OMRON Corporation: Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023 (U.S. GAAP)

Kyoto (pta024/26.07.2022/13:14 UTC+2)

Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31,

2023 (U.S. GAAP)

July 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

Filing of Quarterly Securities Report (Shihanki hokokusho)
(scheduled): August 9, 2022

Start of Distribution of Dividends (scheduled): －

Preparation of Supplementary Materials for the Quarterly
Financial Results: Yes

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

Note: Figures are rounded to the nearest million yen.

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

(April 1, 2022 – June 30, 2022)

Note: Comprehensive income: Three months ended June 30, 2022: JPY39,885 million (55.0% change);
Three months ended June 30, 2021: JPY25,739 million (169.7% change)

(2) Consolidated Financial Position

2. Dividends

Note: Revisions since the most recently announced dividend forecast: No

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.)

Note: Revisions since the most recently announced performance forecast: No

*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) Application of simplified accounting methods and/or special accounting methods: No

(3) Changes in accounting policy

(a) Changes in accounting policy accompanying revision of accounting standards, etc.: No

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

(4) Number of shares issued and outstanding

Note: As of the end of the consolidated first three months of the fiscal year ending March 31, 2023, 600,208 shares of OMRON stock held for 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.

Table of Contents

1. Qualitative Information on Quarterly Financial Results

(1) Description of Results of Operations

General Overview

Despite expanding capital investment demand in the manufacturing industry globally, the business environment surrounding the OMRON Group during the first quarter of the current fiscal year (April through June 2022) deteriorated temporarily due to the lockdowns in Shanghai, tight supply of parts and components, and soaring raw materials prices.

In the Industrial Automation Business, in particular, we accurately captured capital investment demand from the digital and automobile industries by demonstrating our ability to provide solutions. However, net sales and operating income were lower year on year due to the temporary suspension of operations at our main plant caused by the Shanghai lockdowns. Our Healthcare Business experienced high demand in the area of prevention. Despite this demand, net sales and operating income fell year on year due to component supply constraints and the impact of lockdowns in Shanghai and other major cities in China.

As a result, sales for the first quarter decreased year on year. Gross profit margin declined year on year, despite the results of selling price optimization implemented in the previous fiscal year. The decline in profit margin was mainly due to soaring prices for parts and raw materials, as well as high logistics costs. At the same time, we continued to be active in investing for future growth to achieve the goals of our medium-term management plan (SF 1st Stage). As a result of the preceding, operating income decreased significantly year on year.

Consolidated results for the first quarter were as follows.

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

Results by Business Segment

IAB (Industrial Automation Business)

Note: Due to a revision of business management classifications, certain businesses of the IAB is included in the DMB business segment for disclosure beginning with the fiscal year ending March 2023. Accordingly, the Company reclassified results for the fiscal year ended March 2022 under this new categorization for presentation herein.

Sales

Demand for capital investment expanded in the manufacturing industry in all areas of the globe. In the digital industry in particular, demand for capital investment in semiconductors and secondary batteries continued, especially in Greater China, Asia, and the Americas. Demand from Japanese equipment manufacturers remained firm. In the automobile industry, firm demand for capital investment continued in connection with electric vehicles in the automobile industry.

However, the Shanghai lockdowns in April and May caused a decline in capacity utilization at our main plant, resulting in a significant decrease in product supply. Production normalized at our main plant following the lifting of the Shanghai lockdowns in early June, and sales recovered quickly. However, net sales for the quarter declined year on year, unable to overcome the decreases recorded in April and May.

Operating Income

Operating income declined significantly year on year due to the decrease in sales caused by the Shanghai lockdowns, as well as soaring materials costs, logistics costs, and our own ongoing investments in future growth.

HCB (Healthcare Business)

Sales

Sales remained weak globally due to a decrease in the supply of blood pressure monitors and thermometers caused by tight supplies of semiconductors and other parts. In China, sales of blood pressure monitors and other healthcare equipment were weak due to the impact of lockdowns in Shanghai and other major cities. These lockdowns resulted in the temporary closure of dealers and stagnation in distribution networks. As a result, sales were lower year on year.

Operating Income

Operating income declined significantly year on year due to the decrease in sales as well as soaring parts costs and our own ongoing investments in future growth.

SSB (Social Systems, Solutions and Service Business)

Sales

The Public Transportation System business experienced the impact of ongoing restrained investment among major customers. The Energy Solutions Business provided a stable supply of storage battery systems and other products in response to firm demand for renewable energy-related products, mainly products for captive consumption. As a result, sales remained flat year on year.

Operating Income

Despite the impact of soaring material and component prices, operating income increased year on year owing to efforts to selling price policies and other means to improve added value.

DMB (Devices & Module Solutions Business)

Note: Due to a revision of business management classifications, certain businesses of the IAB is included in the DMB business segment for disclosure beginning with the fiscal year ending March 2023. Accordingly, the Company reclassified results for the fiscal year ended March 2022 under this new categorization for presentation herein.

Sales

Demand for automobile components remained sluggish, affected by the shortage of semiconductors and customer production adjustments in response to the Shanghai lockdowns. At the same time, demand for consumer industry components remained strong, particularly for home appliances and housing equipment in the Americas and Europe. As a result, sales increased 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 sales and the results of selling price optimization, etc.

