OMRON Corporation: Summary of Consolidated Financial Results for the Year Ended March 31, 2022 (U.S. GAAP)

Kyoto (pta008/26.04.2022/09:00 UTC+2)

Summary of Consolidated Financial Results for the Year Ended March 31, 2022 (U.S. GAAP)

April 26, 2022

OMRON Corporation (6645)

Exchanges Listed: Tokyo

URL: https://www.omron.com/global/en/

Representative: Yoshihito Yamada, President and CEO

Contact: Toyoharu Tamoi, Executive Officer, Senior General Manager, Global Finance and Accounting HQ

Telephone: +81-75-344-7070

Annual General Shareholders' Meeting (Scheduled): June 23, 2022

Start of Distribution of Dividends (Scheduled): June 24, 2022

Filing of Securities Report (Yuka shoken hokokusho) (Scheduled): June 24, 2022

Preparation of Supplementary Materials for the Financial Results: Yes

Holding of Presentation of Financial Results: Yes (Financial results presentation held via online streaming and teleconference for investors on April 26)

Note: Figures are rounded to the nearest million yen.

1. Consolidated Financial Results for the Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022)

Note: Comprehensive income: Year ended March 31, 2022: JPY108,105 million (14.2% change);

Year ended March 31, 2021: JPY94,695 million (53.1% change)

(2) Consolidated Financial Position

(3) Consolidated Cash Flows

2. Dividends

Notes: 1 Interim and year-end dividends for the fiscal year ending March 31, 2023 have yet to be determined.

2 The number used in calculating shareholders' equity ratio (consolidated) above is the average shareholders' equity ratio at the beginning and the end of the fiscal year. Beginning next fiscal year (ending March 31, 2023), we will perform this calculation based on the average of the number at the beginning of the fiscal year and at the end of each fiscal quarter during the period in question. Further, under this calculation method, shareholders' equity ratio (consolidated) for the fiscal years ended March 31, 2021 and 2022 were 3.0% and 2.9%, respectively.

3. Projected Results for the Year Ending March 31, 2023 (April 1, 2022 – March 31, 2023)

(Percentages represent changes compared with the same period of the previous fiscal year.)

*Notes

(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries due to changes in the scope of consolidation): No

New: - company (company name) Excluded: - company (company name)

(2) Changes in accounting policy

(a) Changes in accounting policy accompanying revision of accounting standards, etc.: Yes

(b) Changes in accounting policy other than (a) above: No

Note: For details, refer to 5. Consolidated Financial Statements and Notes(5) Notes Regarding Consolidated Financial Statements on P.19.

(3) Number of shares issued and outstanding (common stock)

Note: As of the end of the fiscal year ended March 31, 2022, 606,434 shares of OMRON stock held for the Board Incentive Plan and Employee Stock Ownership Plan are included in period-end treasury stock. The average number of shares during the period includes treasury stock deducted in the calculation of net income per share attributable to OMRON shareholders, basic.

(Reference) Summary of Non-consolidated Results

1. Non-consolidated Financial Results for the Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022)

Notes: 1 We adopted Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) as of the beginning of the fiscal year under review. Each figure related to the fiscal year ended March 31, 2022 reflects the adoption of this accounting standard.

2 As disclosed in Notice Regarding Non-Consolidated Loss on Valuation of Stocks of Affiliates, published January 28, 2022, the Company recorded JPY16.8 billion (including JPY5.7 billion in foreign exchange impact) in non-consolidated loss on valuation of stocks of affiliates in connection with the valuation of shares of consolidated subsidiary OMRON Electronica do Brasil LTDA. The amount recorded is reflected in extraordinary loss in the OMRON Corporation non-consolidated financial results.

