Omron Announces Management Plans for the Third Stage of Long-term Corporate Vision, "GD2010"

Business Wire, Jan 10, 2008

TOKYO -- OMRON Corporation's (TOKYO:6645; ADR:OMRNY; "Omron", "the Company") Board of Directors today confirmed management plans for the third stage of the Company's long-term corporate vision, "Grand Design 2010" (GD2010), which is due to start from April 2008 and will cover the three years from FY 2008 to FY 2010.

Omron began implementing GD2010 in April 2001, and is now in the final year of the vision's second stage (FY 2004 to FY 2007).

Throughout the first and second stages of GD2010, Omron has increased its revenue and income for the most part according to plan. ROE of at least 10%, a goal set for the end of FY 2004, was achieved one year ahead of schedule in FY 2003 (the final year of the first stage). Omron is also on target to meet its second stage goal of "doubling total business value1" in FY 2007 (the final year of the second stage).

"Raising business value by an annual average of at least 10%" is Omron's midterm goal for the third stage, which begins in April 2008. Having identified core existing businesses in each business segment, Omron will now work to strengthen these via a strategy geared to shift each business into the global no. 1 position in its respective market (i.e. achieving the highest business value in the market). Omron will boost its profitability as a result of this, and also through return on investments made in Greater China and continued business growth in that market. From the third stage onwards, Omron will leverage its strengths in sensing and control technology, setting its sights over a decade into the future with a focus on the fields of safety/security, healthcare and environmental preservation, to expand and create new businesses driven by social needs.

In terms of concrete performance indicators, Omron envisages revenues of JPY 1 trillion and operating income of JPY 95 - 100 billion (with an operating margin of approximately 10%) as it aims to complete its transformation into a profitable, growth company by 2010.

1 Business value is defined as the total current value of future free cash flows generated by individual businesses.

1. "GD2010" Third Stage - Background

(1) "GD2010" Long-term Corporate Vision

Omron is following the basic policies outlined in its long-term corporate vision, GD2010, for management of the Group during the period from FY 2001 to FY 2010. While pursuing its mission of contributing to society's development, Omron aims to achieve its management objective of long-term maximization of corporate value, and create a "21st century company". Omron designated "maintaining ROE of at least 10% and ensuring continued growth" as an indicator for measuring its success in these endeavors.

(2) Positioning of the Third Stage

Working towards the long-term maximization of corporate value, GD2010's management objective, Omron has divided this ten-year period into three stages. As the culmination of GD2010, the third and final stage should see Omron complete its transformation into a profitable, growth company.

1st Stage: "Establishing a Profit Structure" FY 2001 - FY 2003

2nd Stage: "Balancing Growth and Profits" FY 2004 - FY 2007

3rd Stage: "Achieving a Growth Structure" FY 2008 - FY 2010

2. Overview of GD2010 Third Stage

(1) A Vision for the Omron Group

In GD2010, Omron defined its vision for the company as "creating a 21st century company". In the third stage, the Company will renew its commitment to this vision by focusing on "dreams", pride" and "confidence".

* "Dreams" refer to innovation driven by social needs

Omron will focus on needs related to security/safety, healthcare and environmental preservation, and develop products that are completely new to the market. Additionally, Omron will work to modify existing products and technologies so that they can be used easily, anywhere, anytime and by anyone who needs them. The Company will show consistent commitment to fulfilling these two social needs.

* Omron will take "Pride" in its social contributions, as a company that is working for the benefit of society.

In line with its core corporate value of "working for the benefit of society", Omron will strive to make a continued contribution to society through its business operations.

* "Confidence" coming from continued profit generation

Omron regards profits as a reflection of society's expectations for a company. By earning society's trust and regard, Omron will generate a continuous profit stream that will inspire confidence.

(2) Third Stage Midterm Goals

Omron has set "raising business value by an annual average of at least 10%" as its midterm goal for the third stage. The following measures have been designated as indicators of its performance against this target.

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(3) Key Strategies

"Becoming global no. 1" in existing businesses and building up business in China will be key strategies in the third stage. In addition, Omron will seek to create and expand new businesses with a clear plan as to their development over the next ten years and beyond.

1) Strengthening existing businesses