IDEC Corporation is a comprehensive manufacturer and vendor of control equipment, especially human-machine interface (HMI) devices such as switches. The company’s products have a wide range of applications, being used for example in robots, machine tools, semiconductor manufacturing equipment, and operational control panels for production lines in factories. It has the largest share of the pushbutton switch market in Japan at about 50% (according to company research; the same applies for other market share figures), including a 68% share of the domestic emergency stop switch market. In addition, it holds the third largest share of the global switch market, including pushbuttons (nearly 10% share), putting it behind Schneider Electric SE (France, EU: SU) and Rockwell Automation, Inc. (US, NYSE: ROK). In 2017, IDEC increased its market share with the acquisition of major switch manufacturer APEM (France). Further, in the field of safety equipment, one of its focus areas, IDEC has the largest share (over 80%) of the global three-position enabling switch market.

Of the JPY54.0bn in revenue recorded in FY03/21, Industrial Switches accounted for 46.4%, Industrial Relays & Components (including control panels and other internal control components for production facilities) for 18.2%, Automation & Sensing (including programmable logic controllers) for 15.2%, Safety & Explosion Protection (including safety-related equipment such as enabling switches and equipment related to explosion protection used at sites where flammable gases are generated) for 12.1%, and Systems and Others for 8.2%. Although IDEC does not disclose profit data for individual businesses, Shared Research estimates the profit margins for Industrial Switches (including pushbutton switches) and Safety & Explosion Protection (including enabling switches), two businesses where the company has a majority market share, exceed the companywide average (OPM of 7.5% in FY03/21).

Since its founding in 1945 (corporate name changed from Izumi Denki to IDEC in 2005), the company has utilized core technologies cultivated through the development of control equipment—such as operator switches for machinery—to realize and pursue safety, “anshin” (a sense of trust and assurance without any fear or stress), and well-being for users, protecting them even in unforeseen circumstances, since it understands that people can make mistakes and machines can break down. In the course of developing its businesses, IDEC pioneered the use of plastic switches in Japan starting in the 1950s. The company achieved mass production and multi-product, variable-volume production using its proprietary mold design technology and automatic production equipment it developed itself. In addition, it ensures the quality of custom products and supplies a wide range of product variations.

IDEC annually produces and ships more than 20mn switches for control equipment alone, mainly by planned production, but also with some made-to-order production. For the latter, lead time is typically three to six months, depending on the product. For the planned production portion, the company reviews its production plans as needed, based on past order data. It carries out production in Japan, Taiwan, China, and Thailand (not including APEM products). Although production declined in FY03/21 due to the COVID-19 pandemic, it has recovered nearly to full capacity in FY03/22.

Roughly 80% of the company’s sales are through distributors, with the remainder being direct sales. Both sales through distributors and direct sales are B2B, with no sales to general consumers. When selling through distributors, the company’s sales staff make proposals of equipment and production facilities from the design stage, and once they receive an order, the products are delivered from distributors’ inventory.

In addition to the expertise and customer trust the company has cultivated since its founding, the safety technology and the quality of the company’s switches, as evidenced by a track record of preventing hazards (failure or malfunction), have led to IDEC’s sizable market share. In particular, the company’s products are used by automotive makers who are increasingly automating their production lines, along with machine tool and semiconductor manufacturers. They are also widely installed in various robots and factory automation devices that support production line automation (IDEC’s share of the emergency stop switch market in Japan is approximately 68%).

The company has pioneered HMI technology (such as technology for operating machines via switches) that has become common across numerous industries. Typical HMI products include switches, touch screens, and pilot lights used in machine operation. In order for people to safely operate machines, it is crucial that these HMI products do not malfunction or break. IDEC has worked to raise safety awareness and has integrated “ease of use” into its definition of quality, and its efforts have helped it gain the trust of major manufacturers such as Toyota Motor Corporation (TSE1: 7203).

The company is working to enhance its sales efforts by providing solutions that encompass its mainstay switches and other control equipment to customers’ technical challenges. The products handled by IDEC’s various businesses, especially Industrial Relays & Components and Automation & Sensing, are important tools when making such proposals. For this reason, the company believes its proposal-based sales approach should be viewed as an integration of all its businesses.

In FY03/21, Japan accounted for 45.6% of IDEC’s consolidated revenue, while overseas operations accounted for 54.4%, with the Americas at 15.8%, EMEA (Europe, the Middle East, and Africa) at 16.4%, and Asia Pacific (excluding Japan) at 22.2%. The company began overseas expansion in the 1970s, but focused mainly on the Americas and Asia, so it had only a slight presence in Europe. To remedy this situation, it acquired the major industrial switch manufacturer APEM SAS (France) in 2017, and its portfolio is now fairly balanced among the Americas, Europe, and Asia. However, in FY03/21, IDEC reported operating profit of JPY2.0bn in Japan (profit margin of 7.5%), JPY544mn in the Americas (6.3%), and JPY1.5bn in Asia (16.4%), but operating loss of JPY252mn in EMEA, where the pandemic had a substantial impact. The main reason the profit margin is high in Asia (excluding Japan) is that the Japan business shoulders the R&D costs.

Costs related to materials (including subcontracted processing costs) make up the bulk of production costs at about 70%, while labor accounts for roughly 20% and other manufacturing expenses such as depreciation for about 10%. Main raw materials are resins, copper, and silver, but the company obtains almost all materials through in-house procurement.

IDEC is focusing on the Safety & Explosion Protection business and the System business with a view to future growth. It aims to ensure safety in companies’ production lines where humans and machines work together and to provide control equipment and systems that can be used in areas where flammable liquids and gases are present. IDEC has strengthened its human resource development in regard to safety by encouraging employees to acquire certifications. This has resulted in a large number of qualified safety assessors knowledgeable in safe machinery and equipment design. It raises safety awareness by holding seminars and consultations encouraging safe manufacturing equipment design and production line management and promotes proposals for safety measures using equipment and systems that incorporate its control equipment.

Earnings trends

For FY03/22, the company reported revenue of JPY70.8bn (+31.1% YoY), operating profit of JPY9.7bn (about 2.4x YoY), recurring profit of JPY10.4bn (about 2.5x YoY), and net income of JPY7.9bn (about 2.8x YoY), with EPS of JPY264.1. Revenue and all profit lines reached record highs on the back of increased orders, especially in the mainstay Industrial Switches business. In particular, the operating profit margin rose to 13.7%, the highest level for 16 years, highlighting the company's improved profitability. The annual dividend is expected to be JPY100.0/share (ordinary dividend of JPY80.0/share and commemorative dividend of JPY20.0/share). This is a 100% increase on the JPY50.0/share paid in FY03/21. Based on the company plan, the dividend payout ratio is expected to be 37.9% (53.9% in FY03/21).

For FY03/23, the company forecasts revenue of JPY74.5bn (+5.2% YoY), operating profit of JPY10.8bn (+11.7% YoY), recurring profit of JPY10.8bn (+3.9% YoY), and net income of JPY7.5bn (-5.0% YoY). Forecast EPS is JPY250.9. The company plans a second consecutive year of record revenue, operating and recurring profit, and also expects a record OPM of 14.5%. The company assumes an exchange rate of JPY120/USD and JPY130/EUR. The company plans to pay an annual dividend of JPY100.0/share (JPY100.0/share in FY03/22). However, since FY03/22 includes a commemorative dividend of JPY20.0/share, the company is actually planning to increase the ordinary dividend. Based on the company's forecast, the dividend payout ratio will be 39.9% (37.9% in FY03/22).

On May 13, 2022, the company announced a new medium-term management plan covering the next three years (FY03/23–FY03/25). Under the new plan, the company aims to achieve revenue of at least JPY80.0bn (JPY70.8bn in FY03/22), operating profit of at least JPY13.0bn (JPY9.7bn in FY03/22) and an OPM of at least 16% (13.7%), based on four core strategies: 1) implementation of growth strategy; 2) improvement of profitability; 3) strengthening of management base; 4) strengthening of ESG initiatives. The company also announced a long-term objective of achieving an OPM of 20%.

