)
Hideyo Uchiyama
Nov. 1975 Joined Arthur Young & Company
Dec. 1979 Joined Asahi Accounting Company (now
KPMG AZSA LLC)
Mar. 1980 Registered as Certified Public Accountant
July 1999 Representative Partner of KPMG AZSA LLC
May 2002 Board Member of KPMG AZSA LLC
Jun. 2006 Executive Board Member of KPMG AZSA
LLC
Jun. 2010 Managing Partner of KPMG AZSA LLC,
Chairman of KPMG Japan
Sep. 2011 Chairman of KPMG Asia Pacific
Oct. 2013 CEO of KPMG Japan
Sep. 2015 Executive Advisor of
ASAHI Tax Corporation
(to present)
Jun. 2016 Audit & Supervisory Board
Member (Independent),
Omron (to present)
Audit & Supervisory Board Members
Audit & Supervisory Board Member
Kiichiro Kondo
Apr. 1977 Joined Mitsui Ocean Development &
Engineering Co., Ltd.
Jan. 1988 Joined Mitsui Trust and Banking Company,
Limited (now Sumitomo Mitsui Trust Bank,
Limited)
Apr. 1999 Joined Omron
Apr. 2007 Senior General Manager, Public Solutions
Business Department, Social Systems,
Solutions and Service Business Company
Jun. 2007 Executive Officer
Apr. 2011 President and CEO, OMRON
Social Solutions Co., Ltd.
Jun. 2011 Managing Executive Officer
Jun. 2015 Audit & Supervisory Board
Member, Omron (to present)
Audit & Supervisory Board Member
Tokio Kawashima
Apr. 1982 Joined Mitsubishi Bank Ltd. (now The Bank
of Tokyo-Mitsubishi UFJ, Ltd.)
Sep. 2008 Regional Head for Germany and General
Manager, Düsseldorf Branch,
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Apr. 2011 Joined Omron
Jun. 2011 Audit & Supervisory Board
Member, Omron (to present)
Honorary Chairman
Honorary Chairman Yoshio Tateishi
Apr. 1963 Joined Omron
May 1973 Director
Jun. 1976 Managing Director
Jun. 1983 Senior Managing Director
Jun. 1987 President and CEO
Jun. 2003 Representative Director and
Chairman of the Board
May 2007 Chairman, Kyoto Chamber of
Commerce and Industry
(to present)
Jun. 2011 Honorary Chairman
(to present)
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
79
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Executive Off icers
Senior Managing Executive Officers
Koji Nitto
Senior General Manager,
Global Strategy HQ
Yutaka Miyanaga
Company President,
Industrial Automation Company
Managing Executive Officers
Shigeki Fujimoto
Senior General Manager,
Business Development HQ
Kiichiro Miyata
CTO and Senior General Manager,
Technology & Intellectual
Property HQ
Katsuhiro Wada
President and CEO,
OMRON Automotive
Electronics Co., Ltd.
Shizuto Yukumoto
Senior General Manager,
Environmental Solutions
Business HQ
Kenji Matsunami
Company President,
Electronic and Mechanical
Components Company
80
Satoshi Ando
Senior General Manager, Global
Investor Relations & Corporate
Communications HQ
Toshio Hosoi
President and CEO, OMRON
SOCIAL SOLUTIONS Co., Ltd.
Isao Ogino
President and CEO,
OMRON HEALTHCARE Co., Ltd.
Kiyoshi Yoshikawa
Senior General Manager,
Global Manufacturing Innovation HQ
Nigel Blakeway
Senior General Manager, Robotics Business
Development Project, Industrial
Automation Company, and
Chairman and CEO, OMRON
ADEPT TECHNOLOGY INC., and
Chairman, President and CEO,
OMRON MANAGEMENT
CENTER OF AMERICA, INC.
OMRON Corporation Executive Officers
Goshi Oba
Masahiko Tomita
Chairman and President, OMRON INDUSTRIAL
AUTOMATION (CHINA) Co., Ltd.
General Manager, Corporate Planning Department,
Global Strategy HQ
Takayoshi Oue
Munenori Odake
Senior General Manager, Global Finance and
Accounting HQ
Senior General Manager, Sales & Marketing Division
HQ, Industrial Automation Company
Izumi Echizen
Kenji Sugawa
Senior General Manager, Global Human Resources
and Administration HQ
Director, Executive Vice President, and Senior General
Manager, Global Sales and Marketing Group HQ,
OMRON HEALTHCARE Co., Ltd.
Hideji Ejima
General Manager, Business Planning Department and
General Manager, Application Engineering Center,
Environmental Solutions Business HQ
Shuji Tamaki
Senior General Manager, Global Risk Management and
Legal HQ
Seigo Kinugawa
Ken Tanikawa
Senior General Manager, Strategy Planning Division
HQ, Industrial Automation Company
President and CEO, OMRON PRECISION
TECHNOLOGY Co., Ltd.
Takashi Kitagawa
Senior General Manager, Board of Directors Office
Makoto Ota
President and CEO,
OMRON RELAY & DEVICES Corporation
t
C
o
r
p
o
r
a
e
V
a
u
e
F
o
u
n
d
a
l
t
i
o
n
81
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Financial Section (U.S. GAAP)
83
Six-Year Summary
84
Fiscal 2015 in Review
90
Outlook for Fiscal 2016
92
Consolidated Balance Sheets
94
Consolidated Statements of Income
94
Consolidated Statements of Comprehensive Income
95
Consolidated Statements of Shareholders’ Equity
96
Consolidated Statements of Cash Flows
Fiscal 2016 forecast figures shown here are plan figures as published on April 27, 2016.
Forecasts use exchange rates of ¥110 to the U.S. dollar and ¥125 to the Euro. The impact of the
British exit from the EU and exchange rate trends occurring after July 2016 have not been
incorporated into these forecasts.