(2) Non-consolidated Financial Position

(Reference) Net worth: Year ended March 31, 2022: JPY277,159 million; Year ended March 31, 2021: JPY298,916 million

Table of Contents

1. Analysis of Results of Operations and Financial Condition

(1) Analysis of Results of Operations

1) General Overview

The business environment surrounding the OMRON Group during the consolidated fiscal year (ended March 31, 2022) experienced ongoing strong demand overall from the digital industry, mainly in Greater China, Asia and the Americas. At the same time, investments related to carbon-neutral and plastic-free products expanded against the backdrop of social demands to protect the global environment. Further, the COVID-19 pandemic led to increased demand for home medical equipment as consumers gained a new appreciation of the importance of preventing serious chronic diseases. On the other hand, the fiscal year ended March 31, 2022 was one of continued uncertainty due to a variety of factors such as the emergence of extended supply chain disruptions beginning in the second quarter, the deteriorating situation in Russia and Ukraine, and the Shanghai lockdowns in the fourth quarter.

Amid this business environment, the Industrial Automation Business continued to build on the ability to propose solutions, securing parts and responding to increased production to meet strong demand in response to capital investment in semiconductors, electric vehicles, secondary batteries, and food packaging machinery. As global demand for blood pressure monitors increased, our Healthcare Business responded by strengthening promotions through our retail pharmacy and online channels, securing components, and improving logistics.

As a result, sales increased significantly year on year. Gross profit margin remained almost unchanged from the previous year, despite the impact of soaring material and logistics costs, due to efforts to reduce variable costs and improve production efficiency, as well as the results of profit structure reforms implemented to date. Our strong earnings structure generated a multiplicative effect on net sales, leading not only to a significant increase in operating income year on year, but also to a record high.

Consolidated results for fiscal 2021 were as follows.

(Billions of yen, except exchange rate data and percentages)

2) Results by Business Segment

IAB (Industrial Automation Business)

(Billions of yen, %)

Sales

Demand for capital investment rose in the manufacturing industry in all areas of the globe. Demand for secondary batteries and semiconductor-related capital investment in the digital industry expanded, particularly in Greater China, Asia, and the Americas, and demand among Japanese equipment manufacturers also increased. At the same time, demand for capital investment related to electric vehicles continued to increase in the automobile industry. The food and daily goods industry experienced firm demand, mainly for packaging equipment. We accurately captured these rising demands through solution proposal-based sales, which we have strengthened over time, while also engaging in production increases, etc. As a result, net sales grew significantly year on year, reaching a record high.

Operating Income

Operating income increased significantly year on year, reaching a record high, mainly due to the large increase in sales.

HCB (Healthcare Business)

(Billions of yen, %)

Sales

Demand for blood pressure monitors continued to grow globally with increased awareness of the need to prevent the progression of serious chronic diseases due to the COVID-19 pandemic. Demand for nebulizers continued to recover as patients had more opportunities to visit hospitals. Demand for thermometers experienced a reactionary decline to the previous-year surge in demand. Despite factory operation restrictions in the first half of the year due to the COVID-19 pandemic and supply chain disruptions beginning in the third quarter, the Company steadily captured robust demand by implementing rapid product design changes and switching transportation routes. As a result, sales increased year on year.

Operating Income

Despite efforts to control fixed costs and improve added value, operating income declined compared to the previous fiscal year due to soaring component and logistics costs.

SSB (Social Systems, Solutions and Service Business)

(Billions of yen, %)

Sales

Our Energy Solutions Business saw significant growth in sales of storage battery systems as we endeavored to secure components to meet the growing demand for carbon-neutral businesses and disaster prevention and mitigation. The Public Transportation System Business experienced the impact of ongoing restrained investment by customers owing to the prolonged effects of the COVID-19 pandemic. As a result, sales were lower year on year.

Operating Income

Operating income rose significantly year on year, despite the impact of lower sales, owing to efforts to control fixed costs and increase added value.

DMB (Device & Module Solutions Business)

(Billions of yen, %)

Note: In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

Sales

Demand for components increased significantly in our focus industries, including home appliances, housing equipment, and power tools for the consumer industry. Demand for components for the automotive industry recovered moderately, despite the impact of the COVID-19 pandemic and production adjustments among our customers due to the shortage of semiconductors. We accurately captured this demand and responded quickly to secure product supplies in response to production increases and by engaging in other measures. As a result, sales rose significantly year on year.