Strengths and weaknesses

Shared Research views the company’s strengths as the following.

Has established a position as a leading niche manufacturer of pushbutton switches using contact technology with safety warranty and products lineups responding to various needs

Has established a multi-product and variable-volume production system thanks to technology for designing and producing complex and precise molds, and efficient operation achieved with automated production equipment developed in-house

Carries control equipment other than switches, increasing added value to its switches and making it possible to propose solutions to customer needs

However, we view the company’s weaknesses as the following.

High share of switch market has in some respects hindered the company’s introduction of new killer content

Control equipment other than switches contributes value-added to switches, but are less competitive on their own, weighing on overall profitability

Evolution of HMI, including expanded use of touch screens, may constrain the company’s growth

Key financial data

Income statement		FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Est.
Revenue		36,319	42,173	43,468	43,426	59,783	62,757	58,355	53,983	70,789	74,500
	YoY	23.8%	16.1%	3.1%	-0.1%	37.7%	5.0%	-7.0%	-7.5%	31.1%	5.2%
Gross profit		15,406	17,117	18,017	18,027	26,022	26,973	25,040	22,783	30,310	32,500
	YoY	17.9%	11.1%	5.3%	0.1%	44.4%	3.7%	-7.2%	-9.0%	33.0%	7.2%
	Gross profit margin	42.4%	40.6%	41.4%	41.5%	43.5%	43.0%	42.9%	42.2%	42.8%	43.6%
SG&A expenses		13,063	14,207	14,841	14,479	19,909	21,244	20,336	18,742	20,638	21,700
	YoY	12.4%	8.8%	4.5%	-2.4%	37.5%	6.7%	-4.3%	-7.8%	10.1%	5.1%
	SG&A ratio	36.0%	33.7%	34.1%	33.3%	33.3%	33.9%	34.8%	34.7%	29.2%	29.1%
Operating profit		2,342	2,910	3,176	3,547	6,112	5,728	4,704	4,041	9,672	10,800
	YoY	63.3%	24.3%	9.1%	11.7%	72.3%	-6.3%	-17.9%	-14.1%	139.3%	11.7%
	Operating profit margin	6.4%	6.9%	7.3%	8.2%	10.2%	9.1%	8.1%	7.5%	13.7%	14.5%
Recurring profit		2,482	3,160	3,182	3,357	6,484	5,849	4,613	4,104	10,398	10,800
	YoY	46.3%	27.3%	0.7%	5.5%	93.1%	-9.8%	-21.1%	-11.0%	153.4%	3.9%
	Recurring profit margin	6.8%	7.5%	7.3%	7.7%	10.8%	9.3%	7.9%	7.6%	14.7%	14.5%
Net income		1,456	2,096	1,708	2,440	5,296	3,700	3,006	2,803	7,896	7,500
	YoY	-21.7%	44.0%	-18.5%	42.9%	117.0%	-30.1%	-18.8%	-6.8%	181.7%	-5.0%
	Net margin	4.0%	5.0%	3.9%	5.6%	8.9%	5.9%	5.2%	5.2%	11.2%	10.1%
Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)		38,224	38,224	38,224	38,224	33,224	33,224	33,224	33,224	33,224	-
EPS (JPY)		69.5	69.5	56.5	80.7	170.4	112.5	95.2	92.8	264.1	250.9
EPS (fully diluted; JPY)		49.0	69.3	56.5	80.7	170.1	112.5	95.2	92.8	263.7	-
Dividend per share (JPY)		30.0	35.0	36.0	40.0	50.0	50.0	50.0	50.0	100.0	100.0
Book value per share (JPY)		959.6	1,062.5	1,057.3	1,102.2	1,370.0	1,383.2	1,365.7	1,432.4	1,677.5	-
Balance sheet (JPYmn)
	Cash and cash equivalents	8,876	8,836	11,643	12,774	13,403	14,170	15,298	16,783	17,896
Total current assets		23,683	26,212	27,738	35,936	39,873	38,870	38,193	39,815	47,171
Tangible fixed assets		18,903	19,867	18,151	19,448	19,690	19,885	20,855	22,093	22,227
Intangible assets		851	831	771	25,002	28,631	26,565	24,373	23,665	22,691
Investments and other assets		2,339	2,467	2,666	2,693	3,334	3,710	3,602	2,677	2,870
Total assets		45,778	49,378	49,328	83,080	91,530	89,032	87,025	88,252	94,960
	Short-term debt	6,107	6,602	5,399	32,081	12,971	11,182	17,028	7,908	6,265
Total current liabilities		14,893	15,345	15,682	44,662	26,953	22,804	19,140	18,959	21,660
	Long-term debt	157	413	245	3,153	14,608	15,611	12,014	21,209	19,222
Total fixed liabilities		1,856	1,687	1,441	4,794	19,284	20,684	25,096	26,180	24,291
Total liabilities		16,749	17,032	17,124	49,457	46,237	43,488	44,236	45,140	45,951
	Shareholders' equity	28,802	32,122	31,977	33,356	45,006	45,510	42,725	42,963	48,660
Total net assets		29,029	32,345	32,204	33,623	45,292	45,544	42,788	43,111	49,008
Total interest-bearing debt		6,264	7,015	5,644	35,234	27,579	26,793	29,042	29,117	25,487
Cash flow statement(JPYmn)
Cash flows from operating activities		4,633	1,925	5,690	2,644	4,926	6,119	6,928	7,443	9,652
Cash flows from investing activities		-2,493	-1,169	-18	-21,190	-858	-2,665	-2,037	-3,147	-1,386
Cash flows from financing activities		-1,929	-891	-2,611	19,929	-3,926	-2,878	-3,605	-3,672	-8,578
Financial ratios
ROA (RP-based)		5.6%	6.6%	6.4%	5.1%	7.4%	6.5%	5.2%	4.7%	11.4%
ROE		5.2%	6.9%	5.3%	7.5%	13.5%	8.2%	6.8%	6.5%	17.2%
Equity ratio		62.9%	65.1%	64.8%	40.1%	49.2%	51.1%	49.1%	48.7%	51.2%
R&D expenses		1,857	2,110	2,328	2,242	2,202	2,359	2,325	2,343	2,593	2,800
Capital expenditures		2,277	1,761	1,500	2,103	1,991	4,122	2,673	3,567	2,503	3,000
Depreciation		1,699	1,677	1,519	1,141	2,398	2,701	3,016	2,981	3,264	3,600

Source: Shared Research based on company materials
Note: Figures may differ from company data due to differences in rounding methods.