For more information, please refer to the Company’s audited annual financial report:
http://www.omron.com/ir/irlib/annual.html
82
OMRON Corporation
Six-Year Summary
OMRON Corporation and Subsidiaries
Years ended March 31
Net Sales:
Industrial Automation Business (IAB)
Electronic and Mechanical Components
Business (EMC)
Automotive Electronic Components
Business (AEC)
Social Systems, Solutions and Service
Business (SSB)
Healthcare Business (HCB)
Other Businesses
Eliminations and Corporate
Net Sales by Region
Japan
Americas
Europe
Greater China
Asia Pacific
(Total)
Costs and Expenses:
Cost of sales
Selling, general and administrative expenses
(excl. R&D expenses)
R&D expenses
Other expenses (income), net
(Total)
Income before income taxes and equity in
earnings of affiliates
Income taxes
Equity in loss (earnings) of affiliates
Net income (loss)
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Millions of yen (except per share data)
¥271,894
¥270,835
¥262,983
¥291,739
¥331,840
¥335,959
81,216
83,002
84,107
97,699
103,946
103,681
84,259
85,027
97,643
126,620
137,883
139,966
63,846
57,200
68,754
82,695
80,410
77,538
60,629
49,672
6,309
62,446
53,535
7,416
71,520
59,240
6,214
89,275
100,615
108,121
78,949
87,382
63,028
5,989
5,176
5,311
311,906
307,649
328,470
356,342
351,321
342,824
74,397
84,511
74,820
83,561
80,427
100,992
123,496
130,968
80,453
100,929
108,427
109,147
97,012
101,074
106,283
142,444
180,954
162,508
49,999
52,357
54,828
72,259
83,054
88,157
617,825
619,461
650,461
772,966
847,252
833,604
386,123
391,574
408,954
475,758
514,645
512,792
142,365
145,662
152,676
181,225
198,103
205,735
41,300
42,089
43,488
47,928
47,913
52,790
6,344
6,589
4,106
6,048
(797)
(3,399)
576,132
585,914
609,224
710,959
759,864
767,918
41,693
33,547
41,237
62,007
87,388
65,686
14,487
17,826
14,096
19,475
28,893
20,043
190
(631)
(2,976)
(3,782)
(3,937)
(2,039)
27,016
16,352
30,117
46,314
62,432
47,682
Net income (loss) attributable to noncontrolling interests
234
(37)
(86)
129
262
392
Net income attributable to shareholders
26,782
16,389
30,203
46,185
62,170
47,290
Per Share Data (yen):
Income from continuing operations
Basic
Diluted
Cash dividends (Note)
Capital expenditures (cash basis)
Total assets
Total shareholders' equity
Financial Indicators:
Gross profit margin
Operating income margin
Return on sales
ROIC (Return on invested capital)
ROE (Return on equity)
Asset turnover (times)
Inventory turnover (times)
Shareholders’ equity ratio
121.7
121.7
30.0
74.5
74.5
28.0
137.2
137.2
37.0
209.8
ー
53.0
283.9
283.9
71.0
219.0
219.0
68.0
21,647
27,502
30,383
32,218
37,123
37,903
562,790
537,323
573,637
654,704
711,011
683,325
312,753
320,840
366,962
430,509
489,769
444,718
37.5%
36.8%
37.1%
38.5%
7.8%
4.3%
7.8%
8.7%
1.1
4.7
6.5%
2.6%
4.8%
5.2%
1.1
4.4
7.0%
4.6%
8.6%
8.8%
1.2
4.5
8.8%
6.0%
11.3%
11.6%
1.3
5.0
39.3%
10.2%
7.3%
13.4%
13.5%
1.2
4.8
38.5%
7.5%
5.7%
9.7%
10.1%
1.2
4.6
55.6%
59.7%
64.0%
65.8%
68.9%
65.1%
Note: Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the fiscal year.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
83
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Fiscal 2015 in Review
Consolidated Results
Omron Group net sales for fiscal 2015
amounted to ¥833.6 billion, a 1.6% decline
compared to fiscal 2014. Operating income
amounted to ¥62.3 billion, a decline of 28.1%.
Operating income margin fell to 7.5% (2.7-point
decline), while net income attributable to
shareholders amounted to ¥47.3 billion, a
23.9% drop-off.
The global economy benefited during the first
half of fiscal 2015 from strong demand for
capital investment, particularly in the U.S. and
the EU. During the second half of the year,
however, the Chinese economic slowdown and
rapid appreciation of the yen led to concerns
about the future direction of world economics.
Reflecting this environment, our Industrial
Automation Business, Automotive Electronic
Components Business, and Healthcare
Business recorded ongoing revenue growth. On
the other hand, we experienced significant
revenue declines in our Other Businesses
segment. Looking toward long-term,
sustainable growth, our mainstay Industrial
Automation Business acquired two companies
during the year. We believe these companies
will provide a springboard for future expansion.
At the same time, the segment incurred higher
R&D expenses and other costs related to up-
front investments for the future. These
transactions had an impact on overall profits for
the Group. This performance marked a year-on-
year decline in revenues and profits for the first
time in seven years.
Review of Consolidated Statement of Income
Net Sales
Omron Group net sales for fiscal 2015 fell to
¥833.6 billion, down ¥13.6 billion from the
prior year (1.6%). This decrease was due to
several dramatic changes in the business
environment, including slowing demand in the
solar power and smartphone markets and
weak growth in the Chinese economy. By
region, net sales in Greater China amounted to
¥162.5 billion, an ¥18.4 billion (10.2%)
decrease. This decline was a significant drag on
overall Group revenues. On the other hand,
stable growth in the Americas led to strong
demand for capital investment in the
automobile and other industries. Southeast
Asia and other emerging economies also
showed strengthening demand for capital
investment, as well as ongoing growth in
markets for healthcare and medical devices.
The strength in these regions combined to
support overall revenue performance
throughout the year.
Gross Profit Margin, SG&A Expenses and
R&D Expenses
Gross profit margin for fiscal 2015 was down
0.8 point to 38.5%. This decline was mainly
due to the impact of a stronger U.S. dollar, a
weaker Euro, and weaker currencies among
emerging economies. Controlling for these
variables, raw materials costs, and other
external factors shows that gross profit margin
would have actually improved year-on-year.
Selling, general and administrative expenses
were ¥205.7 billion, up ¥7.6 billion from the
prior year (1.3-point increase in comparison to
net sales). This increase was mainly due to
acquisitions and post-acquisition costs incurred
to integrate these new entities into the Omron
Group. R&D expenses amounted to ¥52.8
billion, up ¥4.9 billion (0.6-point increase in
comparison to net sales). This increase was
mainly due to up-front investment for future
growth on the part of the Industrial Automation
Business.
84
OMRON Corporation Operating Income, Income before Income Taxes,
and Net Income Attributable to Shareholders
Omron Group operating income for the year was
¥62.3 billion (28.1% decrease), with avn operating
income margin of 7.5% (2.7-point decrease).
■ Consolidated Operating Income Analysis (YoY)
Income before income taxes amounted to
¥65.7 billion (24.8% decrease), while net
income attributable to shareholders came in at
¥47.3 billion for the year (23.9% decrease).
