Integrated Report 2018
Year Ended March 31, 2018
SINIC* Theory:
A Compass for Corporate Management
Our founder, Kazuma Tateishi, believed that solving social issues
through business to 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.
* SINIC: Seed-Innovation to Need-Impetus Cyclic Evolution
OMRON’s founder, Kazauma Tateishi with
Peter Drucker (left)
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1876-
1945-
1974-
2005-
(present)
2025-
2033-
Industrial Society
Mechanization
Society
Automation
Society
Cybernation
Society
Optimization
Society
Autonomous
Society
Natural
Society
Second Industrial
Revolution
Priority on
productivity to
produce goods in
abundance
Higher degree of
individual freedom;
IT revolution
Society offering
information and
functions tailored to
the individual
Society allowing people
to express themselives
while living in harmony
with others
Sustainable society
incorporating
mechanisms of life
From an Information Society to an Optimization Society,
and, Finally, an Autonomous Society
The SINIC Theory predicts the future by looking at the past through the lens of three central elements:
Society, technology, and science. The theory states that the transition from the Primitive Society of 1 million
years ago to the Autonomous Society of the future is one cycle. According to SINIC, the year 2033 is
predicted to be the year in which we reach the Natural Society, signalling the beginning of the second cycle.
In the Natural Society, human creativity and technology harmonize with natural mechanisms.
At present, we live in an Optimization Society in which the focus shifts from products and goods to more
mindful endeavors. The Industrialization Society to this point generated products and wealth in abundance,
the pursuit of which led to dramatic economic growth. However, the advent of this society brought with it
significant new issues, including crowding, class divisions, destruction of the community, and more. The
Autonomous Society will bring solutions to these social issues based on new sets of values. This society will
share values, pursue meaningful experiences and psychological abundance, and allow individuals to live any
way they see fit. This society will be a mature society in which people find joy in life and living. Seeking
approval through social media, the spread of the sharing economy, and the rise of the circular economy are
just a few signs that perfectly align with SINIC Theory predictions.
Predicting the Future Through the Interrelationships of
Science, Technology, and Society
The basic philosophy behind the SINIC Theory is that the interrelationships among science, technology, and
society lead to social change. Let us use the Cybernation Society as an example. We can see how the rise of
cybernetics, computer science, and other synthetic sciences in the 1940s became the seeds of electronic
control technologies, programming, and other technology. These technologies gave rise to the PC and the
internet, leading to the advent of the Cybernation Society. At the same time, the Cybernation Society
demanded more data, along with more accurate and rapid data analysis. These demands forced us to produce
CPUs and GPUs with faster processing power, make advancements in deep learning and other artificial
intelligence technologies, and reach higher levels of sophistication in neuroscience and cognitive science.
The evolution of these interrelationships serves as a driving force behind humanity’s desire to progress.
Seed
Technology
Innovation
Impetus
Progress
-oriented
motivation
Need
Science
Society
1
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision Contents
Vision
Strategy
1 SINIC Theory:
A Compass for Corporate
Management
4 A History of Creating Value
6 Value Creation Model
8 Message from the CEO
16 VG2.0 Medium-Term
Management Plan
18 Sustainability Goals: Progress
20 Message from the CFO
24 ROIC Management
26 Earnings Structure and
Global Business
28 Market Share and
Sales by Product
30 Our Stakeholders
32 Financial Highlights
33 Non-Financial Highlights
34 11-Year Financial and
Non-Financial Highlights
O
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O
N
I
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t
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g
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1
8
Integrated Report 2018
Year Ended March 31, 2018
005_0394387913009.indd 1
2018/09/19 19:27:45
About the Cover
OMRON Corporation contributes to sustainable society by means of
our businesses through innovation driven by social needs. This cover
represents the upward spiral of societal development through our unique
SINIC theory.
Editorial Policy
The scope of this report covers the 183 companies of the OMRON Group, consisting of 165 consolidated subsidiaries and
17 nonconsolidated subsidiaries and affiliates accounted for under the equity method (as of March 31, 2018). OMRON
Corporation contributes to the creation of a sustainable society by offering solutions to social issues through our business
and by engaging in sustainability initiatives.
We voluntarily disclose information to our stakeholders. This integrated report conforms to the integrated reporting
frameworks recommended by the International Integrated Reporting Council and the World Intellectual Capital Initiative
and refers to Guidance for Collaborative Value Creation issued by Ministry of Economy, Trade and Industry. Sustainability-
related disclosures have been written with reference to the GRI Standards. See our Sustainability website for a
comparative table. https://www.omron.com/about/sustainability/guide_line/
2
Business
Governance
36 Special Feature 1:
CTO Interview
Creating Innovation Driven
by Social Needs Anchored
in the Future
66 Message from the Chairman
Creating Innovation
in Focus Domains
42 Factory Automation
48 Healthcare
52 Mobility
54 Energy Management
In Support of Innovation
56 Human Resources Management
58 Special Feature 2:
Putting the OMRON Principles
Into Practice TOGA
60 Manufacturing
61 Environment
62 Risk Management
68 Corporate Governance
72 Board of Directors and Auditors
Financial Information
78 Financial Section
Corporate Information
92 Corporate Information and More
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 conditions in OMRON’s markets, which are primarily Japan, the Americas, Europe, Greater China, and Asia
Pacific; demand for and competitive pricing pressure on OMRON’s products and services in the marketplace; OMRON’s ability to continue to win
acceptance for its products and services in these highly competitive markets; and movements of currency exchange rates.
3
BusinessFinancial InformationStrategyGovernanceCorporate InformationVision A History of Creating Value
Since our founding, OMRON has pursued innovation driven by social needs, leading the world in
innovative ideas. We will continue to improve lives and contribute to a better society by creating
value for the future.
Social Issues/Needs
Automation Society (1945-74)
Cybernation Society (1974-2005)
Productivity improvements to
support high economic growth
Congestion in urban public
transportation
Rising concern for personal health
resulting from changes in lifestyle
(c) Tokyu Corporation /amanaimages
OMRON Solutions
Factory floor automation
Social systems automation
Wider use of in-home
blood pressure monitors
FY1960
World’s first non-contact
switch
FY1966
General purpose relays
(MY Series)
FY1967
World’s first automated
train station system
FY1973
Digital blood pressure monitors
History and Sales Trend
1933 OMRON established
1959 Established Corporate Motto
1960 Established Central R&D Laboratory
1933 OMRON established
1959 Established Corporate Motto
1960 Established Central R&D Laboratory
1970 Announced the SINIC Theory
1974 Established Tateishi Institute of Life Science
1970 Announced the SINIC Theory
1974 Established Tateishi Institute of Life Science
1988
1988
Established Management
Established Management
Center in the Netherlands
Center in the Netherlands
and Singapore
and Singapore
1989
1989
Established Management
Established Management
Center in U.S.
Center in U.S.
1994
1994
2003
2003
2012 Established Management Center in India and Brazil
2012 Established Management Center in India and Brazil
Established Management
Established Management
Established Keihanna Technology
Established Keihanna Technology
Center in China
Center in China
Innovation Center
Innovation Center
2015 Revised OMRON Principles
2015 Revised OMRON Principles
2017 Established Management Center in Korea
2017 Established Management Center in Korea
Net sales
Net sales
2018 Established OMRON SINIC X
2018 Established OMRON SINIC X
Target
Target
¥1 trillion
¥1 trillion
VG2.0
VG2.0
¥500 billion
¥500 billion
FY
FY
1960
1960
1970
1970
1980
1980
1990
1990
2000
2000
2010
2010
2020
2020
G'90s
G'90s
GD2010
GD2010
VG2020
VG2020
Long-Term
Long-Term
Vision
Vision
4
Cybernation Society (1974-2005)
Optimization Society (2005-)
Advanced information society
Global warming
Population decline and
soaring labor costs
Technology speeding the wider
use of digital devices
Wider adoption of renewable
energy and energy saving
Advanced labor savings
solutions for factories
FY1995
OKAO® vision image sensing
technology
FY2011
PV inverters
FY2012
DC/DC converter for
idling stop system
FY2015
NX Series machine
automation controller
FY2016
AI-equipped mobile
robots
1933 OMRON established
1933 OMRON established
1970 Announced the SINIC Theory
1970 Announced the SINIC Theory
1988
1988
1959 Established Corporate Motto
1959 Established Corporate Motto
1974 Established Tateishi Institute of Life Science
1974 Established Tateishi Institute of Life Science
1960 Established Central R&D Laboratory
1960 Established Central R&D Laboratory
1994
Established Management
Center in China
1994
Established Management
Center in China
Established Management
Established Management
Center in the Netherlands
Center in the Netherlands
and Singapore
and Singapore
1989
1989
Established Management
Established Management
Center in U.S.
Center in U.S.
2003
2003
Established Keihanna Technology
Established Keihanna Technology
Innovation Center
Innovation Center
2012 Established Management Center in India and Brazil
2012 Established Management Center in India and Brazil
2015 Revised OMRON Principles
2015 Revised OMRON Principles
2017 Established Management Center in Korea
2017 Established Management Center in Korea
2018 Established OMRON SINIC X
2018 Established OMRON SINIC X
Net sales
Net sales
Target
Target
¥1 trillion
¥1 trillion
VG2.0
VG2.0
¥500 billion
¥500 billion
FY
FY
1960
1960
1970
1970
1980
1980
1990
1990
2000
2000
2010
2010
2020
2020
G'90s
G'90s
GD2010
GD2010
VG2020
VG2020
Long-Term
Vision
Long-Term
Vision
5
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision Value Creation Model
OMRON value creation is anchored to future social needs as we work toward our vision of a
better society. Innovation driven by social needs means creating new value through inspired
solutions to social issues. At OMRON, we base value creation on the OMRON Principles and the
SINIC Theory (future predictive model).
We commercialize innovations as products and services for our customers, contributing to a
better society as these solutions are put into use. Our value creation model results in business
growth and sustainable corporate value improvement. As we grow, we generate larger amounts
of management capital for use in creating innovation driven by new social needs.
Business Creation Process at OMRON
Management Capital (Input)
Human Capital
Employees
36,193
(As of March 2018)
Social and Relationship Capital
No. of Countries 117
(As of March 2018)
Financial Capital
Ratings
AA-(R&I)/A(S&P)
(As of March 2018)
Intellectual Capital
Patents
8,774
(As of March 15, 2018)
R&D Expenses
¥270 billion
(FY2017 to FY2020 plan)
Manufactured Capital
Capital Investment
¥160 billion
(FY2017 to FY2020 plan)
Intellectual Capital,
Manufactured Capital,
Social and Relationship
Capital
Growth Investment*
¥100 – ¥200 billion
(FY2017 to FY2020 plan)
*M&A + Alliances
6
Innovatio
n D
riv
Near-
Future
Design
e
n
b
y
S
o
c
i
a
l
N
e
e
d
s
Core
Technology
Evolution
and
Business
Model
Design
Demographic
Trends
Limited
Resources
Technological
Innovation
Identify Social
Issues
Launch
and
Monetize
Businesses
Sensing &
Control
+ Think
Open
Innovation
Develop
Products and
Services
C
o
m
m
ercialization
OMRON Principles
12345
Business Creation Process at OMRON
Innovation Driven by Social Needs
Identify Social Issues
Identify signs of change in the world and search for social issues (including customer issues) in key areas of focus.
Implement Near-Future Design
Develop near-future design for the next three to ten years, anchored to our future vision of social issues,
technological innovation, and developments in science.
Evolue Core Technology and develop Model Design
Evolve core technologies and design business models necessary for achieving our vision of the near future.
Commercialization
Develop Products and Services
Develop products and services for customers and society.
Launch and Monetize Businesses
Incubate and grow businesses to solve social issues, while identifying new and emerging social issues.
Domains
Products and Services (Output)
Social Value
Goals for
FY2020
Factory
Automation
Industrial Automation
Business
P42
Healthcare
Healthcare Business
Factory Automation Equipment
P48
Healthcare &
Medical Equipment
Mobility
Automotive Electronic
Components Business
Social Systems, Solutions
and Service Business
P52
Energy
Management
Other Businesses
Automotive
Electronic
Components
Station and Traffic
Equipment
Maintenance /
Services
Customers:
Manufacturers
Digital
Auto
Food and more
Contribute to economic
growth through social
productivity
improvement
Customers:
Users including
healthcare
professionals and
consumers
Contribute to
healthy and vibrant
lifestyles for people
around the world
Customers:
Auto makers
Railway / Roads
Contribute to safe,
secure, pleasant, and
clean lifestyles for
people around the world
Customers:
Housing Makers,
and more
Contribute to
sustainable society by
promoting the use of
renewable energy
P54
PV Inverters, Other
Electronic and
Mechanical Components
Customers:
Home Appliance
Makers and more
Relays, Other
Open Innovation
Human Capital
Management
Manufacturing,
Environment
Risk
Management
Corporate Governance
VG2.0
Targets
P14, 16
Sustainability
Goals
P18
PDF_010_0394387913009.indd 7
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2018/09/26 17:26:47
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision
Message from the CEO
“OMRON is solving social issues
through our business, accelerating
Innovation Driven by Social Needs.”
Since our very founding, the OMRON mission has been to improve lives and contribute to a
better society, believing that a business should create value for society through its key
practices. We have become the company we are today by seeing the signs of global change,
leading the world in taking on the issues of the times. We have become the company we are
today by creating innovative value for society, through an idea we call Social Needs.
Our aspirations to create innovation driven by social needs through our day-to-day efforts are
defined in our corporate philosophy, the OMRON Principles.
Today, the world changes at a speed and scale unprecedented in history. In response, we began
implementing our new VG2.0 medium-term management plan in fiscal 2017, setting record
highs for earnings and proving the success of strategies that are distinct from those of the past.
During fiscal 2018, we intend to deliver even greater growth, guided by VG2.0 and our
aspirations to create innovation driven by social needs.
A History of Creating Value (P4)
Value Creation Model (P6)
OMRON Principles (P15)
8
President and CEO
August 2018
9
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision Looking Back on VG2.0 in Fiscal 2017
VG2.0 represents the final medium-term
management plan incorporated into VG2020, our
long-term vision leading through fiscal 2020.
VG2.0 also includes growth strategies we intend
to implement through the year 2030. Under
VG2.0, we have defined four focus domains: (1)
Factory Automation; (2) Healthcare; (3) Mobility;
and (4) Energy Management.
We believe these four domains present the
most promising businesses for market growth in
future society, as well as areas in which OMRON
technologies and products have the best chance
to make a positive difference in the world.
Executing VG2.0 will not only help us solve social
issues, but also generate self-driven growth for
our businesses.
VG2.0 in our Long-term Vision
Focus Domains in VG2.0
Long-term Vision VG2020
2021-
Factory Automation
Healthcare
VG2.0
Sales ¥1 trillion
Operating Income
¥100 billion
(2017-2020)
EARTH-1
STAGE
(2014-2016)
GLOBE
STAGE
(2011-2013)
In fiscal 2017, our first year operating under VG2.0,
we set record highs in net sales, gross profits,
and net income, driven by strong performances in
our Industrial Automation Business and Healthcare
Business segments. We also set records for gross
profit margin, a yardstick by which we measure
our customers’ assessment of our products and
services. We have used the profits generated to
invest in future growth, including two acquisitions
in our Industrial Automation Business segment.
This positive cycle of growth has already shown
tangible results.
10
Mobility
Energy Management
FY2017 Results
FY2017 Results
Y/Y
Net Sales
¥860.0 billion
+ 8.3%
Gross Profit
¥357.7 billion
+ 14.7%
Operating Income
¥85.9 billion
+ 27.1%
Net Income
¥63.2 billion
+ 37.3%
Gross Profit
Margin
41.6%
+ 2.3%pt
Industrial
Automation
Business
Healthcare
Business
FY2017 Results
Y/Y
¥396.1 billion
+ 19.7%
¥108.5 billion
+ 11.0%
Record high
Fiscal 2017 was also a year in which we made
great strides in innovative-Automation, our
strategic concept for innovation in manufacturing.
Our progress was especially apparent in our
Industrial Automation Business segment, a key
growth driver. We have developed innovative
solutions hand in hand with customers who
practice advanced manufacturing methods, in turn
introducing these innovations to other customers
for major successes. As a result of these
activities, our Industrial Automation Business
segment recorded sales growth of 19.7% (profit
growth of 42.3%) year on year. Our Healthcare
Business segment, another key growth driver for
our company, captured rising global demand for
blood pressure monitors among people suffering
from high blood pressure. Combined with growth
in emerging markets, this segment generated
sales 10.9% higher (profit growth of 28.2%)* year
on year.
*Excluding sales of OMRON Colin Co., Ltd. (sold in December 2016)
Looking Forward to VG2.0 in Fiscal 2018
Our financial goals for fiscal 2018 are ¥900 billion
in net sales, ¥93 billion in operating income, ¥64.5
billion in net income, and 42.5% in gross profit
margin. As you will read below, fiscal 2018 is an
important year for us in progressing toward our
goals and greater growth for fiscal 2020 and
beyond.
Accelerating Growth Through Focus
Domains
Fiscal 2018 will be a year of accelerating growth in
our four focus domains. In particular, we will
continue to drive group-wide growth through our
Factory Automation and Healthcare businesses,
which address significant social issues.
Our Industrial Automation Business will execute
innovative-Automation to work even closer with
customers on their production floors. Here, the
segment will solve customer challenges and bring
innovation to manufacturing via automation,
enriching the lives of people all over the world. As
one example, we plan to double the number of
our Automation Centers to 35 worldwide this year.
Industrial Automation engineers will work with
customers to offer innovative solutions through
unique product lines and services, developed over
many years. i-BELT is another example of
innovation in manufacturing. This service collects,
analyzes, and utilizes production floor data in
FY2018 Plan
Y/Y
Net Sales
Gross Profit
¥900.0 billion
¥382.5 billion
Operating Income
¥93.0 billion
Net Income
¥64.5 billion
+ 4.7%
+ 6.9%
+ 8.3%
+ 2.1%
Gross Profit
Margin
42.5%
+ 0.9%pt
conjunction with AI-equipped controllers. i-BELT
replicates and automates the skills of experienced
engineers to detect the warning signs of
production line stoppages. This, in turn,
contributes one solution to the desperate
shortage of skilled workers who are well-versed in
manufacturing processes.
We plan to grow our Healthcare Business
segment through three core categories
contributing to healthy and comfortable lives for
the people of the world: (1) Cardiovascular
Disease; (2) Respiratory Disease; and (3) Pain
Management. Of these three, our main focus will
be to achieve Zero Events related to
cardiovascular disease and complications
therefrom. Our ultimate vision is to ensure zero
events of life-threatening seizures, including
stroke and myocardial infarction associated with
high blood pressure. We plan to unveil new
products this year to support this mission,
11
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision including a combination blood pressure monitor/
electrocardiograph. When we combine the data
gathered by these breakthrough devices with
patient monitors and biological information from
external partners, we will learn much more about
the causes of high blood pressure and blood
pressure fluctuations than we know today. We will
use the results of these studies to work closely
with personal care physicians to achieve our
dream of Zero Events for patients throughout the
world.
Managing Technology for Innovation
Driven by Social Needs
The pace of technological innovation and changes
in cultural values is more dramatic than ever, and
we envision many serious social needs at local
and global levels arising in the future. In the
meantime, AI, IoT, robotics, and other
technological innovations have advanced much
more quickly than anyone thought possible. These
technology innovations lie at the core of the
OMRON evolution in Sensing & Control + THINK.
At OMRON, we see the coming social and
technological changes as opportunities to grow, as
we fulfill our mission to solve social issues. In
fiscal 2015, we created the new role of chief
technology officer to capture every technology-
related opportunity available. Our CTO formulates
group technology strategy and identifying
technology development for core cross-
organization technologies, as well for the core
technologies used in each business. This new role
is just one more way in which OMRON leverages
the strengths of our entire organization to make
advancements in creating innovation driven by
social needs.
This is just one way in which OMRON will
engage in open innovation with partners and
customers to solve serious social issues.
Creating Innovation in Focus Domains (P42,48)
To accelerate technological development further,
we established the Innovation Exploring Initiative
HQ in April 2018. This entity reports directly to the
CTO and functions as the hub for technology
innovation across our organization. The Innovation
Exploring Initiative HQ is responsible for end-to-
end technology management, coordinating with
divisions and functional departments to perform
near-future design for society, draft technology
strategies, and incubate potential businesses. We
have also taken the step to establish OMRON
SINIC X Corporation (OSX), under the umbrella of
the Innovation Exploring Initiative HQ. OSX is
responsible for near-future design and backcasting
strategies to develop those technologies
necessary for a brighter future. Stronger
technology management of this kind will ensure
that we create innovation driven by social needs.
Special Feature 1: CTO Interview (P36)
12
Supporting Innovation Driven by Social Needs
ROIC Management
OMRON practices ROIC management as the
best method to speed our engagement of social
issues around the world. We operate nearly 90
business units through various companies, each
striving to solve social issues to improve lives and
contribute to a better society. To accomplish this
mission, we must prioritize and allocate resources
to maximize value in return. We believe ROIC to
be the fairest method to assess the performance
of our diverse group of businesses, each facing
different challenges. As one specific example, we
have invested in acquisitions and production
capacity expansion in our Industrial Automation
Business and Healthcare Business segments,
which have proven to have the greatest potential
for growth.
Meanwhile, we are optimizing our Backlights
Business, selling OMRON Laserfront, Inc.* (part
of our Industrial Automation Business), and taking
other measures deemed rational under ROIC.
In this way, OMRON makes smarter investments
for our future, while at the same time engaging in
ongoing structural reform to secure our platform
for profitability and growth in line with the rules of
ROIC management.
*Finalized on August 1, 2018.
Message from the CFO (P20)
ROIC Management (P24)
13
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision Sustainability Initiatives
OMRON set sustainability goals in fiscal 2017,
ensuring sustainability was a part of our VG2.0
plan. This demonstrates our commitment to
solving issues we consider material.
Our sustainability issues focus on two major
areas: issues to solve through our business and
those for sustainable business practices. Our
initiatives based on these goals tie directly to our
vision of a better society, the Sustainable Develop
Goals of the United Nations, and other targets to
ensure a sustainable international society in the
future. Solving through business means to create
new value through innovative products and
services, working with customers, partners, and
society. Sustainable business practices mean that
we meet the expectations of our stakeholders.
We do this by building a stronger business
platform, supported by talented employees and
competitive product quality management. In the
year since we set our goals, we have monitored
and made directional adjustments to our
sustainability initiatives. I believe we have started
to see true progress in accelerating innovation
driven by social needs through sustainability.
VG2.0 (P16)
Progress of Sustainability Goals (P18)
Newly Emerging Social Needs Drive New Innovation
In fiscal 2018, we will continue to invest in future
growth and corporate value improvement.
Of our six financial goals for fiscal 2020, we
expect to achieve four of them in fiscal 2018
(Gross profit margin, ROIC, ROE, and EPS).
OMRON is growing steadily in earning power,
and we will continue to grow as we work to
achieve our fiscal 2020 goals for net sales and
operating income, as well.
Change is the only constant. It is a truism that
means new social needs will always emerge. As
technological and social change become more
disruptive, OMRON will have more opportunities
to improve lives and contribute to a better society.
Despite deepening trade frictions and other
uncertainties, we will seize the opportunities
presented. We will monitor changes in the market
environment, execute our action plans, and invest
in people and in research and development. As
our investments in future growth translate into
results, we will take on even bigger social issues.
OMRON is a corporate group on which people
can always depend, and we are an organization
that continues to live up to the high expectations
of people from all over the world.
Management Indicators
Net Sales
Gross Profit
Margin
FY2018 Plan
FY2020 Targets
¥900 billion
42.5%
¥1 trillion
Over 41%
Operating Income
¥93 billion
¥100 billion
ROIC
ROE
EPS
Approx. 12%
Approx. 12%
Over 10%
Over 10%
¥306
Over ¥300
FY2020 Targets expected to be achieved in FY2018
We will push forward together, creating innovation
driven by social needs to improve lives and
contribute to a better society.
