Omrons New Long-Term Strategy Value Generation 2020

July 13, 2011 Yoshihito YAMADA, President and CEO Omron Corporation

Omron Corporation

Contents

Omrons New President Value Generation 2020 Midterm Targets

P.2 P.6 P. 14

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New President

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Yoshihito YAMADA: Brief Bio

Apr. 1984 Joined Tateisi Electric Manufacturing Co., currently Omron Corporation Worked in sales and marketing departments Vice-President of Omron Healthcare Inc. (USA) President of Omron Healthcare Europe B.V. Executive Officer and President and Representative Director of OMRON Healthcare Co., Ltd. Senior General Manager of Corporate Strategy Planning HQ of OMRON Corporation Managing Officer of the Company President and Chief Executive Officer of the Company (to present)
3 Yoshihito YAMADA, President and CEO

Oct. 2001 Apr. 2003 June 2008 Mar. 2010 June 2010 June 2011

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OMRON will Change

New New Management Management Team Team

New New + Strategies Strategies

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Taking on the Challenge of Transformation

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Long-Term Strategy VG2020

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Net Sales: FY1990-2010

Highest in FY2007. Growth rate after FY2000 ended lower than expected due to unfavorable external factors.
(Billions of yen) 800 700 594.3 600 464.4 500 400 300 200 100 0
93 92 94 FY 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 90 91 19 19 19 19 19

763.0

Highest
617.8

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Net Sales

Growth Rate

4%

G90s

GD2010
7

Operating Profit: FY1990-2010

Hit twice by external factors after FY2000 (Dot-com bubble burst and 2008 global financial crisis), but now on the road to recovery as a result of structural reform.
(Billions of yen)

12.1%
70 60 Operating profit OP margin
65.3

12%

9.9%

9.8%
45.0 45.7 44.3

Disaster In Japan
48.0

10%

Operating Profit Margin

89

90

FY 19

93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

91

88

19

19

19

19

92

19

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Operating Profit

50 40

7.5%

7.8%

8%

6% 30 4% 20 10 0

.com bubble burst

2008 financial crisis

2%

0%

Value Generation 2020

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VG2020: Vision & Goals

Vision
Sense, Think, and Control For a brighter future for People & the Earth.

Goals
Qualitative Quantitative A global value-creating group that is qualitatively and quantitatively superior Sales: Over 1 trillion yen Operating profit margin: 15%
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Two Perspectives in VG2020 Strategies

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VG2020 Scenario
GLOBE STAGE
Establishment of a profit & growth structure on a global basis

EARTH STAGE
New value generation for growth

ts g marke gin in emer Growth

tion Crea

O r the ss fo sine bu f new o

ptim

iety Soc on izati

Net Sales FY2011

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Maximization of Industrial Automation Business

Profit structure reform FY2013 FY2020
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VG2020 Growth Targets

GLOBE STAGE EARTH STAGE
(Billions of yen)

over 1,000 750

Net Sales

617.8

Operating Profit (%)

48

100

over 150

(7.9%) FY2010

(13.3%) FY2013

(15.0%) FY2020
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Midterm Milestones (Globe Stage)

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Globe Stage: Goals & Direction

External Environment Goals
Reinforcing of IA business

Explosive expansion of emerging markets

Growth

Greater Earth-conscious social needs

Issues OMRON faces

Growth in emerging markets Focus on business with a global perspective Profit structure reform for long-term growth Establishment of global management infrastructure

Profit Base

Growth and profitability to support that growth

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Globe Stage: Goals & Tasks

Policy Policy

Establishment of global profit & growth structures FY2013 Net sales: 750 bn; Operating profit: 100 bn OP margin: 13.3%; ROE: over 15%
(Assumed exchange rates: 1USD = 82; 1EUR = 116) (Assumed exchange rates: 1USD = 82; 1EUR = 116)

Goals Goals

Tasks Tasks

1. Reinforcement of Industrial Automation (IA) Business (IAB & EMC) 2. Sales expansion in emerging markets 3. Focus on environmental solutions business 4. Profit structure reform 5. Strengthening global human resources
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Task 1: IA (IAB & EMC) Reinforcement