86.6
Forex, raw materials
impacts
-2.4
Added value down
-12.5
Fixed manufacturing
costs down
1.0
SG&A up
-5.8
R&D up
-4.6
(Billions of yen)
62.3
Gross profit -11.5
(excl. forex & raw materials impacts)
FY2014 Actual
FY2015 Actual
Note: SG&A and R&D expenses do not reflect foreign exchange or material costs. Accordingly, these figures do not match prior-year comparative figures on P84.
Review of Operations by Business Segment
Industrial Automation Business (IAB)
Our Industrial Automation Business recorded
domestic net sales of ¥130.5 billion for fiscal 2015,
a 2.9% gain year on year. This growth was mainly
due to strong demand for capital investment in the
automobile and electronic components fields.
Revenues were lower overseas, primarily due to
lower demand in the petroleum industry of the
Americas. Europe reported revenue gains based on
slightly improving business conditions in the region.
The slowdown of the Chinese economy during the
second half of the year resulted in overall sluggish
demand. However, the positive impact of foreign
exchange rates led to higher sales in the region.
Weakening market conditions and currency
weakness in Asia led to revenue declines in the
ASEAN markets. Korea, however, experienced
strong demand for electronic components,
pushing revenues higher in that nation. As a result,
overseas net sales amounted to ¥205.5 billion, an
increase of 0.2% compared to fiscal 2014. While
the segment reported higher revenues as a whole,
investments for future growth resulted in
increased R&D expenses, driving operating
income down to ¥47.9 billion (12.2% year-on-year
decline) for the year.
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
FY2011
270.8
123.1
147.7
29.3
55.3
36.8
25.3
1.0
35.4
13.1%
15.4
4.2
3.8
FY2012
263.0
116.3
146.7
31.6
50.4
39.4
24.7
0.6
31.3
11.9%
16.5
3.5
2.8
FY2013
291.7
119.4
172.3
36.9
61.9
43.8
28.9
0.8
38.8
13.3%
15.7
3.6
3.3
FY2014
331.8
126.7
205.1
47.6
67.8
55.0
34.1
0.7
54.6
16.5%
15.3
3.5
4.2
(Billions of yen)
FY2015
FY2016 (Forecast)
336.0
130.5
205.5
40.4
69.3
58.3
36.9
0.6
47.9
336.0
136.0
200.0
37.5
71.0
55.0
36.0
0.5
46.5
14.3%
13.8%
18.2
4.0
5.3
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
85
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Electronic and Mechanical Components
Business (EMC)
Domestic net sales for the segment were down
2.8% to ¥23.2 billion. Despite strong demand in the
Japanese consumer and commercial product
markets, the April 2015 tax hike on mini vehicles
(kei cars) had a negative impact on the automobile
industry. Overseas net sales rose 0.5% to ¥80.4
billion. The Americas, with strong demand in the
automobile industries, and Europe, with strong
demand in the consumer and commercial product
industries, drove overseas revenue performance.
The increasing economic slowdown in China led to
weak demand in the automobile and consumer
and commercial products industries, resulting in
lower revenues in that region. However, the added
factors of a strong U.S. dollar and the positive
impact of exchange rates for the Chinese yuan
contributed to overall revenue growth overseas.
While segment net sales were level with the prior
year as a whole, investments in productivity
improvements drove operating income down
16.5% to ¥8.5 billion.
FY2011
FY2012
FY2013
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
83.0
25.3
57.7
13.2
12.9
22.7
7.6
1.3
5.1
6.2%
5.5
7.2
9.9
84.1
26.7
57.4
13.1
11.3
24.6
7.1
1.4
4.4
5.2%
5.2
7.4
8.9
97.7
28.1
69.6
16.6
14.7
28.7
8.7
0.9
8.7
8.9%
6.0
7.8
10.9
FY2014
103.9
FY2015
103.7
23.9
80.0
18.1
15.9
35.0
10.1
0.9
10.2
9.8%
5.4
8.0
9.5
23.2
80.4
19.9
16.1
33.6
10.4
0.5
8.5
8.2%
4.9
8.3
8.9
(Billions of yen)
FY2016 (Forecast)
100.0
23.5
76.5
18.0
15.5
32.0
11.0
0.0
10.0
10.0%
Automotive Electronic Components
Business (AEC)
Domestically, net sales were down 18.5% to
¥21.1 billion. This was mainly the result of the tax
hike on mini vehicles resulting in significantly lower
auto production. Overseas sales amounted to
¥118.9 billion, which was a 6.1% increase year on
year. While inventory adjustments among our
Chinese customers resulted in lower demand,
favorable business conditions in North America
drove continued growth in demand, raising
overseas segment net sales. Overall segment
operating income was down 20.5% on the year
to ¥7.3 billion. Despite growth in overseas
revenues, lower domestic sales and higher R&D
expenses combined for this result.
FY2011
FY2012
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
85.0
28.9
56.1
21.5
2.4
9.5
16.2
6.5
2.7
3.2%
6.6
2.1
5.2
97.6
30.2
67.4
25.0
2.8
13.9
19.5
6.2
5.0
5.1%
7.0
2.4
5.5
FY2013
126.6
28.4
98.2
33.3
3.3
25.4
29.2
7.2
9.1
7.2%
8.2
3.4
6.7
FY2014
FY2015
FY2016 (Forecast)
(Billions of yen)
137.9
25.9
112.0
39.3
3.6
29.9
32.2
7.1
9.2
6.7%
8.5
4.7
6.5
140.0
21.1
118.9
47.6
4.6
27.4
31.9
7.3
7.3
5.2%
9.3
5.3
6.9
130.0
17.5
112.5
44.5
4.0
27.0
30.5
6.5
6.5
5.0%
86
OMRON Corporation Social Systems, Solutions and Service
Business (SSB)
Total segment net sales amounted to ¥77.5 billion
for the year (3.6% decrease), while operating
income was ¥3.2 billion (36.0% decrease). The
public transportation business reported significantly
higher sales for the year, driven mainly by demand
for updated station equipment. Our traffic and road
management system business also experienced
significant growth, mainly due to strong capital
investment resulting in higher volumes of sales in
terminals for use in traffic-related applications.
Meanwhile, slow demand for solar power and
related markets led to significantly lower revenues
in our environmental solutions business products
and services.
