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OMRON Corporation Reports Fiscal 2012 Third Quarter Consolidated Performance

OMRON Corporation (TOKYO:6645)(ADR:OMRNY) today reported consolidated performance for the third quarter of fiscal 2012, ending March 31, 2013.

Consolidated net sales for the nine months ended December 31, 2012, increased 2.4 percent compared with the same period of the previous fiscal year to JPY 463,681 million. Operating income decreased 7.6% to JPY 27,848 million, income before income taxes increased 7.2% to JPY 28,216 million, and net income attributable to shareholders increased 77.7% to JPY 20,684 million.

Note: All amounts are rounded to the nearest million yen.

1. Overview of Conditions

In the first nine months of fiscal 2012 (April – December 2012), although sales of IAB (Industrial Automation Business) were sluggish, AEC (Automotive Electronic Components Business), SSB (Social Systems, Solutions and Service Business) and HCB (Healthcare Business) performed strongly, meaning the Omron Group's net sales were essentially unchanged from the same period of the previous fiscal year when temporary factors including the Great East Japan Earthquake and floods in Thailand affected the business environment. The Omron Group's perception of conditions in the nine months ended December 31, 2012 is as follows.

Economic and Market Conditions by Region

Japan:   The automotive industry was firm but the semiconductor and other industries weakened, and business confidence worsened.
U.S.: The automotive and other industries were firm, yet business confidence deteriorated overall.
Europe: The slump continued, despite a sense that the economic downturn caused by financial instability had bottomed out.
China: Despite solid demand, the growth rate slowed due to worsening economic conditions, etc.
Asia: Conditions were firm in the emerging markets of ASEAN, including reconstruction demand in Thailand. However, the semiconductor industry weakened.

Conditions in the Omron Group's Primary Related Markets

Automotive-related:   Capital investment and component demand was firm everywhere but Europe.
Semiconductor-related: Capital investment demand was weak, other than for smartphones.
Machine tool-related: Capital investment demand was firm, mainly in emerging markets.
Home appliance and electronic component-related: Capital investment in large home appliances and component demand were firm.
Healthcare equipment-related: Demand was firm due to an increase in purchasers in connection with economic growth in emerging markets.

The average exchange rates for the nine months ended December 31, 2012 were USD 1 = JPY 80.4 and EUR 1 = JPY 103.2 (1.2 yen more and 8.2 yen less than the same period of the previous fiscal year, respectively).

Consolidated Sales and Income

(Percentages represent changes compared with the same period of the previous fiscal year).

  Millions of yen, except per share data and percentages

 

Nine months ended

December 31, 2012

  Nine months ended

December 31, 2011

      Change (%)     Change (%)
Net sales 463,681 2.4   452,859 0.3  
Operating income 27,848 (7.6 ) 30,137 (18.9 )
Income before income taxes 28,216 7.2   26,323 (26.8 )
Net income attributable to shareholders   20,684   77.7     11,641   (49.8 )

Note: Comprehensive income (loss):
Nine months ended December 31, 2012: JPY 30,165 million (—% change);
Nine months ended December 31, 2011: JPY (2,302 million) (—% change)

 

Results by Business Segment

IAB (Industrial Automation Business)

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change

Sales to external
customers

  Japan 92,204 87,071 -5.6%
Overseas 113,706 105,381 -7.3%
  Total 205,910 192,452 -6.5%
Segment profit   27,764   20,290   -26.9%
 

Sales in Japan

Demand was basically unchanged from the same period of the previous fiscal year in automotive and electronic component-related industries but capital investment demand was sluggish in semiconductor-related industries. Consequently, sales weakened. Sales in Japan for the nine months ended December 31, 2012 decreased compared with the same period of the previous fiscal year due in part to the absence of the temporary rise in sales from the impact of the Great East Japan Earthquake and floods in Thailand during the same period of fiscal 2011.

Overseas Sales

Performance in the Americas was firm, supported by a robust automotive industry. In Europe, demand remained weak despite a sense that the economic downturn was bottoming out. In China, although demand was solid, performance weakened due to the absence of the temporary rise in sales in the same period of the previous fiscal year. Elsewhere in Asia, despite solid demand in emerging markets overall, demand weakened due to factors including restrained capital investment in the semiconductor and other industries in South Korea. As a result, overseas sales for the nine months ended December 31, 2012 decreased compared with the same period of the previous fiscal year.

Segment Profit

Factors such as reduced sales due to the depreciation of the euro and a reaction to a temporary increase in sales in the same period of fiscal 2011, as well as proactive investments, resulted in a decrease in segment profit compared with the same period of the previous fiscal year.

EMC (Electronic and Mechanical Components Business)

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change

Sales to external
customers

  Japan 18,117 19,650 +8.5%
Overseas 43,861 42,296 -3.6%
  Total 61,978 61,946 -0.1%
Segment profit   5,901   4,496   -23.8%
 

Sales in Japan

In consumer industries, demand grew in the office equipment field and mobile industries from the second half, and demand in infrastructure-related fields was firm. As a result, sales in Japan for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year.

