2020_1q_omron_e

14/38 Macro Operating Environment

First, this is our view of the macro environment. With regard to the operating environment from Q2 onward, we are not optimistic. The market has deteriorated relative to our assumptions in March and April, when we formulated our full-year plan. Changes to the operating environment have exceeded our assumptions for earnings fluctuation risk built into our initial plan. US-China trade friction has not only led to a deterioration of the global economy but is forcing changes to economic spheres and the trade framework. The impact is increasingly clear. We are already seeing its impact in the form of slowing capex investments in automotive and digital, and falling demand on a global basis. As you know, the downward trend in PMI continues, with the index below 50 for all areas except the US in June. At this point, we see no signs that the downtrend is moderating. Given this, we have factored in the possibility that the uncertain operating environment may persist for some time.