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016 (Forecast)
(Billions of yen)
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
57.2
56.9
0.3
0.0
0.0
0.0
0.0
0.3
0.1
0.2%
2.2
1.1
0.9
68.8
68.5
0.3
0.0
0.0
0.1
0.0
0.2
2.9
4.2%
2.2
1.1
15
82.7
82.4
0.3
0.0
0.0
0.2
0.0
0.1
5.6
6.7%
2.5
1.2
1.5
80.4
79.1
1.3
0.0
0.0
0.3
0.0
1.1
5.0
6.2%
2.1
1.4
1.7
77.5
75.7
1.8
0.0
0.0
0.6
0.0
1.2
3.2
4.1%
2.2
1.2
1.5
70.0
69.0
1.0
0.0
0.0
0.5
0.0
0.5
4.0
5.7%
Healthcare Business (HCB)
Net sales for the Healthcare Business segment
amounted to ¥108.1 billion, representing an
increase of 7.5%. Operating income was up 11.9%
to ¥7.3 billion. Domestic net sales fell slightly to
¥31.1 billion (1.0% decrease). We reported sales
growth for home-use healthcare and medical
devices. This growth came mainly from captured
inbound tourist demand, the introduction of new
blood pressure monitors and other new products,
and stronger in-store promotions of massagers and
other products. On the other hand, slack capital
investment among medical institutions led to
lower demand for institutional equipment.
Overseas sales increased by a significant margin,
up 11.3% to ¥77.0 billion. Sales in the Americas
were driven by synergies with one of our Brazilian
subsidiaries acquired in fiscal 2014 and strong
demand for nebulizers (inhalers to treat
respiratory diseases) in South America. At the
same time, demand for medical devices
continued to grow in China and Asia.
FY2011
FY2012
FY2013
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
62.4
27.2
35.2
9.8
13.0
8.6
2.9
0.9
2.9
4.7%
5.1
1.5
2.8
71.5
29.5
42.0
10.8
15.9
11.1
3.5
0.7
4.4
6.2%
5.0
1.9
3.1
89.3
30.8
58.5
14.3
21.0
17.3
5.5
0.4
7.5
8.5%
5.2
2.3
3.9
FY2014
100.6
FY2015
108.1
31.4
69.2
18.6
21.2
22.4
6.6
0.5
6.5
6.5%
5.5
3.3
3.9
31.1
77.0
23.1
19.2
25.4
8.9
0.5
7.3
6.7%
6.1
3.7
2.8
(Billions of yen)
FY2016 (Forecast)
108.0
32.5
75.5
22.0
19.0
25.0
9.0
0.5
8.0
7.4%
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
87
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Other Businesses
The Other Businesses segment recorded net sales
of ¥63.0 billion, down 27.9% year on year. The
segment recorded an operating loss of ¥4.1 billion.
With the decrease in demand in the Chinese
smartphone market, revenues for the Backlights
Business decreased by a significant margin. In the
meantime, slow demand in the solar power market
drove revenues down in our Environmental
Solutions Business. Net sales in our Electronic
Systems and Equipment Business outperformed
the prior year, driven higher by strong demand for
uninterruptible power supply units and
development/contract production services for
electronic devices. On the other hand, revenues
were lower in our Micro Devices Business due to
slow demand for smartphone microphones.
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016 (Forecast)
(Billions of yen)
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct Exports
Operating income
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
53.5
29.5
24.0
0.0
0.0
22.6
0.0
1.4
(3.6)
－
2.8
0.9
2.1
59.2
41.4
17.8
0.0
0.0
16.3
0.0
1.5
2.5
4.3%
3.0
1.4
2.5
78.9
51.0
27.9
0 .0
0.0
25.6
0.0
2.3
8.7
11.0%
4.3
2.0
4.0
87.4
45.8
41.6
0.0
0.0
38.2
0.0
3.4
8.4
9.6%
5.5
2.5
6.9
71.0
42.0
29.0
0.0
0.0
25.5
0.0
3.5
1.5
2.1%
63.0
44.0
19.0
0.0
0.0
17.1
0.0
1.9
(4.1)
−
4.6
3.1
5.3
Review of Financial Condition
Total assets at the end of the period amounted
to ¥683.3 billion, which was ¥27.7 billion lower
than the end of the prior fiscal year. This
decrease was mainly due to decreases in cash
and cash equivalents used for share buybacks.
In addition, we established a retirement benefit
trust designed for more efficient pension
reserves. As we have transferred a portion of
investment securities to this retirement benefit
trust, the balance of investment securities
decreased ¥20.1 billion compared to the end of
the prior fiscal year. Total liabilities amounted to
¥236.3 billion, which was a ¥17.4 billion
increase. The main factor in this increase was a
¥31.9 billion increase in allowance for
retirement benefits due to a major reduction in
the discount rate used for calculating benefit
obligations. Total net assets amounted to
¥447.0 billion, which was a decrease of ¥45.1
billion. Pension liability adjustments, affected by
low interest rates, and foreign currency
translation adjustments, impacted by a strong
yen, contributed to other comprehensive loss of
¥50.2 billion. This decreased shareholders’
equity by ¥45.1 billion compared to the end of
the prior fiscal year. Shareholders’ equity ratio
fell by 3.8 points to 65.1%, while the debt
equity ratio increased 0.08 points to 0.53.
88
OMRON Corporation Capital Expenditures
During fiscal 2015, the Omron Group made a
total capital investment of ¥36.9 billion, which
was a 3.4% decrease compared to fiscal 2014.
Our Industrial Automation Business engaged in
active capital investment in infrastructure and
productivity improvements to serve as the basis
for future growth. On the other hand, the Other
Businesses segment revised its investments in
response to dramatic changes in the external
environment. As a whole, the Group spent ¥1.3
billion less in capital investment than the prior
year.
Cash Flows
Cash and cash equivalents at the end of fiscal
2015 amounted to ¥82.9 billion, a decrease of
¥19.7 billion compared to the end of the prior
fiscal year. Net cash provided by operating
activities amounted to ¥84.2 billion for fiscal
2015. This was an increase of ¥7.2 billion over the
prior year, resulting mainly from increased
depreciation and amortization and decreases in
accounts receivable and inventories. Net cash
used in investing activities amounted to ¥67.1
billion, an increase of ¥27.6 billion year over year.
While we maintained capital expenditures (¥37.9
billion) at the same level as fiscal 2014, we also
spent ¥33.4 billion in cash for mergers and
acquisitions. Free cash flow based on net cash
provided by operating activities and used in
investing activities amounted to ¥17.1 billion,
which was a decrease of ¥20.4 billion. Net cash
used in financing activities increased ¥2.2 billion
over the prior year, reaching ¥31.6 billion. The
Omron Group paid ¥16.1 billion in dividends (¥3.1
billion increase over fiscal 2014) and ¥15.0 billion
for stock buybacks (nearly level with prior year).
