Company Reports

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 global players in the factory automation control and inspection equipment market (which includes programmable logic controllers, relays, sensors, and switches). As the main driver, we expect the industrial automation segment to be 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.

Omron's June-quarter revenue rose 26% year on year to JPY 210 billion, led by a 37% increase in industrial automation sales. Operating profit more than tripled to JPY 18.9 billion, with IAB operating margin reaching 16.2%. Shares rose 15% on Aug. 6, 2026.

Omron reported fiscal 2025 (ended March 2026) sales of JPY 767 billion, up 7% year on year excluding device and module solutions, or DMB. Industrial Automation, or IAB, sales rose 12% to JPY 409 billion. Fiscal 2026 guidance targets 7% sales growth and 7.6% operating margin.

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.

Omron posted third-quarter sales growth of 8% year on year, led by a 10% increase in industrial automation, or IAB, sales. Operating margin was 7.3%, down 0.8 percentage point from a year ago. Omron raised sales guidance by 1% for fiscal 2025 (ending March 2026). Shares are up 8% intraday Feb. 6.

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.

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.

Omron's September-quarter sales rose 6.8% year on year, while operating profit fell 12.5% year on year. Sales from industrial automation grew 6% year on year with an 8.4% operating margin, down 3.1 percentage points from a year ago. Shares dropped nearly 10% after the announcement.

We are transferring coverage of Omron, a leading global provider of industrial automation, healthcare, and social systems solutions. With decades of expertise in sensors, controllers, and medical devices, Omron leverages technology and customer trusts to drive growth and resilient profitability.

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.

Omron's June-quarter sales rose 3.1% year on year, with the operating margin at 3.4%. Industrial automation grew 10.5% yearly, offsetting a 17.9% yearly decline in healthcare, or HCB. The company maintained its fiscal 2025 (ending March 2026) sales growth guidance of 2.3%-4.1%.

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.

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.

Omron's fiscal 2024 (ending March 2025) sales declined 2% yearly, following a 7% yearly decline in fiscal 2023. The company guided its fiscal 2025 sales to grow by 4.3% yearly to JPY 835 billion, assuming growth of 2.8% in the industrial automation business.

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.

We maintain our fair value estimate of JPY 7,400 for wide-moat Omron as our midterm outlook for the company’s margin expansion remains intact. While revenue dropped by 1% year on year in the December quarter, operating profit margin improved to 8.1%, an improvement for four consecutive quarters after bottoming out at 2.9% in the same period last year. We attribute the strong recovery in profitability to enhanced structural reforms, including reducing staff and product/region mix optimization and we see the margin improvement continuing as demand gradually recovers and the utilization rate continues to rise. We see the companywide operating profit margin improving further to 9% in fiscal 2025 from 7% in fiscal 2024 and eventually increasing to 11.7% in fiscal 2028 as Omron achieves better inventory management and better mix shift to high value-added products in the future. We think the company’s shares are substantially undervalued as the market is skeptical of the company’s ambitious plan of achieving historical JPY 90 billion operating profits by fiscal 2026. However, we have a higher conviction on Omron’s guidance given the significant efficiency improvements in the past several quarters.

Wide-moat Omron’s fiscal second-quarter revenue was down 3% year on year and below our expectations, largely offset by better-than-expected operating margin of 6.8%, up 3.6 percentage points year on year and above our expectation of 4.9%. This was largely due to the industrial automation business, or IAB, whose revenue declined 11%, worse than our forecast of a 7.5% decline, on the back of a delayed electric vehicle investment schedule and slack lithium battery production due to the oversupply issue in China. On the other hand, IAB’s operating margin improved 3.1 percentage points to 11.5% from 8.4% in the June quarter and above our expectation of 9.6%, suggesting that the company’s structural reform plan on workforce reduction is working well.

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.

As expected, Omron’s industrial automation business, or IAB, continues to face headwinds, leading to a 10% year on year companywide revenue decline in the June quarter, due to sluggish factory automation demand in key markets like China. However, its operating margin of 3.4%, down from 7.0% in the previous year, was slightly better than expected due to progress in IAB’s restructuring initiatives. As we expect further cost cuts, we slightly raise our operating margin assumption for fiscal 2024 (ending March 2025) to 6.4% from 6.1%, but our longer-term outlook remains largely unchanged; therefore, we maintain our fair value estimate at JPY 7,500. We believe the market underestimates the company’s operating margin recovery from fiscal 2025, which we project to increase to 9.1%, driven by improved capacity utilization and IAB's sales growth for electronics/semiconductor and electric vehicle-related applications, which have high profitability.

Omron’s March-quarter results and full-year guidance for fiscal 2024 (ends March 2025) show signs of a recovery in the operating margin of its industrial automation business, or IAB. However, due to slower channel inventory adjustments, we cut our fiscal 2024 operating income forecast to JPY 52 billion from JPY 68 billion, assuming a 4% revenue growth and 6.1% operating margin. As such, we lower our fair value estimate to JPY 7,500 per share from JPY 8,000. Nevertheless, we believe Omron’s shares are undervalued as the market underestimates IAB’s medium-term margin expansion, driven by improved capacity utilization and a favorable product mix from increased automation solutions to the electronics/semiconductor and automotive industries.