2021_1q_omron_e

4/37 ■Q1 FY2020 Results

Here are OMRON's Q1 FY2020 results. Sales were ￥146.5 billion, gross profits were ￥66.4 billion, operating income was ￥12.5 billion and net income was ￥9.7 billion. In spite of the unprecedented disruption caused by COVID-19, OMRON was able to grow operating income a substantial 24.2% YoY. This is despite a decline in sales, reflecting OMRON’s resilience in the face of a changing environment. We attribute this to 3 factors. The first was our determined efforts to minimize the magnitude of the sales decline despite the disruption. As of April, we had prepared ourselves for a Q1 topline decline of around 15% Y/Y. The actual sales decline was limited to 8.5%. By tapping into OMRON's resilience, we were able to fully capture suddenly emerging opportunities, despite an overall backdrop of falling demand owing to COVID-19. For instance, in IAB, we were able to capture opportunities such as a surge in demand from the Digital industry or the wave of demand triggered by the need to expand production capacity for surgical masks. We were also able to capture the rise in demand for thermometers at HCB. The second was the continued improvement in GP margin. We were able to reap the benefits of ongoing initiatives such as variable cost cuts and the winding down of the Backlight Business, offsetting the negatives from forex impact and lower sales. OMRON's GP margin rose 0.6% points Y/Y. We continue to solidly improve our ability to generate profits. The third factor was the reduction of fixed costs. We maintained the discipline of our initial objective to reduce full-year fixed costs by \20 billion, executing in line with plan. In addition to this, profits were also boosted by lower-than-expected expense levels, the result of lockdowns and other restrictions related to COVID-19. We look at changes in operating income in more detail on the next slide. Please turn to slide 5.