Trends and outlook

Quarterly trends and results

Cumulative		FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue		12,837	25,387	39,138	53,983	17,270	34,856	52,255	70,789	102.6%	69,000
	YoY	-12.3%	-14.8%	-11.2%	-7.5%	34.5%	37.3%	33.5%	31.1%		27.8%
Gross profit		5,407	10,779	16,520	22,783	7,300	14,919	22,434	30,310	102.7%	29,500
	YoY	-13.8%	-15.8%	-12.7%	-9.0%	35.0%	38.4%	35.8%	33.0%		29.5%
	Gross profit margin	42.1%	42.5%	42.2%	42.2%	42.3%	42.8%	42.9%	42.8%		42.8%
SG&A expenses		4,561	9,153	13,760	18,742	4,999	10,066	15,239	20,638	101.7%	20,300
	YoY	-11.8%	-11.0%	-9.6%	-7.8%	9.6%	10.0%	10.7%	10.1%		8.3%
	SG&A ratio	35.5%	36.1%	35.2%	34.7%	28.9%	28.9%	29.2%	29.2%		29.4%
Operating profit		845	1,626	2,760	4,041	2,300	4,853	7,194	9,672	105.1%	9,200
	YoY	-23.0%	-35.4%	-25.5%	-14.1%	172.2%	198.5%	160.7%	139.3%		127.7%
	Operating profit margin	6.6%	6.4%	7.1%	7.5%	13.3%	13.9%	13.8%	13.7%		13.3%
Recurring profit		806	1,519	2,649	4,104	2,436	5,022	7,491	10,398	113.0%	9,200
	YoY	-23.5%	-37.9%	-28.6%	-11.0%	202.2%	230.6%	182.8%	153.4%		124.2%
	Recurring profit margin	6.3%	6.0%	6.8%	7.6%	14.1%	14.4%	14.3%	14.7%		13.3%
Net income		570	1,090	1,589	2,803	1,799	3,526	5,303	7,896	114.4%	6,900
	YoY	-34.0%	-41.0%	-39.7%	-6.8%	215.6%	223.5%	233.7%	181.7%		146.2%
	Net margin	4.4%	4.3%	4.1%	5.2%	10.4%	10.1%	10.1%	11.2%		10.0%
Quarterly		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		12,837	12,550	13,751	14,845	17,270	17,586	17,399	18,534
	YoY	-12.3%	-17.2%	-3.7%	4.0%	34.5%	40.1%	26.5%	24.9%
Gross profit		5,407	5,372	5,741	6,263	7,300	7,619	7,515	7,876
	YoY	-13.8%	-17.7%	-6.3%	2.5%	35.0%	41.8%	30.9%	25.8%
	Gross profit margin	42.1%	42.8%	41.7%	42.2%	42.3%	43.3%	43.2%	42.5%
SG&A expenses		4,561	4,592	4,607	4,982	4,999	5,067	5,173	5,399
	YoY	-11.8%	-10.2%	-6.7%	-2.5%	9.6%	10.3%	12.3%	8.4%
	SG&A ratio	35.5%	36.6%	33.5%	33.6%	28.9%	28.8%	29.7%	29.1%
Operating profit		845	781	1,134	1,281	2,300	2,553	2,341	2,478
	YoY	-23.0%	-44.9%	-4.8%	28.5%	172.2%	226.9%	106.4%	93.4%
	Operating profit margin	6.6%	6.2%	8.2%	8.6%	13.3%	14.5%	13.5%	13.4%
Recurring profit		806	713	1,130	1,455	2,436	2,586	2,469	2,907
	YoY	-23.5%	-48.9%	-10.6%	61.3%	202.2%	262.7%	118.5%	99.8%
	Recurring profit margin	6.3%	5.7%	8.2%	9.8%	14.1%	14.7%	14.2%	15.7%
Net income		570	520	499	1,214	1,799	1,727	1,777	2,593
	YoY	-34.0%	-47.2%	-36.7%	229.0%	215.6%	232.1%	256.1%	113.6%
	Net margin	4.4%	4.1%	3.6%	8.2%	10.4%	9.8%	10.2%	14.0%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Earnings by region			FY03/21				FY03/22				FY03/22
Cumulative (JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue			12,837	25,387	39,138	53,983	17,270	34,856	52,255	70,789	102.6%	69,000
	YoY		-12.3%	-14.8%	-11.2%	-7.5%	34.5%	37.3%	33.5%	31.1%		27.8%
	Japan		6,331	12,744	19,602	27,209	8,106	16,311	24,895	34,045
		YoY	-13.0%	-15.6%	-13.7%	-10.5%	28.0%	28.0%	27.0%	25.1%
	The Americas		2,003	3,999	6,369	8,681	2,712	5,731	8,426	11,560
		YoY	-19.6%	-17.9%	-10.0%	-8.4%	35.4%	43.3%	32.3%	33.2%
	EMEA		2,263	4,105	6,411	8,831	3,059	6,108	8,940	11,940
		YoY	-22.3%	-27.9%	-19.8%	-14.9%	35.2%	48.8%	39.4%	35.2%
	Asia Pacific		2,238	4,538	6,753	9,260	3,392	6,705	9,993	13,244
		YoY	14.5%	9.5%	7.0%	14.3%	51.6%	47.8%	48.0%	43.0%
Operating profit			845	1,626	2,760	4,041	2,300	4,853	7,194	9,672	105.1%	9,200
	YoY		-23.0%	-35.4%	-25.5%	-14.1%	172.2%	198.5%	160.7%	139.3%		127.7%
	Operating profit margin		6.6%	6.4%	7.1%	7.5%	13.3%	13.9%	13.8%	13.7%
	Japan		477	795	1,319	2,033	1,163	2,265	3,482	4,833
		YoY	-7.6%	-41.1%	-33.6%	-19.9%	143.8%	184.9%	164.0%	137.7%
		Operating profit margin	7.5%	6.2%	6.7%	7.5%	14.3%	13.9%	14.0%	14.2%
	The Americas		49	80	362	544	352	866	1,160	1,540
		YoY	-66.4%	-64.9%	1.7%	0.0%	618.4%	982.5%	220.4%	183.1%
		Operating profit margin	2.4%	2.0%	5.7%	6.3%	13.0%	15.1%	13.8%	13.3%
	EMEA		-81	-222	-220	-252	137	263	446	636
		YoY	-	-	-	-	-	-	-	-
		Operating profit margin	-3.6%	-5.4%	-3.4%	-2.9%	4.5%	4.3%	5.0%	5.3%
	Asia Pacific		373	863	1,183	1,517	594	1,338	1,941	2,532
		YoY	119.4%	113.1%	76.8%	87.3%	59.2%	55.0%	64.1%	66.9%
		Operating profit margin	16.7%	19.0%	17.5%	16.4%	17.5%	20.0%	19.4%	19.1%
	Adjustments		26	109	116	198	51	119	164	129
Earnings by region			FY03/21				FY03/22
Quarterly (JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue			12,837	12,550	13,751	14,845	17,270	17,586	17,399	18,534
	YoY		-12.3%	-17.2%	-3.7%	4.0%	34.5%	40.1%	26.5%	24.9%
	Japan		6,331	6,413	6,858	7,607	8,106	8,205	8,584	9,150
		YoY	-13.0%	-18.0%	-9.9%	-1.2%	28.0%	27.9%	25.2%	20.3%
	The Americas		2,003	1,996	2,370	2,312	2,712	3,019	2,695	3,134
		YoY	-19.6%	-16.1%	7.5%	-3.8%	35.4%	51.3%	13.7%	35.6%
	EMEA		2,263	1,842	2,306	2,420	3,059	3,049	2,832	3,000
		YoY	-22.3%	-33.7%	0.3%	1.5%	35.2%	65.5%	22.8%	24.0%
	Asia Pacific		2,238	2,300	2,215	2,507	3,392	3,313	3,288	3,251
		YoY	14.5%	5.1%	2.2%	40.2%	51.6%	44.0%	48.4%	29.7%
Operating profit			845	781	1,134	1,281	2,300	2,553	2,341	2,478
	YoY		-23.0%	-44.9%	-4.8%	28.5%	172.2%	226.9%	106.4%	93.4%
	Operating profit margin		6.6%	6.2%	8.2%	8.6%	13.3%	14.5%	13.5%	13.4%
	Japan		477	318	524	714	1,163	1,102	1,217	1,351
		YoY	-7.6%	-61.9%	-17.7%	29.3%	143.8%	246.5%	132.3%	89.2%
		Operating profit margin	7.5%	5.0%	7.6%	9.4%	14.3%	13.4%	14.2%	14.8%
	The Americas		49	31	282	182	352	514	294	380
		YoY	-66.4%	-62.2%	120.3%	-3.2%	618.4%	1,558.1%	4.3%	108.8%
		Operating profit margin	2.4%	1.6%	11.9%	7.9%	13.0%	17.0%	10.9%	12.1%
	EMEA		-81	-141	2	-32	137	126	183	190
		YoY	-	-	-98.4%	-	-	-	9,050.0%	-
		Operating profit margin	-3.6%	-7.7%	0.1%	-1.3%	4.5%	4.1%	6.5%	6.3%
	Asia Pacific		373	490	320	334	594	744	603	591
		YoY	119.4%	108.5%	21.2%	136.9%	59.2%	51.8%	88.4%	76.9%
		Operating profit margin	16.7%	21.3%	14.4%	13.3%	17.5%	22.5%	18.3%	18.2%
	Adjustments		26	83	7	82	51	68	45	-35