Operating Income

Despite the impact of soaring raw material prices and logistics costs, operating income increased significantly year on year, mainly due to the significant increase in net sales, as well as value-added initiatives and restructuring.

(2) Analysis of Financial Condition

Total assets as of the end of the fiscal year amounted to JPY930.6 billion, a JPY110.3 billion increase compared to the end of the previous fiscal year. This increase was, mainly due to an increase in trade receivables stemming from strong sales and an increase in inventories due the securing of components. Total liabilities amounted to JPY262.7 billion, up JPY51.6 billion compared to the end of the previous fiscal year, mainly due to external borrowings, increases in accounts payable, and accrued expenses. Net assets increased JPY58.6 billion compared to the end of the previous fiscal year to JPY668.0 billion, mainly due to the recording of net income attributable to OMRON shareholders. The Company also conducted an acquisition of treasury stock, etc., contributing to this result.

As a result, the OMRON Group shareholders' equity ratio was 71.5%, indicating a strong financial footing. Cash on hand as of the end of the fiscal year amounted to JPY155.5 billion. Further, OMRON has signed commitment line agreements with financial institutions in the amount of JPY30.0 billion. In addition, OMRON has received a long-term credit rating of stable from ratings firms, reflecting our strong ability to raise capital. Even in an uncertain business environment, we will maintain good relationships with financial institutions on a global basis to ensure the liquidity of funds and our ability to raise funds.

(Billions of yen, except exchange rate data and percentages)

(3) Summary of Cash Flows for the Year Ended March 31, 2022

Net cash provided by operating activities was JPY67.4 billion, JPY26.4 billion lower compared to the previous fiscal year. This result was mainly due to the recording of net income, as well as increases in notes and accounts receivable-trade, inventories, and other working capital.

Net cash used in investing activities amounted to JPY150.2 billion (an increase of JPY135.4 billion compared to the previous fiscal year), mainly due to investments for future growth, including our acquisition of JMDC stock, and capital expenditures, such as investments in production capacity expansion.

Free cash flow, which is the sum of net cash provided by operating activities and net cash used in investing activities, resulted in a net cash outflow of JPY82.7 billion, compared with a net cash inflow of JPY79.0 billion in the previous fiscal year.

Net cash used in financing activities amounted to JPY29.6 billion (an increase of JPY9.3 billion compared to the previous fiscal year), mainly due to dividend payments and the purchase of treasury stock.

As a result, cash and cash equivalents at the end of the fiscal year amounted to JPY155.5 billion, down JPY95.3 billion yen compared with the end of the previous fiscal year.

(Billions of yen, except exchange rate data and percentages)

Note: Capital expenditures represent the amount from the consolidated statement of cash flows

(4) Basic Policy for Distribution of Profits, and Dividends for the Year Ended March 31, 2022 and the Year Ending March 31, 2023

OMRON consults with our general meeting of Shareholders regarding decisions on dividends from retained earnings, with the exception of interim dividends, which are decided by resolution of the Board of Directors based on the provisions of the Articles of Incorporation. In addition, the Company will apply the following basic policy regarding distribution of profits to shareholders, including shareholder returns.

Cash Allocation Policy

1) We prioritize investments that create new value from a medium- to long-term perspective, aiming to maximize corporate value by achieving our Long-Term Vision. Under our Medium-Term Management Plan (SF 1st Stage) covering the fiscal years 2022 to 2024, we intend to invest in human resources and R&D to solve social issues and innovate driven by social needs. We also intend to invest in production capacity increases and digital transformation (DX), M&A&A (mergers and acquisitions and alliances), and other growth investments. We will also give priority to investments in sustainability initiatives, including decarbonization, environmental impact reduction, and respect for human rights in the value chain. Having committed to these investments, we will also engage in stable and continued shareholder returns.

