Omron Basic Information

May 2016 Omron Corporation

Corporate Profile Established

May 10, 1933

Head Office

Shiokoji Horikawa, Shimogyo-ku, Kyoto 600-8530 Japan

Capital Sales Number of Employees

¥64.1bn ¥833.6bn (Year ended Mar 31, 2016; Overseas: 60.3%) 37,709 (As of Mar 31, 2016)

Stock Listing

Tokyo

Ticker Symbol Number

6645

Number of Shares Issued

213,958 thousand shares (As of Mar 31, 2016)

●1

Net Sales by Region

Americas

¥833.6bn

Europe Asia Pacific

(FY2015)

Japan

Greater China

●2

Employees by Region

Americas

Europe

Asia Pacific

37,709 (As of Mar 31, 2016)

Japan

Greater China

●3

History 1933

1950’s

1960’s

Today

1970’s

Important Developments Automatic train ticket gates, and ticket vending machines

Aiming at a new relationship between humans and machines

Established

Aiming at greater convenience and comfort in civic life

Factory automation devices (switches and relays)

Aiming at improvement of industrial productivity

X-ray timer Micro switches

Relays

Sensors

Controllers

Expansion of business fields

Blood pressure monitors

The world's fastest, high-performance controller

Technological development & innovation ●4

Corporate Principles (Revised in 2015)

●5

Core Competence “Sensing & Control”, which converts information into value, is Omron’s core technology. New value is created by adding “think” (knowledge of people).

●6

Business Segments Other Business under the Direct Control of HQ

Eliminations & Corporate

1％

IAB Industrial Automation

PV inverters,

Omron’s mainstay business,

backlights, etc.

leading the innovation of global manufacturing through factory

HCB

automation (FA)

Healthcare

Supporting the health of people around the

FY2015 Net Sales by Segment

world (electronic blood pressure monitor,

SSB

thermometer, etc.)

EMC

Social Systems Solution SSB & Service Business Social Systems, Solution & Service

Contributing to the comfortable and safe life by diverse systems for social infrastructure (automatic ticket gates, ticket vending machine, etc.)

Electronic & Mechanical Components

AEC Automotive Electronics Components

Undertaking new challenges in the automotive electronics field, to help

Contributing to the high performance of consumer electronics, telecommunication equipment, etc. (relays, switches, etc.)

make automobiles safer and friendlier toward people and

environment (electric power steering controller, etc.)

●7

Industrial Automation (IAB) Manufacture and sales of factory automation equipment Market Share* Control-Related Equipment (Japan)

% of Total Sales

40%

40%

*FY2015

Input

Omron’s mainstay business, leading the innovation of global manufacturing through factory automation (FA)

Logic

Output

Vision Sensors

Controllers Fiber Sensors

Motion Controllers

Inverters

Robot

Robots

Emergency Stop Switches

Servomotors Servo Drivers

Safety Light Curtains

*Source: Nippon Electric Control Equipment Industries Association

Safety Controllers

Safety ●8

Electronic & Mechanical Components (EMC) Manufacture and sales of electronic components for consumer electronics, automobiles, mobile devices and amusement equipment Market Share* Relays (Global)

% of Total Sales

12%

20%

*FY2015

Contributing to the high performance of consumer electronics, telecommunication equipment, etc.

For Consumer Electronics and Automobiles

Relays

For Amusement Equipment

Switches

Pachinko Panel Keys Connectors

Pachinko Ball Sensors

●9

Automotive Mechanical Components (AEC) Development, manufacture and sales of on-board automobile electronic components % of Total Sales

17%

Market Share* Body Control Units For Miniature Vehicles (Japan)

*FY2015

Smart Entry Systems

Engine Start Systems

*Source: Internal survey

50%

Undertaking new challenges in the automotive electronics field, to help make automobiles safer and friendlier toward people and environment

Electric Power Steering Controllers

Power Window Switches

Components for Eco-Friendly Vehicles (DC-DC Converters)

● 10

Social Systems, Solution & Service (SSB) Solutions and services for a safer, comfortable, more secure society

9%

Market Share* Station Equipment (Japan)

*FY2015

45%

% of Total Sales

Public Transportation Automated Ticket Gates

Contributing to the comfortable and safe life by diverse systems for social infrastructure

Environmental Solutions

Ticket Vending Machines

Road Traffic Road Traffic Management Systems Installment and maintenance service for PV Power Generation System