Thank you for your continued support.
14
OMRON Principles
Sustainability Policy
We believe a business should create value for society through its key practices.
We are committed to sustainably increasing our long-term value
by putting Our Mission and Values into practice.
We uphold a long-term vision in our business practices to create solutions to
society’s needs.
We operate as a truly global company through our fair and transparent
management practices.
We cultivate strong relationships with all of our stakeholders through responsible
engagement.
We consider Sustainability Policy to reflect the same meaning and content as declared by our Management
Philosophy based on the OMRON Principles. Namely, “We are committed to sustainably enhancing our
long-term corporate value by putting the OMRON Principles into practice.”
15
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionVision VG2.0 Medium-Term Management Plan
A Road Map Anchored in the Future
In 2011, OMRON started Value Generation 2020 (VG2020), a plan that outlines a 10-year vision for our
company. VG2.0, our medium-term management plan launched in fiscal 2017, is the last stage of
VG2020. Spanning four fiscal years, VG2.0 also defines our long-term strategy to respond to social
change beyond the timeframe. In drafting VG2.0, we forecast future world trends and social changes,
incorporating these projections of the future into our strategies. VG2.0 also reflects considerations of
the SINIC theory (OMRON’s unique future predictive model) and Sustainable Development Goals*.
Innovation driven by social needs. It is a core tenet of the OMRON Principles and a concept driving
us to work with customers and partners, leveraging open innovation to address four core areas of
emerging social needs: Factory Automation, Healthcare, Mobility, and Energy Management.
* Goals for sustainable development adopted by the United Nations.
Growing Concern for
Social Issues
Labor shortages
Adapting to changes in manufacturing
Frequent traffic accidents, congestion
Deteriorating urban environment
Aging society
Soaring medical costs
Advancing climate change
Rapid Technological Innovation
AI
IoT
Robotics
16
OMRON Principles
Sustainability Policy
VG2.0
Business Strategies
1. Redefine focus domains and maximize
the strength of businesses
2. Evolve business models
3. Reinforce core technologies
Collaborative Creation with Partners
Operations/Functional Strategies
Human Capital Management, Manufacturing,
and Risk Management
VG2.0 and Sustainability Initiatives
OMRON has aligned sustainability targets with our VG2.0 goals to pursue sustainable corporate value
through the generation of social value. Based on the OMRON Sustainability Policy, we identified social
issues in VG2.0 to be solved through four focus business domains, while selecting core sustainability
issues to support our execution of VG2.0 as well as answer the expectations of our stakeholders. We
set goals in these areas to achieve by fiscal 2020, and began working toward these goals in fiscal 2017.
In the same year, we added progress toward VG2.0 and sustainability indicators* evaluated by third
parties into the medium- and long-term performance-linked stock based compensation system for our
officers and directors.
* Dow Jones Sustainability Index (DJSI)
OMRON Principles
Sustainability Policy
Sustainability Initiatives
Social Issues to be solved through our Business
P42
FA
Healthcare
Mobility
Energy
Management
Collaborative Creation with Partners
VG2.0 Targets
A global value-creating
group that is qualitatively
and quantitatively superior
Net Sales ¥1 trillion
Income ¥100 billion
Operating
CEO Message (P14)
2030 Shared Goals (SDGs)
Among International Society
Issues Responding to Stakeholder Expectations
P56
Human Capital Management
Manufacturing
Risk Management
https://www.un.org/
sustainabledevelopment/
17
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy Sustainability Goals: Progress
During fiscal 2017, OMRON pursued sustainability goals tied to VG2.0. These goals were based on
sustainability policies established by our board of directors in fiscal 2016. Having pursued these goals
for one year, our executive officers met in the Executive Council to discuss our progress, adding and
updating certain goals based on our fiscal 2017 performance. Our board of directors received a report
about progress and revisions, performing oversight of the OMRON sustainability initiatives.
(Note) Selected goals presented here; see reference pages for progress related to certain goals.
See the OMRON corporate website for more about progress and initiatives.
Solving Social Issues Through Our Businesses
red: targets updated or added
Sustainability Targets (Fiscal 2020 Goals/KPI)
Factory Automation
Respond to labor shortages and
diversifying manufacturing practices
Create new products leading to innovative-Automation
in four focus industries
– Create Controls Technologies for Manufacturing
Innovation –
Healthcare
Zero brain and cardiovascular
diseases, respiratory diseases
Mobility
Reduce traffic accidents,
environmental footprint of
automobiles
Blood pressure monitor sales: 25 million units /year
Develop analytical technologies to continuously track
blood pressure fluctuations
Nebulizer + asthma wheeze monitor sales: 7.65 million
units/year
Create safe driving support systems, technologies
Create 360° recognition technologies for advanced
driving support/self- driving vehicles
Sales of vehicles with eco-friendly products: 12 million
units/year
(Increase ratio of high fuel efficiency products: 50%)
Energy Management
Promote the use of renewable
energy, CO2 reductions
Cumulative shipped capacity of solar power/storage
battery systems: 11.2GW
Build the energy resource aggregation business using
PV/storage system (Japan)
P42
P48
P52
P54
During fiscal 2017, we made steady progress toward achieving year 2020 sustainability goals for social issues
to be solved through our businesses.
We added goals under healthcare and energy management. These goals call for new technologies and new
businesses in combination with progress on our ongoing initiatives.
In mobility, we raised our goals to reflect progress to date. We also added goals seeking greater impact on
the environment in parallel with our business plan.
18
Issues Responding to Stakeholder Expectations
Human Capital Management
Sustainability Targets (Fiscal 2020 Goals/KPI)
red: targets updated or added
Talent Attraction and
Development
Diversity and Inclusion
Wellness Management
Occupational Safety and Health
Continue expanding TOGA*1,
Accelerate the PDCA implementation via employee
engagement surveys
Ratio of women in managerial roles (Japan): 8%
Improve awareness of wellness management*2
(company-wide awareness of Boost5*3)
International OSH*4 certifications: At sites representing
80% of production capacity
Respect for Human Rights and
Define and adopt due diligence processes for human
Labor Practices
rights
Manufacturing/Environment
Product Safety and Quality
Produce safety assessments for newly developed
Supply Chain Management
products: 100%
Improve product safety assessments
Sustainability self-checks at partner suppliers: 100%
implementation; score of 85 points or higher
Reduction of Greenhouse Gas
Reduce GHG emissions by 4%
Emissions
(vs. fiscal 2016, SBT conformity*5)
Appropriate Management and
Reduce mercury through the adoption of digital
Reduction of the use of
Hazardous Substances
thermometers and digital blood pressure monitors:
69 tons/year
Risk Management
Fair Business Practices
Information Security, Personal
Information Protection
Promote OMRON Group rules in all global bases
Global training for ethical conduct
Build a new information security system
*1 TOGA: The Omron Global Awards
*2 Awareness: Awareness and personal practice of OMRON wellness management programs
*3 Boost5: Five areas of physical and mental health: Exercise, Sleep, Mental Health, Nutrition, Smoking
*4 OSH: Occupational Safety and Health
*5 SBT: Science Based Target. International initiative asking companies to set science-based greenhouse gas emissions reduction targets.
P56
P60
P61
P64
Our fiscal 2017 progress toward achieving year 2020 sustainability goals to meet stakeholder expectations
were generally in line with plan.
Respect for human rights and labor practices was our focused issue in fiscal 2017. The Executive Council
established a group management framework. Based on the framework, we conducted a self-assessment of
human rights and labor practice risks at our production centers (including overseas centers), taking action as
necessary.
For fiscal 2018, we have added goals related to employee wellness. We launched the Boost5 program, which
assesses mental and physical wellness.
OMRON added goals for product safety and quality for fiscal 2018 to improve manufacturing quality
management.
Beginning fiscal 2018, OMRON will pursue a new goal to reduce total greenhouse gas emissions in
conformity with SBT. We are moving forward with initiatives to reach carbon zero by fiscal 2050.
19
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy
Message from the CFO
I was named senior general manager of the Global Strategy HQ in March 2014. In April 2017, I
assumed the post of chief financial officer of the OMRON Group. At present, I hold both CFO
and senior general manager titles, responsible for both group finance and management
strategy. I joined OMRON as a freshly graduated engineering student. Over the next ten years, I
worked on development for automatic control technics. Later, I went on to hold positions in
business and headquarters management strategy, group resource management (including
human resources and administration), and a variety of other posts. A CFO with both technical
and business backgrounds might be an exception to the norm today; however, I believe my
experience is a strength for a company like OMRON that has declared itself a leading
technology company since the beginning. Technological innovation has changed so much in our
world. I believe any financial strategy now must integrate management, business, and
technology strategies. I will continue to rely on my experience, offering a high-level perspective
to the OMRON decision-making process.
Koji Nitto
Director, Senior Managing Executive Officer
CFO and Senior General Manager, Global Strategy HQ
August 2018
20
Fiscal 2017: A Positive Cycle of Growth
I view fiscal 2017, our first year under the VG2.0
plan, as a year in which we created a positive
cycle of growth.
First, I will address measures we took to
strengthen corporate earning power through
improved gross profit margin. For fiscal 2017, we
recorded a gross profit margin of 41.6%, a sharp
2.3-point jump compared to the prior year. What
drove this improvement? Our practice of ROIC
management, two specific factors that I wish to
mention here. The first factor was improved value
added ratio. This growth in value added ratio
stems from coordinating production,
development, sales, and planning functions. This
coordination leads to a better mix of high-value-
added products, as well as cost savings through
standardized components. The second factor was
lower fixed manufacturing costs, achieved through
gains in productivity generated by industrial
engineering (research into manufacturing
processes). Consistent, intentional efforts in three
areas shifted our product mix and led to gross
profit margin gains: (1) Constant attention to
improving value added and reducing fixed costs
(just mentioned); (2) Concentration of
management resources for growth in our high-
margin Industrial Automation Business; and (3)
Ongoing company-wide structural reform. I am
confident that our corporate earnings power has
reached a new stage.
We are using our profits as a resource to
accelerate growth investments in technology
management in our organization as a whole, and
in our mainstay Industrial Automation Business
and Healthcare Business in particular. These two
businesses were the workhorses driving us to
record-high OMRON Group sales.
We will reach new levels of corporate value as
we continue to repeat this growth cycle, building
our earnings power, investing for market
dominance, and growing our revenue base.
Overall
Raise added value
through integrated
production, sales,
etc.
Sales Growth
Improve GP
Margin
Growth Cycle
Industrial Automation
Business
Healthcare Business
Growth Investments
Industrial Automation
Business
Healthcare Business
Technology
Management
21
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy ROIC Management Builds True Earnings Power
OMRON has selected ROIC as a key management
indicator to measure the profitability of our
invested capital. We believe ROIC correctly assess
the profitability across multiple businesses having
different characteristics. This, in turn, allows us to
invest our resources wisely. ROIC management
has become familiar throughout our business, an
accepted company-wide measure we use to
encourage ongoing improvement. Our activities to
improve gross profit margin, mentioned earlier,
stem from our focus on ROIC. ROIC management
consists of two components: Down-top
management and portfolio management. Down-
top ROIC management is a more detailed key
performance indicator tied to activities in the local
workplace. Portfolio management assesses our
more than 90 business units using a combination
of sales growth and market growth. We ensure
ROIC management is the tool by which
management and local workplaces view our
business. This is how we strengthen our ability to
generate value and earnings power, as well as
establish a persistent growth cycle. For fiscal 2017,
we generated an extremely high ROIC of 12.7%.
Under VG2.0, we consider ROIC of between
10% and 15% to be appropriate. Accordingly, we
require business divisions to deliver a minimum
10% ROIC. Where a business cannot reach 10%
ROIC, we assess the business’s future and market
value, taking action as necessary. For example,
during fiscal 2017 we introduced structural
reforms in our Micro Devices Business, which has
struggled with profitability. More specifically, we
closed the smartphone microphone business,
while we integrated the competitive MEMS
business into our Electronic and Mechanical
Components Business. At the same time, we
moved the important technologies and expertise
of the R&D and manufacturing departments under
the management of headquarters. We also sold
the shares of OMRON Laserfront Inc. and
continued with structural reform measures at our
Backlights Business, downsizing the scope
operations.
Practicing ROIC management in this way, we
generate value (profits), which is used to create
even greater value through correct cash allocation
and investment management.
Balancing Discipline and Risk in Investment Management
We will focus the resources we generate through
improved earnings power to invest in promising
growth areas, speeding initiatives for innovation
driven by social needs.
The first half of VG2.0, fiscal years 2017 and
2018, is a time for us to solidify our growth
structure, bolstering sales and other front office
functions. We will also increase investments in
research and development, facilities, and M&A.
Speaking of M&A, we made two acquisitions
during 2017 in our Industrial Automation Business.
When we consider an acquisition, we give priority
to the type of synergies and innovation we expect
from combining the resources of the target with
our own. Simple addition is not acceptable. We
must be confident of multiplicative effects gained
through synergies. As an objective standard, we
22
set a minimum 10% ROIC as the hurdle for
recovering our investment. Obviously, we require
a higher rate of return for projects that demand
higher returns from a standpoint of strategic
value. Acquisitions are subject to annual
performance reviews to determine whether
results are in line with plans. If progress is not
satisfactory, we monitor the project to understand
what measures are being taken. I am proud to say
that each of the five M&A transactions over the
past four years have outperformed our
expectations, offering dramatic synergies with our
existing businesses.
M&A Transactions Since Fiscal 2014
Acquisition
(FY)
Company Name
Company Overview
2014
NS Indústria de Aparelhos
Médicos Ltda.
Nebulizer manufacturer with the number one share of the
nebulizer market in Brazil
2015
Delta Tau Data Systems, Inc.
U.S.-based manufacturer of world-class motion controllers
2015
Adept Technologies, Inc.
U.S.-based manufacturer of a wide range of industrial robot
models
2017
Sentech Co., Ltd.
Japan-based manufacturer of ultra-compact high-definition
industrial cameras
2017
Microscan Systems, Inc.
U.S.-based manufacturer of industrial code readers
incorporating industry-leading reading technologies
Research and development expense is an
important long-term investment for the OMRON
Group. We have set a standard for R&D expense
at 7% of sales, and we intend to raise this level to
7.5% by fiscal 2020. Our target for investments in
core technologies, including AI and robotics, is
about 1% of sales. Dedicating capital to the
progress of technology represents up-front
investments that will bear fruit for corporate
growth 10 and 20 years down the line. This is the
type of investment we must undertake as a
manufacturing company if we are to develop
innovations that improve lives and contribute to a
better society. Accordingly, we will continue to
make bold investment decisions that challenge
the frontiers of science, balancing discipline and
risk to deliver to the world innovation driven by
social needs.
Appropriate Cash Management and Profit Distribution
OMRON distributes profits according to principles
of appropriate cash management and our own
profit distribution policy. Our profit distribution
policy prioritizes growth investment, stable
dividends, and stock buybacks, in that order. We
engage actively in growth investments, including
M&A activities. At present, we hold cash reserves
at a level of between one and two months’ sales,
a policy we intend to continue. We used internal
reserves for the past five corporate acquisitions.
However, we would consider borrowing funds
from outside sources—after considering the
impact on our credit rating—if a promising growth
investment demanded more cash than we held in
reserve.
target for dividend payout ratio and dividend on
equity is approximately 30% and 3%, respectively.
Why did we add a dividend on equity target of 3%
to a dividend payout ratio? We did this to avoid
wide swings in dividend payments, even in the
event we change earnings forecasts during the
fiscal year. Share buybacks will be performed as
opportunities present themselves, balanced by
growth investment plans and cash on hand. In
July 2017, we set a one-year scope of ¥20 billion
for share repurchases, securing the entire amount
as of May 2018.
Speaking on behalf of OMRON management,
we will redouble our efforts to build corporate
value as we implement the growth cycle.
Once we have allocated profits to growth
Thank you for your support of the OMRON
investment, we next look to shareholder return.
Under the fiscal years covered by VG2.0, our
Group.
23
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy ROIC Management
OMRON has selected ROIC as a key performance indicator for our business. We stress ROIC
management throughout our organization to encourage further improvement. Our VG2.0 medium-term
management plan emphasizes ROIC management, which we will use to reach a new level of growth.
Why ROIC?
OMRON encompasses a number of business
divisions with varied characteristics. We believe
ROIC is an excellent measure for assessing
business performance fairly for each business.
Using operating income or operating income
margin as an indicator doesn’t account for
variances due to the nature or scope of a
business. ROIC, on the other hand, measures
return on invested capital, providing a fair
assessment. Under VG2.0, we have defined four
focus domains. ROIC is an indispensable tool as
we continue to grow our unique business
portfolio.
More specifically, ROIC management consists
of Down-Top ROIC Tree and Portfolio
Management.
Down-Top ROIC Tree
Down-Top ROIC Tree breaks ROIC into key
performance indicators for each department,
allowing us to improve ROIC at the most basic
operating level. Using simple ROS or invested
capital turnover as ROIC indicators are ineffective,
since they do not relate directly to front-line
operations. On-site managers would have trouble
thinking of ways to improve ROIC using these
indicators. However, we can break ROIC down
into automation/head count reduction or facilities
turnover as KPIs of manufacturing departments.
With these indicators, managers can finally see
how their goals tie directly to ROIC improvement
initiatives. At OMRON, one of our greatest
strengths is our unified approach to improving
ROIC from the ground level up.
24
ROIC
Management
Down-Top
ROIC Tree
Portfolio
Management
Down-Top ROIC Tree
KPI
Drivers
Sales in Focus Industries / Areas
Gross Profit Margin
Sales of New / Focus Products
Selling Price Control
Added-Value %
Variable Cost Reduction, Value %
Defect Cost %
Per-Head Production #Units
Automation %
(Headcount Reduction)
Labor Costs-Sales %
Fixed Manufacturing
Costs %
SG&A %
R&D %
Inventory Turnover Months
Slow-Moving Inventory Months
Credits & Debits Months
Working Capital
Turnover
Facilities Turnover
(1/N Automation Ratio)
Fixed Asset Turnover
R
O
C
I
R
O
S
I
n
v
e
s
t
e
d
C
a
p
i
t
a
l
T
u
r
n
o
v
e
r
Portfolio Management
OMRON consists of 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 consider both the economic value and the
market competitiveness of a business to allocate
limited resources in an optimal manner. This
assessment system allows us to identify the
growth potential of each business unit, making an
optimal allocation of our resources.
Assessing Economic Value
Assessing Competitiveness
B
S
Expecting Growth
Investment
C
A
Profit Restructuring
Examining Regrowth
)
%
(
e
t
a
R
h
t
w
o
r
G
s
e
a
S
l
)
%
(
e
t
a
R
h
t
w
o
r
G
t
e
k
r
a
M
B
C
S
A
ROIC (%)
Market Share (%)
Embracing ROIC Management
To promote ROIC management more widely, we
introduced ROIC Management 2.0 in 2015. ROIC
Management 2.0 incorporates a qualitative
interpretation of ROIC. The interpreted formula
tells us to add needed management resources (N)
and generate greater levels of value to our
customers (V), while reducing loss-making
management resources (L). Using this simple
interpreted formula, our employees in charge of
sales or development functions who may be
unfamiliar with financial statement concepts are
able to envision ROIC improvement measures in
their day-to-day work.
ROIC Translation Under ROIC Management 2.0
(V)
Value to our Customers
ROIC
(N)
Needed Management
Resources
Goods, Money, Time
(L)
Loss-Making
Management Resources
Muri, Muda, Mura
(overburden, waste, unevenness)
Actively invest needed management
resources (N) in order to create value
Realize value to our customers (V) more
Staff in charge of business unit accounting and
than the investment amount
finance act as ambassadors responsible for
promoting ROIC Management 2.0. Ambassadors
provide simple case studies of successful ROIC
Management 2.0 initiatives to raise awareness of
ROIC on the front lines of our businesses around
the world.
Reduce loss-making management resources (L)
and shift/invest it to (N)
25
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy
Earnings Structure and Global Business
OMRON manufactures and sells market-leading sensing and control products in 117 countries around
the world. Our products include control equipment, electronic components, automotive electronic
components, social systems, 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
13%
¥108.5 billion
7%
¥63.7 billion
15%
¥131.2 billion
Eliminations and Corporate
1%
¥2.8 billion
6%
¥54.8 billion
Fiscal 2017
Net Sales
by Segment
¥860
billion
12%
¥102.8 billion
Industrial Automation
Business (IAB)
OMRON’s mainstay
business; innovating global
manufacturing through factory
automation
46%
¥396.1 billion
Social Systems, Solutions
and Service Business (SSB)
Offering social infrastructure
systems for a safer, more
comfortable society
Fiscal 2017 Earnings by Business Segment
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 market with
sophisticated components that
create seamless relationships
between people and machines
(Billions of yen)
BUSINESS SEGMENT
NET SALES
OPERATING INCOME (LOSS) 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
396.1
102.8
131.2
63.7
108.5
54.8
2.8
860.0
74.0
12.1
5.8
4.1
11.2
(2.1)
(19.2)
85.9
18.7%
11.8%
4.4%
6.5%
10.3%
—
—
10.0%
26
Asia Pacific
13%
¥112.2 billion
Ratio of overseas
sales to net sales
Approx.
62%
Greater China
20%
¥174.6
billion
Fiscal 2017
Net Sales
by Region*
¥860
billion
Japan
38%
¥328.5
billion
Europe
15%
¥124.2 billion
Americas
14%
¥120.5 billion
Ratio of overseas
employees to
total employees
Approx.
68%
Asia Pacific
18%
6,662
Fiscal 2017
Employee Ratio
by Region*
36,193
Employees
Worldwide
Europe
6%
2,263
Greater
China
32%
11,463
Japan
32%
11,554
Americas
12%
4,251
* As of March 31, 2018
(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
27
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy Market Share and Sales by Product
The six OMRON business segments each feature product lines that boast
top share in global or Japanese markets.
Industrial Automation
Business
Share of the Control-
Related Equipment
Market (Japan)
Approx. 40%
Source: Nippon Electric Control Equipment Industries Association
Electric and Mechanical
Components Business
Share of the Relays
Market (Global)
Source: Internal survey
Approx. 20%
Automotive Electric
Components Business
Share of the Body Control
Units for Miniature
Vehicles Market (Japan)
Source: Internal survey
Approx. 35%
28
Output
+ Robot
12%
Sales by
Product
Servo Motors
and Drivers
52%
Mobile Robots
Logic
Fiber Sensors
Safety Light
Curtains
36%
Vision Sensors
Input
Programmable
Controllers
Safety Controllers
Motion Controllers
Other Electric
Components
(Amusement
Equipment,
Image Sensing,
etc.)
Power Supply Units for
Amusement Devices
22%
Sales by
Product
Relays,
Switches,
Connectors
78%
Power Relays for
Printed Circuit Boards
Surface-Mounted
Switches
Image Sensing
MIL Connectors
Other
(Passive Entry/
Push-Button
Engine Start
Systems, Keyless
Entry Systems,
etc.)
26%
Switches
(Power Window
Switches,
Power Seat
Switches, etc.)
49%
Sales by
Product
25%
Power
Window Switches
Motor Controllers
(Electric Power Steering
Controllers, Power
Sliding Door Controllers,
etc.)
Electric Power Steering
Controllers
Social Systems, Solutions
and Service Business
Share of the Station
Equipment Market
(Japan)
Source: Internal survey
Approx. 50%
Healthcare Business
Other
(Software
Development,
etc.)
Engineering,
Environmental
Solutions
13%
Sales by
Product
48%
Public Transportation
(Automated Ticket Gates,
Ticket Vending
Machines)
31%
8%
Ticket Vending
Machines
Automated
Ticket Gates
Road Traffic
(Road Traffic
Management Systems,
etc.)
13%
Blood Pressure
Monitors
Other (Activity
Trackers, etc.)