2) In principle, we will source the funds for these value-creating investments and shareholder returns through retained earnings and the sustained creation of operating cash flows. As needed, we will allocate funds by raising capital through appropriate means. In addition, we will continue to strive to maintain financial soundness to facilitate the raising of capital regardless of financial market conditions.

Shareholder Return Policy

1) We will prioritize investments necessary for value creation from a medium- to long-term perspective, establishing a dividend on equity (DOE) target of approximately 3% as a standard for annual dividends. We will also consider past dividend performance, striving to provide stable and continuing returns to our shareholders.

2) Having engaged in the investments and allocation of profits described above, the Company will distribute retained earnings accumulated over the long term to shareholders through opportunistic share buybacks and other measures.

For the current fiscal year (ended March 31, 2022), OMRON plans to pay a year-end dividend of JPY46 per share for the purpose of stable, ongoing dividends in light of company earnings, DOE standards*, and past dividend levels. Combined with an interim dividend of JPY46 per share implemented on December 2, 2021, our full-year dividend will amount to JPY92 per share. For the next fiscal year (ending March 31, 2023), we plan to pay an annual dividend of JPY98 per share, applying the DOE standard in line with the policy above. The interim dividend (end of the second quarter) and year-end dividend for the next fiscal year have yet to be determined.

* Beginning next fiscal year (ending March 31, 2023), we will perform this calculation based on the average of the shareholders' equity at the beginning of the fiscal year and at the end of each fiscal quarter during the period in question.

(5) Outlook for the Year Ending March 31, 2023

1) General Outlook

The OMRON Group will begin executing our Long-Term Vision SF2030 and the initial year of our three-year Medium-Term Management Plan beginning next fiscal year (ending March 31, 2023). Working from the customer assets we have cultivated to date, we will seize on newly emerging business opportunities and offer solutions as we invest steadily for future growth. As the transformation to social and economic systems accelerates toward the post-COVID-19 era, we will strive to reform our business models and create new businesses, aiming for sustainable growth.

The business environment over the next fiscal year will continue to present uncertainties, including growing geopolitical risks, supply chain disruptions, accelerated inflation, and the impact of urban lockdowns in response to new outbreaks of COVID-19. At the same time, we expect generally that strong demand will continue globally in the areas addressed by the OMRON Group. In particular, the widening adoption of digital transformation (DX) equipment, increasing decentralization of production sites, and growing social demands to protect the global environment will lead to growing demand for capital investment in semiconductor manufacturing, electric vehicles, plastics-free approaches, and renewable energy-related areas. At the same time, aging societies and rising health consciousness will lead to continued firm demand for blood pressure monitors and other health-related equipment.

In light of this highly uncertain business environment, the OMRON Group will continue to bring to bear our resilience in the face of change and achieve strong growth. To this end, we will seize on business opportunities presented by changes in society, while factoring into our forecasts the risk of company-wide performance fluctuations (JPY10.0 billion decrease in net sales and JPY4.0 billion decrease in operating income). In addition, we will engage actively in growth investments, particularly in our Industrial Automation Business and Healthcare Business, seeking to create new value in line with our Long-Term Vision. Because of these efforts, we expect to increase sales and profits for a second consecutive fiscal year, setting a new record high for operating income.

Our outlook for the next fiscal year is as follows.

(Billions of yen, except exchange rate data and percentages)

2) Outlook by Segment

IAB (Industrial Automation Business)

(Billions of yen, %)

Note: After revising business management classifications, we have included a portion of IAB in the DMB business segment beginning with the fiscal year ending March 31, 2023. Accordingly, the Company reclassified results for the fiscal year ended March 31, 2022 under this new categorization for presentation herein.

Sales

We expect demand for capital investment for semiconductors and electronic components to remain strong due to the advancement of DX. We also expect demand for capital investment related to the food and medical-related industries to continue to grow due to efforts to eliminate plastics and promote safety, security, and labor savings. In addition, we project strong global demand to continue in the manufacturing industry in general, as capital investment decisions are made in response to carbon neutrality movements. We intend to strengthen reliance on local sales personnel and systems engineers, while accelerating the creation and marketing of innovative control applications. In this way, we expect to accurately capture demand and achieve a significant increase in year-on-year sales over the next fiscal year.