*Source: Internal survey

● 11

Healthcare (HCB) Manufacture, sales and services related to home-use/institutional healthcare and medical devices % of Total Sales

13%

Market Share* Home-Use Blood Pressure Monitors

50%

*FY2015

Home-Use Healthcare & Medical Devices Body composition Analyzers

Digital Blood Pressure Monitors

Thermometers

Supporting the health of people around the world

Institutional Medical Devices Patient Monitors

Central Monitors

Operating room

Nebulizers

Activity Monitors

Full-Automatic Digital Blood Pressure Monitors

Hospital room

Medical examination

Non-Invasive Vascular Screening Devices

● 12

Business under the Direct Control of HQ (Other) % of Total Sales

8%

*FY2015

Market Share* Residential-Use PV Inverters (Japan)

40%

Environmental Solutions

Solar Power Generation Systems

Micro Device

MEMS (Micro Electro Mechanical Systems)

Mainly incubating Omron’s next generation of businesses

Backlights

LCD Backlights

Electronic Systems & Equipment

Uninterruptible Power Supply Units

Embedded MiniCPU Boards

● 13

Earnings (Results & Forecasts) (¥bn)

847.3 773.0 Sales

619.5

OP (ROS)

36.8% 40.1 (6.5%)

820.0

650.5 38.5%

GP%

833.6

38.5%

39.3%

86.6

37.1% 68.1 45.3

39.3%

(10.2%)

(8.8%)

62.3 (7.5%)

63.0 (7.7%)

(7.0%)

2011

2012

2013

2014

2015

2016 (Plan)

ROIC

4.8%

8.6%

11.3%

13.4%

9.7%

10%

ROE

5.2%

8.8%

11.6%

13.5%

10.1%

10%

EPS (¥)

74.5

137.2

209.8

283.9

219.0

222.2

● 14

Midterm Financial Strategy Basic policy of profit distribution 1. Priority is to secure resource for growth investment, in order to maximize corporate value over the long term. 2.

Surplus will be distributed stably and uninterruptedly taking into consideration the level of free cash flow.

3.

A payout ratio of 30%, the medium-term management plan target for FY2016, is applied in FY2015, delivering one year ahead of schedule. The 30% payout ratio will be applied for FY2016 as originally planned. 2% DOE remains unchanged as a goal.

4.

Accumulated retained earnings over a long period will be distributed to shareholders by share repurchase and other measures in a timely manner.

● 15

Dividends & EPS Dividends (¥)

EPS (¥)

● 16

Corporate Value Creation Factors that support sustainable corporate value creation

④

①

Compensation and incentive scheme

Long-term vision and midterm strategy

OMRON. Principles

② ③ Governance structure

Management indices

● 17

SINIC Theory* SINIC as a management compass  10-year long-term vision ＜SINIC theory – predicting the future＞ 1975

2005

Industrial Society Mechanization Society

Automation Society

Cybernation Society

Second Industrial Revolution

Automation by Computer

Information Sharing over Network

2025

Selection of Information and Function optimized to Individual

Autonomous Society

1945

Optimization Society

1876

Autonomous Action without Constraints

Sensing & Control Technology Productivity, efficiency Manufacturer's viewpoint "Product" generation

A purpose of life, work User's viewpoint "Heart" generation

*SINIC: Seed-Innovation to Need-Impetus Cyclic Evolution ● 18

Long-Term Vision and Goal Announced the 3 rd long-term vision, Value Generation 2020, on July 7, 2011 (1st: Golden ’90s, 2 nd: Grand Design 2010)

Vision Sense, Think, and Control.

For a Brighter Future for People & the Earth.

Goal Qualitative Quantitative

A global value-creating group that is qualitatively and quantitatively superior Sales: Over 1 trillion yen Operating profit margin: 15%

● 19

Long-term Vision and Midterm Strategy Set and announced midterm targets to steadily achieve 10-year sustainable growth

＜Long-term vision＞

＜Midterm Strategy＞

Value Generation 2020 From FY2011 to FY2020 Announced in July 2011

EARTH-1 STAGE From FY2014 till FY2016

Qualitative Goals

Policy

Global value-creating group that is qualitatively and quantitatively superior

Establishment of "self-driven" growth structure Targets

Quantitative Goals

Sales : OP Margin :

> ￥1tr. 15％

Initial Target*1

FY2016 Plan*2

> ￥900bn

￥820bn

GP Margin:

> 40%

39.3%

OP Margin:

> 10%

7.7%

ROIC:

approx. 13%

10%

ROE:

approx. 13%

10%

EPS:

approx. ￥290

￥222.2

Net Sales:

*1 Announced in April 2014 *2 Announced in April 2016

● 20

VG2020 GLOBE STAGE

EARTH-1 STAGE

EARTH-2 STAGE

Sales

Existing business strategy （Reinforcement of the Industrial Automation Business)

Profit structure reform Global HR strategy FY2011

FY2013

FY2016

FY2020 ● 21

Management Indices Management indices as decision making tools to achieve midterm targets

ROIC Management

Down-top ROIC tree  By business segment (structure, issues)  Key items (drivers) to improve ROIC, and specific actions & KPIs

Portfolio management  Plan out reinforcement/ market withdrawal, taking each business segment status into account  Decide on resource allocation

● 22

Management Indices (Down-Top ROIC Tree)

GP margin

● 23

Management Indices (Business Portfolio Management) Management decision to allocate investment resources for M&A, growth acceleration, restructuring, and new entry

Portfolio Management Category Sales Growth (%)

B Expecting Growth

S Investment

C Profit Restructuring

Ａ Examining Regrowth ROIC(%)

● 24

ROIC Management Upgrading (ROIC 2.0) Upgrading ROIC management to encourage an awareness and better understanding on ROIC ＜ROIC Interpreted Formula＞

ROIC ≒

Value to Customers (stakeholders) (V) Necessary Management (N) Resources Goods, Money, Time

Loss-Making ＋ Management (L) Resources Muri, Muda, Mura (waste, unevenness, overburden)

(1) Increase investments in Necessary Management Resources (N) for growth based on growth strategies

(2) Raise (V) more than (N) (3) Reduce Loss-Making Management Resources (L) to shift to/invest in (N)

● 25

Corporate Governance Scheme Omron has highly transparent and effective corporate governance scheme as a basis for sustainable value creation  Separation of management oversight and business execution   

Separate position: Chairperson of the BoD and CEO Of 8 directors, 3 are independent, with majority being non-executive Larger authority given to business company presidents for swifter decisionmaking

Audit & Supervisory Board

Shareholders Meeting

BoD

1. Personnel Advisory Committee

Accounting Auditor

2. CEO Selection Advisory Committee

 Personnel/ CEO selection/ compensation advisory committees and corporate governance committee 

 

While Omron is a company with an audit & supervisory board under Japan's Companies Act, it has 3 advisory committees and 1 committee The four chaired by independent directors President does not belong to any of the committees

Chaired by BoD Chairman

3. Compensation Advisory Committee 4. Corporate Governance Committee Executive Organization CSR-related Committees

President & CEO

Executive Council

Internal Audit Division

● 26

Governance (CEO Selection) CEO Selection Advisory Committee  As specialized in president’s selection, discussing the next president personnel and the succession candidate when an emergency has formed  Independent director is chaired, two of four commissioners are independent directors, all members are non-executive Shareholders Meeting Audit & Supervisory Board BoD

Chaired by BoD Chairman 1. Personnel Advisory Committee

Accounting Auditor

2. CEO Selection Advisory Committee 3. Compensation Advisory Committee 4. Corporate Governance Committee Executive Organization

CSR-related Committees

President & CEO

Executive Council

Internal Audit Division

*Annual Report 2011

● 27

Governance (Compensation and Incentive Scheme) Motivation towards mid to long-term value creation = directors' interests aligned with shareholders’

Audit & Supervisory Board

Director Compensation

Shareholders Meeting

BoD

Chaired by BoD Chairman 1. Personnel Advisory Committee

Accounting Auditor

2. CEO Selection Advisory Committee 3. Compensation Advisory Committee 4. Corporate Governance Committee Executive Organization CSR-related Committees

President & CEO

Executive Council

• Base (fixed) compensation + bonuses based on past one year performance +Medium-term performance-linked bonuses • Stock Compensation

Other Incentives • Issuance of paid stock acquisition rights (exercisable depending on the achievement of midterm management target)

Internal Audit Division

● 28

Contact: Omron Corporation Global Investor Relations & Corporate Communications Headquarters Investor Relations Department Phone : +81-3-6718-3421 E-mail : [email protected] Website (English): http://www.omron.com/about/ir/