Body
Composition
Monitors
5%
6%
7%
Sales by
Product
57%
12%
Share of the Home-Use
Blood Pressure Monitors
Market (Global)
Source: Internal survey
Approx. 50%
Other Businesses
Thermometers
Nebulizers
Low-frequency
therapy equipment
Environmental Solutions
Backlights
PV Inverter
LCD Backlights
Share of the
Residential-Use PV
Inverters Market (Japan)
Source: Internal survey
Approx. 35%
Electric Systems and
Equipment
Uninterruptible Power Supply
Units
Micro Devices
MEMS Pressure Sensors
29
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy Our Stakeholders
As stated in our Sustainability Policy, OMRON cultivates strong relationships with our
stakeholders through responsible engagement. We see these relationships as invisible assets
important for our sustainable growth. These relationships are also an indispensable part of
creating innovation driven by social needs. Here, we discuss some ways in which we engaged
with stakeholders during fiscal 2017.
Shareholders
(General Meeting of Shareholders)
We encourage our shareholders to attend the general meeting of
shareholders. We hold our meeting at least three business days prior to
the date used by the majority of companies in Japan. We send
convocation notices at least four weeks prior to the meeting, ensuring
shareholders have sufficient time to study proposals in advance. Feedback
from the meeting indicated an overall favorable assessment of our
willingness to answer questions and of the positive tone of the meeting.
Attendees
................893 persons
Ratio of Voting Rights Exercised
.......................86.0 %
Institutional Investors
(Interviews, Conferences, Factory Tours, etc.)
OMRON engages actively with institutional investors in Japan and across
the world through meetings and telephone conferences. During fiscal
2017, we held factory tours in Chicago and Shanghai, mainly for our
institutional investors. These tours included presentations about our
productivity improvements and regional growth strategies, as well as
question and answer sessions, helping investors learn more about
sustainable growth at OMRON.
Meetings
............824 companies
Investors and Other
Stakeholders
(ESG Meeting)
In December 2017, OMRON held our first-ever ESG information session.
The event featured presentations by executive officers discussing how we
incorporate the OMRON Principles in our approaches to human capital,
manufacturing and risk management. Attendees learned about OMRON in
ways not possible via usual investor relations activities. Some 120 investors
attended, as did ESG experts and scholars, students, and media
representatives. The event also served as an opportunity to receive direct
feedback about expectations of OMRON.
Attendees
..................165 people
30
Suppliers
(Global Partner Conference)
Suppliers are important OMRON partners. Every year, we hold the
OMRON Global Partner Conference to encourage a shared vision toward
creating new value. At the end of the conference, we have a gathering for
sharing opinions, which builds a stronger mutual understanding and a
more effective event. The May 2017 conference covered many important
topics, including the OMRON long-term vision, partnership frameworks
for innovative products, and initiatives for sustainability through supply
chain management.
Attendees
.....128 individuals from
97 companies
Employees
(OMRON Principles Missionary Dialogues)
Our chairman conducts OMRON Principles Missionary Dialogues as one
opportunity to engage with employees. During fiscal 2017, dialogues were
held in Korea, the Americas, Europe, and Japan. These meetings are an
opportunity for employees to discuss real-world examples of solving social
issues through practice of the OMRON Principles, to address the
importance of sustainability, and to interact with the chairman of OMRON
in an open and honest setting. These interactions help OMRON continue
to build a resilient organization.
No. of Dialogues
........................11 times
Other Stakeholders
(Exhibitions)
We exhibit at trade shows and other events to allow customers and other
stakeholders the chance to experience our business and technologies
firsthand. We exhibited for the first time at the U.S. Consumer Electronics
Show in January 2018. Our table tennis coaching robot, FORPHEUS, was
a highlight of the show, demonstrating our latest developments in factory
automation and mobility. Many luminaries from a wide range of industries
visited our booth, including Tom Soderstrom, Chief Technology &
Innovation Officer at NASA - Jet Propulsion Laboratory, experiencing the
OMRON vision of harmony between human and machine.
Booth Visitors
............18,000 +
*Fiscal 2017 results
31
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy Financial Highlights
Gross Profit Margin
ROIC
EPS
41.6%
12.7%
¥296.9
Gross profit margin
(excluding R&D expenses)
Selling, general and administrative expenses ratio
R&D expenses ratio
Operating income margin
(%)
50
40
30
20
10
0
36.8
37.1
38.5
39.3
38.5
39.3
41.6
23.5
23.4
23.5
23.4
24.7
24.4
24.7
6.8
6.5
7.0
6.7
8.8
6.2
FY
11
12
13
10.2
5.7
14
7.5
6.3
8.5
6.4
10.0
6.9
(%)
15
10
5
0
8.6
4.8
Earnings per share
Dividend payout ratio
Cash dividends per share
Dividend on equity
12.7
13.4
11.3
10.3
9.7
(Yen)
300
200
37.6
283.9
296.9
(%)
40
31.1
31.6
219.0
215.1
209.8
25.3
25.0
25.6
30
20
27.0
137.2
Expected cost
of capital
6%
100
74.5
53
37
28
71
68
68
76
10
0
1.9
FY
11
2.4
12
2.9
13
3.4
14
3.1
15
3.2
16
3.3
17
0
15
16
17
FY
11
12
13
14
15
16
17
We set a record high for gross profit
margin, driven by stronger earnings
capacity group-wide.
Our focus on ROIC management resulted
in a 12.7% ROIC, far above our 6%
expected cost of capital.
OMRON paid dividends of ¥76 per share,
representing a dividend on equity above
our target of approximately 3%.
Cash and Cash Equivalents
Ratio of Overseas Sales to Total
Net Sales
Capital Expenditures
¥113.0billion
Cash and cash equivalents
Total interest-bearing liabilities
(Billions of yen)
150
126.0
113.0
100
102.6
90.3
82.9
55.7
50
45.3
18.8
5.6
0
0.5
0.0
0.0
0.2
0.3
61.8% ¥38.9billion
Overseas total
Japan
52.2
51.1
47.8
48.9
55.4
44.6
60.1
60.3
58.4
61.8
39.9
39.7
41.6
38.2
(%)
70
60
50
40
30
20
10
0
Capital expenditures
Depreciation and amortization
(Billions of yen)
40
38.1
36.9
38.9
33.7
30
28.3
28.3
28.3
31.5
29.0
29.5
25.1
25.7
22.6
22.5
20
10
0
FY
11
12
13
14
15
16
17
FY
11
12
13
14
15
16
17
FY
11
12
13
14
15
16
17
We continued to conduct essentially
debt-free management, as cash balances
remain in excess of interest-bearing debt.
Overseas sales rose sharply as a
percentage of total sales, with Greater
China and Southeast Asia driving the
majority growth.
We followed an aggressive capital
investment plan to increase production
capacity in response to a strong market
environment.
32
Non-Financial Highlights
Ratio of Non-Japanese in
Managerial Positions Overseas
Ratio of Women in Managerial
Roles (OMRON Group in Japan)
Ratio of Employees with Disabilities
(OMRON Group in Japan)
49%
66
(%)
80
60
49
49
46
42
42
40
36
20
0
3.6%
2.59%
Ratio of women in managerial roles (left)
No. of women in managerial roles (right)
OMRON Group in Japan
Employees with disabilities
at OMRON Corporation
Japanese national average
(%)
8
6
4
2
0
59
8.0
60
(%)
5
53
36
2.3
30
27
1.8
1.9
23
1.5
3.3
3.6
3.14
3.11
3.40
3.24
3.14
3.33
3.33
2.24
2.22
2.35
2.44
2.41
2.47
2.59
1.65
1.69
1.76
1.82
1.88
1.92
1.97
45
30
15
0
4
3
2
1
0
FY
12
13
14
15
16
17
20
(Target)
FY
13
14
15
16
17
18
20
(Target)
FY
11
12
13
14
15
16
17
We are training and promoting local
managers in increasing numbers.
We are increasing the ratio of women in
leadership-level managerial roles in Japan.
We are striving to create more employment
opportunities and fulfilling work for disabled
persons.
* Key positions overseas are critical to executing our
* Figures represent results as of April 20.
* Figures represent results as of June 30 (including special
VG2020 long-term vision. Promotions or assignments to
these key positions require the approval of the CEO.
subsidiaries).
* For companies subject to the Act on Employment
Promotion etc. of Persons with Disabilities.
Environmental Contribution
Net Sales to CO2 Emissions
Energy-Generation Product
PV inverters
Energy-Saving Product
659thousand
ton-CO2
Environmental contribution
CO2 emissions of production sites
(Thousand ton-CO2)
1,000
851
661
659
593
508
313
189 193
203
215
221
202
202
204
800
600
400
200
0
FY
11
12
13
14
15
16
17
Electricity monitors (left) Environment ANDON (right)
We are expanding the environmental contribution of OMRON products and services that
reduce the impact on the environment. We also strive to reduce CO2 emissions at our
production centers through the use of our own energy saving products. For the sixth
consecutive year, our environmental contribution has exceeded the CO2 emissions from
our production centers.
* Environmental Contribution = Volume of CO2 emissions reduction contributed by society’s use of the OMRON Group’s
energy generation and savings products and services.
Calculation method : https://www.omron.com/about/sustainability/environ/contribution/products/
Indicates independent assurance performed by a third party.
Indicates independent verification or review performed by a third party.
P98
P98
¥4.22million /
ton-CO2
(Million yen / ton-CO2)
4.12
3.94
4.22
3.83
3.60
3.21
3.21
5
4
3
2
1
0
FY
11
12
13
14
15
16
17
* Net sales to CO2 emissions: Net sales per one ton of CO2
emissions
* Since fiscal 2016, OMRON has been using the following
published figures for the CO2 emissions coefficient
associated with electric power:
Japan: Ministry of the Environment-By Power Company
(updated annually); China: National Development and
Innovation Committee – By Power Company (updated
annually); Other: IEA, by country (2011)
https://www.omron.com/about/sustainability/environ/
reduce/co2/
* Figures revised retrospectively to reflect an updated
coefficient for CO2 emissions.
33
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy ¥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
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
193
¥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
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
203
¥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
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
215
¥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
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
221
¥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
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
202
¥794,201
311,802
193,539
50,697
67,566
96,532
45,987
77,875
(15,041)
62,834
(15,012)
697,701
126,026
156
469,029
215.1
2,193.7
68
31.6%
39.3%
8.5%
12.2%
10.3%
10.1%
67.2%
31.6%
25,692
28,966
58.4%
36,008
68.3%
8,224
593
202
(Millions of yen)
¥859,982
357,685
212,641
59,134
85,910
115,375
63,159
73,673
(55,842)
17,831
(33,082)
744,952
113,023
298
505,530
296.9
2,400.4
76
25.6%
41.6%
10.0%
13.4%
12.7%
13.0%
67.9%
48.2%
38,852
29,465
61.8%
36,193
68.1%
8,774
659
204
11-Year Financial and Non-Financial Highlights
OMRON Corporation and Subsidiaries (As of and for the years ended March 31)
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
Operating Results:
Net sales
Gross profit
Selling, general and administrative expenses (excl. R&D expenses)
R&D expenses
Operating income
EBITDA (Note 1)
Net income (loss) attributable to OMRON shareholders
Cash Flows:
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow (Note 2)
Net cash provided by (used in) financing activities
Financial Position:
Total assets
Cash and cash equivalents
Total interest-bearing liabilities
Total shareholders’ equity
Per Share Data:
Net income (loss) attributable to OMRON shareholders (EPS)
Shareholders’ equity
Cash dividends (Note 3)
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 4)
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 5)
Environmental contribution (thousand ton-CO2) (Note 6)
CO2 emissions of production sites (thousand ton-CO2) (Note 6)
Notes: 1. EBITDA = Operating income + Depreciation and amortization
¥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
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
–
34.8%
0.9%
6.2%
(7.6%)
(8.7%)
55.4%
–
36,844
33,496
49.7%
32,583
63.4%
5,205
¥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
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
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
187
2. Free cash flow = Net cash provided by operating activities + Net cash used in investing activities
3. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the fiscal year.
4. Total return ratio = (Total dividends paid + Amount of shares repurchased) / Net income (loss) attributable to OMRON shareholders (does not include repurchases
of less than one trading unit)
5. Patent information is as of March 15 each year.
6. Please refer to P33
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
34
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
3rd Stage Achieve a Growth
Structure
Fortify growth businesses
(high profitability)
Achievements
Increased earnings per share from ¥110.7
(FY2003) to ¥185.9 (FY2007)
Revival Stage
(February 2009 to March 2011)
Revised 3rd-stage targets due to an
abrupt change in the business
environment, implemented cost
reductions, and spun off Automotive
Electronic Components Business and
Social Systems, Solutions and Service
Business
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
(Millions of yen)
Operating Results:
Net sales
Gross profit
R&D expenses
Operating income
EBITDA (Note 1)
Cash Flows:
Selling, general and administrative expenses (excl. R&D expenses)
Net income (loss) attributable to OMRON shareholders
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow (Note 2)
Net cash provided by (used in) financing activities
Net income (loss) attributable to OMRON 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 3)
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 4)
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 5)
Environmental contribution (thousand ton-CO2) (Note 6)
CO2 emissions of production sites (thousand ton-CO2) (Note 6)
¥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
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
–
34.8%
0.9%
6.2%
(7.6%)
(8.7%)
55.4%
–
36,844
33,496
49.7%
32,583
63.4%
5,205
¥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
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
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
187
¥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
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
193
¥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
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
203
¥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
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
215
¥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
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
221
¥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
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
202
¥794,201
311,802
193,539
50,697
67,566
96,532
45,987
77,875
(15,041)
62,834
(15,012)
697,701
126,026
156
469,029
215.1
2,193.7
68
31.6%
39.3%
8.5%
12.2%
10.3%
10.1%
67.2%
31.6%
25,692
28,966
58.4%
36,008
68.3%
8,224
593
202
¥859,982
357,685
212,641
59,134
85,910
115,375
63,159
73,673
(55,842)
17,831
(33,082)
744,952
113,023
298
505,530
296.9
2,400.4
76
25.6%
41.6%
10.0%
13.4%
12.7%
13.0%
67.9%
48.2%
38,852
29,465
61.8%
36,193
68.1%
8,774
659
204
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.
FY2008 – FY2010
FY2011 – FY2013
FY2014 – FY2016
FY2017 – FY2020
Value Generation 2020 (VG2020)
GLOBE STAGE
Establishment of profit and growth
structures on a global basis
EARTH-1 STAGE
Establish self-driven growth
structure
Initial Target*1 FY2013 Result
¥750.0 billion ¥773.0 billion
¥100.0 billion ¥68.1 billion
42.0%
13.3%
over 15%
38.5%
8.8%
11.6%
Net sales
Operating
income
Gross profit
margin
Operating
income margin
ROE
*1 Announced July 2011
Initial Target*2
over ¥900 billion
Net sales
Gross profit
margin
Operating
margin
ROIC
ROE
EPS
*2 Announced April 2014
over 40%
over 10%
approx. 13%
approx. 13%
approx. ¥290
FY2016 Result
¥794.2 billion
39.3%
8.5%
10.3%
10.1%
¥215.1
VG2.0
Achieve self-driven growth by
creating innovation originated by
technological evolution
FY2020
Targets*3
Net sales
¥1 trillion
41%
Gross profit margin over
Operating income ¥100 billion
over 10%
ROIC
over 10%
over ¥300
ROE
EPS
*3 Announced April 2017
35
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionStrategy Special Feature 1:
CTO Interview
Creating Innovation Driven
by Social Needs
Anchored in the Future
Kiichiro Miyata
Director, Senior Managing Executive Officer, CTO
Over the years, OMRON has introduced numerous world-first innovations driven by social needs,
including the non-contact switch, the automated ticket gate, and many others. How has one company
been able to come up with innovation after innovation? One key is the backcasting method of
technology management practiced in our company beginning with our founder. OMRON established
the position of chief technology officer in 2015 in response to the increasingly disruptive changes in
society and technology. In our CTO position, we have recreated that technology management as
practiced under the keen insight of our founder. In this special feature, we discuss creating innovation
driven by social needs with CTO and OMRON technology leader Kiichiro Miyata.
— Three years have passed since you were named OMRON CTO. Can you tell
us about your thoughts when first named to the position and your
experiences to date?
OMRON is a leading technology company that
searches for solutions to customer and social
issues proactively through technology
development. The result is a unique collection of
nearly 90 business units, ranging from several
hundreds of millions of yen in sales to several
billions. In 1999, we adopted an internal company
structure, with each business division responsible
for its own technology strategy. Under this
structure, we experienced a significant leap
forward in the sophistication of our division
technologies. Over the past several years,
however, we have seen rapid innovations in AI,
IoT, robotics, and other new technologies. The
environment surrounding our businesses has
changed dramatically. To respond quickly and
flexibly, we felt the need for a cross-organizational
approach, establishing the position of CTO to
oversee group-wide technology strategy.
As the first OMRON CTO, I have been
responsible for developing our approach to
technology management and formulating an
OMRON-wide technology strategy to implement
over the long term. I believe we have set OMRON
technology management on a solid course over
the past three years.
36
CTO Interview
— The technology management you mentioned is regarded as a subset of
general business management. What makes the OMRON style of technology
management unique?
Technology management at OMRON relies on
technology innovation to perform near-future
design tailored to solving social issues. We then
outline and execute the strategy required to
realize this future design. The foundation of our
approach is the SINIC predictive theory espoused
by our founder, Kazuma Tateishi, in 1970.
SINIC predicts how the interplay among
science, technology, and society changes the
future social order and propels further social
evolution. New developments in science result in
new technology. New technology brings about
change in society, which give rise to new social
issues. These issues drive more technological
innovation, which impacts science. At OMRON,
we work to solve customer and social issues
arising in the interplay among these elements. In
other words, we create businesses based on
signals from society.
Under VG2.0, we exercise technology
management with a focus on the three areas
related to science, technology, and society: Open
innovation, core technologies (cross-organizational
and business-specific), and business incubation
through trial-and-error. I think our efforts in these
focus areas have been successful so far.
Basis of OMRON Technology Management and Fiscal 2017 Highlights
Core Technologies
Development of AI controller
Launch of i-BELT platform
Development of world’s
first on-board driver
monitoring sensors
Seed
Technology
Innovation
Impetus
Progress
-oriented
motivation
Need
Science
Society
Open Innovation
Alliance with RIKEN
(Japan’s largest research
organization for science)
Joint research with universities and
research centers (eg. MIT Media
lab, Stanford university Media X)
AI
IoT
Robotics
Business Creation
Zero Event: Eliminating brain
and cardiovascular diseases
DriveKarte: Driver
management platform based
on driver monitoring sensors
Brain Science
Computer Science
Life Science
Labor Shortages
Traffic Accidents
and congestion
Soaring Medical Cost
37
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness — In the three years since being named CTO, you have been able to create
an effectively functioning technology management framework. As CTO,
what do you see as the next task for OMRON growth?
To support this initiative, we created the
Innovation Exploring Initiative HQ, or IXI, in March
2018 as a company-wide innovation platform. IXI
has all the resources it needs to backcast
innovation driven by social needs, providing end-
to-end oversight of the process. As a platform, IXI
will work with entities both inside and outside our
organization to raise the output of innovation at
OMRON.
*1 Forecasting: Develop business and technology to solve current
customer issues and needs
*2 Backcasting: Develop business and technology based on the
near-future design for the next three to ten years,
anchored to our future vision of social issues,
technological innovation and development in science
We must speed our pace of creating innovation
driven by social needs if we are to deliver new
value for a better society.
I mentioned earlier that OMRON is a collection
of nearly 90 businesses. We have exercised a
degree of portfolio management in consolidated
some of those entities. Now, we need to create
new businesses to take their place and drive
continued growth. In other words, management
at OMRON is concerned with producing new
value from every corner of our organization,
leading to new products and services that
become an indispensable part of society.
We are building frameworks and organizations
that support new value creation, making the
process of innovation driven by social needs part
of our organizational knowledge. This process
consists of forecasting and backcasting.
Traditionally, OMRON has been skilled in
identifying social needs and then backcasting to
create unprecedented value. Under our company
structure, however, we began focusing mainly on
forecasting. Now, backcasting will have a
comparatively greater weight in our technology
management process.
OMRON Technology Management
Forecasting
Close Contact
with
Customers
Near-Future Design
Business Architecture
Technology
Intellectual
Property
Business
Model
Customer
Issues
Which applications, products, and
technologies should we develop now?
Backcasting
View of the
Future
Social Issues
Technological
Breakthroughs
Advancement of
Science
Taking the process for creating innovation driven by social needs and
turning it into organizational knowledge
38
Innovation Exploring Initiative HQ (IXI) as Group-Wide Innovation Platform
Innovation Driven by Social Needs
Near Future Design
Strategy Formulation
Business Verification
Responsible
Organization
OMRON SINIC X
Corporation
(OSX)
Project Management
Team
Business Creation
Team
Incubation Center
Identification of Issues
Execution
IXI
Business
Division
OMRON
Group
Members
— Many other companies have set up organizations to promote innovation,
some more effective than others. Why do you think innovation
acceleration initiatives are proving successful at OMRON?
For many years now, OMRON has used a process
template for backcasting to create innovation
driven by social needs. Another big factor is our
ingrained corporate culture in which employees
take the initiative to do courageous things.
This process template was in the mind of our
founder, an amazing entrepreneur. He was both
businessperson and engineer, combining both
aspects to identify signs of change in the world
and develop a super-specific image of the future.
At OMRON, we call this near-future design. We
contribute to a better society by developing
technologies and products necessary to achieve
near-future design, incubating businesses that
become an indispensable part of society. What we
will do is take the concept of backcasting near-
future design for innovation driven by social
needs, which existed as tacit knowledge in the
mind of our founder, and convert it into a process
based on explicit knowledge for use across our
organization.
As an example, let’s look at the innovative-
Automation and Zero Event goals we are pursuing
through our Industrial Automation Business and
Healthcare Business. We have backcast from a
near-future vision to start businesses in factory
automation and healthcare domains. We will roll
this process out across our entire group in the
future.
The OMRON Principles play a very big role in
our corporate culture, which is one of our major
strengths. The OMRON Principles espouses three
important values: (1) Innovation Driven by Social
Needs; (2) Challenging Ourselves; and (3) Respect
for All. These values have taken hold in our
employees. When we challenge them to create
innovation driven by social needs, many respond
enthusiastically, without fear of failure. We remain
committed to incorporating ideas from outside our
organization, and we have embraced open
innovation.
> Value Creation Model (P6)
> Message from the CEO (P8)
39
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness — Can you tell us about any specific initiatives for accelerating innovation
driven by social needs?
As our corporate innovation platform, the
Innovation Exploring Initiative HQ (IXI) is
responsible for backcasting the social needs
process for near-future design, strategy
formulation, and business verification IXI is home
to many experts from both inside and outside our
organization. We established OMRON SINIC X
Corporation (OSX) as a separate company under
the umbrella of IXI to develop near-future design.
OSX has brought in many top talents from outside
in the fields of AI, IoT, robotics, and other leading-
edge technologies. This company makes the best
use of its talented staff, while working with
research groups inside and outside OMRON,
engaging in open innovation and performing
near-future design. To maximize the effectiveness
of these activities, OSX provides unique human
personnel hiring and evaluation systems, including
allowing side businesses and moonlighting, that
could only work practically under the structure of
a separate company. I think the freedom with
which OSX researchers work will be a model of
work-style reform.
Another important role of IXI is to be the
storehouse of knowledge for OMRON in order to
speed innovation driven by social needs. To create
new value, we must double and triple our
attempts. I’m sure we will see our share of
failures. Each failure is one more point of learning
we can accumulate to ensure future success. Our
performance evaluations stress process even
more than results, encouraging employees to try
and try again without fear of setbacks.
Process of Creating Innovation by Social Needs
Process of Creating Innovation
Near Future Design
Strategy Formulation
Business Verification
Social Issues
Technological
Breakthroughs
Advancement of
Science
Target Customers
Value
Upgrading
Hypothesis
Prototyping
Means of
Implementation
Collection Method
Under-
standing
Customer
Incubation
Incubation
Retrial
Error
Process of Accumulating knowledge
Rebuilding Hypothesis
Cause Analysis
Verify all possibilities with different
domains/customer bases
Analyze causes of failure from the perspective of
value, cost, and technology, and retain records
40
OMRON SINIC X Corporation, home to top researchers in AI, IoT, robotics, and other leading-edge technologies.
