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- 01:16:47.0 Thank you for the presentation. My question is about the KPI targets for the new medium-term management plan as shown on slide 35. Your previous ROIC and ROE targets were to exceed 13% but this time you are guiding for greater than 10%, lowering your targets by 3% points. I would like to confirm the message you are communicating as a result of this large decline. You have said you will be making significant advance investments, but that these will be offset by higher revenues from IAB and HCB. You aim to maintain an OPM of 10% but because the denominator will get larger, your ROE will decline. Is this the right way to understand the KPI targets? Or has your expected cost of capital gone up? Given that it is a relatively large change, can you provide some additional color?
- 01:17:34.0 Mr. Ohue, please jump in with additional comments. This is a point that we discussed intensely but basically, as we show on slide 16, we have repositioned this medium-term plan period from being the final stages of VG2020, to being a preparatory stage for the next long-term vision. We chose to do so because of what we are seeing in the markets and the state of technological innovation. Additionally, as was highlighted in an earlier question, we are uniquely positioned at the edge vis-a-vis production lines. Given all of these factors, we felt that now was the time to be investing. Therefore, this plan is no longer positioned as the final stage of VG2020 where we are reaping the benefits of previous investments. Instead, we have shifted gears and believe that we must be in investment mode over the next four years. This is the underlying assumption for the new plan. What we want to communicate with slide 16 is that we are laying the foundations for a stronger Omron in the coming four years, in preparation for the next long-term vision.
From that perspective, our targets for ROIC and ROE represent the minimum we consider acceptable while giving us the freedom to invest as we see fit at this juncture. That is the spirit behind the targets of greater than 10%.
Therefore, we are not saying that our profitability will decline but that this is the bare minimum that we will seek to achieve. We aim to also grow topline. Our investments are intended to enhance our competitiveness to improve prospects for higher profitability in the period beyond FY2021. That is the thought process behind the targets.
(Ohue) I think CEO Yamada has covered all of the salient points. Perhaps it is better to think of our message this way: although we will be proactively investing, we are also committing to maintain a certain level of profitability as we manage our businesses.
- 01:19:31.3 Thank you.
- 01:19:33.3 Thank you. We will close the Q&A session. We would be grateful if you can take the time to complete our feedback sheet.
This concludes the FY2016 results briefing for Omron. Thank you for your participation today.
- 01:19:47.7 (Yamada) Thank you for your participation. We apologize that we were not able to take all of your questions. Our IR team will be more than happy to follow up with you. We ask for your continued support. Thank you.
(Itagaki) Thank you, everyone.