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Revenue by product category			FY03/21				FY03/22				FY03/22
Cumulative (JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue			12,837	25,387	39,138	53,983	17,270	34,856	52,255	70,789	102.6%	69,000
	YoY		-12.3%	-14.8%	-11.2%	-7.5%	34.5%	37.3%	33.5%	31.1%		27.8%
	Industrial Switches		6,203	11,834	18,329	25,054	8,115	16,340	24,542	33,191	102.4%	32,400
		YoY	-12.5%	-17.2%	-12.2%	-8.3%	30.8%	38.1%	33.9%	32.5%		29.3%
	Industrial Relays & Components		2,491	4,783	7,253	9,803	3,264	6,724	10,062	13,625	98.0%	13,900
		YoY	-3.2%	-9.7%	-6.7%	-5.2%	31.0%	40.6%	38.7%	39.0%		41.8%
	Automation & Sensing		1,629	3,604	5,769	8,203	2,499	5,074	7,527	9,958	108.2%	9,200
		YoY	-22.8%	-21.7%	-12.9%	-8.4%	53.4%	40.8%	30.5%	21.4%		12.2%
	Safety & Explosion Protection		1,595	3,086	4,704	6,513	2,085	4,316	6,549	8,908	104.8%	8,500
		YoY	0.7%	-6.6%	-4.8%	-2.2%	30.7%	39.9%	39.2%	36.8%		30.5%
	Systems		724	1,630	2,405	3,516	901	1,755	2,645	3,742	93.6%	4,000
		YoY	13.5%	15.6%	9.9%	15.4%	24.4%	7.7%	10.0%	6.4%		13.8%
	Other		193	448	675	891	403	644	928	1,363	136.3%	1,000
		YoY	-69.6%	-49.8%	-59.6%	-55.9%	108.8%	43.8%	37.5%	53.0%		12.2%
Revenue by product category			FY03/21				FY03/22
Quarterly (JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue			12,837	12,549	13,750	14,845	17,270	17,585	17,399	18,533
	YoY		-12.3%	-17.3%	-3.7%	4.0%	34.5%	40.1%	26.5%	24.8%
	Industrial Switches		6,203	5,630	6,495	6,725	8,115	8,225	8,201	8,648
		YoY	-12.5%	-21.8%	-1.4%	4.2%	30.8%	46.1%	26.3%	28.6%
	Industrial Relays & Components		2,491	2,292	2,469	2,550	3,264	3,459	3,338	3,563
		YoY	-3.2%	-15.8%	-0.4%	-0.5%	31.0%	50.9%	35.2%	39.7%
	Automation & Sensing		1,629	1,975	2,164	2,433	2,499	2,574	2,453	2,431
		YoY	-22.8%	-20.8%	7.1%	4.3%	53.4%	30.3%	13.4%	-0.1%
	Safety & Explosion Protection		1,595	1,491	1,618	1,808	2,085	2,231	2,232	2,359
		YoY	0.7%	-13.4%	-1.0%	5.3%	30.7%	49.6%	37.9%	30.5%
	Systems		724	906	775	1,111	901	853	890	1,097
		YoY	13.5%	17.5%	-0.6%	29.6%	24.4%	-5.8%	14.8%	-1.3%
	Other		193	254	227	215	403	240	293	434
		YoY	-69.6%	-1.2%	-70.8%	-38.7%	108.8%	-5.5%	29.1%	101.9%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.
Note: From Q1 FY03/22, the company has made some changes to product categories. This table reflects retroactive adjustments from FY03/21 onward.

Revenue by destination				FY03/21				FY03/22				FY03/22
Cumulative (JPYmn)				Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue				12,837	25,387	39,138	53,983	17,270	34,856	52,255	70,789	102.6%	69,000
	YoY			-12.3%	-14.8%	-11.2%	-7.5%	34.5%	37.3%	33.5%	31.1%		27.8%
	Japan			5,732	11,499	17,626	24,638	7,343	14,649	22,477	30,904	105.5%	29,300
		YoY		-13.8%	-17.2%	-16.0%	-12.1%	28.1%	27.4%	27.5%	25.4%		18.9%
	Overseas			7,105	13,887	21,511	29,344	9,926	20,206	29,778	39,885	100.5%	39,700
		YoY		-11.1%	-12.8%	-6.9%	-3.2%	39.7%	45.5%	38.4%	35.9%		35.3%
		The Americas		1,971	3,897	6,219	8,509	2,715	5,725	8,411	11,532
			YoY	-18.0%	-17.6%	-9.5%	-7.5%	37.7%	46.9%	35.2%	35.5%
		EMEA		2,257	4,103	6,452	8,869	2,975	5,972	8,744	11,747
			YoY	-22.9%	-28.0%	-19.5%	-13.7%	31.8%	45.6%	35.5%	32.5%
		Asia Pacific		2,876	5,887	8,840	11,965	4,234	8,509	12,621	16,604
			YoY	8.2%	7.3%	7.5%	10.4%	47.2%	44.5%	42.8%	38.8%
Revenue by destination				FY03/21				FY03/22
Quarterly (JPYmn)				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue				12,837	12,549	13,750	14,845	17,270	17,585	17,399	18,534
	YoY			-12.3%	-17.3%	-3.7%	4.0%	34.5%	40.1%	26.5%	24.9%
	Japan			5,732	5,767	6,126	7,012	7,343	7,305	7,828	8,427
		YoY		-13.8%	-20.3%	-13.6%	-0.7%	28.1%	26.7%	27.8%	20.2%
	Overseas			7,105	6,782	7,623	7,832	9,926	10,280	9,571	10,107
		YoY		-11.1%	-14.4%	6.0%	8.6%	39.7%	51.6%	25.6%	29.0%
		The Americas		1,971	1,925	2,322	2,289	2,715	3,009	2,686	3,121
			YoY	-18.0%	-17.3%	8.5%	-1.8%	37.7%	56.3%	15.7%	36.3%
		EMEA		2,257	1,846	2,348	2,417	2,975	2,996	2,772	3,003
			YoY	-22.9%	-33.4%	1.5%	6.8%	31.8%	62.3%	18.1%	24.2%
		Asia Pacific		2,876	3,010	2,953	3,125	4,234	4,274	4,112	3,983
			YoY	8.2%	6.5%	7.9%	19.4%	47.2%	42.0%	39.2%	27.5%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Orders			FY03/21				FY03/22				FY03/22
Cumulative (JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Orders			12,863	25,718	40,188	57,864	22,795	47,347	69,779	94,452
	YoY		-10.4%	-9.1%	-4.8%	1.5%	77.2%	84.1%	73.6%	63.2%
	Japan		6,023	12,987	20,499	29,163	11,257	22,970	35,174	46,304
		YoY	-16.6%	-10.3%	-7.0%	-1.5%	86.9%	76.9%	71.6%	58.8%
	The Americas		2,135	4,316	6,604	9,187	3,530	7,405	10,952	14,641
		YoY	-9.4%	-5.6%	-1.1%	0.5%	65.3%	71.6%	65.8%	59.4%
	EMEA		2,652	4,306	6,395	8,754	3,891	8,505	11,182	14,912
		YoY	-0.4%	-15.2%	-11.8%	-9.1%	46.7%	97.5%	74.9%	70.3%
	Asia Pacific		2,052	4,107	6,690	10,759	4,114	8,465	12,469	18,594
		YoY	-3.0%	-1.5%	7.0%	25.1%	100.5%	106.1%	86.4%	72.8%
Orders			FY03/21				FY03/22
Quarterly (JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Orders			12,863	12,855	14,470	17,676	22,795	24,552	22,432	24,673
	YoY		-10.4%	-7.8%	3.9%	19.7%	77.2%	91.0%	55.0%	39.6%
	Japan		6,023	6,964	7,512	8,664	11,257	11,713	12,204	11,130
		YoY	-16.6%	-4.0%	-0.7%	14.4%	86.9%	68.2%	62.5%	28.5%
	The Americas		2,135	2,181	2,288	2,583	3,530	3,875	3,547	3,689
		YoY	-9.4%	-1.7%	8.9%	4.8%	65.3%	77.7%	55.0%	42.8%
	EMEA		2,652	1,654	2,089	2,359	3,891	4,614	2,677	3,730
		YoY	-0.4%	-31.5%	-4.1%	-0.8%	46.7%	179.0%	28.1%	58.1%
	Asia Pacific		2,052	2,055	2,583	4,069	4,114	4,351	4,004	6,125
		YoY	-3.0%	0.0%	24.0%	73.5%	100.5%	111.7%	55.0%	50.5%
Order backlog			FY03/21				FY03/22
Quarterly (JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Order backlog			10,348	10,653	11,372	14,203	19,728	26,694	31,727	37,866
	YoY		-19.6%	4.6%	15.7%	37.6%	90.6%	150.6%	179.0%	166.6%
	Japan		3,528	4,079	4,732	5,789	8,941	12,448	16,069	18,048
		YoY	-41.4%	1.8%	19.5%	50.9%	153.4%	205.2%	239.6%	211.8%
	The Americas		1,466	1,689	1,615	1,895	2,537	3,520	4,459	5,060
		YoY	-31.3%	27.7%	32.1%	48.6%	73.1%	108.4%	176.1%	167.0%
	EMEA		3,438	3,246	3,106	3,150	4,309	5,923	5,853	6,708
		YoY	29.6%	2.8%	2.6%	3.3%	25.3%	82.5%	88.4%	113.0%
	Asia Pacific		1,914	1,637	1,918	3,368	3,939	4,801	5,345	8,048
		YoY	-6.7%	-3.6%	18.4%	55.9%	105.8%	193.3%	178.7%	139.0%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Foreign exchange rates		FY03/21				FY03/22				FY03/22
		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
USD		107.63	106.96	106.11	106.10	109.52	109.81	111.14	112.40		108.00
	YoY	-2.1%	-1.5%	-2.3%	-2.4%	1.8%	2.7%	4.7%	5.9%		-2.8%
EUR		120.13	119.34	120.94	121.88	127.80	129.88	129.86	129.91		128.00
	YoY	-2.7%	-1.7%	-1.4%	-0.1%	6.4%	8.8%	7.4%	6.6%		-1.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Cumulative		FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Capital expenditures		781	1,588	2,661	3,567	522	1,135	1,498	2,503	100.1%	2,500
	YoY	-10.6%	21.1%	28.9%	33.4%	-33.2%	-28.5%	-43.7%	-29.8%		-29.9%
Depreciation		736	1,477	2,266	2,981	800	1,617	2,436	3,264	102.0%	3,200
	YoY	-1.9%	-3.1%	-0.8%	-1.2%	8.7%	9.5%	7.5%	9.5%		7.3%
R&D expenses		470	923	1,360	2,343	608	1,230	1,909	2,593	103.7%	2,500
	YoY	-27.4%	-13.3%	-17.3%	0.8%	29.4%	33.3%	40.4%	10.7%		6.7%
Quarterly		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Capital expenditures		781	807	1,073	906	522	613	363	1,005
	YoY	-10.6%	84.7%	42.3%	49.0%	-33.2%	-24.0%	-66.2%	10.9%
Depreciation		736	741	789	715	800	817	819	828
	YoY	-1.9%	-4.3%	3.7%	-2.2%	8.7%	10.3%	3.8%	15.8%
R&D expenses		470	453	437	983	608	622	679	684
	YoY	-27.4%	8.6%	-24.7%	44.3%	29.4%	37.3%	55.4%	-30.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Full-year FY03/22 results (out May 13, 2022)