(Photo, from left) Technology Advisor Yoshitaka Ushiku (concurrently working at the University of Tokyo), Technology Consultant Satoshi Kurihara
(concurrently working at UEC and Keio University), Researcher Felix von Drigalski (Ph.D., Nara Institute of Science and Technology), and Researcher
Atsushi Hashimoto (formerly of Kyoto University)
— Last question. What do you think is most important for innovation driven
by social needs?
Managing our processes effectively and fostering
our people.
We have mechanisms and organizations in
place. In the future, we need to carefully study
whether these frameworks are working
effectively. One job of the IXI is to make sure
information within divisions is identified and
shared across our entire group. At the same time,
IXI is responsible for communicating information
to entities outside the company on a timely basis.
Active internal and external communications in
this way will help our mechanisms function
effectively.
Our people, however, are the most important
factor. We have charged IXI with a responsibility
for providing a space to develop our strategic
personnel. Strategic personnel are those people
who will carry OMRON forward, displaying the
architecture skills, communications skills, and
follow-through necessary to lead our business.
When we want to launch a new project, we put
the idea together with strategic personnel from
the business division in question under the offices
of the IXI, after which a team is formed consisting
of people from different backgrounds. After
participating in and gaining experience in several
projects, these strategic personnel return to their
divisions providing even greater contribution. In
this way, we make full use of our strategic
personnel in mechanisms and organizations,
producing innovation after innovation for social
needs. This process makes sure innovation at
OMRON does not rely on a single person of
genius. Rather, innovation for social needs at
OMRON is driven organizationally.
You can expect more innovation driven by social
needs from OMRON in the future.
41
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Creating Innovation in Focus Domains
Factory Automation
Factory automation is a critical element of manufacturing for the vehicles, home appliances, and other
products to enrich people’s lives over the world. At OMRON, the Industrial Automation Business is the
main segment that drives business in the domain. We follow a unique concept called innovative-
Automation to bring production floor innovations to our customers around the world. We offer
manufacturing technologies and solutions backed by an industry-leading lineup of products, solving
social issues in the factory automation market.
Manufacturing Innovation Solving Production Floor Issues
Today’s labor market suffers from a shrinking labor
circumstances, expectations are higher than ever for
force due to aging and declining populations, soaring
solutions via AI, IoT, robotics, and other technological
labor costs among emerging economies, and a critical
innovations. innovative-Automation, combining our
shortage of skilled engineers. At the same time,
extensive lineup of automation control devices with
production floor processing and assembly tasks are
technology innovation, serves as a platform for
becoming more sophisticated and complex.
working with customers on day-to-day innovations to
Maintaining and improving high quality manufacturing
solve production floor issues.
is now the next issue to solve. Given these
Fiscal 2020 Targets and Fiscal 2017 Progress
Fiscal 2017 Progress
Net Sales in Domain
Industrial
Automation
Business (IAB)
¥396.1 billion
Progress Toward Sustainability Goals
Evolution in integrated, intelligent,
interactive through co-creation with
manufacturing customers (eg. Launch of
i-BELT production floor data service)
Fiscal 2020 Targets
Sales Target
Industrial
Automation
Business (IAB)
¥480 billion
Sustainability Goals
New innovative-Automation
products across
four focus industries
– Control technology for
manufacturing innovation –
Applicable
SDGs
Industry, innovation
and infrastructure
42
Factory Automation
innovative-Automation, Only From OMRON
innovative-Automation is a concept combining
the future of manufacturing to our customers:
emerging production floor needs and the unique
integrated (evolution in control), intelligent
OMRON value to provide automation solutions. This
(intelligence developed through ICT), and interactive
concept incorporates three interrelated is to deliver
(new harmonization between humans and machines).
Intelligence developed through ICT:
Realization of manufacturing
in which machines learn and evolve
through maximum use of data
We leverage the 200,000 different OMRON control devices, AI,
IoT, and other digital technologies to raise productivity and
quality on the production floor through ongoing evolutions in
automation (self-learning machines, etc.).
Evolution in control: Productivity gains
through ultra-high-speed, ultra-high-
precision machine controllers
Advanced replication of the skills and expertise of human
engineers, allowing for unprecedented high-speed, high-precision
processing and assembly. Our unique automation technology
improves manufacturing productivity and product quality.
ntelligent
ntegrated
nteractive
New harmonization between humans and
machine: Pursuit of ultra-high flexibility
through human-machine collaboration
Our goal is to create an ultra-adaptive production floor in which
machines anticipate and assist human movement.
For more about
this topic:
43
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Fiscal 2017 Highlights
OMRON offers critical control devices for the
reader Microscan Systems, Inc. (U.S.), which owns a
production floor, from sensors and other input devices
significant share of its main market. These
to controllers, servo motors, and other output devices,
acquisitions provide a solid foundation for the
from industrial robots to safety equipment. Our
products and applications that serve as the key
engineers work closely at customer facilities to
components of innovative-Automation. We also built
develop control devices that now outnumber any
more Automation Centers around the world to expand
competitor in our industry. OMRON Automation
our control application offerings and support
Centers engineers visit customer manufacturing sites
customers in solving their production challenges.
to conceive and produce unique control applications
incorporating a wide range of control devices.
In fiscal 2017, we acquired leading industrial camera
maker SENTECH Co., Ltd. (Japan) and industrial code
SENTECH Acquisition (July 2017)
SENTECH is an industrial camera maker
boasting an extensive lineup of nearly 200
different cameras featuring technology allowing
high-resolution features in small design
packages. We are combining the SENTECH
ultra-compact high definition camera design and
development technologies with our own image
processing technologies for innovative factory
floor solutions.
Microscan Systems Acquisition (October 2017)
Microscan develops a variety of code readers,
including bar code readers, 2D code readers,
and verification devices*. We are working with
Microscan to code information for a multitude of
objects (components, equipment) on the
production floor to provide a flexible
manufacturing environment that meets a diverse
range of needs. At the same time, this
technology will provide greater traceability for
resolving frequently occurring quality issue,
improving safety and raising confidence.
* Verification Devices: Devices that verify whether a printed
code meets specifications for quality.
44
Building More Automation Centers to Co-Create With Customers
OMRON Automation Centers serve as innovative-
States, China, Spain, and other areas of the world.
Automation hubs, engaging in critical co-creation
These facilities prove the effectiveness of unique
activities with an infinite variety of customers to
OMRON control solutions, including significant
develop new control technologies. Our centers are
leaps forward in the speed of equipment
home to a total 1,100 experts in production and
movement, new processing methods, traceability
robotics technologies who are also well-versed in
systems, and more.
actual production floor conditions. These experts
* Proof of Concept Labs: Facilities running verification tests on
conceive and develop new applications built on a
base of more than 200,000 different types of
OMRON control devices. Our 17 Automation
Centers and PoC Labs* are located in the United
actual equipment.
Italy
(Milan)
Spain
(Barcelona)
Korea
(Seoul)
Shanghai
(Two bases)
Japan
(Kusatsu)
India
(Mumbai)
Taiwan
Thailand
(Bangkok)
Singapore
Indonesia
(Jakarta)
Chicago
New Hampshire
San Jose
Detroit
Cincinnati
Mexico
(Bajio)
45
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Looking to the Near Future
Introducing i-BELT, a Co-Creation Business Model for Innovation
World-wide shortages of technical staff have
i-BELT consists of three major services: (1) Data
presented challenges for maintaining and improving
collection and accumulation; (2) Data visibility and
productivity and quality. This situation calls for
analysis; and (3) Device control. This has been
replicating the skills and knowledge of experienced
possible by the use of our AI controller, the first of
employees through automation, using AI, IoT, robotics,
kind in the industry. We have already developed
and other technologies. However, many customers
partnerships to incorporate devices from other
have yet to adopt specific manufacturing productivity
manufacturers into the i-BELT system. The Edgecross
initiatives based on IoT data, etc., being unable to
Consortium is an organization we operate with other
develop practical solutions on their own. In answer to
companies, aiming to harmonize factory automation
this problem, OMRON launched i-BELT as a new and
and IT beyond the traditional boundaries of
innovative business model in fiscal 2017. i-BELT is a
corporations and industries. This organization is one
service that uses data based on expertise and skills
more piece of the puzzle to building a highly practical
from OMRON and customer sources to allow anyone
data-usage environment for our customers.
the ability to incorporate IoT easily into their
manufacturing practices.
(2) Visibility, Analysis
Data
Accumulation
Analytical
Learning
AI Controller
Data Translation
Control Algorithms
Algorithm
(model)
(1) Data Collection
Sensing
Control
(3) Feedback for Device Control
Input Devices and Equipments
Output Devices and Equipments
s
e
c
i
v
e
D
r
e
n
t
r
a
P
s
e
c
i
v
e
D
r
e
n
t
r
a
P
46
An In-Depth Look
innovative-Automation Model Factory: Opportunities for Co-Creation
Our Automation Centers and local factory staff work together to develop control device solutions
in our own plants that we can introduce to our manufacturing customers. We call these plants
model factories for innovative-Automation acceleration, publishing the processes and results of
our efforts. Each year, more than 2,000 customers visit one of these facilities around the world.
Kusatsu Plant (Exterior)
Kusatsu Plant (Interior)
Case Study 1: Using Data to Automate Artisanship
Today’s employment environment struggles with shortages
of skilled workers and apprentices. To solve this issue, our
Kusatsu Plant has taken up the challenge to replicate and
automate the skills and knowledge of experienced
engineers. Making metal molds requires a machining center*
operated under the experience and intuition of a skilled
machinist. This is a key to quality and productivity for a mold
manufacturer. In observing a skilled machinist at work, we
noticed their careful attention to the differences in sound
from the piece they were grinding. Accordingly, we went
about automating this experience and skill. After much
trial-and-error, we developed a proprietary algorithm to convert vibration data into sound. Using changes
in sound combined with insight from experts, we were able to incorporate this technology into machine
control, reducing processing time by 40 percent and tool wear by 20 percent.
Highly skilled engineers can detect differences
in sound
* Machining Center: Machine tool for processing metal components.
Case Study 2: Freeing Workers From Monotonous Labor Through Robotics
and Manufacturing Technologies
Our plants in Shanghai, Kusatsu, and Ayabe are working to
solve the issue of labor shortages by automating lifting and
transport tasks using autonomous mobile robots. Mobile
robots outfitted with proprietary AI sensing technology can
move autonomously through a plant without causing injury
to humans or damage to property. We are working with
customers to develop mechanics integrating robot,
conveyor, and equipment, allowing these robots the ability
to handle products of various sizes, shapes, and weights.
Adaptive lifting and transport of this type will not only solve
labor shortages, but also create an environment in which
humans can focus on creating higher value.
Mobile robot with proprietary mechanics
47
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Healthcare
Healthcare Business provides the world with devices and services critical to healthy and active living.
Blood pressure management used to be the sole domain of hospitals. Today, OMRON works with
healthcare professionals to spread word of home-use digital blood pressure monitors that make
measurements easy and accurate. In this way and many more, OMRON will continue to solve social
health issues related to cardiovascular disease, respiratory disease, and pain management,
contributing to a better future society.
Extending Healthy Life Expectancies and Reducing Health Care Costs
The ultimate vision of our cardiovascular disease
business is Zero Events. Zero Events means
completely eliminating the incident of brain disease
and cardiovascular disease. High blood pressure is a
major cause of event onset. Human blood pressure is
never constant. It fluctuates continuously, rising in
response to stress, alcohol consumption, smoking,
sleep apnea, and other conditions. OMRON plays an
important role in preventing high blood pressure,
offering products and services that ensure everyone
receives the best diagnoses and treatment possible.
Our devices collect and analyze data about blood
pressure, sleep time and quality and activity level. We
can even track data related to genetics and
environment.
Our respiratory disease business, which deals in
nebulizers and other products, aids in the early
detection and treatment of asthma. Much of our work
is in the emerging economies of the world, where a
rise in air pollution is making asthma-related spasms
even worse. Our pain management business is
dedicated to helping people live healthy, active lives.
Here, we offer low-frequency therapy equipment and
other products to help manage pain without relying
on drugs. Our solutions relieve issues with foot, back,
and knee pain that tend to hinder everyday activity.
At OMRON, we are proud of our role in helping
extend healthy lives, reduce soaring medical costs,
and solve other social health issues through the
prevention and treatment of lifestyle diseases.
Global Health Issues
Brain and Cardiovascular
Disease Patients*1
Respiratory Disease Patients
(Worldwide)*2
Chronic Pain Patients
(Japan, U.S.)*3
17.5 million
440 million
73 million
Sources:
*1 World Health Organization
*2 International Respiratory Societies
*3 Pain in Japan (Japan), National Health Interview Survey (U.S.)
Fiscal 2020 Targets and Fiscal 2017 Progress
Fiscal 2017 Progress
Net Sales in Domain
Healthcare Business
(HCB)
¥108.5 billion
Progress Toward Sustainability Goals
Adoption of home-use blood pressure
monitors and nebulizers in emerging
economies struggling with rising lifestyle
and respiratory diseases (India, China,
etc.)
48
Fiscal 2020 Targets
Sales Target
Healthcare Business
(HCB)
¥150 billion
Sustainability Goals
• Blood Pressure Monitor Sales: 25 million
units/year
• Develop Technologies to continuously
monitor blood pressure fluctuations*4
• Nebulizer + Asthma Wheeze Monitor
Sales: 7.65 million units/year
Applicable
SDGs
*4 Target added
Good Health and
Well-Being
Eliminating Diseases Related to High Blood Pressure: Zero Events
An Evolution in Solving Social Health Issues
Zero Events is a major OMRON initiative
to completely eliminate deaths, bed
confinement, and other events arising
from stroke, myocardial infarction, and
high blood pressure.
Fiscal 2017 Highlights
Developing Innovative Devices for Advanced Blood Pressure Tracking
Blood pressure is never in a steady state. It fluctuates
throughout the day and varies from person to person.
Understanding the when and why of these individual
fluctuations is key to preventing and treating high
blood pressure. However, to gain this understanding
requires more frequent measurements throughout
the day. In response, OMRON is developing wearable
blood pressure monitors worn constantly like a
wristwatch. These monitors let users measure their
own blood pressure comfortably throughout the day
to identify fluctuations. These devices also track
activity (number of steps, etc.) and sleep data.
We are also developing combination blood pressure
with electrocardiograph devices that can share data
with personal physicians, revolutionizing personal
health care in the near future.
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Advancements in
Blood Pressure Monitors
Blood
Pressure
Advancement
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Pressure
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P
Blood
Pressure
ECG
* Under development
Blood
Pressure
Activity
Sleep
* Under development
49
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness
Looking to the Near Future
Personalized Healthcare for Zero Events
Individualized Diagnosis and Treatment Support Services
OMRON is developing sensing devices that collect
users reduce salt intake, exercise more, know when
and analyze a wide range of health-related data from
to go to the hospital, take their medicine, and provide
patients. This data includes vital signs, lifestyle data
other reminders and support tailored to the individu-
(exercise, diet), medical and genetic data (personal
al’s own characteristics and preferences.
and family health history, etc.), and much more. We
OMRON is changing the notion of personalized
are also developing advanced algorithms that use this
medical care through diagnosis and treatment support
data to identify the risk of brain and cardiovascular
services used by medical professionals and behavior
diseases with high precision. We are developing
change support services used by individuals for
services and applications that use this data to help
personal health management.
Patient
Doctor
Wearable Blood Pressure
Monitor
Blood
Pressure
Activity
Sleep
Upper Arm Blood Pressure
Monitor
Blood
Pressure
ECG
• Behavior
Change Support
• Personalized
Care
Providing Innovative
Device
Diagnosis and
Treatment Support
Data Accumulation
and Analysis
50
An In-Depth Look
Rising Use of Home-Use Blood Pressure Monitors to
Battle High Blood Pressure in Emerging Economies
More than 1 billion people are believed to
suffer from high blood pressure around the
world. In emerging economies, where
middle-class populations are exploding, we
expect to see a major rise in patients
suffering from high blood pressure due to
lifestyle diseases.
At OMRON, we believe in-home blood
pressure management is an important part
of prevention and improvement. We have
been working with governments and
medical institutions for many years to speed
the adoption of home-use blood pressure
monitors. Under this initiative, we
cooperated with the International Society of
Hypertension and the World Hypertension
League in a blood pressure measurement project, conducted in 100 countries in conjunction with World
Hypertension Day on May 17, 2017. For our part, we sponsored activities in India, China, and several other
countries to educate citizens about measuring blood pressure regularly. In India, we held blood pressure
measurement events in 13 cities, taking measurements for more than 1,300 people in total. In China, we
worked with the Chinese hyper tension association, the Ruijin Hospital (Shanghai Jiao Tong University
School of Medicine) and the Shanghai Research Institute of Hypertension, donating 8,720 blood pressure
monitors and taking measurements for nearly 490,000 people. Our fiscal 2018 goal is to conduct similar
activities across 200 cities, taking blood pressure readings for 1 million people.
Joint press announcement about the World Hypertension Day blood
pressure measurement program.
Expanding Production Capacity for Latin American
Markets
Brazil and other Latin American markets are experiencing a rise in high blood pressure and asthma
patients, linked to a growing middle class and lifestyle changes. In response to these circumstances,
OMRON acquired Brazilian nebulizer maker NS Indústria de Aparelhos Médicos (NS) in 2014. This
acquisition provided access to NS sales channels for our blood pressure monitors and nebulizers. In 2017,
we built a new blood pressure monitor production line inside NS, starting production of wrist blood
pressure monitors for sale in Brazil. In May 2017, we began construction of a new plant in Brazil to
manufacture blood pressure monitors and nebulizers for sale in Latin American markets. We expect the
plant to commence operations in 2019. Our aim is to increase production capacity in Brazil from 1.2 million
units in 2017 to 5.4 million units in 2022, meeting the growing demand in Latin America for our products.
51
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Mobility
Our goal in the mobility domain is to create a stress-free, safe, comfortable urban traffic system.
The main OMRON businesses tied to mobility are our Automotive Electronic Components Business
(AEC) and our Social Systems, Solutions and Service Business (SSB). Under these two segments, we
pursue safety, convenience, and free traffic flow through automobile components, traffic and road
management systems, and railway station management systems. OMRON will continue building a
mobility society in which people around the world can live in a safe, secure, comfortable, and clean
environment.
Eliminating Driver Error
Nearly 80 percent of Japan’s traffic accidents occur
due to inattention ahead of the vehicle and other
similar driver error. Elderly drivers, increasing in
number over the past several years, have been a
major factor in such accidents.
The world’s leading auto manufacturers and many
other companies are developing driving safety support
technologies to address this serious social issue. At
OMRON, we are combining our expertise in
automotive electronics technologies and road and
traffic control to develop technologies used both
inside and outside the vehicle. These technologies will
support safer driving and lead ultimately to a more
secure, safer mobility society.
Causes of Traffic Accidents (Japan)
Other
18.2%
Inattentive
driving
Failure to
check
safety
12.2%
2017
45.2%
Failure to
yield
24.4%
(Source) 2017 Traffic Accidents Situation , Traffic Bureau, National
Police Agency
Freeway Traffic Accidents by Cause (First Party)
Fiscal 2020 Targets and Fiscal 2017 Progress
Fiscal 2017 Progress
Net Sales in Domain
Automotive Electronic
Components Business (AEC) ¥131.2 billion
and Service Business (SSB) ¥63.7 billion
Social Systems, Solutions
Progress Toward Sustainability Goals
• Introduced DriveKarte (ACE, SSB),
world’s first driver management service
for safe driving using on-board driver
monitoring sensors
• Developed high-precision 3D-LIDAR
(AEC); self-driving technology
• Ratio of high fuel efficiency products in
eco-friendly vehicles: 36% (AEC)
52
Fiscal 2020 Targets
Sales Targets
Automotive Electronic
Components Business (AEC) ¥150 billion
¥80 billion
Social Systems, Solutions
and Service Business (SSB)
Sustainability Goals
• Creation of driving safety support systems/
technologies (SSB)
• Creation of 360-degree around-the-vehicle
recognition technology for advanced driver
assistance/automated driving (AEC)
• Number of vehicles equipped with eco-
friendly products: 12 million/year
(ratio of high fuel efficiency products; 50%)*
Sustainable Cities and
Communities
Affordable and Clean
Energy
Good Health and Well-
Being
Applicable
SDGs
* Target updated
Fiscal 2017 Highlights
New Products for Driver Safety
3D-LIDAR and DriveKarte are two leading examples of
driver support technology under development at
OMRON.
3D-LIDAR is a jump forward in the advancement of
self-driving vehicles on public roads. The cameras and
millimeter-wave radar used in most forward-detection
sensors today have major weaknesses, including
performance in bad weather and the detection of
certain types of obstacles. 3D-LIDAR, on the other
hand, can be used in parallel to detect curbs, drop-
offs, and other obstacles as small as 10 centimeters
and as far away as 30 meters.
The DriveKarte is a management service that uses
data collected from on-board driver monitoring
sensors. We have started sales of DriveKarte to
customers in the logistics and other industries
struggling with chronic labor shortages. The system
detects dangerous driving conditions (sleep, distracted
driving, etc.) based on the driver’s eyelids, line of
sight, and other attributes. When a dangerous
condition is detected, the system warns the driver
and sends an email to an operations manager. We are
developing a score that will be useful in detecting
dangerous driving conditions and providing guidance
for safe driving.
Looking to the Near Future
Advanced Driver Information Sensing
We have launched a new initiative in safe driving
technology: Driver biological information diagnosis.
We are integrating our industry-leading biological
information sensing technologies (blood pressure,
pulse wave) into safe driving systems to manage the
physical condition of a driver. We expect this
technology will be used in applications to prevent
accidents of the type caused by the incapacity of an
elderly person behind the wheel.
3D-LIDAR
in and out
camera
GPS antenna
Accessory socket
DriveKarte*
*Trademark registration pending
53
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Energy Management
Our energy management domain advances the adoption of renewable energy to reduce CO2 emissions
and build a society in which people live in comfort. We work with our partners to promote the use of
power conditioners and storage battery systems for the benefit of a clean environment. The OMRON
Environmental Solutions Business (under corporate headquarters) and Omron Field Engineering Co.,
Ltd. (maintenance and services subsidiary of Omron Social Solutions Co., Ltd.) are the two entities
through which we conduct most of our environmental business.
An Expanding Renewable Energy Market
While industrial activity has made our modern lives
much more convenient, this same activity has given
rise to increasing levels of CO2 and other greenhouse
Japan’s Future Energy Structure
gases. Today, we face the risk of major environmental
Production Capacity
Double Solar Power
damage and economic loss. The government of Japan
has set targets to increase the use of energy from
renewable sources from 15 percent (fiscal 2015) to 24
percent by the year 2030. Forecasts estimate the use
of solar power will double, from 3.3 percent to seven
percent in that same time frame. OMRON is doing
our part to promote renewable energy and reduce
greenhouse gases through power conditioners and
storage batteries used in connection with solar power
systems.
Solar
Power
3.3%
Renewable
Energy
15%
Renewable
Energy
22% to 24%
Solar Power
7%
Nuclear Energy
20% to 22%
Thermal Energy
56%
Fiscal
Year
2015
2030
(Source) Ministry of Economy, Trade and Industry, isep
Fiscal 2020 Targets and Fiscal 2017 Progress
Fiscal 2017 Progress
Progress Toward Sustainability Goals
Cumulative shipped capacity of solar
power/storage battery systems: 8.0GW
Fiscal 2020 Targets
Sustainability Goals
Cumulative shipped capacity of solar
power/storage battery systems: 11.2GW
Build the energy resource aggregation
business using solar pv/storage systems
(Japan)*
Affordable and Clean
Energy
Climate Action
Applicable
SDGs
* Target added
54
Fiscal 2017 Highlights
A New Use Case for Solar Power Systems
A new trend in solar power system adoption is taking
possible to supply electricity to local governments,
hold. Solar power systems have had challenges
which can be used as autonomous power during
gaining traction among local governments due to
costs and maintenance issues. NTT Smile Energy*1,
power outages. Where does OMRON come in? We
supply the power conditioners for these systems, the
however, has come up with a novel solution. Rather
preferred choice based on our track record in the field.
than installing solar power systems in public facilities
In this way and many others, OMRON is committed
and charging electricity usage fees, the company has
to spreading the use of renewable energy, as we
introduced a service for local governments to pay rent
work with partners to develop new service models.
on solar power installations. This service makes it
*1 NTT Smile Energy is a joint venture funded by OMRON and NTT
West Corporation, established in June 2011.
