OMRON Corporation Reports Fiscal 2010 Interim Consolidated Performance

TOKYO--(BUSINESS WIRE)--OMRON Corporation (TOKYO:6645)(ADR:OMRNY) today reported consolidated performance for the third quarter of fiscal 2010, ending March 31, 2011.

Consolidated net sales for the nine months ended December 31, 2010 increased 21.8 percent compared with the same period of the previous fiscal year to JPY 451,311 million due to the implementation of measures including expansion into emerging markets and introduction of new products, although the impact of the strong yen remained significant. Operating income was JPY 37,179 million as a result of the success of the structural reforms and cost reductions the Omron Group has implemented, together with increased sales in core businesses. Income before income taxes was JPY 35,945 million, and net income attributable to shareholders was JPY 23,167 million.

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

1. Overview of Conditions
The economy moved toward recovery until the second quarter. Despite concerns about a possible downturn at the start of the third quarter, economic conditions were generally firm overall.

In the Japanese economy, although a weakening in exports due to the stronger yen was apparent, capital investment demand stemming from improved corporate earnings remained solid. As for overseas economies, China and Southeast Asia remained strong, with continued expansion driven by internal demand. The U.S. economy is gradually recovering, aided by the effects of government measures and other factors. In Europe, economic trends varied by country, with worsening financial conditions in some countries.

In markets related to the Omron Group, there were concerns that the strengthening of the yen and the reduced effect of government stimulus measures in the third quarter would lead to a decline in demand. However, demand for electronic components remained strong, primarily for household electrical appliances and automotive electronics. Capital investment demand was solid, primarily in the semiconductor, electronic components and automotive industries, reflecting rising interest in the environment and energy savings in developed countries, as well as expansion of demand in emerging markets.

The Omron Group's net sales for the nine months ended December 31, 2010 increased 21.8 percent compared with the same period of the previous fiscal year to JPY 451,311 million due to the implementation of measures including expansion into emerging markets and introduction of new products, although the impact of the strong yen remained significant. Operating income was JPY 37,179 million as a result of the success of the structural reforms and cost reductions the Omron Group has implemented, together with increased sales in core businesses. Income before income taxes was JPY 35,945 million, and net income attributable to shareholders was JPY 23,167 million.

The average exchange rates for the nine months ended December 31, 2010 were USD 1 = JPY 86.9 and EUR 1 = JPY 113.5 (6.7 yen and 18.7 yen less than the same period of the previous fiscal year, respectively).

Consolidated Sales and Income
(Millions of yen, %)
(Percentages represent changes compared with the same period of the previous fiscal year.)
	Nine months ended December 31, 2009	Nine months ended December 31, 2010	Period-on- period change	Year ended March 31, 2010	Year ending March 31, 2011 (projected)	Year-on- year change
Net sales	370,505	451,311	21.8%	524,694	620,000	18.2%
Operating income [% of net sales]	1,015 [0.3%]	37,179 [8.2%]	— [+7.9P]	13,074 [2.5%]	49,000 [7.9%]	274.8% [+5.4P]
Income before income taxes [% of net sales]	191 [0.1%]	35,945 [8.0%]	— [+7.9P]	10,195 [1.9%]	45,500 [7.3%]	346.3% [+5.4P]
Net income (loss) attributable to shareholders	(670)	23,167	—	3,518	30,000	752.8%
Net income (loss) per share attributable to shareholders (basic) (JPY)	(3.04)	105.24	+108.28	15.98	136.28	+120.30
Net income per share attributable to shareholders (diluted) (JPY)	—	105.24	—	15.98	136.28	+120.30

Note: The number of consolidated subsidiaries is 151, and the number of companies accounted for by the equity method is 14.

Results by Business Segment

Industrial Automation Business (IAB)
IAB segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 203,579 million, an increase of 41.4 percent compared with the same period of the previous fiscal year.

In Japan, sales were strong as firm capital investment trends continued among manufacturers in general. Contributing factors included increased capital investment demand in the semiconductor and electronic components industries due to expanding demand for smartphones and other electronic handheld devices, and growth in demand from the automotive industry due to economic stimulus measures to promote the purchasing of eco-friendly vehicles.

