OMRON Announces Consolidated Financial Results for Third Quarter of Fiscal 2006 | Automation.com

OMRON Announces Consolidated Financial Results for Third Quarter of Fiscal 2006

Kyoto, Japan, Jan. 30, 2006 - (JCN Newswire) - OMRON Corporation (TSE: 6645; US: OMRNY), a global leader in automation, sensing and control technology, has announced its consolidated financial results for the nine months ended December 31, 2005. The Group's net sales totaled JPY 442,755 million, a 1.5 percent decrease from the same period in the previous fiscal year. The decrease reflected the substantial effect of the transfer of the ATM and other information equipment business to an equity affiliate in October 2004.

However, despite a weak market for consumer and commerce components for IT and digital-related products caused by inventory adjustments that persisted until the first half of the fiscal year, net sales excluding the transferred information equipment business increased 4.8 percent over the same period in the previous fiscal year as a result of steady sales growth of factory automation control systems, automotive electronic components and other core OMRON Group products supported by firm demand from capital investment.

Regarding income, with the decrease in net sales due to the transfer of the information equipment business, operating income decreased 4.0 percent from the same period in the previous fiscal year to JPY 44,009 million. However, income before income taxes was JPY 47,059 million, a 9.2 percent increase from the same period in the previous fiscal year, and net income was JPY 26,161 million, a 5.4 percent increase from the same period in the previous fiscal year.

Results by Business Segment

  • Industrial Automation Business
    In Japan, sales of the safety business and quality solutions business, which OMRON has positioned as strategic growth businesses, remained firm from the first half of the fiscal year, in addition to a recovery in sales of products for the semiconductor and digital appliance industries, which are emerging from an inventory adjustment phase. As a result, overall domestic sales increased from the same period in the previous fiscal year.

    Overseas, sales of products to the automobile industry in North America increased, as did sales of inverters and servomotors in Europe. Foreign currency translation also helped increase sales. Sales were strong in Southeast Asia and Greater China, where exports continue to grow briskly.

    As a result, segment sales were JPY 198,984 million, a 6.1 percent increase from the same period in the previous fiscal year.

  • Electronic Components Business
    In Japan, overall sales of products such as relays for air conditioners and electronic components for the amusement industry were weak due to inventory adjustments in the consumer and commerce industry that have continued from the second half of the previous fiscal year. In addition, sales of backlights for mobile phones and large-screen LCD televisions were down due to intensifying price competition.

    Overseas, sales in the growing field of products for the IT and mobile phone market began to increase as a result of OMRON's efforts to strengthen sales and marketing in the United States and Europe and to expand production capacity and reinforce sales for the rapid growth of the China business. In the electronic appliance and telecommunications equipment markets, overall sales were sluggish, with weak sales of communications relays against the backdrop a downturn in European business conditions and restrained public works investments in China, and greater price competition for relays for electronic appliances.

    As a result, segment sales were JPY 72,017 million, a 5.3 percent decrease from the same period in the previous fiscal year.

  • Automotive Electronic Components Business
    Sales in all areas were solid due to firm global automobile production volume and the use of OMRON Group products that meet needs for automobile safety and environmental friendliness to match customers' new vehicle investment.

    As a result, segment sales were JPY 55,583 million, a 17.8 percent increase from the same period in the previous fiscal year.

  • Social Systems Business
    Sales decreased significantly due to the transfer of the ATM and other information equipment business to an equity affiliate in October 2004.

    In the public transportation systems business, despite strong contributions from renovation demand and equipment deliveries related to the opening of new train lines and introduction of IC cards, sales decreased from the same period in the previous fiscal year, when there was major demand associated with the issue of newly designed banknotes. In the security solutions business, sales grew favorably, centered on demand from large customers.

    As a result, segment sales were JPY 52,241 million, a 34.7 percent decrease from the same period in the previous fiscal year.

  • Healthcare Business
    In Japan, sales of digital blood pressure monitors, digital thermometers, body composition monitors and other products were favorable and increased over the same period in the previous fiscal year. Overseas, sales of digital blood pressure monitors in the United States declined due to slack demand, but in Europe, Southeast Asia and China, sales of digital blood pressure monitors, a core product, increased from the same period in the previous fiscal year.