Free School Solar Power Installation Project
Solar Power
Conditioner
Installation
Local Government
Solar Power System
Installation
Equipment Owner/
Operator
Electricity
NTT Smile Energy
Electricity Sales
Power
Company
Autonomous
Power Supply
Emergency
Shelter
Rooftop Usage Fees
Depreciable Asset Tax
Disaster shelter with
autonomous power
Greater rent and tax
revenues
Higher renewable
energy adoption
Construction
Costs
Equipment Design, Construction,
Operation, Maintenance
Contractor
Looking to the Near Future
Building a Power Aggregation Market Using Solar Power and Storage Batteries
More companies around the world are embracing the
international RE100*2 initiative, adopting renewable
energy for the transition to a low-carbon society.
Demand for renewable energy is rising in Japan, just
as in many regions, requiring aggregation of electricity
and effective controls. OMRON is leveraging our
strengths in equipment installation, servicing, and
maintenance to create an aggregation business that
bundles electricity from solar power systems with
controls and intelligently networked equipment.
Energy Providers
Resource
Aggregators
Control of Bundled
Equipment
(Electric Power)
Remotely
Partnership
Partnership
Partnership
Company
A
Company
B
Offices, Stores, Factories, Apartment Buildings,
Houses, Housing Complexes, Outdoor Equipment
*2 RE100 is an international initiative supported by companies
Consumers
committed to using 100% renewable power.
55
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness In Support of Innovation
Human Resources Management
Personal and Organizational Growth, the Driver of Innovative Creation
Under VG2.0, our human resources strategy calls for
continually. We have set goals for the year 2020 in the
creating a strong company where employees grow,
five following different areas to accomplish this
enjoy their work, and improve performance
objective.
Progress Toward Human-Resources Related Sustainability Goals
Talent Attraction and
Development
Diversity and
Inclusion
Wellness
Management
Fiscal 2020 Goals/KPIs
Fiscal 2017 Progress
Evolve and advance
the OMRON Global
Awards (TOGA)
P57
P58 Special Feature 2
Increase in the number of projects
designed to solve social issues
Ratio of non-Japanese in managerial
Ratio of non-Japanese in managerial
positions overseas: 66%
positions overseas: 49%
Accelerate the PDCA
cycle via employee
engagement surveys
P57
Identified 10 management issues
Ratio of women in managerial roles
Ratio of women in managerial roles
(Japan): 8%
(Japan): 3.6%
Employment of disabled individuals:
employ more disabled individuals
than required by law
Ratio of employees with disabilities:
2.6% (Japan)
Raise awareness of personal wellness
Published the OMRON Health
management, Boost 5 (Japan)
Management Declaration
Health information seminars for
employees
Launched projects at six production
centers
Occupational Health
and Safety
Working to obtain international
occupational safety and health
certifications at major production
centers (representing 80% of
production capacity)
Respect for Human
Rights and Labor
Practices
Define and adopt due diligence
Revised policy and structure system
process
for human rights
Human resources risk analysis and
corrective actions at production
centers
Risk analysis based on Responsible
Business Alliance* self-assessment
questionnaires: Performed at 16
production centers
(Note) Highlights of major goals and performance provided for reference. Please see the OMRON corporate website for more about our sustainability
targets and progress.
* Global CSR alliance for the electronics industry.
56
Case Study
TOGA and Engagement Surveys for Sustainable Growth
OMRON seeks leaders who can drive innovation and talented employees to solve social issues through
our businesses. Launched in 2012, the Omron Global Awards (TOGA) is an annual global employee-
participation awards presentation. TOGA is an important part of how ORMON builds a culture motivated
to put the OMRON Principles into practice through their work. In 2016, we introduced the VOICE
engagement survey (VG OMRON Interactive Communication with Employees). This voice-interactive
survey for employees dealing with social issues encourages frank feedback by which management
uncovers and addresses issues in our business. These two initiatives are critical parts of sustainable
growth for our people and our organization.
TOGA Evolution and
Advancement
TOGA is becoming a more important part of
our global organization with every year. We
saw record participation in fiscal 2017 with
more than 50,000 employees. At first, many
entries dealt with the employee spirit of
challenge. Today, we see more initiatives that
address solving social issues. We are also
seeing more projects that span national,
regional, and business borders, as well as
examples of solving social issues through
innovative partnerships with customers,
government institutions and others.
Number of Participants and Topics
Participants
Topics
(participants)
50,000
40,000
30,000
20,000
10,000
0
51,093
(Topics)
9,000
46,885
38,100
32,751
23,524
20,828
5,003
4,173
3,651
2,481
2,519
6,216
6,000
3,000
0
FY
2012
2013
2014
2015
2016
2017
Engagement Surveys to Identify and Address Issues
Based on survey results from the prior year, we explored a number of different work styles (teleworking,
etc.) and self-development programs in Japan during fiscal 2017. Overseas, we stepped up our talent
search and human resources training. We discussed our fiscal 2017 results in the Executive Council,
identifying five important issues and launching specific programs in response. These issues include
decision-making speed and encouraging our younger employees to be more proactive. As an example,
we are moving and evaluating human resources development functions traditionally performed in Japan
overseas to increase the speed of decision-making at our operations around the world. Our head office
in Europe is taking the lead in standardizing processes overseas, aimed at the future global integration
of accounting and finance operations.
Fiscal 2017 Engagement Survey Overview
Survey Targets
Response Rate
No. of Questions
Languages
Additional Comments
Engagement Score*
Group-Wide Management Issues
All 24,000 global employees (excluding manufacturing operators)
85% (20,000 responses)
76 Questions/15 Categories
Survey published in 26 languages
7,600 (optional feedback from employees to management)
71 points (+11 points vs. prior year)
10 issues identified (five deemed high priority)
* Score indicating pride as a member of OMRON, job motivation, and sense of accomplishment
57
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Special Feature 2:
Putting the OMRON Principles Into Practice
TOGA (The OMRON Global Awards)
TOGA is a program for sharing real-world examples of the OMRON Principles in
action, fostering a culture motivated to create value. This year, we saw many TOGA
entries highlighting innovation driven by social needs. These entries were inspired
by creating value for society, creating value through paradigm change, and
working effectively with partners inside and outside our organization.
For more about
this topic:
Case Study 1 Medical Treatment Innovation Offers Unified Patient Administration
Promoting Metabolic Management Centers (China)
More than 110 million Chinese suffer from diabetes,
many also struggling with kidney, eye, or other diabetes-
related complications. Meanwhile, China has only 20,000
or so diabetes specialists to offer care. Many patients
must visit several different doctors, wasting precious
time and money. In response to this situation, OMRON
MEDICAL (Beijing) Co., Ltd. brought together diabetes
specialists, pharmaceutical companies, and medical IT
companies to launch standardized metabolic
management centers, or MMCs, providing proper
treatment for diabetes patients. The MMC is a part of a
system using big data to combine examination and
treatment data from hospitals with measurement data
take in the home. This standardized administration
platform now allows for uniform treatment for patients in
China. Since its founding in 2016, the MMC system has
been joined by 188* medical institutions from 28
provinces and districts across China.
* As of February 2018
Across 28 Provinces
188 Medical Institutions Join MMC
Presentation by Mr. Zhenjie Li, representing China at the global
conference
Comments from Outside Director and Audit & Supervisory Board Member
Kuniko Nishikawa, Outside Director
OMRON TOGA entries consist of initiatives that address real issues, built on a practice
of the OMRON Principles. Based on my own past experience, the Metabolic
Management Center project must have been an extremely complex venture. Despite
the challenges, OMRON provided an amazing solution. This program will tie in to the
OMRON blood pressure monitor business and other services, potentially rolling out in
other countries struggling with similar issues. The project in Mexico was another
example of addressing a real issue. The manufacturing industry is grappling with the
issue of declining productivity due to the lack of skilled technicians. I can see how
employees who understand both technology and customer production floor operations
contribute to business growth.
58
TOGA winners
Top Management at TOGA
TOGA Presentations Across the World
Case Study 2 Respect for All is the Key
Reducing Employee Turnover Through Mutual Respect (Mexico)
Omron Automotive Electronics de Mexico S. de R.L.de
C.V. (OAX) is located in the state of Guanajuato, home to
the largest concentration of automobile manufacturers in
Mexico. Here, employment is expected to grow 46
percent through the year 2020. This environment has led
to competition for employees, creating serious issue of
turnover not only for OAX, but also for many other local
manufacturers. OAX took the OMRON Principles
declaration of Respect for All to heart, starting the
OMRON High School (high school education) for the
more than 100 OAX factory employees. The company
also introduced 35 other projects for the local
community. OAX employees felt more pride as part of an
organization contributing to the economy, and fiscal 2017
employee turnover fell 21 percent year on year. These
initiatives have fostered a culture of mutual respect and
encouraged a culture of innovation. These programs have
also forged stronger relationships between the company,
customers, and the local community.
Fiscal 2017 OAX Turnover
21% Reduction (Vs. Prior Year)
Presentation by Ms. Krizia Chavira (left) and Ms. Adriana Guzman (right),
representing the Americas at the global conference
Hideyo Uchiyama, Audit & Supervisory Board Member (Independent)
As an outside Audit & Supervisory Board member, I have the opportunity to participate
in board of director meeting discussions of OMRON’s medium-term management
plan, human resources strategy, and other matters. At the same time, I am deeply
interested in whether frontline employees are motivated to achieve these plans and
execute strategies. Does every employee have a real awareness and understanding of
management goals? Seeing the TOGA presentations and talking with employees,
I understand how employees worldwide put the OMRON Principles into practice in the
workplace. I see how they apply the principles to their own roles within the
organization. I think we can say many employees resonate with the goal of solving
social issues within their own set of values, linking achievement of this goal to
motivation in their work. Once again, I am convinced that the long-term improvement
in OMRON corporate value is supported by the daily work and actions of focused and
motivated employees.
59
Comments from Outside Director and Audit & Supervisory Board Member
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness Manufacturing
Supporting Innovation Through Sustainable Manufacturing Practices
Without sustainable manufacturing practices,
OMRON could not produce innovations responding to
rapid technology breakthroughs and emerging social
needs. Sustainable manufacturing requires practices
that consider product safety, labor conditions, and the
environment. At the same time, we must deliver
products that customers can use with confidence. In
keeping with this commitment, OMRON is working
toward our fiscal 2020 sustainability goals.
Progress Toward Sustainable Manufacturing Goals
Fiscal 2020 Goals/KPIs
Fiscal 2017 Progress
Product Safety and
Quality
Ratio of product safety assessments
for newly developed products: 100%
Upgrade of product safety
assessments*1
100% implementation
Supply Chain
Management
Sustainability self-checks at major
Sustainability self-checks at major
suppliers*2:
100% implementation;
score of 85 points or
better
P60
suppliers:
No companies scoring below 65
points
*1 Target added
*2
Sustainability Check: Questionnaire sent to suppliers who self-report their initiatives regarding labor, occupational health and safety, environment,
and other categories. Companies scoring 85 points or higher are considered a low risk; a score of below 65 is considered a high risk. Conformity with
Responsible Business Alliance standards.
Case Study
Building Sustainability Together With Suppliers
As we deal with a more diverse and global group of new suppliers, we recognize the pressing need to bolster
sustainability in our supply chain. At OMRON, we work with our suppliers to build a sustainable society,
identifying as partner suppliers those whom we judge as outstanding in quality, cost, delivery, environment,
and safety. We ask major suppliers to complete a sustainability self-check in accordance with standards
established by the Responsible Business Alliance. Besides self-checks for partner suppliers, we have defined
minimum sustainability standards for all global suppliers. In fiscal 2017, our joint efforts with suppliers resulted
in every partner supplier scoring 65 points or higher on sustainability self-checks.
Partner
Suppliers
Sustainability Self-Check for Partner Suppliers
Implementation ratio: 100%
Score of 85 points or higher
Conformity with Responsible Business Alliance Standards
Minimum Sustainability Requirements for All Suppliers
Contractual obligations (prohibition against child labor, elimination of anti-social forces, etc.)
Systems assessments, certifications related to quality, the environmental
Suppliers
impact, and regulated chemical substances
Self-check for compliance with the OMRON CSR Procurement Guideline
Assessment of financial stability
60
Environment
Introducing OMRON Carbon Zero*1
We believe that building an environment for a
sustainable society is part of improving lives and
contributing to a better society, as stated in the
OMRON Principles. In support of this ideal, we pursue
initiatives under our Green OMRON 2020
environmental vision.
In July 2018, we set new environmental targets
under OMRON Carbon Zero, aligned with the recent
Paris Agreement and the SDGs. Our target is to
reduce Scope 1 and Scope 2*2 greenhouse gas
emissions to zero by fiscal 2050. Our interim goal is
to reduce emissions 32 percent (vs. Fiscal 2016) by
fiscal 2030. Backcasting from these targets, we have
set a fiscal 2020 goal to reduce emissions by four
percent. We are even starting to consider reducing
Scope 3*3 gas emissions in the near future. OMRON
has announced that it will set its greenhouse gas
emissions reduction target based on scientific
grounds for the SBTi*4.
We has built a global framework to achieve our
environmental targets, and we are adopting energy
conservation and renewable energy practices across
our organization. At the same time, we are moving
forward with projects that use the expertise
developed in our renewable energy businesses in our
own company.
*1 OMRON Carbon Zero: a term used to gain recognition for OMRON’s efforts for the reduction of greenhouse gas emissions.
*2 Scope 1 and Scope 2: Direct greenhouse gas emissions from the use of fuels at our company (Scope 1) and indirect greenhouse gas emissions
resulting from the use of electricity and heat purchased by our company (Scope 2).
*3 Scope 3: Greenhouse gases emissions from our company’s value chain.
*4 SBTi: Science Based Targets Initiative. International initiative recommending science-based medium- and long-term targets to reduce greenhouse
gas emissions.
Greenhouse Gas Emissions
Reduction Targets
Target
Reduction
(%)
Fiscal 2016
(Reference Year)
0
Fiscal
2020
Fiscal
2030
Fiscal
2050
4%
Reduction
32%
Reduction
25
50
75
100
Greenhouse Gas Emissions Reduction Activities
(CO2/kWh)
Renewable
Energy
CO2
Reduction
C
O
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E
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F
a
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o
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CO2 Emissions
Energy
Conservation
Energy Conservation and Renewable
Energy Usage
Energy
Conservation
Renewable
Energy
Upgrade equipment (high-
efficiency equipment)
Pursue ongoing energy
conservation activities
Adopt renewable energy
sources (for self-consumption)
Procure renewable energy
Purchase tradable green
certificates
100%
Reduction
Electricity Usage
(kWh)
Progress Toward Environmental Sustainability Goals
Fiscal 2020 Goals/KPIs
Fiscal 2017 Performance
Reduce Greenhouse
Gas Emissions*5
Achieve four percent reduction in
greenhouse gas emissions
(vs. fiscal 2016 SBT conformity)*6
Environmental contribution*7 greater
than CO2 emissions at production
centers
Environmental contribution of
659k tons of CO2 saved vs. 204k
tons of CO2 emissions from
production centers
*5 New goals incorporating sustainability targets for greenhouse gas emissions from the Green OMRON 2020 environmental vision
*6 Target added
*7 Environmental contribution: CO2 emissions reduced through the use of OMRON energy saving, storage, and generation products and services
61
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness
Risk Management
Supporting Global Expansion
In 2011, we launched the OMRON VG2020 long-term
vision. This led to review our existing risk management
activities to adopt a new Integrated Risk Management
platform. Our new risk management platform reflected
the thinking of the top management that the faster
pace of change in the operating environment and rising
levels of uncertainty called for preparation and rapid
response to risk. Management felt the need for
OMRON to become more attuned to risk, identifying
and addressing risks at the earliest stages.
OMRON faces a variety of risks as we expand across
the globe. Accordingly, we have identified and
categorized the entire spectrum of risks that impact
management performance and financial health. Having
Businesses and Risk
defined these risks, we then charted their
interrelationships. The risk categories defined consist
Macro Environment Risk; Natural Disaster Risk;
Management, Business Strategy, and Financial Risk
(including Human Risk and Legal Risk); and Resource
and Infrastructure Risk.
We use this framework as a link between
management and the local workplace, helping
management work with local staff to deal with
OMRON Principles-based risk management issue.
Under our current VG2.0 plan, we take actions related
to business risk management that help us respond to
new challenges including creating value through
innovation.
External Risk
Management, Business Strategy, Financial Risk
Macro:
Economic downturn
Macro:
Market trends
Finance:
Ratings downgrade
Macro:
Economic fluctuations
Finance:
Yen interest rates up
Finance:
Market volatility
Macro:
FX rate movements
Human
capital:
Wages up
Human
capital:
Shortage of
management
Quality:
Environmental rules
Regulatory:
Labor code
Legal:
Anti-bribery
Legal:
Anti-trust
Quality:
Defects, recalls
R&D:
Patent disputes
R&D:
Brand infringement
Legal:
Environmental law
infringement
R&D:
Change in specifications
Human
capital:
Industrial accident
Legal:
Information securities
Procurement:
Price changes
Legal:
Security trade controls
Quality:
Initial response failure
Procurement:
Supplier CSR
issues
Human Risk
Legal Risk
Natural disaster
IT
security:
Data breach
Procurement:
Component shortages
Contagious disease
IT
security:
Major data collapse
Production:
Shipments halt
IT
security:
System failure
Production:
Production halt
Natural Disaster Risk
Resource, Infrastructure Risk
*Graphic representation of the business risks as shown on https://www.omron.co.jp/ir/keiei/risk.html
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62
Integrated Risk Management Structure
Integrated risk management at OMRON consists of
three main activities:
1. Performing an annual global risk analysis to identify
important risks and formulate responses
2. Forming a crisis response measure when a risk
develops into a crisis
3. Reporting important risk information promptly and
providing information to relevant parties (risk
information management)
We formalized this shared framework into a document
titled, OMRON Group Rules for Integrated Risk
Management. This document clarifies the role of risk
management. We have appointed risk managers in
each head office department, each division, each
regional headquarters, and each group company in
Japan and around the world. These risk managers are
responsible for coordinating risk management
activities at the local office level.
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
Execute Plan
Share and report information related
to important risks
Conduct activities based on the plan
Corporate ethics month
Do
Board of Directors
Annual activity review
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
Act
Check
Analyze Global Risk
Headquarters, regional headquarters,
divisions
Corporate Ethics & Risk
Management Committee
Annual activity review
Share analysis of risks
Select important Group risks (draft)
Disclose Results of Activities
Important Risks and Risk Information Management in the OMRON Group
OMRON assigns a rank of “S” to the most critical
risks that may endanger business continuity of the
OMRON Group, or call into questions important
issues of group social responsibility. We assign a rank
of “A” to risks that may impede achievement of key
group goals. Every year, the Corporate Ethics & Risk
Management Committee discusses risks, while the
Executive Council assigns categories to these risks.
As part of our risk information management system,
we monitor the status of important events related to
external risks. We check nearly 100 global information
sources on a daily basis. As a rule, important risk
information within the group is reported to our head
office within 24 hours.
OMRON Group Material Risks
(Fiscal 2017)
S Risks:
Business continuity, violation of global
laws (bribery, etc.)
Global information/IT security risks, etc.
A Risks:
Employee safety, Internal fraud,
occupational health & CSR compliance,
Group management, etc.
63
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness
Advancing Business through Evolving Group Governance
Rules and regulations arising from technological
innovations such as AI and IoT and concerns on
environment and information securities have
significant impact on activities of a company. OMRON
takes these change and risk as an opportunity for
growth of the group. OMRON pursues certain
measures to help us reach advanced levels of group
governance. During fiscal 2017, we pursued
sustainability initiatives aiming for the goal in fiscal
2020.
Progress Toward Sustainability Goals for Risk Management
Fiscal 2020 Goals/KPIs
Fiscal 2017 Progress
Consistent promotion of OMRON
Group Rules*1 at all sites
P65
Launch of global web-site and
system for training and monitoring
Global training in ethics rules
Training offered to 30 thousand
employees in 25 languages
Consistent promotion of OMRON
Group Rules at all sites
Build a new security system
Launch of global cyber security
meeting and CSIRT*2
Fair Business
Practice
Information
Security,
Personal
information
protection
*1 OMRON Group Rules encompass 24 separate topics, including ethical conduct, risk management, unauthorized control , information security,
security export control , IT controls, accounting and funding , labor and occupational health, environmental management, procurement, and brand
management.
*2 CSIRT: Computer Security Incident Response Team
64
Case Study
Instilling OMRON Group Rules Worldwide
We established the OMRON Group Rules (OGR) as a framework to promote efficient and effective risk
management, compliance, and other matters of group governance on a global scale. In addition to
OMRON Principles as a shared group management policy, the rules provided in OGR will help us
accomplish goals in three areas: Group Management, Business, and Employees.
Group Management Appropriate and minimum necessary controls
Business
Employees
Management transparency, fairness, and global vision
Appropriate, responsive decision-making based on shared
understanding
Quick integration of acquisitions, establish companies in emerging
economies, and localize company management
Raise employee motivation through clear rules, allowing employees
to focus on their business activities
We spent three years to produce OGR. OMRON employees from around the globe participated in the
project, ensuring the rules took regional differences in law, societal demands, and culture into
consideration. We adopted OGR fully during fiscal 2017, holding training programs, publishing information
releases through our global website, monitoring, and performing audits to make the rules an integral
part of our organization. We still have work to do, however, to instill OGR group-wide. We will continue
to provide communications, training, and standardization across the group to raise awareness of the
rules. We also facilitate information exchange among local leaders on a regular basis, promoting ways to
incorporate OGR into business processes and daily operations.
OGR global team members discuss how the rules are being adopted in each location
The New Global OGR Database
Post-Merger Integration Process
Prior to VG2020, we had no standard rules for post-merger integration (PMI). Quickly integrating new
businesses into the group was not an easy task. After implementing a PMI program as part of the OGR,
we have been able to integrate understanding of the OMRON Principles, management, human
resources, sales, facilities, and other matters smoothly, comprehensively, and according to schedule.
We used this program in our fiscal 2015 acquisition of Delta Tau Data Systems and Adept Technologies
and achieved effective integration process.
65
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionBusiness
Message from the Chairman
“We are reaching for new levels of
corporate governance in pursuit of
sustainable growth for OMRON
and society.”
66
In 1959, OMRON founder Kazuma Tateishi
audit and supervisory board and a company with a
formally defined the OMRON corporate motto, “To
nominating committee. Each of these committees
improve lives and contribute to a better society.”
is chaired by an independent director. All of
In 1990, OMRON updated this motto under the
OMRON’s independent directors are persons with
OMRON Principles, revised a third time in 2015.
a diverse business background. In 2015, we began
As OMRON has grown in scope and geographical
evaluating the effectiveness of our board of
reach, the role of the OMRON Principles has
directors through the Corporate Governance
become even more important as a unifying force.
Committee, made up of independent directors
Our last revision reflected our strong emphasis on
and independent Audit & Supervisory Board
innovation driven by social needs. We began
members. Also in 2017, we introduced a new
operating under the VG2.0 medium-term
stock-based compensation system tied to long-
management plan in 2017. Our goal under this plan
term performance. This system serves to motivate
is to improve corporate value while solving social
inside directors and executive officers by tying
issues in domains likely to experience the most in
compensation to sustainable improved corporate
terms of social needs.
value, evaluated based on VG2.0 progress,
In the second year of VG2.0, OMRON is
corporate value improvement, and third-party
speeding new initiatives to bolster technology
evaluations.
management and co-create with our customers.