Overview

The results for full-year FY03/22 were as follows.

Revenue: JPY70.8bn (+31.1% YoY; previous forecast, JPY69.0bn)
Operating profit: JPY9.7bn (about 2.4x YoY; JPY9.2bn)
^OPM: 13.7% (+6.2pp YoY; 13.3%)
Recurring profit: JPY10.4bn (about 2.5x YoY; JPY9.2bn)
Net income: JPY7.9bn (about 2.8x; JPY6.9bn)
Orders: JPY94.5bn (+63.2% YoY)
Order backlog: JPY37.9bn (about 2.7x higher than end-FY03/21)

EPS was JPY264.1. The company plans to pay a year-end dividend of JPY60.0/share (ordinary dividend of JPY40.0/share and commemorative dividend of JPY20.0/share), bringing the annual dividend to JPY100.0/share (ordinary dividend of JPY80.0/share and commemorative dividend of JPY20.0/share). In FY03/21, the company paid an ordinary dividend of JPY50.0/share. Based on the company plan, the dividend payout ratio is expected to be 37.9% (53.9% in the previous year).

The recovery in orders was underpinned by an upturn in capital investment in the manufacturing industry, and all businesses, including the mainstay Industrial Switches business, saw revenue growth across the board, both in Japan and overseas. Revenue reached a three-year record high (previous record high was JPY62.8bn in FY03/19). In addition to revenue growth, all profit lines, including operating profit, reached record highs as a result of successful initiatives to improve profitability which have been in place for some time. Operating profit reached a four-year record high (JPY6.1bn in FY03/18).

The company's focus on improving profitability also yielded positive results. The operating profit margin reached its highest level for 16 years (13.3% in FY03/06). Furthermore, ROE also rose to 17.2%, reaching its highest level for four years (13.5% in FY03/18).

Q4 results (January–March 2022)

Results for the Q4 (January–March 2022, three-month period) were as follows.

Revenue: JPY18.5bn (+24.9% YoY)
Operating profit: JPY2.4bn (+93.4% YoY)

OPM: 13.4% (+4.8pp YoY)

Recurring profit: JPY2.9bn (+99.8% YoY)
Net income: JPY2.6bn (about 2.1x YoY)

On a quarterly basis (3 months), revenue and operating profit increased for the fifth consecutive quarter (YoY). Revenue reached a record high not only for Q4 but for any quarter (the previous record high was JPY17.6bn in July–September 2021). The order backlog at the end of FY03/22 was JPY37.9bn, up approximately 2.7x compared to end-FY03/21.

Shared Research will update the details after the financial results interview scheduled for a later date.

FY03/23 forecast (out May 13, 2022)

		FY03/21			FY03/22			FY03/23
(JPYmn)		1H	2H	FY	1H	2H	FY	1H Est.	2H Est.	FY Est.
Revenue		25,387	28,596	53,983	34,856	35,933	70,789			74,500
	YoY	-14.8%	0.2%	-7.5%	37.3%	25.7%	31.1%			5.2%
Gross profit		10,779	12,004	22,783	14,919	15,391	30,310			32,500
	YoY	-15.8%	-1.9%	-9.0%	38.4%	28.2%	33.0%			7.2%
	Gross profit margin	42.5%	42.0%	42.2%	42.8%	42.8%	42.8%			43.6%
SG&A expenses		9,153	9,589	18,742	10,066	10,572	20,638			21,700
	YoY	-11.0%	-4.6%	-7.8%	10.0%	10.3%	10.1%			5.1%
	SG&A ratio	36.1%	33.5%	34.7%	28.9%	29.4%	29.2%			29.1%
Operating profit		1,626	2,415	4,041	4,853	4,819	9,672			10,800
	YoY	-35.4%	10.4%	-14.1%	198.5%	99.5%	139.3%			11.7%
	Operating profit margin	6.4%	8.4%	7.5%	13.9%	13.4%	13.7%			14.5%
Recurring profit		1,519	2,585	4,104	5,022	5,376	10,398			10,800
	YoY	-37.9%	19.3%	-11.0%	230.6%	108.0%	153.4%			3.9%
	Recurring profit margin	6.0%	9.0%	7.6%	14.4%	15.0%	14.7%			14.5%
Net income		1,090	1,713	2,803	3,526	4,370	7,896			7,500
	YoY	-41.0%	48.1%	-6.8%	223.5%	155.1%	181.7%			-5.0%
	Net margin	4.3%	6.0%	5.2%	10.1%	12.2%	11.2%			10.1%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Overview of company forecast

The company has announced its new forecast for FY03/23 as follows.

