2020_1q_omron_e

33/38 Questioner(4)

(Questioner 4) Thank you. My first question relates to the 4 focus domains. If you have the actuals, could you share them with us or provide an image? If possible, could you provide color on each of the focus domains? (Nitto) You are asking for Q1 results? (Questioner 4) Yes. (Oue) I can provide some qualitative comments. Relative to the Y/Y change for overall IAB, digital was very tough and the Y/Y decline was worse than the overall segment. This is a continuation of the trend in FY2018. The other domains did well, all things considered and were not as weak as digital. That said, the weak capex appetite is quite widespread in the automotive industry, so relative to the other domains, automotive is weaker. This should give you a rough picture of the situation. (Questioner 4) Even for food & beverage, you did not see positive growth? (Nitto) Food & beverage is largely flat Y/Y. However, infrastructure-related investments in China are improving on economic stimulus measures. As an example, the Chinese government has revived subsidies for solar power. The government is also spending on underground pipelines and other projects. (Questioner 4) So your strategy to take a countercyclical approach is working? (Nitto) Yes. However, in terms of business scale, digital is the largest, followed by auto, and these areas have been significantly impacted. (Questioner 4) Understood. Thank you. My second question is the direction of improvements to GP margin. Will it be possible to progressively improve the GP margin each quarter? If you think about FA, the product lifecycle is not that short, so I feel that it would be quite challenging to raise the GP margin every quarter. Could you talk about your image of GP margin improvements? (Takeda) One measure that will have an impact throughout the year is higher selling prices. This will push up GP margin throughout the year. The impact of cost reductions will also have an impact throughout the year. The challenge for OMRON is the fact that the magnitude of topline declines is likely to be larger. If the decline at the topline fully offsets the positives for gross profit, then it is possible that the GP margin would be either flat or lower on a Y/Y basis. However, the measures we implemented last year, such as higher selling prices and cost reductions, as well as the concentration on the 4 focus domains and selling solutions packages which have high added-value, should contribute positively on a Y/Y basis. We would not expect to see the kind of large-scale declines in IAB GP margins that were reported in the past. Next, this person, please.