In meeting the new challenge, the role of
Having continued to improve corporate
corporate governance is to oversee management
governance, in 2017, our board of directors
in making business decisions to enhance
engaged in serious discussions of our progress
corporate value. This role is more important than
toward VG2.0, as well as the human resources
ever.
and technology strategies that form the
foundation of our business plans. Throughout
The OMRON style of corporate governance
2018, we will hold in-depth talks related to
reflects our willingness to change as necessary in
information systems and product quality
moments of growth. We work to build a better
management. During 2017 we also began
society while striving for sustainable improvement
executing sustainability policy finalized by the
in corporate value. Along the way, we have
board in 2016. The board will monitor the progress
introduced new stages of improved structures and
of our sustainability efforts, exercising governance
management that contribute to our quest to
to ensure our initiatives respond to the
achieve our ideal as a company.
expectations of international society.
For example, in 2001, we were one of the first
companies to adopt independent directors. Today,
one-third of our board members are independent.
We will continue to follow the OMRON Principles
as we strive for corporate value improvements
While maintaining our status as a company with
an audit and supervisory board, in the year 2000,
through sustainable growth gained by solving
social issues. We will evolve our system of
we established the Personnel Advisory Committee
(initially the Management Personnel Advisory
corporate governance, while working toward the
sustainable growth for OMRON and society.
Committee in 1996). Following we established our
Compensation Advisory Committee (2003), CEO
Selection Advisory Committee (2006), and
Corporate Governance Committee (2008). We
have created a hybrid governance framework,
combining the best features of a company with an
Fumio Tateishi
Chairman
August 2018
67
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance Corporate Governance
Basic Stance for Corporate Governance
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 sustainable enhancement of corporate value by
earning the support of all stakeholders.
OMRON Corporate Governance Policies
OMRON Corporation established the OMRON
Corporate Governance Policies*1 based on the Basic
Stance for Corporate Governance. Since establishing
the Management Personnel Advisory Committee in
1996, we have spent more than 20 years formalizing
and strengthening our systems of corporate
governance. We intend to continue our pursuit of
Corporate Governance Initiatives
ongoing corporate governance improvement as we
develop our own unique vision of governance.
*1 OMRON Corporate Governance Policies
https://www.omron.com/about/governance/organization/
President
1987: Yoshio Tateishi
2003: Hisao Sakuta
2011: Yoshihito Yamada
1999
2003
2011
Chair of the Board
of Directors / CEO
President served as both
2003: Chairman serves as chair of the Board of Directors;
president serves as CEO
Separation of
management oversight
and business execution
30 directors
1999: Revised articles of incorporation,
setting number of board members to 10 or fewer
1999: Adopted executive officer system
2017: Eliminated
board titles*2
2017: Positioned
president as an
executive officer
Advisory Board
1999: Advisory Board
Outside Directors
Audit & Supervisory
Board Members
(Independent)
Advisory and Other
Committees
2001: One
outside
director
2003: Two outside directors
(seven directors)
2015: Three outside
directors (eight directors)
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
Corporate
Philosophy
1959:
Corporate
Motto
1990:
OMRON
Principles
1998: Revised
OMRON Corporate
Governance Policies
68
2006: CEO Selection Advisory Committee
2008: Corporate Governance Committee
2006: Revised
2015: Revised
2015: Established
*2 Not including chairman of the Board
Corporate Governance Framework
OMRON has elected to be a company with an Audit &
Supervisory Board.
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) have been separated. The
chairman serves as chair of the board of directors,
without direct corporate representational authority.
OMRON has established several advisory
committees to enhance the oversight functions of the
board of directors. These committees include the
Personnel Advisory Committee, the CEO Selection
Fiscal 2018 Corporate Governance Structure
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.
Outside directors attended the 13 meetings of the
board of directors held during fiscal 2017 at a rate of
94.4%. Outside auditors attended at a rate of 100%.
Outside auditors attended the 13 meetings of the
Audit & Supervisory Board at a rate of 100%.
Shareholders’ Meeting
Audit & Supervisory Board
Board of Directors
Chair: Chairman of the Board
Audit & Supervisory Board Office
Board of Directors Office
Personnel Advisory Committee
Accounting Auditor
Sustainability Office
CEO Selection Advisory Committee
Compensation Advisory Committee
Corporate Governance Committee
Executive Organization
President & CEO
Executive Council
Internal Audit Division
Sustainability Committee*
Head Office Divisions
Business Companies
(Internal Companies)
* The Sustainability Committee identifies important issues relating to sustainability in the focus domains, the head office divisions, and various
committees (the Corporate Ethics & Risk Management Committee, the Information Disclosure Executive Committee, and the Group
Environment Activity Committee) and oversees them on a Group-wide basis.
Board of Directors
Makes decisions related to
performance targets and
strategies; oversees the execution
of business operations.
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 executive officers;
selects candidates and evaluates
performance of current directors
and executive officers.
CEO Selection Advisory Committee
Deliberates the selection of a chief
executive officer; deliberates
succession plans and candidates in
the event of an emergency.
Compensation Advisory Committee
Sets policies for director and
executive officer compensation;
evaluates compensation levels and
deliberates specific compensation
packages.
Corporate Governance Committee
Oversees ongoing corporate
governance improvement;
deliberates policies to advance
management transparency and
fairness.
Executive Council
Deliberates and makes decisions
regarding important operational
matters within the scope of the
authority of the president and
CEO.
69
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance Fiscal 2018 Advisory Committee Members
Title
Name
Personnel
Advisory
Committee
CEO Selection
Advisory
Committee
Compensation
Advisory
Committee
Corporate
Governance
Committee
Chairman of the Board
Representative Director
Representative Director
Director
Director
Outside Director
Outside Director
Outside Director
Fumio Tateishi
Yoshihito Yamada
Kiichiro Miyata
Koji Nitto
Satoshi Ando
Eizo Kobayashi
Kuniko Nishikawa
Takehiro Kamigama
Audit & Supervisory Board Member (Full-time)
Kiichiro Kondo
Audit & Supervisory Board Member (Full-time)
Tokio Kawashima
Audit & Supervisory Board Member (Independent) Hideyo Uchiyama
Audit & Supervisory Board Member (Independent) Tadashi Kunihiro
Chairperson
Vice-Chairperson
Committee Member
Independent under Tokyo Stock Exchange rules
Status of Initiatives Towards Improving Board of Director Effectiveness
Overview of Initiatives Towards Improving Board of Direct Effectiveness
The company works to improve board effectiveness to ensure sustained enhancement of corporate value. Such
initiatives are undertaken in a two-part cycle: (1) Evaluate board effectiveness and (2) Determine and implement
policies for the operation of the board of directors based on (1).
(1) Evaluate board effectiveness
The Corporate Governance Committee is responsible
for evaluating board effectiveness. Methods of
evaluation are as described below:
a) Directors and Audit & Supervisory Board Members
conduct self-evaluations by completing an
anonymous self-evaluation questionnaire.
b) Individual interviews of directors and Audit &
Supervisory Board members are also conducted by
chairman of the board of directors, who asks about
improving the effectiveness of the board.
c) The Corporate Governance Committee analyzes
the results of the self-evaluations and the
interviews by the chairman of the board of
directors, and then conducts an evaluation of the
board’s effectiveness.
(2) Determine and implement policies for the
operation of the board
Based on the evaluation results by the Corporate
Governance Committee in (1), the board of directors
formulates and determines the policy for the
operation of the board of directors for the next fiscal
year. The board is then operated under this policy.
Initiatives toward improving board of director effectiveness
Fiscal 2016
Evaluation
Analysis and
evaluation of the
board’s
effectiveness
and execution
of measures
Fiscal 2017
Determination of
operating policy
Execution
Evaluation
Determine policies
for operating the
board of directors
for the following
fiscal year based on
evaluation results
Implement
measures to
improve
effectiveness
through board of
directors meetings
Analysis and
evaluation of the
board’s
effectiveness
and execution
of measures
Board of Directors
Corporate Governance
Committee
Fiscal 2018
Determination of
operating policy
Execution
Determine policies
for operating the
board of directors
for the following
fiscal year based on
evaluation results
Implement
measures to
improve
effectiveness
through board of
directors meetings
Board of Directors
Implementation
bodies
Corporate Governance
Committee
70
Overview of the Results of Evaluation of Board of Director Effectiveness for Fiscal 2017
Policy for the operation of the board of directors for fiscal 2017
The board of directors exercises its oversight function with particular focus on three areas to ensure achievement of
the medium-term management plan VG2.0, which began in fiscal 2017:
Progress of short-term management plans
Human resources and technology strategies key to medium-term management strategies
Initiatives to address materiality, which have been identified based on sustainability policies
Results of the fiscal 2017 evaluation of board effectiveness
The Corporate Governance Committee confirmed that the board of directors operated according to the policy for
board operations for fiscal 2017 and that the board demonstrated its oversight function. Evaluation results and future
issues are as described below:
Progress of short-term management plans
The board of directors discussed and approved VG2.0
and the company-wide management plan for fiscal
2017. In addition, the board of directors received
sufficient reports from executives regarding initiatives
at individual divisions.
Human resources and technology strategies key
to medium-term management strategies
1) Human resources strategies
The board of directors discussed human resources
strategies, a key component of VG2.0. The board
recognized that human resources strategies were
important to achieve VG2.0 and that the board
should continue to exercise its oversight function.
2) Technology strategies
The board of directors confirmed the company-
wide core technology system developed on the
SINIC Theory platform. SINIC Theory is OMRON’s
unique predictive theory encompassing AI, IoT,
robotics, and other rapid technological innovations.
The Board recognized that technology strategies
were important to achieve VG2.0 and that the board
should continue to exercise its oversight function.
3) Other strategies related to medium-term
management strategies
The board of directors recognized the need to
exercise its oversight function on strategies related
to information systems and quality to achieve the
company’s medium-term management strategies.
Initiatives to address materiality which have
been identified under sustainability policies
To ensure the achievement of VG2.0, the board of
directors received reports on fiscal 2020 targets and
KPIs for material sustainability issues. The board also
received reports related to the company-wide
management structure for advancing sustainability
and reports on material issues. OMRON began
sustainability initiatives in fiscal 2017. The board
recognized the need to exercise its oversight function
on an ongoing basis.
Policy for the operation of the board of directors for fiscal 2018
Based on the results of the fiscal 2017 evaluation of board effectiveness and identified future issues, the board of
directors has been charged with exercising its oversight function to ensure the achievement of VG2.0, focusing on
three areas in particular:
Strategies for information systems and quality with respect to medium-term management strategies
Ongoing initiatives for human resources and technology strategies
Initiatives to address material sustainability issues (materiality)
71
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance Board of Directors and Auditors
As of June 2018
Takehiro Kamigama
Outside Director
Personnel Advisory Committee Member
CEO Selection Advisory Committee
Member
Compensation Advisory Committee
Member
Corporate Governance Committee
Member
Eizo Kobayashi
Outside Director
Chairman of the Personnel Advisory
Committee
Chairman of the CEO Selection Advisory
Committee
Chairman of the Corporate Governance
Committee
Compensation Advisory Committee
Member
Fumio Tateishi
Chairman
CEO Selection Advisory Committee
Member
Kuniko Nishikawa
Outside Director
Chairman of the Compensation Advisory
Committee
Vice Chairman of the Corporate Governance
Committee
Personnel Advisory Committee Member
CEO Selection Advisory Committee Member
Satoshi Ando
Director
Vice Chairman of the Personnel
Advisory Committee
Vice Chairman of the CEO Selection
Advisory Committee
Vice Chairman of the Compensation
Advisory Committee
Yoshihito Yamada
President and CEO
72
Kiichiro Miyata
Director, Senior Managing
Executive Officer, CTO
Personnel Advisory Committee
Member
Kiichiro Kondo
Audit & Supervisory Board
Member
Tadashi Kunihiro
Audit & Supervisory Board Member
(Independent)
Corporate Governance Committee
Member
Koji Nitto
Director, Senior Managing
Executive Officer, CFO
Compensation Advisory
Committee Member
Tokio Kawashima
Audit & Supervisory Board
Member
Hideyo Uchiyama
Audit & Supervisory Board
Member (Independent)
Corporate Governance
Committee Member
73
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance Directors, Audit & Supervisory Board Members, and Honorary Chairman
As of June 2018
Directors
Chairman
Fumio
Tateishi
Aug. 1975 Joined OMRON
Jun. 1997 Director
Jun. 1999 Managing Executive Officer
Jun. 2001 Senior General Manager, Corporate
Strategic Planning HQ
Jun. 2003 Executive Officer and Executive
Vice President; President, Industrial
Automation Business Company
Jun. 2008 Director and Executive Vice
Chairman
Jun. 2013 Chairman of the Board (to present)
Apr. 1984 Joined OMRON
Jun. 2008 Executive Officer; Representative
Director and President, OMRON
HEALTHCARE Co., Ltd.
Mar. 2010 Senior General Manager, Corporate
Strategic Planning HQ
Jun. 2010 Managing Executive Officer
Jun. 2011 Representative Director and
President (to present)
President and CEO
Yoshihito
Yamada
Apr. 1985 Joined Tateisi Institute of Life
Science, Inc. (now OMRON
HEALTHCARE Co., Ltd.)
Mar. 2010 Representative Director and
President of OMRON HEALTHCARE
Co., Ltd. (Retired in March 2015)
Jun. 2010 Executive Officer
Jun. 2012 Managing Executive Officer,
OMRON
Apr. 2015 Chief Technology Officer (CTO) and
Senior General Manager of
Technology & Intellectual Property
HQ (to present)
Apr. 2017 Senior Managing Director
(to present)
Jun. 2017 Representative Director (to present)
Apr. 2018 Senior General Manager, Innovation
Exploring Initiative HQ (to present)
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)
Apr. 2017 Chief Financial Officer (CFO)
(to present)
Director
Senior Managing
Executive Officer,
CTO
Kiichiro
Miyata
Director
Senior Managing
Executive Officer,
CFO
Koji Nitto
74
Apr. 1977 Joined The Bank of Tokyo, Ltd. (now
MUFG Bank, Ltd.)
July 2003 Branch Manager of Jakarta Branch,
The Bank of Tokyo-Mitsubishi UFJ,
Ltd. (Resigned in June 2007)
Jun. 2007 Audit & Supervisory Board Member
(Independent), OMRON
Jun. 2011 Executive Officer and Senior
General Manager, Investor
Relations HQ
Mar. 2015 Senior General Manager, Global
Investor Relations & Corporate
Communications HQ
Apr. 2015 Managing Executive Officer
Jun. 2017 Director (to present)
Apr. 1972 Joined ITOCHU Corporation
Jun. 2000 Executive Officer, ITOCHU
Corporation
Apr. 2002 Managing Executive Officer,
ITOCHU Corporation
Jun. 2003 Representative Director and
Managing Director, ITOCHU
Corporation
Apr. 2004 Representative Director and Senior
Managing Director, ITOCHU
Corporation
Jun. 2004 President and CEO, ITOCHU
Corporation
Apr. 2010 Chairman and Representative
Director, ITOCHU Corporation
Jun. 2011 Chairman, ITOCHU Corporation
Jun. 2013 Outside Director, OMRON
(to present)
Jun. 2016 Chairman, ITOCHU Corporation
Apr. 2018 Senior Representative, ITOCHU
Corporation (to present)
Apr. 1986 Joined Citibank N.A.
Feb. 1996 Joined A.T. Kearney, Inc.
Sep. 2000 President & CEO, Supernurse Co.
Ltd.
Aug. 2010 Established Firststar Healthcare Co.
Ltd., President & CEO (to present)
Jun. 2013 President, Benesse MCM Corp.
Jun. 2015 Outside Director, OMRON
(to present)
May 2017 Chief Executive Officer, FRONTEO
Healthcare, Inc. (to present)
Director
Satoshi Ando
Outside Director
Eizo
Kobayashi
Outside Director
Kuniko
Nishikawa
Apr. 1981 Joined TDK Corporation
Jun. 2002 Corporate Officer, TDK Corporation
Jun. 2003 Senior Vice President, TDK
Corporation
Jun. 2004 Director & Executive Vice President,
TDK Corporation
Jun. 2006 President & Representative
Director, TDK Corporation
Jun. 2016 Chairman & Representative
Director, TDK Corporation
Jun. 2017 Outside Director, OMRON
(to present)
Jun. 2018 Mission Executive, TDK Corporation
(to present)
Outside Director
Takehiro
Kamigama
Audit & Supervisory Board Members
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
Mar. 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 (to present)
Audit & Supervisory
Board Member
Kiichiro
Kondo
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, KPMG
AZSA LLC
May 2002 Board Member, KPMG AZSA LLC
Jun. 2006 Executive Board Member, KPMG
AZSA LLC
Jun. 2010 Managing Partner, KPMG AZSA
LLC, Chairman, KPMG Japan
Sep. 2011 Chairman, KPMG Asia Pacific
Oct. 2013 CEO, KPMG Japan
Sep. 2015 Executive Advisor, ASAHI Tax
Corporation (to present)
Jun. 2016 Audit & Supervisory Board Member
(Independent), OMRON (to present)
Audit & Supervisory
Board Member
(Independent)
Hideyo
Uchiyama
Apr. 1982 Joined Mitsubishi Bank Ltd. (now
MUFG Bank, Ltd.)
Sep. 2008 Regional Head for Germany and
General Manager of Dusseldorf
Branch, The Bank of Tokyo-
Mitsubishi UFJ, Ltd.
Apr. 2011 Joined OMRON
Jun. 2011 Audit & Supervisory Board Member
(to present)
Apr. 1986 Registered as attorney with the
Daini Tokyo Bar Association; Joined
Nasu & Iguchi Law Office
Jan. 1994 Established Kunihiro Law Office
(now T. Kunihiro & Co. Attorneys-at-
Law)
Jun. 2017 Audit & Supervisory Board Member
(Independent), OMRON (to present)
Audit & Supervisory
Board Member
Tokio
Kawashima
Honorary Chairman
Audit & Supervisory
Board Member
(Independent)
Tadashi
Kunihiro
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)
Honorary Chairman
Yoshio
Tateishi
75
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance
Executive Officers
President
Yoshihito Yamada
CEO
Executive Vice President
Yutaka Miyanaga
Company President,
Industrial Automation Company
Senior Managing Executive Officers
Kiichiro Miyata
Koji Nitto
CTO and Senior General Manager,
Technology & Intellectual Property HQ
and Senior General Manager, Innovation
Exploring Initiative HQ
Managing Executive Officers
Katsuhiro Wada
President and CEO,
OMRON AUTOMOTIVE ELECTRONICS
CO., LTD.
Shizuto Yukumoto
Company President,
Electronic and Mechanical Components
Company, and Senior General Manager,
Business Development HQ
Toshio Hosoi
President and CEO,
OMRON SOCIAL SOLUTIONS CO., LTD.
76
CFO and Senior General Manager,
Global Strategy HQ
Isao Ogino
President and CEO,
OMRON HEALTHCARE CO., LTD.
Kiyoshi Yoshikawa
Senior General Manager,
Global Manufacturing Innovation HQ
Nigel Blakeway
Chairman and CEO,
OMRON MANAGEMENT CENTER OF
AMERICA, INC.
and Chairman,
OMRON MANAGEMENT CENTER OF
EUROPE
and Chairman,
OMRON MANAGEMENT CENTER OF
ASIA PACIFIC
Executive Officers
Goshi Oba
Chairman and President,
OMRON INDUSTRIAL AUTOMATION
(CHINA) CO., LTD.
Takayoshi Oue
Senior General Manager,
Global Finance and Accounting HQ
Seigo Kinugawa
Senior General Manager,
Strategy Planning Division HQ, and
Senior General Manager,
Robotics Business Development Project,
Industrial Automation Company
Takashi Kitagawa
Senior General Manager,
Board of Directors Office
Masahiko Tomita
Senior General Manager,
Global Human Resources and
Administration HQ
Munenori Odake
Senior General Manager,
Sales & Marketing Division HQ,
Industrial Automation Company
Shuji Tamaki
Senior General Manager,
Global Risk Management and Legal HQ
Makoto Ota
President and CEO,
OMRON RELAY & DEVICES Corporation,
and Senior General Manager, Production
Division HQ, Electronic and Mechanical
Components Company
Tsutomu Igaki
Senior General Manager,
Global Investor & Brand
Communications HQ
Jian Xu
China Manufacturing Innovation Project
Executive, Global Manufacturing
Innovation HQ,
and President and CEO,
SHANGHAI OMRON CONTROL
COMPONENTS CO., LTD.
Junta Tsujinaga
Senior General Manager,
Product Business Division HQ,
Industrial Automation Company
Kenji Eda
Senior General Manager,
New Business Development Global
Center, and Senior General Manager,
Global Human Resources HQ,
OMRON HEALTHCARE CO., LTD.
Shinji Fukui
Senior General Manager,
Technology Development Division HQ,
Industrial Automation Company
Masako Kubo
President and CEO,
OMRON EXPERTLINK CO., LTD.
Seiji Takeda
General Manager,
Corporate Planning Dept.,
Global Strategy HQ
Taisuke Tateishi
Senior General Manager,
Environmental Solutions Business HQ
77
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionGovernance Financial Section (U.S. GAAP)
At a Glance
Industrial Automation Business (IAB)
Net Sales / Operating Income / Operating Income Margin
Net Sales / Operating Income / Operating Income Margin
Net Sales Operating Income Operating Income Margin (right axis)
Net Sales Operating Income Operating Income Margin (right axis)
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(Billions of yen)
(Billions of yen)
500
500
18.7%
18.7%
19.2%
19.2%
(%)
20
(%)
20
(Billions of yen)
(Billions of yen)
25
25
400
400
13.3%
13.3%
300
300
291.7
291.7
16.5%
16.5%
14.3%
14.3%
15.7%
15.7%
396.1
396.1
428.0
428.0
331.8
331.8
336.0
336.0
331.0
331.0
15.7
15.7
15.3
15.3
18.2
18.2
16.4
16.4
20
20
15
15
10
10
10
10
21.0
21.0
9.3
9.3
5.2
5.2
38.8
38.8
54.6
54.6
47.9
47.9
52.0
52.0
74.0
74.0
82.0
82.0
5
5
3.6
3.6
4.2
4.2
3.3
3.3
3.5
3.5
5.3
5.3
4.5
4.5
4.0
4.0
4.2
4.2
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0
0
0
FY
0
FY
13
13
14
14
15
15
16
16
17
17
Electronic and Mechanical Components Business (EMC)
Net Sales / Operating Income / Operating Income Margin
Net Sales / Operating Income / Operating Income Margin
Net Sales Operating Income Operating Income Margin (right axis)
Net Sales Operating Income Operating Income Margin (right axis)
(Billions of yen)
(Billions of yen)
120
120
(%)
15
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(Billions of yen)
(%)
15
(Billions of yen)
12
12
10.9
97.7
97.7
103.9
103.9
103.7
103.7
102.8
102.8
102.0
102.0
93.9
93.9
11.8%
11.8%
12.3%
12.3%
8.9%
8.9%
9.8%
9.8%
8.2%
8.2%
10.0%
10.0%
10
10
5
5
8.7
8.7
10.2
10.2
8.5
8.5
9.4
9.4
12.1
12.1
12.5
12.5
10
10
8
6
4
2
8
6
4
2
10.9
9.5
9.5
8.9
8.9
10.0
10.0
7.8
7.8
7.9
7.9
7.7
7.7
8.0
8.0
8.3
8.3
6.0
6.0
5.4
5.4
6.5
6.5
4.9
4.9
4.6
4.6
5.3
5.3
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0
0
0
FY
0
FY
13
13
14
14
15
15
16
16
17
17
Automotive Electronic Components Business (AEC)
200
200
100
100
0
FY
0
FY
90
90
60
60
30
30
0
FY
0
FY
Net Sales / Operating Income / Operating Income Margin
Net Sales / Operating Income / Operating Income Margin
Net Sales Operating Income Operating Income Margin (right axis)
Net Sales Operating Income Operating Income Margin (right axis)
(Billions of yen)
(Billions of yen)
(%)
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(%)
(Billions of yen)
(Billions of yen)
150
150
120
120
90
90
60
60
30
30
0
FY
0
FY
137.9
137.9
140.0
140.0
126.6
126.6
132.1
132.1
131.2
131.2
128.0
128.0
10
10
12
12
7.2%
7.2%
6.7%
6.7%
5.2%
5.2%
5.4%
5.4%
4.4%
4.4%
4.7%
4.7%
5
5
9.1
9.1
9.2
9.2
7.3
7.3
7.1
7.1
5.8
5.8
6.0
6.0
10
10
8
6
4
2
8
6
4
2
8.2
8.2
6.7
6.7
8.5
8.5
6.5
6.5
10.5
10.5
9.3
9.3
9.2
9.2
6.9
6.9
5.8
5.8
5.2
5.2
4.7
4.7
5.3
5.3
4.9
4.9
5.2
5.2
3.4
3.4
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0
0
0
FY
0
FY
13
13
14
14
15
15
16
16
17
17
Financial Section
Contents
80 | Financial Results | Fiscal 2017 in Review
85 | Outlook for Fiscal 2018
87 | Consolidated Balance Sheets
88 | Consolidated Statements of Income
78
* OMRON revised business classifications in fiscal 2017, reclassifying certain operations from the Social Systems, Solutions and Service Business to the Other Businesses segment.