Revenue: JPY74.5bn (+5.2% YoY)
Operating profit: JPY10.8bn (+11.7% YoY)

OPM: 14.5% (+0.8pp YoY)

Recurring profit: JPY10.8bn (+3.9% YoY)
Net income: JPY7.5bn (-5.0% YoY)

Forecast EPS is JPY250.9. The company plans to pay an annual dividend of JPY100.0/share (JPY100.0/share in FY03/22). However, since FY03/22 includes a commemorative dividend of JPY20.0/share, the company is actually planning to increase the ordinary dividend. Based on the company's forecast, the dividend payout ratio will be 39.9% (37.9% in FY03/22).

The company plans to achieve record levels of revenue, operating profit, and recurring profit for the second consecutive year, and expects OPM to rise to a record high of 14.5%. However, net income is expected to decline 5.0% YoY. The company assumes an exchange rate of JPY120/USD and JPY130/EUR, stronger than the current level of approximately JPY129/USD and JPY135/EUR (as of May 13, 2022).

Shared Research will update the details after the financial results interview scheduled for a later date.

Medium-term management plan

Results vs. Initial Est.		FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.
Revenue	Initial Est.	44,000	43,700	55,500	62,500	60,000	-	60,000	74,500
	Act.	43,468	43,426	59,783	62,757	58,355	53,983	70,789
	Difference	-1.2%	-0.6%	7.7%	0.4%	-2.7%	-	18.0%
Operating profit	Initial Est.	3,500	3,500	5,000	7,200	6,800	-	6,200	10,800
	Act.	3,176	3,547	6,112	5,728	4,704	4,041	9,672
	Difference	-9.3%	1.3%	22.2%	-20.4%	-30.8%	-	56.0%
Recurring profit	Initial Est.	3,500	3,500	4,600	7,100	6,800	-	6,200	10,800
	Act.	3,182	3,357	6,484	5,849	4,613	4,104	10,398
	Difference	-9.1%	-4.1%	41.0%	-17.6%	-32.2%	-	67.7%
Net income	Initial Est.	2,250	2,200	2,900	5,100	4,600	-	4,000	7,500
	Act.	1,708	2,440	5,296	3,700	3,006	2,803	7,896
	Difference	-24.1%	10.9%	82.6%	-27.5%	-34.7%	-	97.4%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Medium-term management plan

Medium-term management plan		FY03/22	FY03/23	FY03/25
(JPYmn)		FY	Est.	Midterm plan
Revenue		70,789	74,500	80,000 and over
	YoY	31.1%	5.2%
Operating profit		9,672	10,800	13,000 and over
	YoY	139.3%	11.7%
	Operating profit margin	13.7%	14.5%	16％ and over
ROIC		9.4%	10.0%	10% and over
ROE		17.2%	14.5%	15％ and over
EPS (JPY)		264.1	250.9	300 and over

Source: Company data compiled by Shared Research

Announcement of (May 13, 2022)

Summary of new medium-term management plan

On May 13, 2022, IDEC announced a new medium-term management plan for the next three years (FY03/23–FY03/25). In May 2017, the company announced a medium-term management plan for the next five years (FY03/18–FY03/22) and has been focused on business reforms to drive global expansion. The company achieved record profits in FY03/22, despite the impact of US-China trade tensions and the COVID-19 pandemic. Against this backdrop, IDEC announced measures for the next stage of its growth in the new medium-term management plan.

Under the new medium-term management plan, the company has set out the following numerical targets (performance objectives) for FY03/25, the final year of the plan, based on four core strategies: 1) implementation of growth strategy; 2) improvement of profitability; 3) strengthening of management base; 4) strengthening of ESG initiatives.

Numerical targets (FY03/25)

Revenue: At least JPY80.0bn (JPY70.8bn in FY03/22)
Operating profit: At least JPY13.0bn (JPY9.7bn)
OPM: At least 16.0% (13.7%)
ROIC: At least 10% (9.4%)
ROE: At least 15% (17.2%)
EPS: At least JPY300.0 (JPY264.1)
In addition, the company has been focused on improving profitability for a long time and aims to achieve an OPM of 20% over the long term.

New company slogan; new group concept

The company has adopted a new slogan for its new medium-term management plan: "PASSION FOR YOUR SUCCESS – Aiming to realize safety, security, and wellbeing for people around the world." Based on its development of control technology over the years, the company plans to promote initiatives to meet the increasing demand for automation, unmanned operations, and labor saving, as well as the improvement of safety, security, and awareness of wellbeing issues and other priority areas.

Alongside the announcement of the new medium-term management plan, the company has also resolved to increase its focus on HMI-X [Transformation] as a new concept for the group. HMI-X is a further evolution of IDEC's approach to HMI (Human-Machine Interface), a human-oriented concept that leverages the company's DNA for safety objectives.

Shared Research will update the details after the financial results interview scheduled for a later date.

In 2017, IDEC announced a medium-term management plan running through FY03/23, with a goal of “transforming into a truly global company” by expanding existing businesses, accelerating the growth of new businesses, and building strategic partnerships through collaboration and M&A. Although the plan targeted revenue of JPY100.0bn and OPM of 15% in FY03/23, the company has decided to review those targets, since the business environment has changed, due mainly to the COVID-19 pandemic.

Shared Research will update the details of the new medium-term management plan after the full announcement. Until then, the following text is a summary of the Medium- and Long-term Strategy announced in May 2017.

Overview of medium- to long-term strategy (announced in May 2017)

The medium- to long-term strategy announced on May 25, 2017, sets out a long-term vision of “contributing to global socioeconomic development through continued business growth attained by advancing control technology developed over many decades and creating new technology” and a major goal of “transforming into a truly global company” by FY03/23. The strategy also outlined the following two objectives.

Take a global leadership position in the fields of human-machine interface (HMI) and safety

Foster new businesses to address social issues, for example by providing environmental energy solutions

Financial management targets

Assuming it can achieve these objectives, IDEC has set the following numerical targets (for FY03/23, the final year of the medium-term plan) on the way to achieving long-term profitability.

Revenue: JPY100.0bn (JPY43.4bn in FY03/17)
Ratio of overseas revenue: 60% or higher (35.7%)
Ratio of new businesses: 20% or higher (N.A.)
OPM: 15% or higher (8.2%)
EBITDA: 20% or higher (N.A.)

The company aims to achieve its medium- and long-term goals in stages, each with its own focus:
1) Infrastructure development (FY03/17–FY03/19)
2) New value creation and acceleration of business expansion (FY03/20–FY03/21)
3) Growth into a truly global company contributing to society (FY03/22–FY03/23)

To achieve these management goals, the company has stated specific strategies, such as expanding target markets, increasing overseas development, promoting vertical strategies, and building strategic partnerships through M&A and alliances.

Business

Business overview

Basic business model

IDEC is a comprehensive control equipment manufacturer and vendor that focuses on control panels (operator units) for robots, machine tools, and semiconductor manufacturing equipment, and on operator switches incorporated into factory production lines to control their operation. Its product lineup comprises a range of control equipment (including control relays, programmable logic controllers, sensor-related products, terminal blocks, and switching power supplies). The company’s basic business model is to expand sales of its mainstay operator switches by providing customers with solutions based on its characteristics as a comprehensive vendor (ample variation in its control equipment and other products) and on safety-enhancing technology.

Top share of Japanese pushbutton switch market and third largest share globally

Since its founding in 1945 (corporate name changed from Izumi Denki to IDEC in 2005), the company has been utilizing core technologies cultivated through the development of control equipment such as machine operator switches to realize and pursue safety, “anshin” (a sense of trust and assurance without any fear or stress), and well-being for users, protecting them even in unforeseen circumstances, since it understands that people can make mistakes and machines can break down. Among its operator switches best reflecting the company’s technology, IDEC has the largest share of the Japanese market for pushbutton switches in general at about 50% (according to company research; the same applies for other market share figures), including a roughly 68% share of the emergency stop switch market in Japan. Other than pushbutton switches, it has the largest share of the domestic selector switch market, also at approximately 68%. The company also holds top shares in Japan for pilot lights (about 56%) and operator interfaces (about 58%), which closely relate to pushbutton switches.

