2020_1q_omron_e

36/38 Questioner(7)

(Questioner 7) Thank you for the presentation. I have 2 questions. My first question is a confirmation of numbers. On slide 29, would it be possible for you to provide a breakdown for the decline in added value? For example, how much of the decline is due to falling sales? How much is related to things like changes to selling prices and other factors? (Oue) Almost all of it derives from the decline in sales. There was a very small impact from forex but the vast majority is the result of lower sales. (Questioner 7) Understood. My second question is about inventory levels. As of the end of Q1, it appears that inventory levels are elevated and inventory turnover in months is also up as well. How should we think about adjustments to inventory going forward? Also, could you talk about your customers’ inventory levels? (Nitto) Inventory months are up 0.28 months versus where we were at this time last year. The increases are due to increases at the SSB and Environmental Solutions (PV inverters and storage systems) business. Both of these businesses are doing very well. The increase in inventory is in response to the solid growth in sales. In addition, seasonality is very strong for SSB, with sales skewing heavily to 2H. We have been working with our customers in order to normalize sales across the year by frontloading some of the sales. We are making good progress. This is also contributing to the higher inventory levels in Q1. We are also building inventory at the Environmental Solutions business in response to the strong sales demand. In addition, this business was severely impacted by the torrential rains in July 2018. In the wake of last year’s disaster, we implemented BCP measures to ensure we could maintain our supply capacity, which has led to a slightly higher level of inventory, particularly for indispensable components. These are the factors behind the 0.28 month increase. Apart from this, inventory months for the other businesses of around 3.1 months is unchanged Y/Y and well-controlled. However, given the operating environment, we are monitoring inventory levels very closely. (Questioner 7) Thank you. Are there any more questions? The person at the back, please.