Fiscal 2018 Electronic and Mechanical Components Business figures include certain operations of the Other business classification as previously classified in fiscal 2017 and earlier.
* Fiscal 2018 forecasts are unchanged from forecasts announced April 26, 2018.
Social Systems, Solutions and Service Business (SSB)
Net Sales / Operating Income / Operating Income Margin
Net Sales / Operating Income / Operating Income Margin
Net Sales Operating Income Operating Income Margin (right axis)
Net Sales Operating Income Operating Income Margin (right axis)
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(Billions of yen)
(Billions of yen)
80
80
(%)
10
67.6
67.6
66.4
66.4
70.4
70.4
61.9
61.9
63.7
63.7
67.0
67.0
(%)
10
(Billions of yen)
(Billions of yen)
2.5
2.5
60
60
40
40
5.7%
5.7%
4.6%
4.6%
3.6%
3.6%
6.0%
6.0%
6.5%
6.5%
6.7%
6.7%
5
5
2.5
2.5
2.1
2.1
2.0
2.0
1.5
1.5
1.5
1.5
1.0
1.0
1.2
1.2
1.7
1.7
1.4
1.4
2.2
2.2
1.6
1.6
1.5
1.5
1.8
1.8
1.4
1.4
1.4
1.4
2.1
2.1
1.6
1.6
1.3
1.3
20
20
0
FY
0
FY
3.9
3.9
3.1
3.1
2.5
2.5
3.7
3.7
4.1
4.1
4.5
4.5
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0.5
0.5
0
0
0
FY
0
FY
13
13
14
14
15
15
16
16
17
17
Healthcare Business (HCB)
Net Sales / Operating Income / Operating Income Margin
Net Sales / Operating Income / Operating Income Margin
Net Sales Operating Income Operating Income Margin (right axis)
Net Sales Operating Income Operating Income Margin (right axis)
(Billions of yen)
(Billions of yen)
120
120
100.6
100.6
108.1
108.1
101.3
101.3
119.0
119.0
(%)
12
108.5
108.5
10.3%
10.3%
10.5%
10.5%
90
90
89.3
89.3
8.5%
8.5%
8.4%
8.4%
6.5%
6.5%
6.7%
6.7%
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(Billions of yen)
(%)
12
(Billions of yen)
8
8
6.1
6.1
6.2
6.2
6.7
6.7
6
6
5.2
5.2
5.5
5.5
6
6
4
4
3.9
3.9
3.9
3.9
3.8
3.8
3.3
3.3
2.8
2.8
2
2
2.3
2.3
3.3
3.3
3.2
3.2
3.0
3.0
2.2
2.2
60
60
30
30
0
FY
0
FY
90
90
60
60
30
30
0
FY
0
FY
7.5
7.5
6.5
6.5
7.3
7.3
8.5
8.5
11.2
11.2
12.5
12.5
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0
0
0
FY
0
FY
13
13
14
14
15
15
16
16
17
17
Other Businesses
Net Sales / Operating Income (Loss) / Operating Income Margin
Net Sales / Operating Income (Loss) / Operating Income Margin
Net Sales Operating Income (Loss) Operating Income Margin (right axis)
Net Sales Operating Income (Loss) Operating Income Margin (right axis)
Capital Expenditures / Depreciation
Capital Expenditures / Depreciation
and Amortization / R&D Expenses
and Amortization / R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
Capital Expenditures Depreciation and Amortization R&D Expenses
(Billions of yen)
(Billions of yen)
120
120
101.4
101.4
94.1
94.1
11.0%
11.0%
10.2%
10.2%
(%)
(%)
(Billions of yen)
(Billions of yen)
12
12
8
8
6.9
6.9
70.2
70.2
68.5
68.5
6
6
54.8
54.8
50.5
50.5
6
6
4
4
5.3
5.3
4.6
4.6
4.3
4.3
5.5
5.5
4.0
4.0
3.7
3.7
3.7
3.7
10.3
10.3
10.3
10.3
13
13
14
14
(3.5)
(3.5)
15
15
(1.9)
(1.9)
16
16
(2.1)
(2.1)
17
17
2
2
2.5
2.5
2.0
2.0
0
0
0
0
3.1
3.1
1.7
1.7
1.4
1.4
0.9
0.9
0.8
0.8
13
13
14
14
15
15
16
16
17
17
18
18
(Forecast)
(Forecast)
0
FY
0
FY
189 | Consolidated Statements of Comprehensive Income
190 | Consolidated Statements of Shareholders’ Equity
191 | Consolidated Statements of Cash Flows
For more information, please refer to the Company’s
audited annual financial report:
https://www.omron.com/about/annual/index.html
79
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information Financial Results
Fiscal 2017 in Review
Consolidated Earnings
Fiscal 2017 was our first year operating under VG2.0.
We defined our basic policy for the year as Start up
VG2.0: A Firm First Step Toward Innovation. During the
year, we took on three key initiatives: (1) Group growth
driven by focus domains (Industrial Automation
Business, Healthcare Business); (2) Profit creation
through improved group-wide earnings; and (3)
Stronger investment in growth fields and technologies.
Fiscal 2017 results were significantly higher compared
to the prior fiscal year. Net sales rose 8.3% to ¥860.0
billion, while operating income was up 27.1% at ¥85.9
billion and operating income margin rose 1.5 points to
10.0%. Net income attributable to OMRON
shareholders amounted to ¥63.2 billion, an increase of
37.3%.
Consolidated Statement of Income
Net Sales
The OMRON Group set a record high for net sales in
fiscal 2017, driven by strong performance in our core
Industrial Automation Business and Healthcare
Business. Overseas sales were largely responsible for
group earnings, amounting to ¥531.5 billion, ¥67.7
billion (14.6%) higher than the prior fiscal year. Our
operations in Greater China and Southeast Asia
delivered particularly significant growth. We recorded
¥328.5 billion in sales in Japan, a slight decrease of
0.6% year on year.
Gross Profit Margin, SG&A Expenses, and R&D
Expenses
Gross profit margin for fiscal 2017 was 41.6%, a
2.3-point increase compared to the prior fiscal year and
an all-time high for the OMRON Group. This
improvement was mainly due to a stronger earnings
structure that drove gross profit margin higher, a result
Consolidated Operating Income Analysis (YoY)
Added-value up
+34.9
of closer coordination among our production, sales,
development, and planning groups. Selling, general and
administrative expenses amounted to ¥212.6 billion, a
¥19.1 billion (9.9%) increase, mainly in connection with
stronger revenue performance. Research and
development expenses rose ¥8.4 billion (16.6%) to
¥59.1 billion for the year.
Operating Income, Income before Income Taxes and
Equity in Earnings of Affiliates, and Net Income
Attributable to OMRON Shareholders
OMRON Group operating income for the year was
¥85.9 billion (27.1% increase), while our operating
income margin was 10.0% (1.5-point increase). Income
before income taxes (excluding other income)
amounted to ¥83.4 billion (27.3% increase), while net
income attributable to OMRON shareholders came in
at ¥63.2 billion (37.3% increase).
Forex impact
+7.2
67.6
Fixed
manufacturing
cost up
-1.4
SG & A up
-14.3
R & D up
-8.1
Gross profit +33.5
(Billions of yen)
85.9
FY2016 Actual
FY2017 Actual
80
Review of Operations by Business Segment
Industrial Automation Business (IAB)
Our Industrial Automation Business recorded domestic
net sales of ¥152.0 billion for fiscal 2017, an increase of
13.8% year on year. This result was mainly due to
higher investment demand in the global automobile and
digital markets, as well as our own progress in our
ability to propose solutions to our customers. Overseas
net sales rose 23.7% to ¥244.2 billion, reflecting
positive developments across the world. The Americas
experienced strong investments in semiconductor-
related markets and firm investment demand in
automobile markets. Meanwhile, a more settled
political situation and gradual economic recovery in
Europe, accompanied by strong machinery exports, led
to greater demand, particularly in the food industry.
Greater China and Asia experienced increases in both
pace and scale of investment in the digital industries
(semiconductors and smartphones) throughout the
year. In total, the IAB segment recorded net sales of
¥396.1 billion (19.7% increase). An extensive product
lineup and improved skills in selling solutions led to a
sharp rise in operating income, up 42.3% to ¥74.0 billion.
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
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
FY2015
336.0
130.5
205.5
40.4
69.3
58.3
36.9
0.6
47.9
14.3%
18.2
4.0
5.3
FY2016
331.0
133.5
197.5
30.3
65.6
59.6
41.3
0.6
52.0
15.7%
16.4
4.2
4.5
FY2017
396.1
152.0
244.2
35.3
77.7
77.7
53.1
0.4
74.0
18.7%
21.0
5.2
9.3
(Billions of yen)
FY2018 (Forecast)
428.0
163.0
265.0
38.0
83.5
85.5
57.5
0.5
82.0
19.2%
Electronic and Mechanical Components Business (EMC)
Our Electronic and Mechanical Components Business
recorded domestic net sales of ¥22.8 billion for fiscal
2017, up 1.4% year on year. This increase was mainly
due to an increase in inquiries from the automotive
industry and strong sales of new vehicles among our
customers. Overseas net sales rose 12.0% to 80.1
billion due to several factors. Performance was strong
in the Americas and Europe, as we captured demand
for consumer and commercial products in this growing
market. Sales were strong in Greater China, supported
by higher incomes and improving living standards in
inland regions, which led to higher demand in the
high-function appliances market. Last, sales rose in
Asia, owing to higher demand for motorcycles and an
increasing number of our products being used in home
appliances. Total fiscal 2017 net sales for the EMC
segment rose 9.5% to ¥102.8 billion, while operating
income amounted to ¥12.1 billion, up 28.7%, due in
part to higher revenues and internal sales to the
Industrial Automation Business.
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
FY2013
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
23.9
80.0
18.1
15.9
35.0
10.1
0.9
10.2
9.8%
5.4
8.0
9.5
FY2015
103.7
23.2
80.5
19.9
16.1
33.6
10.4
0.5
8.5
8.2%
4.9
8.3
8.9
FY2016
93.9
22.5
71.4
16.3
14.8
29.0
11.3
0.1
9.4
10.0%
4.6
7.9
6.5
FY2017
102.8
22.8
80.1
17.5
16.9
31.0
14.5
0.1
12.1
11.8%
5.3
7.7
10.0
(Billions of yen)
FY2018 (Forecast)
102.0
21.0
81.0
17.5
17.5
32.0
14.0
0.0
12.5
12.3%
*We revised business classifications and presentation beginning fiscal 2018, reclassifying certain operations under Other Businesses to the EMC segment.
81
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information Automotive Electronic Components Business (AEC)
The Automotive Electronic Components Business
recorded domestic net sales of 17.3 billion, down 9.0%
for the year. This decrease was mainly due to model
changes resulting in the termination of several models
using OMRON products. Overseas net sales were up a
slight 0.7% to ¥113.9 billion due to combination of
offsetting factors. Demand was lower in the Americas
due to declining auto production and model changes
resulting in fewer models using OMRON products. We
experienced strong performance in Asia, by contrast,
due to solid automotive production in India and rising
sales of motorcycles in Indonesia. In total, the AEC
segment recorded net sales of ¥131.2 billion, nearly
level with the prior year at a 0.7% decrease. Operating
income was 18.4% lower at ¥5.8 billion for the year.
This decrease was mainly due to higher research and
development expenses committed to next-generation
products.
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
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
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
FY2015
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
FY2016
132.1
19.0
113.1
43.9
3.9
28.0
30.1
7.2
7.1
5.4%
9.2
4.9
5.2
FY2017
131.2
17.3
113.9
41.9
2.8
28.6
33.3
7.3
5.8
4.4%
10.5
5.2
5.8
(Billions of yen)
FY2018 (Forecast)
128.0
16.0
112.0
38.5
2.0
27.5
37.5
6.5
6.0
4.7%
Social Systems, Solutions and Service Business (SSB)
Sales in the Social Systems, Solutions and Service
Business grew 3.0% for the year to ¥63.7 billion.
Demands for upgrades in our Public Transportation
Business were flat. However, our Traffic and Road
Management Systems Business experienced strong
demand for management systems upgrades, despite
weakness in replacement demand for road traffic
terminals. Segment operating income rose 11.6% to
¥4.1 billion, resulting from revenue growth and stronger
earnings capacity achieved by moving design and
production in-house.
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
FY2013
67.6
67.3
0.3
0.0
0.0
0.2
0.0
0.1
3.9
5.7%
2.5
1.2
1.5
FY2014
66.4
65.1
1.3
0.0
0.0
0.3
0.0
1.1
3.1
4.6%
2.1
1.4
1.7
FY2015
70.4
68.6
1.8
0.0
0.0
0.6
0.0
1.2
2.5
3.6%
2.2
1.6
1.5
FY2016
61.9
61.3
0.6
0.0
0.0
0.3
0.0
0.3
3.7
6.0%
1.8
1.4
1.4
FY2017
63.7
62.8
0.9
0.0
0.0
0.3
0.0
0.6
4.1
6.5%
2.1
1.3
1.6
(Billions of yen)
FY2018 (Forecast)
67.0
66.5
0.5
0.0
0.0
0.5
0.0
0.0
4.5
6.7%
*We revised business classifications and presentation in fiscal 2017, reclassifying certain operations under the SSB segment to the Other Businesses segment.
82
Healthcare Business (HCB)
Our Healthcare Business recorded domestic net sales
of ¥26.0 billion, down 10.0%. While sales of blood
pressure monitors and low-frequency therapy
equipment were strong in response to stepped up
online promotions, sales from professional-use
products were lower due to the transfer of shares of
Omron Colin Co., Ltd. In December 2016. Overseas net
sales were up a healthy 13.9% year on year, reaching
¥82.5 billion. Sales of blood pressure monitors and
nebulizers in the Americas were strong, mainly due to
promotional activity in online sales channels in the U.S.
and an expansion of our store network. Our business in
Europe saw firm sales of blood pressure monitors in
Russia, while our businesses in Greater China reported
higher sales of blood pressure monitors and nebulizers
through online channels. Sales of blood pressure
monitors in Indonesia and elsewhere in Asia were
strong, mainly due to an expansion in our store
network. As a result, the HCB segment recorded a total
of ¥108.5 billion in net sales for fiscal 2017, up 7.1%.
Higher sales and productivity improvements combined
for a sharp rise in segment operating income, up 31.4%
to ¥11.2 billion 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
FY2013
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
31.4
69.2
18.6
21.2
22.4
6.6
0.5
6.5
6.5%
5.5
3.3
3.9
FY2015
108.1
31.1
77.0
23.1
19.2
25.4
8.9
0.5
7.3
6.7%
6.1
3.8
2.8
FY2016
101.3
28.9
72.4
21.7
18.3
23.1
9.0
0.3
8.5
8.4%
6.2
3.3
2.2
FY2017
108.5
26.0
82.5
23.8
21.0
26.8
10.3
0.6
11.2
10.3%
6.7
3.0
3.2
(Billions of yen)
FY2018 (Forecast)
119.0
28.5
90.5
24.5
22.0
30.5
13.0
0.5
12.5
10.5%
Other Businesses
The Other Businesses segment recorded ¥54.8 billion
in net sales for fiscal 2017, down 20.0% year on year.
Despite ongoing structural reforms, lower sales and
other factors combined to produce an operating loss of
¥2.1 billion. Despite the positive impact of expanding
our lineup of storage battery products, sluggish demand
for PV inverters used in solar panels drove down sales
in our Environmental Solutions Business. In contrast,
our Electronic Systems and Equipment Business
experienced strong demand for uninterruptible power
supply units and contract services for the development
and production of electronic devices. Accordingly, sales
in this business increased for the year. Micro Devices
Business sales were higher, mainly due to a temporary
rise in demand for smartphone microphones. Finally,
sales in our Backlights Business fell year on year by a
wide margin, largely due to further business
optimization initiatives.
Net sales
Japan
Overseas
Americas
Europe
Greater China
Asia Pacific
Direct exports
Operating income (loss)
Operating income margin
R&D expenses
Depreciation and amortization
Capital expenditures
FY2013
94.1
66.2
27.9
0.0
0.0
25.6
0.0
2.3
10.3
11.0%
4.3
2.0
4.0
FY2014
101.4
59.8
41.6
0.0
0.0
38.2
0.0
3.4
10.3
10.2%
5.5
2.5
6.9
FY2015
70.2
51.2
19.0
0.0
0.0
17.1
0.0
1.9
(3.5)
—
4.6
3.1
5.3
FY2016
68.5
60.2
8.3
0.0
0.0
7.3
0.0
1.0
(1.9)
—
3.7
1.7
1.4
FY2017
54.8
44.8
10.0
0.0
0.0
8.5
0.0
1.5
(2.1)
—
3.7
0.8
0.9
(Billions of yen)
FY2018 (Forecast)
50.5
43.5
7.0
0.0
0.0
6.5
0.0
0.5
0.0
—
*We revised business classifications and presentation in fiscal 2017, reclassifying certain operations under the SSB segment to the Other Businesses segment.
*We revised business classifications and presentation beginning fiscal 2018, reclassifying certain operations under Other Businesses to the EMC segment.
83
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information Review of Financial Condition
Total assets at the end of fiscal 2017 amounted to
¥745.0 billion, an increase of ¥47.3 billion compared to
the end of the prior fiscal year. This increase stems
mainly from an increase in inventories, machinery and
equipment, and other capital assets.
Total liabilities increased ¥10.6 billion to ¥237.6 billion.
Current liabilities amounted to ¥182.8 billion, ¥10.7
billion higher due mainly to increases in accounts
payable.
Net assets increased ¥36.6 billion to ¥507.4 billion,
owing mainly to higher net income attributable to
Capital Expenditures
OMRON shareholders. Net income attributable to
OMRON shareholders and other factors led to an
increase in retained earnings of ¥45.0 billion. As a
result, shareholders’ equity amounted to ¥505.5 billion
(year-on-year increase of ¥36.5 billion), while
shareholders’ equity ratio increased 0.7 points to
67.9%. While total liabilities and shareholders’ equity
were higher year on year, our debt-equity ratio
remained nearly level at 0.47, a 0.01-point decrease.
The OMRON Group made ¥38.9 billion in total capital
investments during fiscal 2017, representing a 51.2%
increase compared to the prior fiscal year. We engaged
in a deliberate yet active approach to capital
investment, committing resources for future OMRON
Group growth.
Cash Flows
Cash and cash equivalents as of the end of fiscal 2017
amounted to ¥113.0 billion, a decrease of ¥13.0 billion
compared to the end of the prior fiscal year. Net cash
provided by operating activities amounted to ¥73.7
billion. This was a ¥4.2 billion decrease compared to the
prior fiscal year, reflecting net income of ¥63.5 billion
(¥17.2 billion increase) and ¥29.5 billion in depreciation
and amortization (¥500 million increase). Net cash used
in investing activities amounted to ¥55.8 billion. This
was an increase of ¥40.8 billion in net cash outlays,
Dividend Policy
Our policy for profit distribution is to prioritize
investment in R&D necessary for ongoing corporate
value improvement, capital expenditures, and M&A. At
the same, we strive for stable, consistent returns for
our shareholders. The OMRON Group established a
guideline of 30% in payout ratio and 3% of dividend on
mainly due to capital expenditures and business
acquisitions. As a result, free cash flow (total of net
cash provided by operating activities and net cash used
in investing activities) amounted to ¥17.8 billion, a
decrease of ¥45.0 billion versus the prior fiscal year.
Net cash used in financing activities amounted to ¥33.1
billion, an increase of ¥18.1 billion, partly due to ¥15.4
billion in dividend payments (¥800 million increase year
on year).
equity ratio for profit distributions for fiscal years 2017
through 2020 covered by our medium-term
management plan, VG2.0. As guided by this policy, we
paid ¥76 per share in dividends for fiscal 2017. This
resulted in a dividend on equity ratio of 3.3%.
84
Outlook for Fiscal 2018
Consolidated Earnings
While the fiscal 2018 economic environment for certain
regions is difficult to predict with clarity, we expect the
global economy to continue to demonstrate strength
overall. Looking to the OMRON Group’s major markets,
we expect strong demand in Japan as capital
investment expands in the automobile and digital
industries. Overseas, we forecast an economic
recovery in the U.S. spurred by major tax cuts and
other policies, while capital investment and production
increases in Europe should lead to a gradual recovery
in that region. The rate of growth in China will likely
slow down. However, demand for our products and
services should be strong in response to manufacturing
labor shortages and the resulting needs for automation.
In Asia, the economies of Thailand, India, and Indonesia
should continue to recover throughout the year.
We will respond to these conditions in fiscal 2018,
our second year under VG2.0, striving for revenue and
profit growth, pursuing a policy under the banner of
Creating Change: Accelerate growth and transform
profit structure through innovation. As with fiscal 2017,
we will continue to bolster our earnings ability,
investing profits in our Industrial Automation Business,
Healthcare Business, and core technologies. We will
create innovations that keep the growth cycle on an
upward path, accelerating OMRON Group growth.
Our fiscal 2018 plan calls for net sales of ¥900 billion
(4.7% increase) versus fiscal 2017, operating income of
¥93.0 billion (8.3% increase), and net income
attributable to OMRON shareholders of ¥64.5 billion
(2.1% increase). Our target for gross profit margin, an
indicator of earnings ability, will be 42.5%, representing
a 0.9-point increase compared to the prior fiscal year.
Finally, we will dedicate organization-wide efforts to
reaching the important ROIC and ROE targets for the
year, which we have set at approximately 12%.
Industrial Automation Business (IAB)
We expect the IAB to benefit from strong demand for
labor-savings and automation globally. In particular, we
forecast higher demand for capital investment in the
digital (rising needs for IoT) and automotive (investment
in automated driving technologies, eco-friendly
vehicles) industries. We plan to leverage the industrial
code reader and industrial camera businesses we
acquired in fiscal 2017 to capture global demand for
traceability, which is rising in response to greater
awareness of product quality. Based on our projections,
our fiscal 2018 net sales plan calls for ¥428.0 billion in
IAB sales, representing an 8% increase compared to
fiscal 2017. While we will continue to invest in future
growth, we expect rising revenues and other factors to
drive operating income 10.8% higher year on year,
reaching ¥82.0 billion for fiscal 2018.