IDEC’s acquisition of major industrial switch manufacturer APEM (France) in 2017 gave it the third largest share of the global switch market, including pushbuttons (nearly 10% share), putting it behind Schneider Electric SE (France, EU: SU) and Rockwell Automation, Inc. (US, NYSE: ROK). Furthermore, in the field of safety equipment, one of its focus areas, IDEC has the largest share (over 80%) of the global three-position enabling switch market.

Efficient production with uniform quality using multi-product and variable-volume production system

Since its founding, the company has consistently provided human-machine interface (HMI) products, and its interface technology has become the source of its other core technologies. In the course of developing its businesses, it pioneered the use of plastic switches in Japan starting in the 1950s. IDEC achieved mass production and multi-product, variable-volume production using its proprietary mold design technology and automatic production equipment it developed itself. In addition, it ensures quality for custom products (based on particular specifications requested by the customer) and supplies a wide range of product variations.

Development of proposal-based sales to resolve customers’ technical challenges

In addition to being a major manufacturer of operator switches, IDEC is a comprehensive vendor of non-switch control equipment, with a product lineup that includes control relays, programmable logic controllers, sensors, terminal blocks, and switching power supplies. In general, players in the control equipment industry tend to be highly specialized, dealing almost solely in the components and devices in which they excel. In this environment, IDEC takes advantage of its position as a comprehensive vendor to provide solutions incorporating various types of equipment to deal with customers’ technical challenges (such as promoting production automation and enhancing safety). The provision of such solutions leads to increased sales of its mainstay operator switches, increasing added value.

Intention of expanding overseas business through synergies with APEM

IDEC believes the control equipment market, its main business domain, will grow both in Japan and overseas due to the necessity for automation of production lines in light of labor shortages, and to growing IoT-related needs. However, since it expects overseas markets to grow faster than the Japanese market, the company will focus on expanding its overseas business. The most crucial measure will be promoting collaboration with APEM (France), which IDEC acquired in 2017, to make the most of various synergies. In Japan, IDEC will seek to strengthen its position as a comprehensive control equipment vendor by expanding its product lineup and evolving its proprietary technology, in part through effective complementary M&A.

Core technologies cultivated since the company’s founding

Social contribution through the development, production, and sale of control equipment

Since its establishment in 1945, IDEC has responded to the changing needs of companies—in light of societal demands—through the development, production, and sale of control equipment such as switches. The term “changing needs” here refers to three processes that have come into play in making Japan a global economic powerhouse: 1) ensuring quality and performance, 2) respecting safety, “anshin” (a sense of trust and assurance without any fear or stress), and well-being, and 3) protecting the global environment and energy. The company claims that in these three processes, it has always aimed to create an optimal environment for humans and machines, and has provided society with products and services backed by its own technology.

Aiming to further evolve the core technologies it has cultivated

The company recognizes that its technological prowess realized since its establishment has enhanced its value and defined its secure role in society. Its core technologies include control technology and safety technology (detail follows). IDEC aims to further evolve these technologies at its new head office and Technology Research Center, which were completed in Osaka in 2013. To this end, the company plans to combine its own core technologies with external technologies to create technological and functional innovations.

Aiming to innovate at its new head office and Technology Research Center

The new head office and Technology Research Center (Osaka City, Japan) is a place (or space) that combines research, development, and production technologies to further evolve the company’s core technologies, and to spur communication among employees and strengthen collaboration without concern for internal and external boundaries. At the new head office and Technology Research Center, IDEC has realized an office layout that eliminates barriers between departments. It believes that, in addition to strengthening interaction between developers, the face-to-face exchange of opinions between the production engineering and development departments will help accelerate and optimize product development and production.

Overview of core technologies

Mechanical technology

This includes core competence technologies (such as precision mechanism and electromagnetic mechanism technologies) the company has accumulated since its founding through the development of control equipment such as switches, relays, and circuit protectors. To further evolve these core technologies, it is promoting the development of mechanical technology rich in creativity.

Safety technology

Since its inception, IDEC has been keenly aware of the importance of safety. With globally accepted standards in mind, it has sought to shift from a “zero accident” approach to a “zero risk of accident” approach. As a result, as a pioneer in safety technology, the company has worked to develop innovative safety technology, promoting conformity to international standards in the fields of machine safety, functional safety, and explosion protection. It considers reducing the number of industrial accidents to be a corporate social responsibility (CSR) and therefore promotes the development of advanced safety technology.

Control technology

Since it was founded, as a manufacturer of control equipment, IDEC has been developing assorted control technology, such as computer controls, software controls, and network communications controls, regarding which it has accumulated a wealth of knowledge. Aiming to evolve this technology for even broader use, the company promotes the development of advanced control technology.

Automation technology

This comprises a range of technology (for mold production, precision component processing, precision tool production, programming, robotics, automated assembly, control equipment, control safety, and so on) involved in production processes. IDEC has developed such automation technology in-house, promoted technological integration, and established an integrated system of in-house production covering everything from processing materials to turning out finished products.

Quality technology

The company naturally assumes its products will not fail during use, so when defining target quality, its focus is actually “ease of use,” by which it means that customers can purchase and use its products with confidence and satisfaction. It aims to secure the technology to achieve this quality at low cost. To fulfill this objective, IDEC has established a quality assurance system in which all employees participate, thus realizing “IDEC Quality.”

Identification technology

The company has positioned the automatic identification (auto-ID) field at the core of its Automation & Sensing business, and has been developing sensing technology for detecting water and discriminating plastic types using semiconductor lasers. With such technology, it will promote the development of advanced and reliable identification technology such as radio frequency identification (RFID) and image recognition.

Multi-product and variable-volume production system

IDEC has production bases in Japan and overseas, including bases belonging to APEM, a subsidiary it acquired in 2017. Of these bases, the ones it already operated in Japan, Taiwan, China, and Thailand (prior to the acquisition of APEM) use the multi-product and variable-volume production system it initially developed in Japan. The company mainly does planned production, but also handles some made-to-order production. For the latter, which includes control equipment such as switches and explosion protection devices custom-made to customer specifications, the lead time is typically three to six months (depending on the product). For the planned production portion, the company reviews its production plans as needed, based on past order data. Although production declined in FY03/21 due to the COVID-19 outbreak starting in early 2020, it recovered to almost full capacity in FY03/22.

Technology reflected in the production of mainstay products

Production of the company’s mainstay products such as operator switches employs a range of technology (for mold production, precision component processing, precision tool production, programming, robotics, automated assembly, control equipment, control safety, and so on).

IDEC designs and manufactures its own molds. The company says there are few control equipment manufacturers that do this, even though most of the molds used are precision molds due to the nature of switches and other components. In addition, there are tens of thousands of variations in operator switches if one takes into account shape, application, and specifications, encompassing mass produced, small-lot, and custom types. IDEC’s annual operator switch production volume exceeds 20mn units, some of which are in custom orders of fewer than 10 units.

The company has the technology to produce all these products with uniform quality and efficiency, with its core mold production technology. Its ability to design and manufacture precision molds and use them to efficiently produce extremely precise components of uniform quality has helped the company realize the “IDEC Quality” and track record that have earned it the trust of its customers.

Another important factor is the assembly machines (assembly lines) that produce switches using the precision molds designed and manufactured by the company. The use of automatic assembly machines developed in-house, reflecting the company’s automated assembly technology, improves production efficiency. Such machines are essential tools for efficiently producing a wide range of operator switches (including mass produced, small-lot, and custom types).

Establishment of multi-product and variable-volume production system

In addition to its mold production and automated assembly technologies, IDEC has established a multi-product and variable-volume production system that incorporates a range of technologies. The production volume for customer orders is not always level, and many orders are processed each day, ranging from mass-produced products to custom ones. To improve production efficiency, the company works to level out production volume, but this is not an easy task. For example, when there is a change in the type of operator switch being produced, the molds and assembly line settings have to be changed, which leads to time loss and decreased production efficiency. IDEC’s multi-product and variable-volume production system minimizes the drop in production efficiency while still achieving production of uniform quality.

