Omron’s Margins Are Poised To Recover as new Products and MRO Services Gain Traction

Omron's sensing and control-related technologies cover a broad spectrum, but we expect its profit drivers to be its industrial automation and healthcare businesses. The firm is one of the leading domestic players in the factory automation control equipment market (which include programmable logic controllers, relays, sensors, and switches). As the main driver, we expect the industrial automation segment is well positioned for secular growth, driven by an aging population in developed markets, increasing labor costs, and production 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 increased its product line, allowing the firm to provide tailored automation solutions to customers.