2019_1q_omron_e

22/36 Growth Investments and ROIC

We aim to achieve ROIC in excess of 10% while further increasing growth investments in order to improve our ability to generate profits. In FY2014, we achieved a record high ROIC of 13.4%. While ROIC in FY2017, the initial year of VG2.0, was relatively close to this level at 12.7%, there are dramatic differences in our business and profit structures between these 2 years. In terms of business structure, the major contributors to sales growth in FY2014 were the Backlight business, which we are now optimizing, and the Environmental Solutions business, which is now struggling. In FY2017, our business portfolio mix improved, with sales growth being driven by the top priority businesses of IAB and HCB. We have also seen an evolution in our profit structure. While OPM is largely unchanged at around 10%, we have been able to improve our ability to generate profits while increasing R&D investments, as noted earlier. We have created a framework that allows us to improve profit generation while also investing appropriately. During VG2.0, we intend to remain firmly focused on achieving growth driven by investments. We believe the appropriate level for ROIC during this period will be between 10 － 15%. We remain committed to ROIC management and will aim to achieve high quality growth.