Operating Income

We expect operating income for the next fiscal year to increase significantly over the current fiscal year through efforts to increase sales and raise productivity.

HCB (Healthcare Business)

(Billions of yen, %)

Sales

We expect strong demand for blood pressure monitors to continue as consumers become more aware of the need to prevent the progression of serious chronic diseases. As restrictions on outpatient transportation are eased, patients will have more opportunities to visit hospitals, and we expect demand for nebulizers to grow. By boosting sales through growing online channels and other measures, we expect to accurately capture this demand and increase year-on-year sales over the next fiscal year.

Operating Income

Despite the continued impact of soaring material and logistics costs, we expect an increase in sales and efforts to increase added value will lead to operating income growth in the next fiscal year.

SSB (Social Systems, Solutions and Service Business)

(Billions of yen, %)

Sales

We expect the Public Transportation System Business to continue to experience the ongoing impact of restrained investment by customers owing to the prolonged effects of the COVID-19 pandemic. Our Energy Solutions Business should see strong demand for storage battery systems due to growing needs to address carbon-neutrality and disaster prevention and mitigation. By responding quickly to these demands and providing solutions that combine products and services, we expect year-on-year sales growth over the next fiscal year.

Operating Income

Despite the ongoing impact of soaring product supply costs, we forecast a year-on-year increase in operating income based on increased sales and efforts to strengthen our earnings structure.

DMB (Device & Module Solutions Business)

(Billions of yen, %)

Notes: 1. In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

2. After revising business management classifications, we have included a portion of IAB in the DMB business segment beginning with the fiscal year ending March 31, 2023. Accordingly, the Company reclassified results for the fiscal year ended March 31, 2022 under this new categorization for presentation herein.

Sales

We expect demand for consumer products to continue to expand as the market recovers from the COVID-19 pandemic. At the same time, demand for automotive applications should remain strong due to growing needs for electrification. By accelerating industry development for high-frequency relays, expanding the customer base for DC equipment relays, and creating new applications, we expect to steadily capture growing demand and see increased year-on-year net sales for the next fiscal year.

Operating Income

Despite the continued impact of soaring raw materials and logistics costs, we expect a significant increase in operating income for the next fiscal year as a result of our efforts to increase added value.

2. The OMRON Group

As a result of the acquisition of JMDC, Inc. shares, JMDC, Inc. and its 27 consolidated subsidiaries will be included in the scope of equity-method affiliates effective as of the current fiscal year under review.

3. Management Policies

(1) OMRON's Basic Management Policies

Since our founding, the mission of the OMRON Group has been to improve lives and contribute to a better society by solving social issues through our businesses. Through the practice of the OMRON Principles, we strive for sustainable improvement in corporate value and engage in management based on these principles.

(2) Medium- to Long-Term Corporate Management Strategy

Overview of Long-Term Vision Shaping the Future 2030

The OMRON Group has formulated our Long-Term Vision Shaping the Future 2030 (SF2030), which covers fiscal years 2022 to 2030. As society enters a period of change, we have written a story of our own transformation and the creation of new value to fulfill our purpose, to solve more social issues, and to contribute to our stakeholders, including investors and society. Under this Long-Term Vision, we intend to shape sustainable societies through our business and enhance corporate value through an evolution in integrated business growth and sustainability. Our vision statement says that we will continue to create innovation driven by social needs through automation to empower people. This statement reflects the desire of all OMRON Group employees to embody the OMRON Principles and to work in harmony with stakeholders for sustainable societies through Sensing & Control + Think technologies. Many new social issues will arise over the next decade. Working from the perspective of leveraging OMRON Group strengths in automation, our customer assets, and business assets, we identified three social issues that will have an outsized social impact in the future: (1) Achieving Carbon Neutrality; (2) Realizing a Digital Society; and (3) Extending Healthy Life Expectancy. To maximize the social impact of these solutions, we revised the OMRON Group business domains under SF2030, establishing four domains and defining social value within these domains. Through Industrial Automation, we aim to contribute to the advancement of manufacturing to support sustainable societies. Through Healthcare Solutions, we aim to contribute to the achievement of Zero Events of cardiovascular diseases. Through Social Solutions, we aim to contribute to the adoption and efficient use of renewable energy and a sustainable infrastructure to support digital societies. In addition, through Device & Module Solutions, we aim to contribute to the take-up of new energy and high-speed communications.

