2019_4q_omron_e

34/39 Questioner(1)

(Questioner 1) Thank you. I would first like to know the results for the 4 focus domains in FY2018 as I didn’t see a slide in the presentation. (Yamada) You are asking about IAB? (Q) Yes. (Oue) Overall, IAB revenues were down Y/Y. Digital is one of the 4 focus domains. If Digital is included, then revenues for the 4 domains were virtually unchanged Y/Y. The other three focus domains were up Y/Y, so our strategy is functioning in the way that we had hoped. The macro trend had more of an impact on non-focus domain areas, such as general industrial machinery. The other area that was weak was Digital. (Q) Thank you. As a follow-up, Keyence has just released their full-year results. Even now, they have been able to generate a higher growth rate than OMRON. Can you talk about your strategy for narrowing this gap? (Yamada) Relative to the overall scale of the control market, both Keyence and OMRON’s IAB account for less than 10% each. Of course, both are strongly impacted by trends in capex. Therefore, in instances where a project is put on hold, pushed out or cancelled, it has an immediate impact on earnings. The flip side is that there is still significant room to take share from other players. However, OMRON and Keyence are actually moving in different directions. OMRON’s strength is that it has a very broad product lineup. Like the innovative-automation concept we talked about today, our focus is on providing our customers with highly sophisticated control solutions but eliminating the need for complicated fine-tuning. This is the value we provide to our customers. We do not seek to compete on the performance of individual devices but instead to provide comprehensive control solutions. Therefore, we are moving in a different direction than Keyence. Our approach is to capitalize on our strengths. When faced with headwinds, we aim to be smart in taking advantage of opportunities . When there is a tailwind, we aim to grow our business dramatically. (Q) Thank you. I also wanted to double-check on one of the slides. On slide 17, you show the waterfall chart for OP. The footnote at the bottom says ‘excludes the impact of SSB human resource reallocation’. There wasn’t a specific explanation of this in the presentation. Could you elaborate? (Oue) With regard to the footnote on SSB, we have been making some gradual changes to the business model for OSS. To date, the business had focused on maintenance services, which tend to be included in CoGS . However, we are now shifting toward providing value-added engineering services to our customers. As a result, there was a ￥2.7 bn impact this time, although we have been transitioning for a while. This has been reflected in the figures shown here as well as the overall financial accounts. (Itagaki) Thank you. Could you pass the mic to the person behind you, please? Thank you.