2019_3q_omron_e

9/34 IAB Quarterly Sales Growth by Region (Y/Y)

As noted, we saw a dramatic change in earnings for IAB and EMC during Q3. I would like to use this slide to talk in more detail about the change in circumstances for our core IAB business in particular. We show here the regional breakdown for Y/Y sales growth in yen terms by quarter. Please look at Q1. Y/Y topline growth was 7.3%. Next, looking at Q2: Y/Y growth was 1.1%. However, although overall growth slowed sequentially, all regions except South Korea reported Y/Y sales growth. Despite a challenging operating environment, we were able to hold firm through Q2. However, the situation changed significantly in Q3. Overall sales for IAB fell Y/Y. By month in yen terms, October was up 4% Y/Y and November was flat, but December sales were down 8% Y/Y. The impact of the slowdown in Greater China from October, and pushouts of semiconductor investment plans started to have a major impact on corporate capex from December, not just in Greater China, but across all regions, including Japan and the US, as reflected in the earnings. We were tracking virtually in line with plan up to November but the dramatic change in December was much larger than we had expected. We expect the tough operating environment to continue into Q4.