Overview of the SF 1st Stage Medium-Term Management Plan

Our medium-term management plan for fiscal years 2022 through 2024 ("SF 1st Stage") describes these three years as a phase of accelerated transformation. During this phase we will accelerate the transformation of our capabilities to create value and achieve sustainable growth in response to emerging social issues. We will seize growth opportunities arising from changes in the social structure, bringing to bear the competitive strengths we have cultivated over the years for achieve dynamic growth. At the same time, we will promote the transformation of our organizational capabilities to adapt to a changing society and enhance the sustainability of our growth.

The corporate policy we pursue under SF 1st Stage is "taking on the challenge of value creation by accelerating transformation." To achieve this policy, we established three group strategies. The first is the transformation of our business. Specifically, we will pursue the evolution of four core businesses (Industrial Automation Business, Healthcare Business, Social Systems, Solutions and Service Business, and Devices & Module Solutions Busines), expand customer asset-type service businesses, and create new businesses sparked by social issues. In evolving our four core businesses, we will review the growth areas within each, establishing focus domains to create new value and drive sales growth. Second, we will transform corporate management and organizational capabilities. To continue creating value while adapting to change in the business environment, we will accelerate Diversity & Inclusion, engage in data-driven enterprise operations through DX, and improve the resilience of our supply chain. And third, we will strengthen our sustainability initiatives. Here, we will strive to reduce GHG emissions toward decarbonization and a smaller environmental burden, as well as address human rights issues comprehensively throughout our value chain.

SF 1st Stage includes both financial and non-financial management targets by which we will create value through business growth and sustainability initiatives integrated at higher levels than ever before. For financial targets, we aim to achieve sales of JPY930 billion, operating income of JPY120 billion, operating cash flow (three-year cumulative total) of JPY250 billion, ROIC of at least 10%, ROE of at least 10%, and EPS of JPY400 or more by fiscal 2024. In terms of non-financial targets, we have set 10+1 goals that indicate the social value to be created by the OMRON Group and secure our ability to compete in the future. Specifically, we have set targets that will reflect the transformation of corporate operations and organizational capabilities, and targets that reflect stronger environmental and human rights initiatives. These targets include raising the ratio of women in management to at least 18% on a global basis and achieving Carbon Zero at all 76 sites in Japan. In addition, we will establish three of the non-financial targets by global employee vote. As all employees strive to achieve these targets, their efforts will become an engine for the strong acceleration of group value creation. Last, we have set a "+1" target: for top management of each region to declare their commitment to contribute to local communities in alignment with OMRON's Sustainability Policy.

*Further details can be found in the Long-Term Vision and Medium-Term Management Plan presentation materials.

https://www.omron.com/global/en/ir/irlib/sf_info/

(3) Management Plan for the Next Fiscal Year

Fiscal 2021 Results

In fiscal 2021, we began executing business operations under the policies of maximizing our resilience in the face of change and accelerating the shift of our business structure. However, fiscal 2021 was a year that required us to respond to a rapidly changing external environment that included supply chain disruptions, the re-emergence of COVID-19 infections, and the situation in Ukraine. Despite these challenges, we captured robust demand and recorded a historic high for operating income. At the same time, our businesses took steps toward sustainable growth, such as the creation of innovative applications in the Industrial Automation Business and the development of telemedicine services in Europe and the United States in the Healthcare Business. Through the capital and business alliance with JMDC announced in February, we aim to develop a database platform business for solutions in health promotion and the prevention of serious illnesses. We are working with JMDC on business concepts, value development, and business operations in data-based services, and we will accelerate OMRON Group data-driven businesses by applying the knowledge we gain here to our Industrial Automation Business and Social Systems, Solutions and Service Business.