■ Cash Flows
■ Net cash from operating activities ■ Net cash from investing activities
Free cash flow
(Billions of yen)
90
80
70
60
50
40
30
20
10
0
-10
-20
-30
-40
-50
-60
-70
79.0
77.1
84.2
53.1
47.9
31.9
5.5
24.6
37.5
17.1
-26.5
-28.5
-31.1
-39.5
FY2011
FY2012
FY2013
FY2014
FY2015
-67.1
Capital Policies (Dividends, Share Buybacks and Cancellations)
Our policy for profit distribution is to secure
sufficient internal capital for future growth,
while at the same time providing consistent
shareholder returns. In fiscal 2015, we applied
our medium-term business plan target for fiscal
2016 of a payout ratio of 30% a year earlier.
Our actual payout ratio for fiscal 2015 was
31.1% (6.1-point increase compared to fiscal
2014), which translated into a ¥68 per share
dividend for the year. Our dividend on equity
ratio was 3.1%, which was a 0.3-point
decrease compared to the prior year.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
89
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Outlook for Fiscal 2016
Consolidated Earnings
While the global economy is expected to gradually
improve during fiscal 2016, we believe our business
will continue to face challenges in the external
environment. These challenges include the
continued slowdown in Chinese economic growth
and the impact of the strong yen on our domestic
businesses. Based on these assumptions, the
Omron Group has enacted a company-wide policy to
rebuild our earnings structure and create an engine
for self-driven growth. While we are engaged in
improving our earnings structure, we will also be
active in using our capital for growth investments,
pushing forward to create an engine for self-driven
growth. We have set fiscal 2016 targets for net
sales and operating income growth at 4% and 23%
(excluding foreign exchange adjustments). We will
accomplish this by continuing to invest in growth
and rebuild our earnings structure. Considering the
impact of foreign exchange and recent currency
trends, however, we have forecast fiscal 2016 net
sales of ¥820.0 billion, a 1.6% decrease compared
to fiscal 2015. We estimate operating income of
¥63.0 billion (1.1% increase year on year) and net
income attributable to shareholders of ¥47.5 billion
(0.4% increase). By rebuilding our earnings
structure, we believe we will improve gross profit
margin to 39.3% (0.8-point increase), while setting
a target for ROIC and ROE, two of our major
management indicators, to 10%. These
improvements will be the result of dedicated
company-wide efforts.
Industrial Automation Business (IAB)
The IAB forecasts (Note 1) overall fiscal 2016 segment
net sales of ¥336.0 billion (level with fiscal 2015)
and operating income of ¥46.5 billion (3.0%
decrease year on year). Domestically, we expect
continued strong demand for capital investment in
automobile-related industries to drive revenue
growth. Overseas, we project steady demand for
capital investment, as well as demand for
automation and labor-saving systems. However, the
likely negative impact of foreign exchange has led us
to forecast lower revenues for the year compared to
fiscal 2015. Our continued commitment to
investing in future growth will be reflected in
higher research and development expenses,
leading to a fiscal 2016 operating income
forecast lower than fiscal 2015 results.
(Note 1) Fiscal 2016 forecasts do not include the impact of
the May 31, 2016 sale of Omron Oilfield and Marine, Inc. in
North America.
Electronic and Mechanical Components
Business (EMC)
The EMC forecasts overall fiscal 2016 segment
net sales of ¥100.0 billion (3.6% decrease year
on year) and operating income of ¥10.0 billion
(17.7% increase). Domestically, we forecast
slight gains of 1.1% to ¥23.5 billion. While we
expect demand for consumer and commercial
products to weaken, demand among automobile-
related industries should continue to be strong.
Overseas, we forecast net sales of ¥76.5 billion,
a 4.9% year-on-year decrease. Despite the
positive impact of introducing new products to
the Chinese automobile-related industries, slower
growth will likely drive lower demand for
consumer and commercial products. The
negative impact of a strong yen in major markets
such as the Americas and Europe is another
factor we considered in our revenue forecast.
Despite downward pressure on revenues, we
forecast higher profits due to cost reductions and
productivity improvements.
Automotive Electronic Components
Business (AEC)
The AEC forecasts domestic and overseas net
sales of ¥17.5 billion (17.1% decrease year on
year) and ¥112.5 billion (5.4% decrease). We
expect operating income for the segment as a
whole to amount to ¥6.5 billion (11.5% decrease).
Domestically, we expect net sales to
underperform prior year due to a slowdown in
demand for mini vehicles (kei cars). Despite
continued strength in the North American market
slowing growth among the emerging economies
and the negative impact of the strong yen have
90
OMRON Corporation a recovery in demand in Russia, where
consumer spending has been weak.
Considering, however, the negative impact of
foreign exchange, we forecast a slight decrease
in overseas revenues, resulting in lower overall
revenues for the segment (Note 2). Despite lower
revenue projections, we forecast higher profits
for fiscal 2016. While we remain committed to
making up-front investments for future growth,
we will also review our fixed cost structure and
make efforts in productivity improvements.
(Note 2) Fiscal 2016 forecasts do not include the impact of our
business tie-up with Fukuda Denshi Co., Ltd. or the pending sale of
subsidiary Omron Colin Co., Ltd. as announced on June 9, 2016.
Other Businesses
The Other Businesses segment forecasts
overall fiscal 2016 segment net sales of ¥71.0
billion (12.6% increase year on year) and
operating income of ¥1.5 billion. We project
recovery in our Backlights Business, despite
slowing growth in the smartphone market. We
plan to grow by capitalizing on capturing
demand in response to changing consumer
needs in the market. In our Environmental
Solutions Business, we expect to create greater
demand in the solar power market for our
current solar panels, as well as for new systems
that integrate storage batteries. We plan on
building out our lineup of uninterruptible power
supply units within our Electronic Systems and
Equipment Business. At the same time, we
expect to see growing demand for smartphone
microphones and absolute pressure sensors.
led us to forecast lower overseas net sales
compared to fiscal 2015. Our forecast of lower
operating income for fiscal 2016 is mainly a
reflection of soaring labor expenses among the
emerging economies. We intend to rise to the
challenge for real revenue and profit growth
(excluding the impact of foreign exchange) by
creating more high-value-added products and
improving operations efficiencies.
Social Systems, Solutions and Service
Business (SSB)
The SSB forecasts overall fiscal 2016 segment
net sales of ¥70.0 billion (9.7% decrease year on
year) and operating income of ¥4.0 billion (25.1%
increase). We forecast lower revenues for our
train station solutions business due to a low point
in the demand cycle for upgraded station
equipment. At the same time, we forecast sales
in our traffic and road management systems
business to be level with the prior year, as we do
not expect significant changes in capital
investment trends. We do, however, project
continued strong demand for system computer
terminal upgrades. Due to continued weakness in
the solar power and related markets, we forecast
fiscal 2016 environmental solutions business
revenues lower than fiscal 2015.
