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- 01:13:20.0 I would like to ask about your regional strategy. You have said you will invest in R&D and that investments will be more heavily skewed to the early part of this four-year period but you expect to reap the benefits of these advance investments in the latter half of the medium-term plan. You have new products slated for FY2018.
Regionally, you generate about 60% of revenues outside of Japan, but your margins in Europe and the US are slightly lower. As you proactively target growth globally, given the current characteristics of each region, will the scale of regional revenues and profit margins be determined by these characteristics? Or, given that you have a global strategy (you have said you will build new global R&D centers), what sort of management structure do you propose to apply in managing growth across regions in order to grow value in each of the regions? Are the KPIs for your global strategy expressed in the regional sales weights? What are your expectations for regional profitability?
- 01:14:18.0 Omron takes a matrix approach to managing its businesses, with the businesses as verticals and a horizontal regional overlay. As an example, regions like China, North America or Asia all have their own regional headquarters. These headquarters have functional responsibilities for their regions. We will continue to take a matrix approach to regional management.
That said, we aim to grow FA so, as a consequence, Asia, including China, accounts for a significant portion. We would expect further growth going forward, so it will continue to generate a substantial portion of revenues.
We are being more aggressive in North and Central America on the back of a revival in manufacturing. Our resources in this area are spread thinly, so we will be investing here.
As a result, Japan will represent a slightly smaller portion of revenues as the overseas revenues increase. We would not expect to see a huge change in the relative sales weights for the regions, apart from a slight increase in Asia, including China.
- 01:15:23.9 What about the potential to improve the profitability of Europe and the US?
- 01:15:31.0 (Ohue) Currently, when you look at the various regions from the perspective of functionality, many of the overseas offices are sales offices. We do have manufacturing capabilities in China and Asia. For reporting purposes, Omron allocates profits in accordance with functionalities present in each region, so it isn’t necessarily the case that real profitability is significantly lower for specific regions. I am guessing you are basing your comments on the data that is shown in our financial results, but that does not necessarily reflect the true profitability of each region. That said, we have made some recent acquisitions in the US and are now making advance investments; in the case of the US, we do expect profitability to improve.
(Yamada) The figures in the financial results do not represent the profitability of each region on a standalone basis but instead only capture the profits generated at the relevant sales subsidiary.
- 01:16:38.7 This will be the final question.