Fiscal 2022 Policies and Action Plans

In fiscal 2022, which is the first year we will operate under SF 1st Stage, we are pursuing a policy of changing gears to create new value. We intend to leverage the assets we have built over time to accelerate growth, as well as to invest for future growth. Even amid continuing product supply constraints, rising inflation, and turmoil in the world order, we aim for growth through our focus domains, demonstrating our resilience in the face of change and to capture global demand, which is generally strong.

We will also change gears to evolve value creation at a higher stage to execute our Long-Term Vision and Medium-Term Management Plan successfully. To this end, we will focus on the following five key initiatives.

1. Expand and stabilize product supply

We will demonstrate our resilience in the face of change and enhance our product supply capabilities in the face of supply chain disruptions, including limited supplies of parts and materials due to increased demand. Specifically, we will continue efforts in ongoing negotiations with suppliers and in switching procured parts and materials via design changes. In addition, we will develop supply chain strategies to further enhance resilience from a medium- to long-term perspective.

2. Optimize selling price levels in an inflationary environment

In response to the rapid advancements in inflation that began in fiscal 2021, we plan to add value by engaging in appropriate price revisions, addressing unprofitable products through portfolio management, and achieving growth through highly profitable businesses.

3. Create new social value

To achieve sustainable sales growth, we will look at customer needs from the perspective of services, combining products and services to extend our service businesses. To create new businesses, we will define business categories according to social issues, developing both business models and Sensing & Control + Think technologies for commercialization.

4. Strengthen human resources and DX infrastructure

We intend to be more active than ever before in pursuing initiatives to strengthen human resources. These initiatives include hiring diverse human resources who possess specialties, investing in human resource development to help employees exercise their talents more fully, and a job-based personnel system aimed at improving business productivity and increasing added value. In addition, we will work steadily toward the first-year milestone of our Medium-Term Management Plan to build a DX infrastructure that supports employees in the exercise of their talents.

5. Strengthen sustainability initiatives

To engage with the materialities of decarbonization/lowering the environmental burden and thorough respect for human rights throughout the value chain , business divisions and headquarters departments will work together in formulating plans and implementing initiatives on a consistent basis.

Our financial targets for fiscal 2022 are net sales of JPY850 billion (+11% year on year), operating income of JPY93 billion (+4%), ROIC of at least 10% (+0.4%pt), ROE of at least 10% (+0.3%pt), and EPS of JPY316 (+JPY10.6). Our plans for non-financial targets in fiscal 2022 are shown below.

Non-Financial Targets

(*) Sales of focus domains that lead to achieving carbon neutrality, realizing a digital society, and extending healthy life expectancy.

4. Basic Stance on the Selection of Accounting Standards

The OMRON Group has adopted U.S. GAAP, an international accounting standard, to secure the trust of stakeholders worldwide.

5. Consolidated Financial Statements and Notes

(1) Consolidated Balance Sheets

(Millions of yen)

(Millions of yen)

(2) Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income

(Consolidated Statements of Operations)

(Millions of yen)

Note: Other expenses (income), net for the consolidated fiscal year under review includes impairment loss of JPY3,384 million in related to NS Industria de Aparelhos Medicos LTDA. in Brazil, as disclosed in Notice Regarding Non-Consolidated Loss on Valuation of Stocks of Affiliates published on January 28, 2022. NS Industria de Aparelhos Medicos LTDA. was acquired under our Healthcare Business.

(Consolidated Statements of Comprehensive Income)

(Millions of yen)

(3) Consolidated Statements of Changes in Shareholders' Equity

(Millions of yen)

(4) Consolidated Statements of Cash Flows

(Millions of yen)

Note: Free cash flow is cash flow from operating activities plus cash flow from investing activities.