Healthcare Business (HCB)
The HCB forecasts overall fiscal 2016 segment
net sales of ¥108.0 billion (0.1% decrease year
on year), consisting of ¥32.5 billion (4.4%
increase) in domestic sales and ¥75.5 billion
(1.9% decrease) in overseas sales. We expect
operating income for the segment as a whole to
amount to ¥8.0 billion (9.8% increase).
Domestically, we expect an increase in lifestyle
diseases associated with aging and greater health
consciousness to create strong demand for our
products. Overseas, we anticipate economic
growth among emerging economies in Asia that
will result in lifestyle changes and a greater health
consciousness in those markets. We also expect
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
91
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Consolidated Balance Sheets
OMRON Corporation and Subsidiaries
March 31, 2015 and 2016
ASSETS
Current Assets:
Cash and cash equivalents
Notes and accounts receivable - trade
Allowance for doubtful receivables
Inventories
Deferred income taxes
Other current assets
Total current assets
Property, Plant and Equipment:
Land
Buildings
Machinery and equipment
Construction in progress
Total
Accumulated depreciation
Net Property, Plant and Equipment
Investments and Other Assets:
Goodwill
Investments in and advances to affiliates
Investment securities
Leasehold deposits
Deferred income taxes
Other assets
Total Investments and Other Assets
FY2014
FY2015
(Millions of yen)
¥ 102,622
¥ 82,910
178,775
(1,624)
116,020
19,941
18,362
434,096
26,721
147,120
202,149
6,619
382,609
(231,157)
151,452
8,776
24,318
57,106
6,971
6,366
21,926
125,463
165,093
(1,654)
107,267
18,469
17,524
389,609
26,376
146,412
204,499
6,142
383,429
(236,864)
146,565
30,253
25,048
37,055
6,758
22,080
25,957
147,151
Total
¥ 711,011
¥ 683,325
92
OMRON Corporation
LIABILITIES AND SHAREHOLDERS' EQUITY
FY2014
FY2015
(Millions of yen)
Current Liabilities:
Notes and accounts payable - trade
Accrued expenses
Income taxes payable
Other current liabilities
Total Current Liabilities
Deferred Income Taxes
Termination and Retirement Benefits
Other Long-Term Liabilities
Total Liabilities
Shareholders’ Equity:
Common stock, no par value:
Authorized: 487,000,000 shares in 2015
487,000,000 shares in 2014
Issued: 213,958,172 shares in 2015
217,397,872 shares in 2014
Capital surplus
Legal reserve
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, at cost: 149,398 shares in 2015
144,467 shares in 2014
Total Shareholders' Equity
Noncontrolling Interests
Total Net Assets
Total
¥ 92,702
41,942
3,680
38,438
176,762
697
30,393
11,065
218,917
64,100
99,070
13,403
301,174
12,489
(467)
489,769
2,325
492,094
¥ 82,606
37,975
6,890
35,192
162,663
660
62,289
10,679
236,291
64,100
99,101
15,194
317,171
(50,204)
(644)
444,718
2,316
447,034
¥ 711,011
¥ 683,325
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
93
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Consolidated Statements of Income
OMRON Corporation and Subsidiaries
Years ended March 31, 2014, 2015 and 2016
Net Sales
Costs and Expenses:
Cost of sales
Selling, general and administrative expenses
Research and development expenses
Other expenses (income), net
Total
Income before Income Taxes and Equity in Earnings of Affiliates
Income Taxes
Equity in Loss (Earnings) of Affiliates
Net Income
Net Income Attributable to Noncontrolling Interests
FY2013
¥772,966
475,758
181,225
47,928
6,048
710,959
62,007
19,475
(3,782)
46,314
129
FY2014
¥847,252
514,645
198,103
47,913
(797)
759,864
87,388
28,893
(3,937)
62,432
262
(Millions of yen)
FY2015
¥833,604
512,792
205,735
52,790
(3,399)
767,918
65,686
20,043
(2,039)
47,682
392
Net Income Attributable to Shareholders
¥ 46,185
¥ 62,170
¥ 47,290
Per Share Data:
Net Income Attributable to Shareholders
Basic
Diluted
FY2013
FY2014
FY2015
(Yen)
¥ 209.82
－
¥ 283.89
283.89
¥ 218.95
218.95
Consolidated Statements of Comprehensive Income
OMRON Corporation and Subsidiaries
Years ended March 31, 2014, 2015 and 2016
Net Income
Other Comprehensive Income (Loss), Net of Tax:
Foreign currency translation adjustments:
Foreign currency translation adjustments arising during the year
Reclassification adjustment for the portion realized in net income
Net unrealized gain (loss)
Pension liability adjustments:
Pension liability adjustments arising during the year
Reclassification adjustment for the portion realized in net income
Net unrealized gain (loss)
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year
Reclassification adjustment for the portion realized in net income
Net unrealized gain (loss)
Net gains (losses) on derivative instruments:
Unrealized holding gains (losses) arising during the year
Reclassification adjustment for the portion realized in net income
Net unrealized gain (loss)
Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive Income Attributable to Noncontrolling Interests
FY2013
¥46,314
18,946
(1)
18,945
326
1,375
1,701
10,002
(1,116)
8,886
(1,409)
1,249
(160)
29,372
75,686
314
Comprehensive Income (Loss) Attributable to Shareholders
¥75,372
FY2014
¥62,432
21,846
－
21,846
227
1,316
1,543
7,074
(3,062)
4,012
(656)
975
319
27,720
90,152
331
¥89,821
(Millions of yen)
FY2015
¥ 47,682
(23,916)
−
(23,916)
(29,525)
1,486
(28,039)
(5,776)
(4,818)
(10,594)
658
(946)
(288)
(62,837)
(15,155)
248
¥(15,403)
94
OMRON Corporation
