Industrial Automation Business Will Drive Wide-Moat Omron's Medium-Term Revenue Growth

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 boasts the leading domestic share in the control-related factory automation, or FA, equipment market (40% including programmable logic controllers, or PLCs, relays, sensors, switches, and other control equipment). 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.