Overseas, sales remained strong in all areas despite the impact of the rising yen. In China, where internal demand continued to increase and machinery exports remained brisk, strong sales growth was aided by the success of the Omron Group's measures to introduce products geared to the market and to fortify its sales operations. Sales were also strong in India, Brazil and other emerging markets, where capital investment demand increased, reflecting a brisk investment environment with a continued high willingness among manufacturers to invest.

Electronic Components Business (ECB)
ECB segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 60,798 million, an increase of 15.8 percent compared with the same period of the previous fiscal year.

Conditions remained firm in the environment of the consumer and commerce components and automotive components industries, reflecting expansion of demand in China and other emerging markets, rising interest in the environment and energy savings in developed countries, and continued strength in worldwide automobile production.

In this operating environment, despite the impact of the rising yen, sales were strong in all areas, centering on relays and switches, the segment's mainstay products. Sales were particularly strong in North America, as demand for automotive electronics continued to recover. In China, demand continued to expand, centering on components for home electronics.

Automotive Electronic Components Business (AEC)
AEC segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 63,716 million, an increase of 21.1 percent compared with the same period of the previous fiscal year.

In Japan, there were concerns that the end of a program to support environmentally-friendly new car purchases, which contributed strongly to results until the second quarter, would affect the entire automotive industry. However, the effect on the Omron Group was minor, and sales were strong.

Overseas, despite the impact of the rising yen, sales in China and elsewhere in Asia were strong, buoyed by the steady growth of the automobile markets in China and other emerging markets and vigorous expansion into emerging markets by major customers. Sales in North America were strong owing to a solid automobile market reflecting the economic recovery trend.

Social Systems Business (SSB)
SSB segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 34,781 million, an increase of 5.4 percent compared with the same period of the previous fiscal year.

In the public transportation systems business, capital investment by railway companies remained cautious. However, sales were firm as the introduction of new equipment (automated ticket machines and automated ticket gates) went smoothly and led to business discussions for security and safety solutions for railway stations.

In the social sensor solutions business, defect detection and other security and safety solutions for expressways and public facilities have been taking shape. The environmental solutions business has been stepping up its activities, including participation in demonstration tests for a low-carbon economy. The related maintenance business continued to post solid sales due to expansion of demand for solar power related products backed by government subsidies and an increase in related installation.

Healthcare Business (HCB)
HCB segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 45,909 million, a decrease of 2.9 percent compared with the same period of the previous fiscal year.

In Japan, demand for professional medical equipment for use in hospitals continued to be firm with the successful introduction of new vital sign monitors. However, demand for home-use healthcare equipment was impacted by a weak consumption trend, and sales declined from the level of the same period in the previous fiscal year, when demand for digital thermometers rose sharply due to the H1N1 influenza virus. Overseas, demand for Omron's healthcare equipment continued, reflecting rising awareness of health management primarily in emerging markets, and sales were firm, particularly for mainstay blood pressure monitors, despite the impact of the rising yen.

Other
The "Other" segments are primarily responsible for exploring and nurturing new businesses and nurturing/reinforcing businesses not handled by other internal companies as a business under the direct control of headquarters.

Segment sales to outside customers for the nine months ended December 31, 2010, totaled JPY 37,745 million, an increase of 11.3 percent compared with the same period of the previous fiscal year.

In the Environmental Solutions Business HQ, demand was strong for energy-saving solutions employing energy visualization systems and for solar power conditioners, reflecting rising environmental consciousness and market expansion in the field of solar power generation.

In the Electronic Systems & Equipments Division HQ, sales remained strong in the industrial-use personal computer business, contract production and development of electronic devices, and the uninterruptible power supply business as the recovery in customer demand continued.

In the Micro Devices HQ, demand increased for custom integrated circuits, contract semiconductor manufacturing, and other products and services, amid continued economic recovery in emerging markets, which resulted in solid sales.

In the backlight business, despite a decrease in demand for mobile phones and digital cameras, overall sales were level due to growth in demand driven by expansion of the smartphone market and the increasing use of LED backlights for automobiles.