Consolidated Statements of Shareholders’ Equity
OMRON Corporation and Subsidiaries
Years ended March 31, 2014, 2015 and 2016
Number of
common shares
issued
Common
stock
Capital
surplus
Legal
reserve
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total
shareholders'
equity
Noncontrolling
interests
Total net
assets
(Millions of yen)
Balance, March 31, 2013
227,121,372
¥ 64,100
¥ 99,066
¥ 10,876
¥ 253,654
¥ (44,349)
¥ (16,385) ¥ 366,962
¥ 1,801
¥ 368,763
Net income
Cash dividends paid to
OMRON Corporation
shareholders, ¥53 per
share
Equity transaction with
noncontrolling interests
and other
Transfer to legal reserve
Other comprehensive
income (loss)
Acquisition of treasury
stock
Sale of treasury stock
46,185
(11,666)
320
(320)
46,185
129
46,314
(11,666)
(11,666)
—
—
154
154
—
1
29,187
29,187
185
29,372
(161)
(161)
1
2
(161)
2
Balance, March 31, 2014
227,121,372
64,100
99,067
11,196
287,853
(15,162)
(16,545)
430,509
2,269
432,778
Net income
Cash dividends paid to
OMRON Corporation
shareholders, ¥71 per
share
Cash dividends paid to
noncontrolling interests
Equity transaction with
noncontrolling interests
and other
Transfer to legal reserve
Other comprehensive
income (loss)
Acquisition of treasury
stock
Sale of treasury stock
Retirement of treasury
stock
Issuance of stock
acquisition right
62,170
(15,513)
2,207
(2,207)
62,170
262
62,432
(15,513)
(15,513)
—
—
—
(277)
(277)
2
2
—
27,651
27,651
69
27,720
(15,054)
(15,054)
(15,054)
(9,723,500)
0
(2)
5
(31,129)
1
31,131
1
—
5
1
—
5
Balance, March 31, 2015
217,397,872
64,100
99,070
13,403
301,174
12,489
(467)
489,769
2,325
492,094
Net income
Cash dividends paid to
OMRON Corporation
shareholders, ¥68 per
share
Cash dividends paid to
noncontrolling interests
Equity transaction with
noncontrolling interests
and other
Transfer to legal reserve
Other comprehensive
income (loss)
Acquisition of treasury
stock
Sale of treasury stock
Retirement of treasury
stock
Issuance of stock
acquisition right
47,290
(14,656)
47,290
392
47,682
(14,656)
(14,656)
1,791
(1,791)
—
—
—
(256)
(256)
(1)
(1)
—
(62,693)
(62,693)
(144)
(62,837)
(15,023)
(15,023)
(15,023)
(3,439,700)
0
31
(14,846)
0
14,846
0
—
31
0
—
31
Balance, March 31, 2016
213,958,172
¥ 64,100
¥ 99,101
¥ 15,194
¥ 317,171
¥ (50,204)
¥ (644) ¥ 444,718
¥ 2,316
¥ 447,034
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
95
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Consolidated Statements of Cash Flows
OMRON Corporation and Subsidiaries
Years ended March 31, 2014, 2015 and 2016
Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
Net loss (gain) on sales and disposals of property, plant,
and equipment
Loss on impairment of long-lived assets
Net gain on sale of investment securities
Loss on impairment of investment securities
Gain on contribution of securities to retirement benefit trust
Termination and retirement benefits
Deferred income taxes
Equity in loss (earnings) of affiliates
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in income taxes payable
Increase (decrease) in accrued expenses and other current
liabilities
Other, net
Total adjustments
Net cash provided by operating activities
Investing Activities:
Proceeds from sale or maturities of investment securities
Purchase of investment securities
Capital expenditures
Decrease in leasehold deposits, net
Proceeds from sale of property, plant, and equipment
Decrease (increase) in investment in and loans to affiliates
Proceeds from sale of business
Acquisition of business, net of cash acquired
Other, net
Net cash used in investing activities
Financing Activities:
Net repayments of short-term debt
Dividends paid by the Company
Dividends paid to noncontrolling interests
Proceeds from equity transactions with noncontrolling interests
Acquisition of treasury stock
Other, net
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Year
Cash and Cash Equivalents at End of the Year
FY2013
FY2014
FY2015
(Millions of yen)
¥ 46,314
¥ 62,432
¥ 47,682
25,089
1,146
804
(1,714)
501
－
(4,417)
2,170
(3,782)
(6,613)
(325)
(32)
5,824
2,277
10,883
919
32,730
79,044
2,840
(2,179)
(32,218)
75
794
209
26
(672)
－
(31,125)
(5,135)
(10,566)
－
22
(161)
(458)
(16,298)
2,922
34,543
55,708
¥ 90,251
28,339
3,432
137
(4,337)
166
－
(17,427)
11,938
(3,937)
3,384
(10,671)
(2,828)
1,658
(3,127)
6,318
1,580
14,625
77,057
5,274
(603)
(37,123)
118
768
(30)
－
(8,003)
82
(39,517)
(853)
(12,985)
(277)
－
(15,054)
(134)
(29,303)
4,134
12,371
90,251
¥ 102,622
31,460
(485)
463
(1,499)
68
(4,140)
698
2,283
(2,039)
9,436
6,061
1,003
(7,189)
3,433
(4,614)
1,586
36,525
84,207
2,214
(330)
(37,903)
115
2,239
(20)
−
(33,448)
17
(67,116)
2
(16,077)
(256)
−
(15,023)
(196)
(31,550)
(5,253)
(19,712)
102,622
¥ 82,910
96
OMRON Corporation
Corporate Information / Stock Information As of March 31, 2016
Established
May 10, 1933
Incorporated
May 19, 1948
Capital
¥64,100 million
Number of Employees
(Consolidated)
37,709
Common Stock
Issued
213,958 thousand shares
Trading Unit
100 shares
Number of Shareholders
44,787
Stock Listings
Tokyo Stock Exchange,
Frankfurt Stock
Exchange
Securities Code
6645
Fiscal Year-End
March 31
Annual Shareholders’
Meeting
June
Custodian of Register
of Shareholders
Mitsubishi UFJ Trust and
Banking Corporation
Depositary and Transfer
Agent for American
Depositary Receipts
JPMorgan Chase Bank,
N.A.
