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- 00:32:16.6 Please put slide 10 up on the screen.
In my presentation, I touched upon the approximately 50% YoY growth we reported for the Digital business in China, which contributed to the 38% YoY local currency revenue growth for the four focus industries for the first nine months of FY2016.
In thinking about Q4, although the rate of growth in Q3 accelerated from the 24% of 1H, we have not made any significant strategic changes. That said, with regard to Digital and, this time around, Food & Beverage, as well as Automotive to a certain extent, Omron is seeing an increase in orders in China.
We attribute this to two factors. First, over the last three years, we have proactively focused on providing total solutions to our customers, leveraging our strengths in Sensing and Control, in combination more recently with Robotics. We believe our meticulous marketing efforts have gradually started to bear fruit. We do not believe that it is simply a function of our ILOR+S product lineup. Instead, it is Omron’s ability to leverage our broad product lineup to create solutions that only Omron can provide. We believe this has led to a heightened awareness of Omron’s capabilities amongst our customers.
Second, our customers provide us with significant feedback. It is very gratifying to hear that our customers view Omron as a vendor capable of providing a very wide array of solutions. The challenges facing our customers are extremely diverse. As we have deepened the level of engagement we have with our customers, it has enhanced our customers’ sense of trust in Omron’s capabilities. Although we recognize that there is room for further improvement, our ability to provide unique and innovative solutions is also supporting our growth. I have been participating in the quarterly conference call on the China business and feel that this higher level of trust in Omron has been translating into more business recently. Therefore, as we start to see a bottoming in various industries in China, the higher level of trust our customers place in Omron is bearing fruit.
- 00:32:59.2 Thank you.
My second question is more of a big picture question. On the back of the change in administration in the US and talk of a shift in manufacturing back to the US, given the higher labor costs and the low probability that US manufacturing would take a labor intensive approach, I would expect the factory automation market to grow.
However, given the presence of a major US player in this space, it seems likely that you will see more of a geographical concentration for the more commoditized segment of the market, with Omron focusing on Japan, and the European major focusing on Europe. Although there is clearly growth potential in the US for factory automation, what I want to know is if you are considering initiatives related to this that might have a positive impact on your earnings in the future, or if you see specific opportunities in the US market? Can you discuss this in the context of the competitive environment?
- 00:35:37.5 Mr. Tomita will respond.
(Tomita) It goes without saying that we believe that the market for factory automation in the US represents a major opportunity for Omron, given our longstanding focus on factory automation as a business. Additionally, we acquired two West Coast companies last year, Delta Tau and Adept. Prior to these acquisitions, we had acquired a safety related company, also based on the West Coast. One of the benefits of acquiring US companies has been an enhanced ability to develop a foothold with local companies. Historically, much of our business in the US had been with Japanese companies operating in the US. We now have access to both of these channels and believe that an increase in manufacturing in the US represents a major opportunity. We are committed to providing value to our all customers.
- 00:36:31.6 (Suzuki) As you have suggested, there will likely be positives and negatives but we believe that the positives will outweigh the potential negatives for Omron. This is precisely because what we offer are automation solutions that contribute meaningfully to production lines and plants.
Additionally, we have 43 manufacturing bases in 13 countries. Of this, we have four bases in North America, of which three are IAB and the other is AEC.
- 00:37:37.2 (Itagaki) Does this answer your question?
Very well. Moving on to the next question, please.
- 00:38:14.8 Thank you for the presentation.
My first question is related to the Financial Data handout. I would like to ask about SSB. On page 6, the implied Q4 OP for SSB is ¥7.4 billion. Last fiscal year, Q4 OP was below ¥6 billion. In light of this, how should we view the implied Q4 OP target? Is this really an achievable figure? SSB includes the PV inverter business as well. Can you talk about the various businesses and profitability?