2020_1q_omron_e
32/38 Questioner(3)

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(Questioner 3) Thank you for the presentation. I have 2 questions. My first question is about the profits generated by the sale of the AEC business and how you are thinking about the use of these profits. With regard to the profit from the transaction, can we effectively assume the difference between the assets held for sale and the liabilities held for sale of approximately ¥48bn as shown on slide 6 represents net asset value? Is the effective profit on the transfer of shares this NAV subtracted from the purchase amount of ¥100bn? Or, is the book value lower? If you could provide an image, that would be helpful. (Oue) The framework you have proposed is generally fine. However, there are many necessary adjustments so the actual amount might be slightly higher or lower. But as an image, your framework is fine. (Questioner 3) And you will be taxed on these profits? (Nitto) Yes. The profits from the business transfer will be subject to taxation. Having said this, the business is still operational. We will not be able to finalize many things until we actually close the balance sheet. This is why we are not able to disclose the amount at this time. However, as a rough image, your calculations are in the ballpark. (Questioner 3) How are you planning to use these profits? Is your preference to use the profits for M&A for IAB and HCB? (Nitto) Yes. That is our first thought. (Questioner 3) Understood. Thank you. My second question is about how to think about the level of sales for IAB going forward. This time, quarterly sales dropped below the ¥90bn level for the first time in 2.5 years. In the presentation, you made reference multiple times to the uncertain outlook. Do you expect that IAB quarterly sales will remain largely flat at this sub-¥90bn level, and will not recover for a while? Or, are you expecting to see quarterly IAB sales fall further? It wasn’t clear to me what you are expecting. (Nitto) Our current view is that IAB sales will bottom-crawl for a while at this level. Looking at the monthly numbers, it does not feel like we are headed for a major break to the downside. Frankly speaking, the gradual declines to this point have been worrying, but at this stage we expect sales to remain at around the current level. Even if we were to see a further decline, our view at this point is that the magnitude is likely to be limited. (Questioner 3) Then, by implication, a conservative baseline for full-year sales would be the Q1 sales level multiplied by 4? Is that fair? (Nitto) Well, it is tough to say, but as an image, I suppose that is fair. At this stage it is difficult to say clearly. Mr. Takeda, do you have anything to add? (Takeda) The business is taking a conservative view in assuming that Q2 may actually be slightly slower than Q1. At the same time, as discussed by CFO Nitto in the presentation, there should be some self-sustaining growth which should mitigate the downtrend, so that the declines in IAB may be smaller than the decline in the overall market. This is our current view. (Questioner 3) Thank you. Thank you. Are there any more questions? Next, we will take a question from the front row.