2. Consolidated Financial Position and Cash Flows
Total assets as of December 31, 2010 increased JPY 4,604 million compared with the end of the previous fiscal year to JPY 536,858 million due to increases in notes and accounts receivable – trade and inventories.

Total liabilities decreased JPY 730 million compared with the end of the previous fiscal year to JPY 224,389 million due to a decrease in short-term debt, which offset an increase in notes and accounts payable – trade. While foreign currency translation adjustments fluctuated due to the rise in the yen, net assets increased JPY 5,334 million from the end of the previous fiscal year to JPY 312,469 million due to the increase in net income attributable to shareholders associated with the recovery in results. The net worth ratio rose to 58.0 percent from 57.5 percent at the end of the previous fiscal year.

Net cash provided by operating activities for the nine months ended December 31, 2010 was JPY 26,420 million (an increase of JPY 77 million compared with the same period of the previous fiscal year) despite an increase in inventories, as a result of net income.

Net cash used in investing activities was JPY 12,850 million (a decrease in cash used of JPY 2,600 million compared with the same period of the previous fiscal year) as Omron continued to conduct highly selective capital investment.

Net cash used in financing activities was JPY 7,825 million (an increase in cash used of JPY 2,160 million compared with the same period of the previous fiscal year) due to payment of cash dividends and repayment of short-term bank loans.

As a result, the balance of cash and cash equivalents at December 31, 2010 was JPY 54,809 million, an increase of JPY 3,083 million from the end of the previous fiscal year.

Consolidated Financial Position
	Millions of yen - except per share data and percentages
	As of December 31, 2010	As of March 31, 2010
Total assets	536,858	532,254
Net assets	312,469	307,135
Shareholders' equity	311,462	306,327
Shareholders' equity ratio (%)	58.0	57.5
Shareholders' equity per share (JPY)	1,415.12	1,391.41

Consolidated Cash Flows
	Millions of yen
	Nine months ended December 31, 2009	Nine months ended December 31, 2010
Net cash provided by operating activities	26,343	26,420
Net cash used in investing activities	(15,450)	(12,850)
Net cash used in financing activities	(5,665)	(7,825)
Cash and cash equivalents at end of period	52,428	54,809

3. Dividends
		Year ended March 31, 2010	Year ending March 31, 2011	Year ending March 31, 2011 (projected)
Dividends per share	1st quarter dividend (JPY)	—	—
	2nd quarter dividend (JPY)	7.00	14.00
	3rd quarter dividend (JPY)	—	—
	Year-end dividend (JPY)	10.00		—
	Total dividends for the year (JPY)	17.00		—

Notes:	1. Revisions to projected dividends during the nine months ended December 31, 2010: No
	2. The year-end dividend for the year ending March 31, 2011 is undetermined. For details, see "Notes Regarding Use of Projections of Results and Other Matters."

4. Fiscal 2010 Consolidated Performance Forecast
Although the Omron Group forecast a slight slowdown in some businesses associated with economic uncertainty in the third quarter, results were firm, particularly for businesses related to consumer and commerce components. In addition, the Omron Group does not anticipate any major changes in its business environment in the fourth quarter. Consequently, the performance forecast for the full fiscal year is revised upward from the July 28, 2010 announcement, as summarized below.

The assumed exchange rates for the fourth quarter in the performance forecasts for the fiscal year are USD 1 = JPY 83 and EUR 1 = JPY 112.

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, 2011 (April 1, 2010 - March 31, 2011)
(Percentages represent changes compared with the previous fiscal year.)
	Millions of yen
	Year ending March 31, 2011	Change (%)
Net sales	620,000	18.2
Operating income	49,000	274.8
Income before income taxes	45,500	346.3
Net income attributable to shareholders	30,000	752.8
Net income per share attributable to shareholders (JPY)	136.28

Note: Revisions to projected results during the nine months ended December 31, 2010: Yes

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 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 industries, social systems and healthcare. The company is divided into five regions with head offices in Japan (Kyoto), Asia Pacific (Singapore), China (Shanghai), Europe (Amsterdam) and US (Chicago). For more information, visit OMRON's website at http://www.omron.com/