Omron Affected by Weakening Industrial Automation Demand, but Expect Medium-Term Recovery

Omron uses its sensing and control-related technologies to cover a broad spectrum of fields, and its core focus will be in industrial automation and healthcare. The firm is one of the leading domestic players in the factory automation, or FA, control equipment market (which include programmable logic controllers, relays, sensors, and switches). It also has the leading global share with its home-use blood pressure monitors, BPMs, at a 50% share. As the main driver, we expect the industrial automation segment is well-positioned for secular growth, driven by an aging population, increasing labor costs in key Asian markets, and the coronavirus exposing manufacturers to risks related to supply chain contingency/continuity and safety. As trends related to the "Internet of Things" gain prominence, automation equipment such as PLCs will be required to connect to networks/databases in factories. Also, Omron’s recent acquisitions allowed it to expand its product line, as the firm continues to focus on providing automation solutions to customers, based on its products.