| Olympus Optical Co., Ltd., (President: Tsuyoshi Kikukawa) has formulated a corporate strategic plan (medium term) that rounds out its business strategy for the next five years from the current year through fiscal year 2007 (2006.4-2007.3). |
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The plan, which makes maximization of corporate value the management objective, seeks the establishment of a world-class corporate structure and financial structure by boosting growth potential, profitability and brand strength. In fiscal year ending March 2007, it aims for consolidated sales of 870 billion yen, 1.6 times the figure for the fiscal year ended March 2002 (last year), a consolidated operating profit of 120 billion yen, 2.8 times last year's figure, and a Return on Equity (ROE) of 16%. In order to achieve the plan's objectives, the company will fully implement the president's strategy of "Creative Destruction and Innovation" and make speed a top priority in the management of its business.
The basic business development strategy will be to steadily increase the profits of the Medical Systems Group, which has made a major contribution to Olympus' profits with medical endoscopes. At the same time, Olympus will build a structure that enables adequate profits to be generated at both the Imaging Systems Group, centered on digital cameras, and the Industrial Systems Group, which includes industrial microscopes and industrial endoscopes. Specifically, by fiscal year 2007, Olympus will surely improve the consolidated operating profit of the Imaging and Industrial Systems Groups and establish a business structure that allows each of the three internal companies to achieve stable earnings. This will take place through a strengthening of OPTO-digital technologies (optical technology, digital imaging technology and micro-fabrication technology), which is a core competency, and improvements in business efficiency. Through this process, Olympus aims to become a major player on the global stage in imaging, medical and industrial business domains, respectively.
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|
| Business Objectives |
|
| |
|
2002/3
|
%
|
2005/3
|
%
|
2007/3
|
%
|
|
Operating
income
|
Imaging
|
208.5
|
39%
|
295
|
42%
|
345
|
40%
|
|
Medical
|
255.0
|
48%
|
315
|
45%
|
400
|
46%
|
|
Industrial
|
55.8
|
11%
|
65
|
9%
|
85
|
10%
|
|
Other
|
9.1
|
2%
|
25
|
4%
|
40
|
5%
|
|
Total
|
528.4
|
100%
|
700
|
100%
|
870
|
100%
|
|
Operating
income
|
Imaging
|
-6.8
|
-16%
|
18
|
21%
|
25
|
21%
|
|
Medical
|
57.2
|
135%
|
67
|
79%
|
89
|
74%
|
|
Industrial
|
0.5
|
1%
|
5
|
6%
|
10
|
8%
|
|
Other
|
-2.8
|
-7%
|
0
|
0
|
1
|
1%
|
|
Head office
costs
|
-5.8
|
-14%
|
-5
|
|
-5
|
-4%
|
|
Total
|
42.3
|
100%
|
85
|
100%
|
120
|
100%
|
|
Operating income on
net sales
|
8%
|
12%
|
14%
|
|
ROE
|
5%
|
14%
|
16%
|
|
| Unit: Yen (billions) Exchange rate assumptions: US$ = 120 yen, EURO = 105 yen |
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| Strategy for Each Group |
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| Imaging Systems Group |
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Establishment of the world's highest product quality and lowest cost production |
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Collaboration with dealers and speedy operations |
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Strengthening of peripheral products business and new businesses launch |
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| The Imaging Systems Group aims to establish the earnings base through improving quality and reducing costs by applying the successful business model for conventional film cameras into digital cameras. The business model is a production system in which product development and production technology development are conducted in Japan and mass production is operated in China. It will also create a rapidly moving business structure that can respond to market changes by deepening its collaboration with distributors and utilizing information systems. Through these measures, it aims to become a major global brand with a 25% share of the world market for conventional film cameras, and a 20% share for digital cameras. |
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| Medical Systems Group |
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Becoming a total system supplier from basic medicine to clinical medicine |
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Growth and expansion of current business, and new businesses launch |
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The Medical Systems Group will expand the peripheral businesses of its gastrointestinal endoscope business, which is the mainstay of Olympus, and which accounts for approximately 80% of the global market. It will position Surgical, Endo-therapeutic and Ultrasonic fields so-called "Minimally Invasive Product" as growing business, and develop proactive strategies including alliances with other companies and OEM businesses. In addition to a solid earnings expansion in the endoscope-related businesses, it will seek further growth as a total system supplier across the spectrum from basic medicine to the clinical sector through synergies with the Scientific Equipment (biological microscopes), Diagnostic and Genome Medical businesses.
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|
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| Industrial Systems Group |
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Become Olympus' third pillar, based on the industrial equipment business |
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Construction of a direct-link-to-customers business model |
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|
The Industrial Systems Group is positioning industrial microscopes (including semiconductor and LCD inspection equipment) and industrial endoscopes as growth businesses, and it will establish a direct-link-to-customers business model to develop a business with sales of 100 billion yen, including new businesses. Specifically, it will promote the development of a solution-style business that integrates inspection technology, hardware, software and expertise, by putting together a sales and support structure to match production centers at client companies all over the world.
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| Corporate Issues to Achieve the Objectives |
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| Full Implementation of President's Strategies |
| The president's strategies of "making speed a top priority," "selection and concentration," "pursuing efficiency" and "reforming our way of thinking" will be fully implemented within the company with "Creative Destruction and Innovation" as the main theme. Olympus will carry out a continuous review of its management structure, and seek to reform its employees' ways of thinking in order to achieve a world class corporate structure. |
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| Restructuring Management System |
To further invigorate the Board of Directors, Olympus will flatten the hierarchical structure, with the exception of the president and chairman, and change the term of appointment to the Board of Directors from two years to one year. By doing this, Olympus will ensure the best management decision making and monitoring at the executive level. It will also promote a remuneration system that focuses more on performance, such as linking the remuneration of executives to business results.
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| New Businesses Launch |
Olympus is aiming for sales of 30 billion yen in genome medical businesses such as the manufacturing and sales of genetic analysis equipment, and contracted genetic analysis services in fiscal year ending March 2007 and the full-scale business development of Micro-Electro-Mechanical Systems (MEMS1), nanotechnology and other new businesses.
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| Note 1: |
Chips several millimeters in size that integrate mechanical components and electronic devices on top of a silicon substrate. |
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| Production Reform |
In the past, the company had a tendency that depended on outsourcing of production based on cost considerations, and the desire to establish businesses rapidly. However, the company will switch to a "returning to internal production" system that cultivates the necessary technology in-house. By doing this, Olympus aspires to accumulate production technology in-house that will enable the company to achieve top-level cost competitiveness, product quality and total lead time, and to incorporate added value in manufacturing.
Olympus will also promote the development of "in-house EMCS (Engineering, Manufacture & Customer Service)" primarily at its China plants, in order to make maximum use of manufacturing infrastructure and business expertise beyond boundaries of internal companies.
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| Boosting Brand Strength |
IIn order to boost the "Olympus brand" around the world, the company will actively invest 20 billion yen over five years centered on the digital camera sector that has the biggest impact on ordinary people. By doing this, in addition to establishing Olympus as a top brand in the digital camera sector, the company is aiming to foster a corporate image brimming with vitality, growth potential and dynamism.
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(Cautionary Statement with respect to Forward-Looking Statements)
This report contains forward-looking statements that reflect management's current view, plans, and expectations. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Olympus' actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by forward-looking statements.
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*Olympus Optical Co., Ltd. was changed to OLYMPUS CORPORATION as of October 1, 2003.
