2020_2q_omron_e

30/37 ■Management Priorities

This is also a good opportunity to revisit the key management themes I believe to be important. First, I have focused on the disciplined implementation of ROIC management. We have exited several businesses such as the backlight business, where returns were below the cost of capital. At the same time, we took the decision to sell the AEC business, which generated annual sales of around ￥130bn and a return in excess of the cost of capital. As a result of these actions, the businesses that remain at OMRON are businesses that can leverage the strength of business models unique to OMRON, supported by OMRON’s core competence of Sensing & Control + Think. These businesses address global social issues and also have the potential to achieve sustainable growth while generating high margins and commanding strong market shares. I believe that these actions have strengthened OMRON’s business portfolio. Second, I have focused on capital efficiency in running our businesses. I have concentrated on maximizing corporate value by focusing on ROIC and the GP margin. At the same time, we also enhanced shareholder value through improved shareholder returns, including proactive share buybacks and the cancellation of treasury stock. We announced a new share buyback program and the cancellation of treasury stock. These measures are completely unrelated to the profits generated on the sale of the AEC business. The cash generated by the sale of the AEC business will be allocated to growth investments. OMRON has aimed to both secure the funds for growth investments in order to execute on its growth strategy, while managing its business with a focus on capital efficiency and shareholder returns. Third, I have focused on investing for growth, both to strengthen IAB as well as supporting growth by engaging in M&A, further deepening alliances, and investing in start-ups. We will accelerate our initiatives in this area. With regard to M&A, we have set up a permanent team within our Global Strategy Department, which is currently engaged in creating long and short lists and exploring potential opportunities. Obviously, I am not only proactively focused on these themes as CEO but also engaging with the board and building an overall consensus within the organization. I have also delegated significant responsibility for the promotion and acceleration of innovation initiatives to our CTO, to enhance technology management underpinned by near-future design. Finally, I have focused on ESG management. I believe corporates must embrace a proactive role in building not only economic value but social value which contributes to the creation of a sustainable society. We are proactively engaged in material sustainability issues. Reflecting our stance and activities, we have been selected for inclusion in DJSI World for 3 consecutive years. We are included in many other ESG indices as well. The areas where OMRON can make a contribution continue to expand. We will continue to improve our growth capability, profitability and our resilience in the face of change, in order to achieve sustainable growth in corporate value. We humbly ask for the continued support of our shareholders and investors. This completes my remarks. Thank you.