Omron will concentrate on core business of IA to increase sales. Expansion of automation business Expansion in emerging markets (especially in China) Strengthen & expand production to meet surging global demand Promotion of M&A&A

450
Developed countries +20 Emerging Markets +80

(Billions of yen)

353.1
FY2010
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Sales up 100 bn

IA Business Sales (IAB & EMC)

FY2013
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Task 2: Sales Increase in Emerging Markets

Omron will meet surging demand of emerging markets without fail. Wider range of products aimed at emerging markets (IAB, EMC, HCB) Stronger sales & marketing Strengthening the "OMRON" brand in emerging markets
approx. 270 (Billions of yen)

HCB, Other +30 IA Business (IAB & EMC) +80

approx. 160

Sales up 110 bn

*Emerging markets: Greater China, Southeast Asia (plus India), Latin America (incl. Brazil), East Europe, Russia, the Middle East, and South Africa

Sales in Emerging Markets*

FY2010
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FY2013
18

Task 3: Focus on Environmental Solution Business

Omron will meet environment-related social needs with its technologies and solutions.
Global marketing of New Energy Creation Business with solar power conditioners as a core Growth of Energy Saving Business (packaged sales to manufacturers) Integrated Energy Solution Business to meet future demand for environmental solutions Group-wide efforts toward environmental solution business Integrated Energy Solution Group-wide efforts to meet eco-related demand
(e.g. components, devices)

ESB Sales (Billions of yen)

(Omron sales total)

x4
approx.

approx.

50
FY2013
Energy Saving

13 FY2010
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FA equipment, relays and more

New Energy Creation

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Task 4: Profit Structure Reform

Omron will enhance profitability required for growth by improving gross profit margin by 4.5% pt.
(Billions of yen)

750.0
Net Sales
627.2

617.8
Material-saving technologies Improved product mix with stronger IA

Other cost reductions Automation in China & Asia +0.6P

315.2

+0.8P

42.0%
+1.1P

+2.0P

Gross Profit
(Gross Profit margin)

231.7
218.5 34.8%

+2.7P

37.5%
OP 48 (7.8%)

.5 P +4

OP 100 (13.3%)

FY2008
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FY2010

FY2013
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Task 5: Strengthening Global Human Resources

Global HR Development & Assignment

to strengthen IA business & operations in emerging markets

Recruit, develop, and assign global business leaders

Establishment of "Team OMRON" Corporate Culture

to work together globally and achieve growth

Vision & principles shared by all OMRON staff around the world
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Globe Stage: Investments

Omron will focus R&D expenses, capital investments, and strategic investments (e.g. M&A&A) on IA Business in China and other emerging markers.
R&D
approx.

Capital Investment
approx.

150 bn 150

100 bn

+21%
124

Extra Strategic Investments

+43%
70

100

+ extra

FY10x3

FY11-13 Total

FY10x3

FY11-13 Total

FY11-13 Total Mainly IA & emerging markets

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More than 50% for IA & emerging markets

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Sales Growth by Business

Business Segments Net Sales (billions of yen)
FY2010 FY2013 YoY Growth

Focus

IAB EMC AEC SSB HCB Other

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271.9

355 95 90 75 75 60

+9%
Increase sales in emerging markets and improve profitability

81.2

+5% +2% +6% +7% +2%

Maintain and improve profitability
Establish profit structure Build base for business with future growth potential Increase sales in emerging markets Create new business Promote Environmental Solutions Business
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84.3

63.8

60.6

49.7

Notes 1. The consolidated statements of Omron Corporation (the Company) are prepared in accordance with U.S. GAAP. 2. Projected results and future developments are based on information available to the Company at the current 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) 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 Company to develop new technologies and products, (iv) major changes in the fundraising environment, (v) tie-ups or cooperative relationships with other companies, (vi) movements in currency exchange rates and stock markets, and (vii) accidents and natural disasters.

Contact: Investor Relations Department Investor Relations Headquarters Omron Corporation Phone : +81-3-6718-3421 E-mail : omron_ir@omron.co.jp Website (English) : www.omron.com

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