(2) Description of Information on Outlook, Including Consolidated Performance Forecast

We expect the business environment surrounding the OMRON Group to remain generally firm globally in the second quarter and beyond.

Demand for capital investment in the manufacturing industry, particularly in connection with the digital industry, should remain strong. We also expect the Industrial Automation Business will continue to receive strong orders. Further, we expect increased production volume and production reallocations to contribute significantly to an increase in product supply volume. As a result, sales in the second quarter onward should make up for the first quarter decline, which was caused by the Shanghai lockdowns. In total, we expect full-year sales to be in line with initial plan.

In light of these circumstances, we decided to leave the full-year consolidated earnings forecast unchanged from our announcement on April 26, 2022. The OMRON Group has set exchange rate assumptions for the second quarter and beyond to USD1 = JPY121.0, EUR1 = JPY133.0, and CNY1 = JPY19.0. These rates are the same foreign exchange rates published on April 26, 2022.

(3) Establishment of Treasury Stock Acquisition Limit

At a meeting held today (July 26, 2022), the OMRON Corporation board of directors resolved to establish a limit on share repurchases in accordance with the provisions of Article 156 of the Companies Act, as applied pursuant to Paragraph 3 Article 165 of the same Act.

Details of Matters Related to the Acquisition of Treasury Stock

Reasons for the Acquisition of Treasury Stock

In line with the Company's cash allocation and shareholder return policies, we set a limit of 3.3 million shares, or 20 billion yen, as the maximum number of shares to be repurchased. This decision was made in consideration of the Company's current cash position, fiscal year-end cash position taking into account projected operating cash flows, future investment plans, the stock market environment, etc.

Cash Allocation Policy

(1) Aiming to maximize corporate value through the realization of the long-term vision, OMRON prioritizes the necessary investments to create new value from the medium- and long-term perspectives. During SF 1st Stage, priority will be placed on investments for solving social issues, creating social needs, developing human resources, promoting research and development, capital investments to ramp up production capacity and advance the digital transformation (DX), and investments in growth initiatives such as M&A&A (merger, acquisition, and alliance), as well as investments in sustainability initiatives such as de-carbonization and reduction of our environmental impact and incorporation of respect for human rights in the value chain, while at the same time returning profits to shareholders in a stable and sustainable manner.

(2) Such investments for value creation and shareholder returns will be, at least in principle, sourced from internal reserves and operating cash flows that are generated continually, as we use appropriate financing facilities when necessary. We will maintain a degree of financial soundness that allows us to seek financing regardless of the current financial situation.

Shareholder Return Policy

(1) With priority being placed on the investments necessary for value creation over the medium- and long-term, annual dividends will be based on "dividends on equity (DOE) of around 3%." With the past dividend records also being taken into account, we will ensure stable and sustainable shareholder returns.

(2) OMRON will distribute retained earnings accumulated over the long term after making the above investments and profit distribution to shareholders through strategic share buybacks and other measures.

2. Quarterly Consolidated Financial Statements and Notes

(1) Quarterly Consolidated Balance Sheets

(Millions of yen)

(Millions of yen)

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

(Quarterly Consolidated Statements of Operations)

(Three months ended June 30, 2022)

(Millions of yen)

(Quarterly Consolidated Statements of Comprehensive Income)

(Three months ended June 30, 2022)

(Millions of yen)

(3) Consolidated Statements of Cash Flows

(Millions of yen)

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

(4) Notes Regarding Consolidated Financial Statements

(Notes Regarding Assumptions of Going Concern)

None applicable

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

None applicable

(Notes Regarding Significant Subsequent Events)

At a meeting held July 26, 2022, the OMRON Corporation board of directors resolved to establish a limit on share repurchases in accordance with the provisions of Article 156 of the Companies Act, as applied pursuant to Paragraph 3 Article 165 of the same Act.

[Details of matters related to the acquisition of treasury stock]

1. Type of shares to be acquired: Common stock of the Company

2. Total number of shares to be acquired: 3,300,000 shares (maximum) (Representing 1.65% of total shares outstanding (excluding treasury stock))

3. Total acquisition price: 20,000,000,000 yen (maximum)

4. Acquisition period: July 27, 2022 to March 31, 2023

(Segment Information)

Business Segment Information

(Millions of yen)

Note: Due to a revision of business management classifications, certain businesses of the IAB is included in the DMB business segment for disclosure beginning with the fiscal year ending March 2023.Accordingly, the Company reclassified results for the fiscal year ended March 2022 under this new categorization for presentation herein.

Sales by Geographical Region

(Millions of yen)

Note 1: Due to a revision of business management classifications, certain businesses of the IAB is included in the DMB business segment for disclosure beginning with the fiscal year ending March 2023. Accordingly, the Company reclassified results for the fiscal year ended March 2022 under this new categorization for presentation herein.

Note 2: Major countries or regions belonging to segments other than Japan are as follows:

(1) Americas: United States of America, Canada, Brazil

(2) Europe: Netherlands, Great Britain, Germany, France, Italy, Spain

(3) Greater China: China, Hong Kong, Taiwan

(4) Southeast Asia and Others: Singapore, Republic of Korea, India, Australia

(5) Direct Exports: Direct export transactions

(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