Overseas Sales

In the Americas, demand increased in the automotive industry, but decreased in consumer industries. Demand decreased in Europe due to ongoing economic weakness. In China and elsewhere in Asia, slack exports due to the weak economy in Europe and the depreciation of the euro caused sales to remain essentially unchanged. Consequently, overseas sales for the nine months ended December 31, 2012 decreased compared with the same period of the previous fiscal year.

Segment Profit

Factors including the depreciation of the euro and a continuing decrease in sales within the Omron Group caused segment profit to decrease compared with the same period of the previous fiscal year.

AEC (Automotive Electronic Components Business)

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change

Sales to external
customers

  Japan 20,368 23,290 +14.3%
Overseas 40,870 48,370 +18.4%
  Total 61,238 71,660 +17.0%
Segment profit   1,847   4,053   +119.4%
 

Sales in Japan

Automotive demand was robust due to government support measures for the purchase of eco cars (extension of tax breaks, reintroduction of subsidies) and strong sales of small cars. Sales in Japan for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year, partially reflecting the temporary decrease in sales in the same period of fiscal 2011 due to the Great East Japan Earthquake and floods in Thailand.

Overseas Sales

Demand for certain components decreased due to the impact of austerity policies and the deteriorating labor environment in European economies as a result of financial instability and a sharp drop in sales for Japanese automobile manufacturers in China. Overall, however, demand was strong among overseas automobile manufacturers and in emerging markets. As a result, overseas sales for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year, due in part to the rebound from the temporary decrease in sales caused by the impact of floods in Thailand.

Segment Profit

Factors such as increased sales and the absence of the temporary production adjustments carried out in the same period of fiscal 2011 due to the impact of the Great East Japan Earthquake and floods in Thailand resulted in an increase in segment profit compared with the same period of the previous fiscal year.

SSB (Social Systems, Solutions and Service Business)

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change
Sales to external customers 32,985   36,805  

+11.6%

Segment profit (loss)   (3,804 )   (2,588 )  
 

Public Transportation Systems Business Sales

Passenger revenues of railway companies rebounded compared with the same period of the previous fiscal year due to factors including the absence of the impact of the Great East Japan Earthquake, and investment in equipment renewal was firm. As a result, there was an increase in deliveries of ticket vending machines, passenger gates and other equipment and related installation work, and sales for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year. In addition, there is an increasing need for platform safety and security equipment, such as gates to prevent passengers from falling onto tracks.

Traffic and Road Management Systems Business and Other Sales

In the traffic and road management systems business, sales for the nine months ended December 31, 2012 were flat, partially due to the absence of the temporary reconstruction demand in the same period of the previous fiscal year resulting from the impact of the Great East Japan Earthquake. In the environmental solutions business, solar power generation products sold strongly as a result of a focus on launching new equipment models and expanding sales channels, backed by the announcement of the introduction of a system in Japan for purchasing the total amount of renewable energy generated and the expansion of a tax system to promote environment-related investment.

Segment Profit

Segment loss decreased compared with the same period of the previous fiscal year because of increased sales.

HCB (Healthcare Business)

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change

Sales to external
customers

  Japan 19,878 21,699 +9.2%
Overseas 26,424 30,280 +14.6%
  Total 46,302 51,979 +12.3%
Segment profit   2,940   3,733   +27.0%
 

Sales in Japan

Sales of healthcare products for household use were firm, with robust sales of new products (body composition monitors, digital thermometers for women, electric toothbrushes, massagers, sleep time monitors, sleep monitors) and new and preexisting digital blood pressure monitors, HCB's core product. On the other hand, sales of equipment for use in medical institutions were flat, as medical institutions maintained a careful stance toward investment. Sales in Japan for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year, reflecting the temporary decrease in sales in the same period of fiscal 2011 due to the Great East Japan Earthquake.

Overseas Sales

Although demand in the markets of Southern and Eastern Europe remained weak amid the gradual easing of financial instability, demand for healthcare equipment continued to rise in emerging markets such as Russia, China and Southeast Asia. As a result, overseas sales for the nine months ended December 31, 2012 were strong overall.

Segment Profit

Despite factors including the depreciation of the euro, segment profit increased compared with the same period of the previous fiscal year due to the increase in sales and other factors.

Other

Millions of yen, except percentages

    Nine months ended

December 31, 2011

  Nine months ended

December 31, 2012

  Change
Sales to external customers 39,536   44,174 +11.7 %
Segment profit (loss)   (2,932 )   1,589  

 

Businesses in the "Other" segment are primarily responsible for exploring and nurturing new business fields and nurturing/reinforcing businesses not handled by other internal companies.

Environmental Solutions Business Sales

Sales for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year due to factors including increased demand for solar power condensers (energy-generation business) amid rising expectations for solar power generation as an alternative source of power.