Electronic and Mechanical Components Business (EMC)
We forecast a significant decline in EMC sales in Japan,
impacted by level demand in the automobile-related
industries and contracting demand in the amusement
industry. Overseas, we expect to see strong demand in
the consumer markets of the Americas and Europe. In
Greater China, demand in the high-function home
appliance market should continue to grow, while
government environmental policies are likely to drive
growth in markets for water heaters and home
furnaces. The markets for semiconductor inspection
equipment and home appliances are also likely to
expand in Asia. Based on these projections, we
forecast ¥102.0 billion in EMC net sales, which will be a
decrease of 2.3% year on year. Given our expectations
for higher overseas sales and internal sales, we
forecast EMC operating income of 12.5 billion,
essentially level at 0.2% above fiscal 2017 results.
* Comparisons to fiscal 2017 figures are calculated on revised business
classifications for fiscal 2017 actuals (¥104.4 billion in net sales, ¥12.5 billion in
operating income).
85
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information Automotive Electronic Components Business (AEC)
Our forecast for AEC sales in Japan calls for lower fiscal
2018 sales versus fiscal 2017, mainly due to projected
decreases in Japanese automobile production volume.
Overseas, expectations are for level year-on-year auto
production in the Americas and North America.
However, vehicle model changes will result in the
termination of models using OMRON products, driving
sales down compared to fiscal 2017. We forecast higher
sales in Asia, where strong auto production should
bolster our performance. Given these assumptions and
the likely negative impact of foreign exchange, we
expect AEC sales to underperform fiscal 2017.
Accordingly, our forecast for AEC fiscal 2018 net sales
is ¥128.0 billion (2.4% decrease). In contrast, we
forecast productivity improvements and other factors
to generate a 3.2% rise in operating income, reaching
¥6.0 billion.
Social Systems, Solutions and Service Business (SSB)
In the SSB segment, we project higher Public
Transportation Business sales, mainly due to firm
replacement demand. Our Traffic and Road
Management Systems Business should likewise see
firm demand resulting from ongoing needs for security
and safety. Given these assumptions, we forecast SSB
fiscal 2018 net sales of ¥67.0 billion (5.2% increase) and
operating income of ¥4.5 billion (9.5% increase).
Healthcare Business (HCB)
We forecast higher fiscal 2018 net sales in the HCB
segment. An increase in individuals suffering from
lifestyle diseases associated with Japan’s aging society,
as well as greater overall interest in health, should drive
firm demand, mainly via online channels. Overseas,
economic growth should spur lifestyle changes and an
increase in interest in health, while the emerging
economies of the world, particularly in Asia, should see
higher demand for health-related products. Based on
these projections, we forecast HCB fiscal 2018 net
sales of ¥119.0 billion (9.7% increase) and operating
income of ¥12.5 billion (11.5% increase).
Other Businesses
We forecast higher fiscal 2018 sales in our
Environmental Solutions Business, driven by growth in
the storage battery market and recovery in the solar
power market. Electric Systems and Equipment
Business sales should likewise grow, benefiting from
the expansion of our uninterruptible power supply line.
Our Backlights Business, on the other hand, is likely to
see largely decreasing sales due to the effects of
business optimization. The combination of these factors
lead use to forecast Other Businesses segment net
sales of ¥50.5 billion (0.9% year-on-year decrease). We
expect to break even in terms of operating income.
* Comparisons to fiscal 2017 figures are calculated on revised business
classifications for fiscal 2017 actuals (¥51.0 billion in net sales, ¥500.0 million in
operating loss).
86
Consolidated Balance Sheets
OMRON Corporation and Subsidiaries
March 31, 2017 and 2018
ASSETS
Current Assets:
(Millions of yen)
(Millions of yen)
FY2016
FY2017
LIABILITIES AND SHAREHOLDERS' EQUITY
FY2016
FY2017
Current Liabilities:
Cash and cash equivalents
¥ 126,026
¥ 113,023
Notes and accounts payable - trade
¥ 89,362
¥ 93,792
Notes and accounts receivable - trade
169,210
174,065
Accrued expenses
Allowance for doubtful receivables
(1,320)
(1,117)
Income taxes payable
Inventories
109,404
129,581
Other current liabilities
39,354
6,994
36,371
44,291
6,414
38,281
Deferred income taxes
Other current assets
19,123
13,461
—
21,833
Total Current Liabilities
172,081
182,778
Total Current Assets
435,904
437,385
Deferred Income Taxes
Termination and Retirement Benefits
Other Long-Term Liabilities
Property, Plant and Equipment:
Total Liabilities
Land
Buildings
25,550
24,886
141,527
145,389
Shareholders’ Equity:
763
43,708
10,392
706
42,342
11,740
226,944
237,566
Machinery and equipment
189,286
205,233
Capital
64,100
64,100
Construction in progress
6,104
10,063
Common stock
Total
362,467
385,571
Authorized: 487,000,000 shares in FY2017
Accumulated depreciation
(234,852)
(250,468)
487,000,000 shares in FY2016
Net Property, Plant and Equipment
127,615
135,103
Issued: 213,958,172 shares in FY2017
Investments and Other Assets:
Goodwill
Investments in and advances to affiliates
Investment securities
Leasehold deposits
Deferred income taxes
Other assets
30,385
25,303
27,006
6,907
21,101
23,480
38,705
27,195
29,016
7,531
39,947
30,070
Total Investments and Other Assets
134,182
172,464
213,958,172 shares in FY2016
Capital surplus
Legal reserve
Retained earnings
99,138
17,813
99,588
19,940
346,000
390,950
Accumulated other comprehensive income (loss)
(57,363)
(49,359)
Treasury stock
(659)
(19,689)
3,352,916 shares in FY2017
152,836 shares in FY2016
Total Shareholders' Equity
469,029
505,530
Noncontrolling Interests
Total Net Assets
1,728
1,856
470,757
507,386
Total
¥ 697,701
¥ 744,952
Total
¥697,701
¥ 744,952
87
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information
Consolidated Statements of Income
OMRON Corporation and Subsidiaries
Years ended March 31, 2016, 2017 and 2018
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 Earnings of Affiliates
Net Income
Net Income Attributable to Noncontrolling Interests
FY2015
¥ 833,604
FY2016
¥ 794,201
(Millions of yen)
FY2017
¥ 859,982
512,792
205,735
52,790
(3,399)
767,918
65,686
20,043
(2,039)
47,682
392
482,399
193,539
50,697
2,074
728,709
65,492
19,882
(712)
46,322
335
502,297
212,641
59,134
2,543
776,615
83,367
21,615
(1,754)
63,506
347
Net Income Attributable to OMRON Shareholders
¥ 47,290
¥ 45,987
¥ 63,159
Per Share Data:
Net income Attributable to OMRON Shareholders:
Basic
Diluted
FY2015
FY2016
FY2017
(Yen)
¥ 218.95
218.95
¥ 215.09
215.09
¥ 296.85
—
88
Consolidated Statements of Comprehensive Income
OMRON Corporation and Subsidiaries
Years ended March 31, 2016, 2017 and 2018
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
FY2015
¥ 47,682
FY2016
¥ 46,322
(Millions of yen)
FY2017
¥ 63,506
(23,916)
—
(23,916)
(29,525)
1,486
(28,039)
(5,776)
(4,818)
(10,594)
658
(946)
(288)
(62,837)
(15,155)
248
(9,003)
(7)
(9,010)
4,908
3,046
7,954
1,164
(7,283)
(6,119)
983
(1,109)
(126)
(7,301)
39,021
193
3,153
—
3,153
451
2,335
2,786
3,695
(2,034)
1,661
(514)
920
406
8,006
71,512
349
Comprehensive Income (Loss) Attributable to OMRON Shareholders
¥ (15,403)
¥ 38,828
¥ 71,163
89
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information
Consolidated Statements of Shareholders’ Equity
OMRON Corporation and Subsidiaries
Years ended March 31, 2016, 2017 and 2018
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, 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 transactions 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
(3,439,700)
Issuance of stock
acquisition rights
47,290
(14,656)
1,791
(1,791)
47,290
392
47,682
(14,656)
(14,656)
—
—
—
(256)
(256)
(1)
(1)
—
(62,693)
(62,693)
(144)
(62,837)
(15,023)
(15,023)
(15,023)
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
Net income
Cash dividends paid to
OMRON Corporation
shareholders, ¥68 per
share
Cash dividends paid to
noncontrolling interests
Equity transactions with
noncontrolling interests
and other
Transfer to legal reserve
Other comprehensive
income (loss)
Acquisition of treasury
stock
Sale of treasury stock
Issuance of stock
acquisition rights
45,987
(14,539)
14
23
2,619
(2,619)
(0)
45,987
335
46,322
(14,539)
(14,539)
—
14
—
(297)
(297)
(484)
(470)
—
(7,159)
(7,159)
(142)
(7,301)
(16)
1
(16)
1
23
(16)
1
23
Balance, March 31, 2017
213,958,172
64,100
99,138
17,813
346,000
(57,363)
(659)
469,029
1,728
470,757
Net income
Cash dividends paid to
OMRON Corporation
shareholders, ¥76 per
share
Cash dividends paid to
noncontrolling interests
Equity transactions with
noncontrolling interests
and other
Share-based compensation
Transfer to legal reserve
Other comprehensive
income (loss)
Acquisition of treasury
stock
63,159
(16,083)
1
2,127
(2,127)
6
444
63,159
347
63,506
(16,083)
(16,083)
—
7
444
—
(215)
(215)
(6)
1
444
—
8,004
8,004
2
8,006
(19,030)
(19,030)
(19,030)
Balance, March 31, 2018
213,958,172
¥64,100
¥99,588
¥19,940
¥390,950
¥(49,359)
¥(19,689)
¥505,530
¥1,856
¥507,386
90
Consolidated Statements of Cash Flows
OMRON Corporation and Subsidiaries
Years ended March 31, 2016, 2017 and 2018
Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
Net loss (gain) on sale and disposals of property, plant,
and equipment
Impairment losses on long-lived assets
Net gain on sale of investment securities
Impairment losses on investment securities
Gain on contribution of securities to retirement benefit trust
Termination and retirement benefits
Deferred income taxes
Equity in earnings of affiliates
Loss (gain) on sales of business
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 (increase) 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, net of cash paid
Acquisition of business, net of cash acquired
Other, net
Net cash used in investing activities
Financing Activities:
Net borrowings (repayments) of short-term debt
Dividends paid by the Company
Dividends paid to noncontrolling interests
Payments for 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
FY2015
FY2016
FY2017
(Millions of yen)
¥47,682
¥46,322
¥63,506
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
28,966
705
12,998
(3,764)
558
(7,004)
2,863
11
(712)
(3,686)
(8,923)
(7,112)
2,604
8,384
852
5,097
(284)
31,553
77,875
4,606
(3,274)
(25,816)
(145)
2,278
30
7,187
—
93
(15,041)
155
(14,539)
(297)
(470)
(16)
155
(15,012)
(4,706)
43,116
82,910
29,465
949
911
(3,003)
155
—
2,706
(2,607)
(1,754)
14
(3,210)
(17,409)
(6,113)
4,116
(614)
6,276
285
10,167
73,673
3,776
(649)
(38,542)
(634)
990
—
(427)
(20,445)
89
(55,842)
951
(15,378)
(215)
—
(18,530)
90
(33,082)
2,248
(13,003)
126,026
¥126,026
¥113,023
91
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionFinancial Information
Corporate Information As of March 31, 2018
Established
May 10, 1933
Incorporated
May 19, 1948
Capital
¥64,100 million
Number of Employees
(Consolidated)
36,193
Common Stock
Issued
213,958 thousand shares
Trading Unit
100 shares
Number of Shareholders
38,615
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
Major Manufacturing & Development, Sales & Marketing,
and Research & Development Centers in Japan
Manufacturing &
Subsidiaries and Affiliates
Development
Kusatsu Office
Okayama Office
Ayabe Office
Yasu Office
OMRON Automotive Electronics Co., Ltd.
OMRON SOCIAL SOLUTIONS Co., Ltd.
OMRON HEALTHCARE Co., Ltd.
OMRON RELAY & DEVICES Co., Ltd.
OMRON SWITCH & DEVICES Co., Ltd.
OMRON AMUSEMENT CO., Ltd
Research & Development
OMRON FIELD ENGINEERING Co., Ltd.
Keihanna Technology
OMRON SOFTWARE Co., Ltd.
Innovation Center
OMRON ASO Co., Ltd.
Sales & Marketing
OMRON EXPERTLINK Co., Ltd.*
OMRON Nohgata Co., Ltd.
* Established in April 2018
Tokyo Office
Osaka Office
Nagoya Office
Mishima Office
North America
OMRON MANAGEMENT
CENTER OF AMERICA
(Illinois)
Brazil
OMRON MANAGEMENT
CENTER OF BRAZIL
(São Paulo)
Europe
OMRON MANAGEMENT
CENTER OF EUROPE
(The Netherlands)
Overseas Headquarters
Greater China
OMRON MANAGEMENT
CENTER OF CHINA
(Shanghai)
Asia Pacific
OMRON MANAGEMENT
CENTER OF ASIA PACIFIC
(Singapore)
India
OMRON MANAGEMENT
CENTER OF INDIA
(Haryana)
Korea
OMRON MANAGEMENT
CENTER OF KOREA
(Seoul)
92
Stock Information
Total Shareholder Return (TSR*1) Tokyo Stock Exchange
TSR (Annualized rate)
Holding Period
OMRON
TOPIX
TOPIX Electric Appliances
3 years
6%
6%
7%
5 years
24%
13%
18%
10 years
13%
5%
6%
(Index)
Daily Trading Volume
OMRON
TOPIX
TOPIX Electric Appliances
400
350
300
250
200
150
100
50
0
(1,000 Shares)
2,000
1,600
1,200
800
400
0
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3
2017/3
2018/3
† Share index (2008/3E = 100)
† 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.
† TSR holding period indexed to March 2018
*1 TSR: Total investment return, combining capital gains and dividends
52-Week High / Low, Volatility*2
Dividends per Share / Payout Ratio
FY
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
High (¥)
Low (¥)
Volatility (%)
7,670
5,120
5,900
5,800
4,730
2,478
2,357
2,418
2,215
2,385
4,385
3,045
2,742
3,365
2,213
1,436
1,381
1,749
1,132
940
27.1
32.5
40.0
30.9
39.7
29.9
36.5
34.7
35.9
52.4
FY
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
Dividends per Share (¥)
Payout Ratio (%)
76
68
68
71
53
37*3
28
30
17
25
25.6
31.6
31.1
25.0
25.3
27.0
37.6
24.7
106.4
—
*2 Volatility: Price fluctuation risk expressed in standard deviations
*3 Including ¥5.0 per share of 80th anniversary memorial dividend
Ownership and Distribution of Shares
Shareholder Distribution by Number of Shares Held
(Trading unit: 100 shares)
%
100
80
60
40
20
0
14.4%
12.4%
13.0%
45.2%
47.5%
47.9%
5.8%
0.9%
5.7%
1.1%
5.7%
1.0%
33.7%
33.3%
32.4%
2015
2016
2017
(FYE)
Individuals and
others
Foreign investors
Other
corporations
Financial instruments
dealers
Financial
institutions
100 to less than1,000
1.4%
10 to less
than 100
14.1%
1,000 to less than 5,000
0.3%
More than
5,000
0.2%
38,615
Shareholders
Less than 10
84.0%
9393
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionCorporate Information The Year in Review
Fiscal 2017 was the first year of the OMRON VG2.0 medium-term management plan. It was an
eventful year in which we accelerated growth investments, including the acquisition of an industrial
camera manufacturer and an industrial code reader manufacturer. We also set up a new technology
development center to drive dramatic technological growth.
Year Highlights
April 2017
Industrial camera maker Sentech
acquired
(Finalized July 2017)
https://www.omron.com/media/press/
2017/04/c0427.html
June 2017
RIKEN BSI-OMRON Collaboration
Center established; venture between
OMRON and RIKEN
https://www.omron.com/media/press/
2017/06/c0601.html
2017
September 2017
OMRON selected as component of the Dow
Jones Sustainability World Index (DJSI World)
https://www.omron.com/media/press/
2017/09/c0911.html
July 2017
Scope defined for fiscal 2017
stock repurchase
https://www.omron.com/about/ir/
irlib/news/pdfs/20170727e.pdf
August 2017
Acquired U.S. industrial code reader Microscan
Systems
(finalized October 2017)
https://www.omron.com/media/
press/2017/08/c0830.html
April—May
June
July
August
September
October
April 2017
August 2017
Developed AI Machine Automation
Controller featuring machine-learning AI
algorithm
https://www.omron.com/media/press/
2017/04/c0425.html
Announced i-BELT service
using production floor data
October 2017
Developed 3D-LIDAR for
self-driving vehicle use on
public roads
https://www.omron.com/
media/press/2017/10/c1024.html
July 2017
Launched production of in-home
electronic blood pressure monitors
in Brazil
September 2017
Introduced NC Integrated Controller for
dramatic improvement in processing
equipment productivity
https://www.omron.com/media/press/2017/09/c0926.html
Developed world’s first on-board driver
monitoring sensor
https://www.omron.com/media/press/
2017/09/c0927.html
Product Highlights
94
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
March 2018
New Diversity Management Selection 100
and Nadeshiko Brand Designation
https://www.omron.com/media/press/
2018/03/c0328.html
April 2018
Established OMRON SINIC X Corporation
https://www.omron.com/media/press/2018/04/c0425.html
Named 2017 Top 100 Global Innovator
https://www.omron.com/media/press/2018/04/c0410.html
October 2017
Opened automation center in
Singapore
https://www.omron.com/media/
press/2017/10/c1006.html
November 2017
Issued secondary offering of
stock
https://www.omron.com/about/ir/
irlib/news/pdfs/20171128e.pdf
2018
November
December
January
February
March
April
November 2017
February 2018
Introduced four series
of conditioning monitoring
devices to provide visual
representation of equipment
status
https://www.omron.com/media/
press/2017/11/c1120.html
Upgraded features of
OMRON connect
blood pressure
monitoring app
April 2018
Introduced USB
environmental sensor;
obtained environmental
information for seven types of
environmental data, including
acceleration and VOC gases
December 2017
February 2018
Announced DriveKarte monitoring service for
driver safety
Announced sales of KPV
Series outdoor-use
computers
9595
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionCorporate Information OMRON Recognitions
OMRON Innovations Recognized
Selected as Top 100
Global Innovator
OMRON was selected for a
second consecutive year as a
Top 100 Global Innovator, an
award recognizing the best
100 innovative companies
and research institutes.
Received fiscal 2017 Commissioner’s
Award/Intellectual Property
Achievement Awards
OMRON HEALTHCARE
Co., Ltd. received the
Commissioner’s Award of
the Intellectual Property
Achievement Awards for
fiscal 2017.
Coverage in ESG Indexes
Recognizing our commitment to sustainability, OMRON is a constituent member of several major ESG indexes. We
are honored to have been included for the eighth consecutive year in the Dow Jones Sustainability (DJSI) Asia/Pacific
Index and for the first year in the DJSI World Index. We have also been included for the third consecutive year in the
MSCI ESG Leaders Index and for the second consecutive year in the FTSE4Good Index Series.
THE INCLUSION OF OMRON Corporation IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS,
TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A
SPONSORSHIP, ENDORSEMENT OR PROMOTION OF OMRON Corporation BY MSCI OR ANY
OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND
THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR
ITS AFFILIATES.
With the commencement of ESG investing by the Japan Government Pension Investment Fund, OMRON was
selected as a component member of three ESG indexes in July 2017 for the second consecutive year.
Recognized for Contributions to Sustainability
New Diversity Management Selection
100 and Nadeshiko Brand Designation
Designated Certified Health and
Productivity Management Organization
(White 500)
OMRON was recognized for our engagement in human
resources strategy under VG2.0.
OMRON Corporation and OMRON HEALTHCARE Co.,
Ltd. were recognized for a second consecutive year
under the Certified Health and Productivity Management
Organization (White 500) program.
96
Recognition for Communications
Integrated Report 2017
OMRON has been honored with the Award for Excellence in each of the first four years, sponsored
by the World Intellectual Capital Initiative Japan. This year, OMRON was awarded the Grand Prize for
Excellence in Integrated Reporting for the first time. The latest edition of the Nikkei Annual Report
Awards, sponsored by Nikkei Inc. (publisher of the Nihon Keizai Shimbun), recognized OMRON as the
Grand Prix winner.
The 33rd Corporate Communications Awards
For the second time since 1990, OMRON received the Award for Excellence in Corporate Communications from the
Keizai Koho Center.
Fifth Web Grand Prix Corporate B to B Site Award
OMRON’s EDGE & LINK website was awarded the Corporate B to B Website Award in the Corporate Grand Prix division
of the Fifth Annual Web Grand Prix, sponsored by the Web Advertising Bureau of the Japan Advertisers Association.
*See below for more about EDGE & LINK.
OMRON Corporate Websites
OMRON publishes a wide range of information through our corporate websites. We have also produced
numerous videos online that tell the story of our future in a much more dynamic way.
Investor Relations Information
Sustainability Information
Medium-Term Management Plan
Website
https://www.omron.com/about/ir/
https://www.omron.com/about/
sustainability/
https://www.omron.com/
vg2020/
EDGE & LINK
EDGE & LINK is a website that discusses OMRON
technologies and initiatives for improving lives and
contributing to better societies through our businesses.
Corporate Overview Video
We invite you to watch the OMRON corporate overview
video to learn more about how our technologies are
changing society for the better.
9797
BusinessFinancial InformationStrategyGovernanceCorporate InformationVisionCorporate Information Independent Practitioner’s Assurances
To enhance the reliability of the information presented in Integrated Report 2018, the following information
associated with social and environmental performance provided herein has been reviewed by independent
third parties*.
* Deloitte Tohmatsu Sustainability Co., Ltd.
Bureau Veritas Japan Co., Ltd.
Data subject to independent assurance
Data subject to independent verification
Ratio of non-Japanese in managerial
positions overseas (P33)
Ratio of women in managerial roles (OMRON
Group in Japan) (P33)
Ratio of employees with disabilities (OMRON
Group in Japan) (P33)
Net sales to CO2 emissions (P33)
Data subject to independent review
Environmental contribution (P33)
98
From the Editor-In-Chief
Integrated Report 2018 marks the
seventh integrated report published
by the OMRON Group. We believe
this report represents an important
opportunity to deepen engagement with
our stakeholders. Accordingly, we have
endeavored to make this report a logical
story that encompasses the results of our
initiatives to improve corporate value
during the course of the year. Our story
tells how OMRON has created value to
date, how we intend to continue to create
value in the future, and why we think this
is possible. We hope that communicating
the commitment of OMRON management
to sustainable corporate growth over
the medium and long term encourages
greater engagement with our
stakeholders.
The theme of this year’s report is
Accelerating the Creation of Innovation
Driven by Social Needs. What do we
mean by Innovation Driven by Social
Needs? We mean taking up the challenge
to lead the world in solving social issues
through groundbreaking innovative value.
This stance has been part of the OMRON
DNA since our founding, and it continues
to live on in the OMRON Principles. In
this year’s report, we make the case that
it is our initiatives to create innovation
driven by social needs that are the very
source of our value creation. We have
also gone to great lengths to show how
sustainability initiatives are tied to the
efforts of OMRON business segments to
create innovation, and how the functional
divisions and departments supports the
OMRON business with these initiatives.
Integrated Report 2018 was edited by
a team of individuals selected from
our Global Investor Relations & Brand
Communications HQ and Sustainability
Office. We also owe a word of thanks to
others within and outside of OMRON who
provided their valuable input. This entire
process proved to be an opportunity for
seeing OMRON strengths and issues from
new perspectives. Our report production
team will continue to work hard on future
integrated reports, just as they look
forward to further opportunities to interact
with you, our important stakeholders. We
hope you take the chance to share your
opinions about Integrated Report 2018
with us.
August, 2018
Tsutomu Igaki
Executive Officer and Senior General Manager
Global Investor Relations & Brand Communications HQ
The Integrated Report Production Team
Shiokoji Horikawa, Shimogyo-ku, Kyoto 600-8530 Japan TEL: +81-75-344-7000