(5) Notes Regarding Consolidated Financial Statements

(Notes Regarding Assumptions of Going Concern)

None applicable

(Basis of Presentation for Consolidated Financial Statements)

As a result of the acquisition of JMDC, Inc. shares, JMDC, Inc. and its 27 consolidated subsidiaries will be included in the scope of equity-method affiliates effective as of the current fiscal year under review.

(Notes in the Event of Significant Changes in Shareholders' Equity)

None applicable

(Changes in Accounting Policies)

For the current consolidated fiscal year, OMRON elected for the early adoption of FASB Accounting Standards Update No.2017-04, Simplifying the Test for Goodwill Impairment. This accounting standards update eliminates step 2 of the two-step test previously required for goodwill impairment testing, and requires that if the carrying amount of a reporting unit exceeds its fair value, the excess of the carrying amount over the fair value of the reporting unit shall be recognized as an impairment loss, up to the amount of the total goodwill allocated to the reporting unit. The adoption of this accounting standards update has no impact on OMRON or our subsidiaries.

(Per-Share Information)

In calculating earnings per share, the Company applies FASB Statement No. 260, Earnings per Share.

The number of shares used to calculate net income per share attributable to OMRON shareholders, basic and diluted net income per share attributable to OMRON shareholders, basic are as follows.

Note: The number of diluted shares for the fiscal year ended March 31, 2021 and March 31, 2022 are not shown, as there are not dilutive shares.

(Details of Other Expenses (Income), Net)

Details of other expenses (income), net are as follows.

We have omitted notes on lease transactions, transactions with related parties, tax effect accounting, financial instruments, securities, derivative transactions, retirement benefits, business combinations, etc., and asset retirement obligations, as the necessity for disclosure in the summary of financial results is not considered significant.

(Segment Information)

Business Segment Information

(Millions of yen)

Notes: 1. In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

2. Beginning with the prior consolidated fiscal year, the OMRON Group has changed our depreciation method related to property, plant and equipment from the declining balance method to the straight-line method for the Company and our domestic consolidated subsidiaries. This change resulted in a decrease in operating expense (total JPY2,120 million, consisting of JPY427 million under the IAB, JPY311 million under the HCB, JPY370 million under the SSB, JPY418 million under the DMB, and JPY594 million under Eliminations & Corporate). Rather than allocate these amounts to each segment, we have posted the entire JPY2,120 million to Eliminations & Corporate. This change has been reflected under each business segment for the fiscal year ended March 31, 2022.

Sales by Geographical Region

(Millions of yen)

Note: In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

6. Supplementary Information

(1) Projected Consolidated Performance by Business Segment

(Billions of yen)

Notes: 1. In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

2. After revising business management classifications, we have included a portion of IAB in the DMB business segment beginning with the fiscal year ending March 31, 2023. Accordingly, the Company reclassified results for the fiscal year ended March 2022 under this new categorization for presentation herein.

(2) Projected Consolidated Net Sales by Business Segment

(Billions of yen)

Notes: 1. In connection with the start of our long-term vision beginning April 2022, the name of EMC (Electronic and Mechanical Components Business) will change to DMB (Device & Module Solutions Business) beginning with the fiscal year ending March 31, 2023.

2. After revising business management classifications, we have included a portion of IAB in the DMB business segment beginning with the fiscal year ending March 31, 2023. Accordingly, the Company reclassified results for the fiscal year ended March 31, 2022 under this new categorization for presentation herein.

(end)

Emitter:	OMRON Corporation Shiokoji Horikawa, Shimogyo-ku 600-8530 Kyoto Japan
Contact Person:	Jan Hutterer
Phone:	+49 172 3462831
E-Mail:	jan.hutterer@kirchhoff.de
Website:	www.omron.com
ISIN(s):	DE0008647488 (Share) JP3197800000 (Share)
Stock Exchange(s):	Regulated Market in Frankfurt; Free Market in Berlin, Hannover, Stuttgart
Other Stock Exchanges:	NASDAQ, Tokio