Electronic Systems & Equipments Division Sales

Although demand for uninterruptible power supplies was firm in response to concerns about the electrical supply, sales of industrial-use computers and development and contract manufacturing of electronic devices weakened. As a result, sales for the nine months ended December 31, 2012 decreased compared with the same period of the previous fiscal year.

Micro Devices Business Sales

Although demand for MEMS microphone chips and custom integrated circuits for industrial use rose sharply, sales for the nine months ended December 31, 2012 decreased compared with the same period of the previous fiscal year due to a rapid drop in demand for contract semiconductor manufacturing.

Backlight Business Sales

Due to the launch of a large-scale project amid a robust smartphone market, sales for the nine months ended December 31, 2012 increased compared with the same period of the previous fiscal year.

Segment Profit

Segment profit increased compared with the same period of the previous fiscal year because of higher sales in the environmental solutions business.

2. Consolidated Financial Position and Cash Flows

Total assets as of December 31, 2012 increased JPY 22,150 million compared with the end of the previous fiscal year to JPY 559,473 million, due to an increase in inventories and other factors.

Total liabilities decreased JPY 5,739 million compared with the end of the previous fiscal year to JPY 209,904 million, largely reflecting a decrease in notes and accounts payable – trade. Net assets increased JPY 27,889 million from the end of the previous fiscal year to JPY 349,569 million due to a change in foreign currency translation adjustments. The shareholders' equity ratio was 62.2 percent, compared with 59.7 percent at the end of the previous fiscal year.

Net cash provided by operating activities for the nine months ended December 31, 2012 was JPY 31,932 million (an increase of JPY 18,949 million compared with the same period of the previous fiscal year) due to collection of receivables in addition to net income. Net cash used in investing activities was JPY 20,421 million (an increase in cash used of JPY 2,733 million compared with the same period of the previous fiscal year) due to capital investment in production and other facilities. Net cash used in financing activities was JPY 4,319 million (a decrease in cash used of JPY 18,179 million compared with the same period of the previous fiscal year) due to dividends paid and other factors.

As a result, the balance of cash and cash equivalents at December 31, 2012 was JPY 54,726 million, an increase of JPY 9,469 million from the end of the previous fiscal year.

 

Consolidated Financial Position

  Millions of yen - except percentages
  As of

December 31, 2012

 

As of

March 31, 2012

Total assets 559,473   537,323  
Net assets 349,569   321,680  

Shareholders' equity

347,900   320,840  

Shareholders' equity ratio (%)

  62.2     59.7  
 

Consolidated Cash Flows

    Millions of yen
   

Nine months ended
December 31, 2011

 

Nine months ended
December 31, 2012

 

Period-on-
period change

Net cash provided by operating activities 12,983   31,932   +18,949  
Net cash used in investing activities (17,688 ) (20,421 ) -2,733  
Net cash used in financing activities (22,498 ) (4,319 ) +18,179  
Cash and cash equivalents at end of period   44,699     54,726     +10,027  
 

3. Dividends

        Year ended

March 31, 2012

  Year ending

March 31, 2013

 

Year ending
March 31, 2013
(projected)

Dividends
per share

  1st quarter dividend (JPY)        
2nd quarter dividend (JPY) JPY14.00   JPY14.00      
3rd quarter dividend (JPY)        
Year-end dividend (JPY) JPY14.00       JPY23.00  
  Total dividends for the year (JPY)   JPY28.00           JPY37.00  
 

4. Fiscal 2012 Consolidated Performance Forecast

There is no change to the forecast for the fiscal year ending March 31, 2013, as announced on April 26, 2012. The assumed exchange rates for the fourth quarter in the performance forecasts for the fiscal year are USD 1 = JPY 89 and EUR 1 = JPY 118.

The performance forecast and other forward-looking statements are based on information available to the Company at the present time, and on certain assumptions judged by the Company to be reasonable. Due to a variety of factors, actual results may differ materially from the forecast.

 

Projected Results for the Fiscal Year Ending March 31, 2013 (April 1, 2012 – March 31, 2013)

 
Millions of yen - except per share data and percentages
   
  Year ending March 31, 2013 Change (%)
Net sales 650,000   4.9  
Operating income 46,000   14.6  
Income before income taxes 43,000   28.2  
Net income attributable to shareholders 28,500   73.9  

Net income per share attributable to shareholders (JPY)

 

129.47

   

Note: Revisions since the most recently announced results forecast: No

 

About OMRON

Headquartered in Kyoto, Japan, OMRON Corporation is a global leader in the field of automation. Established in 1933, Omron has more than 36,000 employees in over 35 countries working to provide products and services to customers in a variety of fields including industrial automation, electronic components, social systems, healthcare, and the environment. The company has regional head offices in Singapore (Asia Pacific), Beijing (Greater China), Amsterdam (Europe, Africa, and the Middle East), Chicago (the Americas), Gurgaon (India), and Sao Paulo (Brazil). For more information, visit OMRON's website at http://www.omron.com/

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