    As a result, segment sales were JPY 44,864 million, a 16.3 percent increase from the same period in the previous fiscal year.

  • Other Businesses
    Among existing businesses, in the entertainment business, competition continued to intensify for commercial game machines, including printed sticker machines, but overall sales increased over the same period in the previous fiscal year due to steadily expanding sales of content for cellular phones and other new businesses. In the computer peripheral business, IT investment recovered against the backdrop of improved corporate earnings, and sales of products such as uninterruptible power supplies increased. However, sales of the commissioned software business declined from the same period in the previous fiscal year. In new business themes, sales of the radio frequency identification (RFID) business grew steadily along with the trend toward practical application of IC tags in Japan and overseas.

    As a result, segment sales totaled JPY 19,066 million, a 5.4 percent decrease from the same period in the previous fiscal year.

    Financial Condition
    Total assets were JPY 557,072 million, a decrease of JPY 28,357 million from the end of the previous fiscal year. Shareholders' equity was JPY 362,894 million, an increase of JPY 57,084 million from the end of the previous fiscal year. As a result, the ratio of shareholders' equity to total assets increased to 65.1 percent from 52.2 percent at the end of the previous fiscal year.

    As for cash flow, net cash provided by operating activities was JPY 24,752 million, a decrease of JPY 11,697 million from the same period in the previous fiscal year. Net income increased, but the reserve for termination and retirement benefits decreased in connection with the return of the substitutional portion of the employees' pension fund, and there was an increase in income taxes payable. Net cash used in investing activities totaled JPY 31,289 million, an increase of JPY 3,741 million from the same period in the previous fiscal year, mainly due to investments for future growth and aggressive business acquisitions. Net cash used in financing activities was JPY 26,296 million, a decrease of JPY 9,695 million from the same period in the previous fiscal year, mainly due to the payment of cash dividends and acquisition of treasury stock. OMRON had also made substantial repayments of interest-bearing debt during the same period in the previous fiscal year.

    As a result, cash and cash equivalents at the end of the period were JPY 49,699 million, a decrease of JPY 30,920 million from the end of the previous fiscal year.

    Outlook for the Year Ending March 31, 2006
    In the fourth quarter, although elements of uncertainty regarding the outlook for the global economy will remain, including high crude oil and raw material prices and the direction of the stock market and exchange rates, moderate growth is expected to continue overall, due to factors including an expectation that consumer spending and corporate capital investment will remain firm.

    Amid these conditions, the OMRON Group expects net sales for the fiscal year to remain in line with its initial forecast, following from third-quarter results and the ongoing recovery trend in the external environment. Income is also expected to be in line with the initial forecast, as the OMRON Group invests aggressively for future growth while relentlessly promoting structural improvements toward realizing a strong profit structure.

    For the full fiscal year, OMRON's performance forecast announced on October 31, 2005 remains unchanged. The assumed exchange rates for the fourth quarter are US$1 = JPY 115 and 1 euro = JPY 135.

    Note: Projections of results and future developments are based on information available to the Company at the present time, as well as certain assumptions judged by the Company to be reasonable. Various factors could cause actual results to differ materially from these projections. Major factors influencing OMRON's actual results include, but are not limited to, (i) the economic conditions affecting the Company's businesses in Japan and overseas, (ii) demand trends for the Company's products and services, (iii) the ability of the OMRON Group to develop new technologies and new products, (iv) major changes in the fund-raising environment, (v) tie-ups or cooperative relationships with other companies, and (vi) movements in currency exchange rates and stock markets.

    About OMRON
    Headquartered in Kyoto, Japan, OMRON Corporation is a global leader in the field of automation. Established in 1933 and headed by President Hisao Sakuta, Omron has more than 25,000 employees in over 35 countries working to provide products and services to customers in a variety of fields including industrial automation, electronic components industries, and healthcare. The company is divided into five regions and head offices are in Japan (Kyoto), Asia Pacific (Singapore), China (Hong Kong), Europe (Amsterdam) and US (Chicago). The European organisation has its own development and manufacturing facilities, and provides local customer support in all European countries.
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