Head Office
Shiokoji Horikawa,
Shimogyo-ku, Kyoto
600-8530, Japan
Tel: +81-75-344-7000
Fax: +81-75-344-7001
Overseas Headquarters
North America
OMRON MANAGEMENT
CENTER OF AMERICA
(Illinois)
Brazil
OMRON MANAGEMENT
CENTER OF BRAZIL
(São Paulo)
Europe
OMRON MANAGEMENT
CENTER OF EUROPE
(The Netherlands)
Greater China
OMRON MANAGEMENT
CENTER OF CHINA
(Shanghai)
Asia Pacific
OMRON MANAGEMENT
CENTER OF ASIA
PACIFIC (Singapore)
India
OMRON MANAGEMENT
CENTER OF INDIA
(Haryana)
Major Manufacturing &
Development, Sales &
Marketing, and Research &
Development Centers in Japan
Manufacturing &
Development
Kusatsu Office
Ayabe Office
Yasu Office
Research & Development
Keihanna Technology
Innovation Center
Okayama Office
Sales & Marketing
Tokyo Office
Mishima Office
Nagoya Office
Osaka Office
■ Total Shareholder Return (TSR*1) Tokyo Stock Exchange and Osaka Securities Exchange
Daily Trading Volume
Omron
TOPIX
TOPIX Electric Appliances
TSR (annualized rate)
Holding Period*2
Omron
TOPIX
TOPIX Electric Appliances
3 years
15%
12%
13%
5 years
9%
11%
7%
10 years
1%
-1%
-2%
(Index)
250
200
150
100
50
0
(1,000 Shares)
2,000
1,600
1,200
800
400
0
2006/3
2007/3
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3
Notes: 1. Share index (2006/3E = 100)
2. Stock price and trading volume information is for the 1st section of the Osaka Securities Exchange before July 16, 2013, and for the 1st section of the Tokyo
Stock Exchange thereafter.
*1 TSR: Total investment return, combining capital gains and dividends
*2 TSR holding period indexed to March 2016
■ 52-Week High / Low, Volatility*3
■ Ownership and Distribution of Shares
(%)
High (¥)
Low (¥)
Volatility (%)
100
FY
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
3,590
3,510
2,385
2,215
2,418
2,357
2,478
4,730
5,800
5,900
2,615
1,950
940
1,132
1,749
1,381
1,436
2,213
3,365
2,742
27.1
36.3
52.4
35.9
34.7
36.5
29.9
39.7
30.9
40.0
*3 Volatility: Price fluctuation risk, expressed in standard deviations
14.5%
12.4%
14.4%
48.2%
47.6%
45.2%
5.5%
1.0%
5.7%
1.8%
5.8%
0.9%
30.8%
32.5%
33.7%
2013
2014
2015 （FYE）
80
60
40
20
0
Individuals and
others
Foreign investors
Other
corporations
Financial instru-
ments dealers
Financial
institutions
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
97
Integrated Report 2016Where We’re HeadedAbout OmronCorporate Value InitiativesCorporate Value FoundationFinancial Section
Independent Practitioner’s Assurance
Omron believes the independent assurance process is important to improve the accuracy and
objectivity of its Integrated Report 2016. The following information contained in the Integrated
Report was reviewed by an independent third party*. The process leading to issuance of the
Independent Practitioner’s Assurance Report was as follows:
* Deloitte Tohmatsu Evaluation and Certification Organization Co., Ltd.: A related company of Deloitte Touche Tohmatsu LLC, a member firm of Deloitte Touche Tohmatsu
Limited.
■ Independent Practitioner’s Assurance Process
STEP 1
STEP 2
STEP 3
STEP 4
STEP 5
STEP 6
Planning
Perform
Procedures
Reporting
Check
Final
Report
Quality
Assurance
Issue
Assurance
Report
Determine scope,
categories, proce-
dures, and schedule
Perform procedures at Om-
ron headquarters and other
offices (site visit,
analytical procedures,
vouching, document
reviews, inquiries, etc.)
Report the results of
procedures, including
identified issues
Follow up on issues
identified in Step 3
A professional separate
from the assurance team
performs a quality control
check
Obtain management represen-
tation letter, and issue the inde-
pendent practitioner’s
assurance report
■ Scope of Independent Practitioner’s
Assurance Report
● Ratio of non-Japanese in managerial
positions overseas (P30)
● Ratio of women in managerial roles
(OMRON Group in Japan) (P30)
● Ratio of employees with disabilities (P30)
● Global net sales to CO2 emissions (P31)
● Environmental contribution (P31, 32-33)
98
OMRON Corporation From the Editor-in-Chief
This Integrated Report 2016 represents the
fifth Omron Corporation integrated report
since our first publication in 2012.
We consider the integrated report an
important tool for disclosing information to
our stakeholders. We believe that we can
accomplish our duty of corporate governance by
practicing diligent management in combination
with sustainable corporate value improvement.
This belief is also embodied in the Omron
Corporate Governance Policies, formulated in
June 2015, which organized lessons learned
from our 20-plus years of focused commitment
to strengthening corporate governance.
We are pleased that these efforts have been
recognized by outside institutions. The Japan
Investor Relations Association awarded Omron
the fiscal 2015 Best IR Award. As well, our
Integrated Report 2015 received the Award
for Excellence in Integrated Reporting from
the World Intellectual Capital Initiative Japan,
a partner with the International Integrated
Reporting Council for the third consecutive
year, and the Nikkei Annual Report Awards
Second Prize from Nikkei Inc., publisher of the
Nikkei Shimbun.
We created the Integrated Report 2016
with particular focus on our overall value
creation story. Human resources (source of
corporate value) and technology (source of
sustainable growth) are emphasized as two
important capitals at Omron in this report.
Continuing last year’s effort, we have been
taking steps to improve reliability by contracting
an independent assurance organization to
confirm our main non-financial indicators.
At the opening of this report, our Chief
Executive Officer and Chief Financial Officer
each issued messages under their signatures
as representatives of management. As Chief
Communications Officer with responsibility for
this integrated report, I assure the reader of
the validity of the report creation process, as
well as the accuracy of the content herein.
We will strive to communicate with our
stakeholders about our path of corporate value
creation. I encourage you to support us in this
endeavor by sharing your frank opinions and
ideas with us.
Satoshi Ando
Managing Executive Officer
Senior General Manager,
Global Investor Relations &
Corporate Communications HQ
July 2016
Omron Integrated Report 2015: Awarded for Excellence
The Omron Integrated Report 2015 was selected winner of the Award for
Excellence in Integrated Reporting from the World Intellectual Capital Initiative
Japan. This report was also awarded Second Prize in the Nikkei Annual Report
Awards sponsored by Nikkei, Inc.
Integrated Report 2016
99
Website
OMRON Global Site
http://www.omron.com/
Financial Information
http://www.omron.com/about/ir/
Non-Financial Information
http://www.omron.com/about/sustainability/
Integrated Report
http://www.omron.com/about/annual/index.html
Financial Results
http://www.omron.com/about/ir/irlib/presen/
INQUIRIES
OMRON Corporation
Shinagawa Front Building 7F
2-3-13, Konan, Minato-ku, Tokyo 108-0075, Japan
Global Investor Relations & Corporate Communications HQ
Investor Relations Department
Board of Directors Office
Corporate Social Responsibility Department
Tel: +81-3-6718-3421 Fax: +81-3-6718-3429
Tel: +81-3-6718-3410 Fax: +81-3-6718-3411