OMRON Corporation (TOKYO: 6645, ADR: OMRNY) announced on May 29 its new medium-term business plan for the three years from FY2014 to FY2016.
In 2011, OMRON launched its long-term business strategy for the decade leading up to 2020, called "Value Generation 2020" or "VG2020." With this strategy, OMRON has specified goals; "global value-creating group that is qualitatively and quantitatively superior," "over 1 trillion yen in sales and 15% return on sales (ROS)." For the first three years (FY2011-FY2013) of VG2020; called the "GLOBE STAGE," also for the next seven years (FY2014-FY2020) of VG2020; called the "EARTH STAGE." In GLOBE STAGE, OMRON worked to establish a profit structure that enables the company to remain competitive for the upcoming decade, attaining growth worldwide by centering on emerging markets. The three pivotal strategies for the growth were: (1) reinforcement of industrial automation business; (2) pursuit of growth in emerging markets, and (3) business development for the "Optimization Society*.
These pivotal strategies were combined with supporting functional strategies: "profit structure reform" and "strengthening of global human resources." As a result of steady implementation of these strategies in GLOBE STAGE, OMRON was able to record net sales of 773 billion yen and operating profit of 68.1 billion yen in FY2013 on a consolidated basis, with ROS of 8.8%. This represents the first achievement of record high sales and operating profit for OMRON in six years.
The first three years (FY2014-FY2016) of EARTH STAGE are designated "EARTH-1 STAGE," during which OMRON will enhance its efforts toward establishing a "self-driven" growth structure. To this end, OMRON will continue to focus on the aforementioned three pivotal strategies and two functional strategies, and further strengthen their implementation.
Management Policy of EARTH-1 STAGE
- The key to "reinforcement of OMRON's industrial automation business" is the Global Industry Strategy. This strategy is intended to provide value through our automation, with focus on global fast-growing industries such as mobile, automotive, foods and daily commodities, and social infrastructure industries. To this end, OMRON will make full use of its extensive global network of more than 150 business locations in some 40 countries around the world.
- For growth in emerging markets, OMRON will expand its China-focused strategy to a well-balanced growth policy that includes China as well as other parts of Asia (ASEAN countries and India).
- Through business development for the "Optimization Society," OMRON will seek to create new businesses in its specialty fields, with the aim of satisfying potential demands or yet-to-be-recognized needs of society. This conforms to the company's commitment to addressing social challenges through its operations.
- To accelerate growth, OMRON will also implement an aggressive investment strategy during the EARTH-1 STAGE. The investment plan for the upcoming three years will include strategic investments and investments for growth (including M&A) amounting to about 100 billion yen in total. OMRON will also invest another 100 billion yen for capital expenditures, and some 150 billion yen for research and development to support planning and development of new technologies from a long-term perspective.
Goals for EARTH-1 STAGE (FY2014-FY2016)
Policy: Establishment of "self-driven" growth structure
Targets (for FY2016):
Sales: Over 900 billion yen (up from 773 billion yen in FY2013)
ROS: Over 10% (up from 8.8% in FY2013)
Gross profit ratio: Over 40% (up from 38.5% in FY2013)
(1) Reinforce industrial automation business
(2) Pursue growth in emerging markets
(3) Engage in business development for the "Optimization Society"
(4) Implement profit structure reform
(5) Strengthen global human resources
(1) Strengthen industrial automation business
(2) Promote growth throughout Asia (China and ASEAN countries)
(3) Create environmental solutions business and other next-generation businesses
By turning societal changes into opportunities, OMRON will continue to promote growth by helping tackle issues our society faces through the company's business, while creating innovations to spur new demand. OMRON seeks to remain a corporate group that people can always depend on as the company strives to boost its corporate value.
* The Optimization Society is a new society that OMRON has envisioned after the industrial society. The concept is based on OMRON's original SINIC (Seed-Innovation to Need-Impetus Cyclic Evolution) theory. Such a society is thought to emerge by creating a complete balance and harmonious relationships between individuals and society, between humans and the environment, and between people and machines.
For more information, visit OMRON's website at: http://www.omron.com/.