Omron Corp. announced on Tuesday that it will embark on a new two-year restructuring program after chalking up consolidated net profits of 2.15 billion yen in the first half of fiscal 2001, down 73.8 percent from a year earlier.
The program will include pay cuts of 10 percent to 20 percent for board members and corporate officers, the closure or merger of more than five domestic plants, and an increase in overseas production, especially in China, the company said.
Omron attributed the weak showing to the slump in the global information technology industry, which sapped demand for the Kyoto-based company's mainstay automated control equipment.
Lower stock prices also ate into profits by forcing Omron to register valuation losses under new mark-to-market accounting rules.
The company said net profit per share in the April-September period plummeted from 32.03 yen to 8.67 yen.
Omron's interim group results, calculated in line with U.S. accounting criteria, also include a pretax profit of 3.58 billion yen, down 76.1 percent, on a 5.7 percent fall in sales to 256.18 billion yen.
For the entire fiscal year, Omron anticipates a consolidated net loss of 5 billion yen, a sharp downward revision from its August forecast of 15 billion yen in net profit.
Omron also foresees a consolidated pretax loss of 8 billion yen on group sales of 550 billion yen, down from a pretax profit of 25 billion yen and sales of 570 billion yen in the August projection.
Omron downwardly revised its annual earnings estimate on the grounds that the market for automated control equipment is unlikely to pick up until after the second half of fiscal 2002.
In addition, the company anticipates an increase in valuation losses on shareholdings and registration of losses resulting from operational restructuring.
In fiscal 2000, the company posted consolidated net and pretax profits of 22.30 billion yen and 40.04 billion yen on group sales of 594.26 billion yen.