2018_4q_omron_e

44/45 Questioner(3)

Thank you for the presentation. I have two questions that are similar to previous questions. I would like to ask about how I should think about growth investments. My first question is about the medium-term management plan. I recall that you had previously explained that the first 2 years of the 4-year plan had been earmarked as investment years. Does this still hold? If you look at R&D, you had guided for ￥270 billion over the 4-year period but you will only use ￥120 billion in the first 2 years. You could interpret this to imply that R&D spend will be increasing over the third and fourth years. I would like to know whether the negative impact of growth investments will fade over the course of the medium-term management plan. How should I think about this? The currently running medium-term management plan VG2.0 started at the beginning of FY2017. It is a 4-year plan; as discussed at previous briefings, we divide the 4-year period into 2 phases. The investments in R&D, manufacturing or operational facilities which we consider necessary for achieving our FY2020 sales target, such as the ATCs we talked about in the presentation, are skewed toward the first two years of the plan. They need to be because otherwise, these facilities would not be operational in time to achieve our plan objectives in FY2019/2020. New products needed to drive sales growth toward the final year target have already been rolled out or will be rolled out by the end of the next fiscal year at the latest. However, we are also investing for 2030, primarily in technology, as referenced by CTO Miyata earlier. We are committed to making the investments we consider necessary. Managing a good balance will depend upon the circumstances as we go along. We intend to adjust for changes in the environment as they occur. So, to sum up, much of the necessary investments for achieving the FY2020 targets will be concentrated in the first 2 years of the plan (FY2017/2018). Thank you. My second question overlaps with a previous question. Do you apply KPIs to assess the efficiency of your growth investments? Should we be looking at the overall ROE, ROIC or GP margins? Or, are there KPIs that you apply to individual investment projects which you could share with us? I cannot disclose figures specifically related to the individual businesses. However, the key metric to look at is whether or not the overall GP margin is rising. Also, if you are trying to understand the relationship between growth investments and profitability, you should be looking at the OPM for the individual businesses such as IAB and HCB. Tracking annual trends should give you a sense for whether we are maintaining a good balance between investments and profitability. These are the metrics we focus on in managing our businesses. I will also say that when we look at individual investment projects, we take a portfolio approach, looking at around 100 different businesses. Thank you. Are there any more questions?