A similar system involves multi-product and low-volume production, in which the bulk of production is small-lot items, with mass production occurring only rarely. IDEC’s multi-product and variable-volume production system differs from this sort of system in that it can be used to produce a wide variety of products in variable quantities, ranging from mass production to production runs of fewer than 10 units, while maintaining uniform quality. This is thanks to production technologies the company has accumulated since its founding.

Although IDEC has an integrated system of in-house production covering everything from processing materials to turning out finished products, some work is outsourced to partners. The company, however, performs high-valued-added processes such as design and precision processing in-house.

Proposal-based sales providing solutions to customers’ technical challenges

Japanese sales and marketing structure

Roughly 80% of the company’s sales in Japan are through distributors, with the remainder being direct sales. Both sales through distributors and direct sales are B2B, with no sales to general consumers. However, even with the 80% of sales that occur through distributors, the distributors are not fully engaged in sales activities. Instead, the company’s own sales staff work on the front line to identify customer needs. For this reason, many distributors function more as the company’s sales support and serve as distribution warehouses.

Streamlining of distributor system

After IDEC’s CEO, Toshiyuki Funaki, took office in 1997, the company reviewed the sales system it had been using until that time, with the aim of better understanding customer needs. One improvement was the streamlining of the distributor system. When CEO Funaki took office, the company had dealings with about 160 distributors, but that number was reduced to roughly 60 in a relatively short time to strengthen relationships with remaining distributors and expand sales more efficiently.

Although cutting the number of distributors to less than half what it was negatively affected sales in the short term, the company believes it eventually enhanced its sales structure and led to more efficient use of individual distributors.

Conducting sales based on proposing solutions to customers’ technical challenges

Following this reduction in the number of distributors, IDEC began promoting a proposal-based sales policy and is enhancing its sales activity based on proposing solutions to the technical challenges faced by customers. For example, customers want to automate their inspection processes and production lines and improve safety at production sites, save energy, and reduce the number of processes at their factories (production sites).

However, it is often difficult for small and medium-sized companies, the company’s customers, to address these challenges on their own. Taking advantage of its position as a comprehensive vendor with a full line of control equipment, the company enhanced its provision (sales) of solutions combining various equipment, rather than just trying to sell switches as single items. For example, IDEC offers combinations of sensors, switches, and controllers as solutions. Mid-sized vendors who specialize in their own products are unable to emulate this style.

Leveraging the characteristics of a comprehensive control equipment vendor in sales activity

In the control equipment industry, because of the large number of product variations available, many players tend to stick to their areas of expertise (products at which they excel). While IDEC’s mainstay product is switches, it is a comprehensive vendor with a nearly complete lineup of other control equipment as well (including control relays, programmable logic controllers, and auto-ID devices). There are few comprehensive vendors in Japan with a full range of control equipment in addition to their mainstay product, and none with a scale of sales similar to IDEC’s.

Leveraging its advantages as a comprehensive vendor, the company plans to enhance its sales activity based on proposing solutions to customers’ technical challenges.

Providing solutions based on technology and products related to safety and explosion protection

Especially in recent years, there has been growing interest in enhancing safety at production sites. In general, factory production lines involve many dangerous work processes and hazardous locations that can endanger employees’ lives. There are many industries that handle flammable liquids and gases, such as the petrochemical and materials industries, so awareness of explosion protection (prevention) has also increased. Since IDEC has been researching safety and explosion protection for more than 70 years, it has accumulated substantial knowledge and expertise in the form of data and experience. By proposing solutions to customers’ technical challenges that make use of the safety and explosion protection technologies and products it has accrued over the years, it aims to increase sales, including sales of its mainstay switches.

Spinning off Japanese sales division to strengthen sales capabilities

Although IDEC has reduced the number of distributors with which it does business, it plans to strengthen its relationships with the remaining ones, since they are essential to revenue growth. As a specific measure to achieve this and in light of intensifying competition in the domestic control equipment market, the company decided to spin off its domestic sales division as IDEC Sales Support Corporation. It hopes this measure will facilitate growth in sales and market share in Japan by enhancing sales support operations.

Focusing on nine major industry sectors

The company’s intention is to drive the growth of its control equipment business by focusing on industries where it has strengths and expects robust growth. It has determined priority industries on which to concentrate its marketing resources and will promote the aforementioned sales approach of proposing solutions to technical challenges. Specifically, it sees promise in nine industries: automotive, machine tools, semiconductors, food and packaging, material handling, elevators, robotics, special vehicles, and transportation and logistics.

IDEC originally focused on six industries—automotive, machine tools, semiconductors, food and packaging, material handling, and elevators—but added special vehicles and transportation and logistics after it acquired APEM in 2017. In terms of robotics, it intends to strengthen system integration using collaborative robots and promote package proposals that include safety equipment.

While it plans to focus on all of these industries, IDEC believes there is significant room for expansion in the food and packaging industry and the transportation and logistics industry in particular, as it anticipates further adoption of automation at production sites.

Acquisition of major industrial switch manufacturer APEM (France)

Acquisition gives IDEC third largest share of global industrial switch market

In March 2017, IDEC acquired the major French industrial switch manufacturer APEM (the acquisition was first announced in December 2016). This move puts it at number three in terms of market share for switches, behind only Schneider Electric (France) and Rockwell Automation (US).

Overview of APEM

According to the company’s press release at the time of the acquisition, APEM, founded in 1952 and based in France, produces and sells switches and other human-machine interface (HMI) products globally. APEM designs, manufactures, and sells interface components for applications in fields ranging from transportation and industrial automation to medical, communications, and aviation. At the time of acquisition, APEM had more than 20,000 customer companies and good brand recognition internationally. The following is a brief profile of APEM at the time of acquisition in March 2017.

Company name: MMI Technologies (APEM Group)
Location of head office: Paris, France
Business: Development, manufacture, and sale of control equipment
Mainstay products: Industrial switches, joysticks, keyboards, and LED pilot lights
Capital: JPY3.6bn
Production bases: 14 (in the US, the UK, France, Italy, Denmark, Tunisia, and China)
Revenue composition by region: Europe 63%, North America 25%, and Asia and other 12%
Number of employees: 1,280 globally
Performance trends: Revenue was JPY10.3bn in FY12/13, JPY11.3bn in FY12/14, and JPY12.5bn in FY12/15. Operating profit was JPY1.5bn in FY12/13 (OPM of 14.4%), JPY1.7bn in FY12/14 (15.1%), and JPY2.1bn in FY12/15 (16.5%).
Other: Sells broad range of switches to more than 20,000 customer companies worldwide

Prior to acquisition (FY03/16 for IDEC and FY12/15 for APEM), IDEC reported revenue of JPY43.5bn and APEM was at just 28.7% of that scale, with revenue of JPY12.5bn. However, IDEC’s OPM was 7.3% and APEM’s was more than twice that at 16.5%. While a difference in accounting standards must be considered, it is still clear that APEM’s profitability exceeded IDEC’s. Nevertheless, IDEC reported JPY20.1mn in revenue per employee to APEM’s JPY9.8mn and JPY1.5mn in operating profit per employee to APEM’s JPY1.3mn.

It is hard to determine what factors underlie the differences in profitability between the two companies based only on data released at the time of acquisition. However, Shared Research understands that one of the main factors is that APEM had been focusing on selling custom products (such as industrial switches and joysticks) it considered its specialties to specific target industries and customers.

Based on various data available at the time of acquisition, IDEC viewed APEM’s strengths as the following.

APEM has R&D bases in France, the US, the UK, and Denmark, and an established R&D system to meet the needs of customers in the US and Europe.

To support a wide variety of applications, APEM focuses on both standard products and the development of custom products that fulfill customer needs.

APEM supplies quality products in Europe, North America, and Asia, including products with excellent environmental durability.

Synergies anticipated from acquisition of APEM

IDEC cited four objectives contained in its medium- to long-term strategy as reasons for acquiring APEM: further enhancement of its core businesses, establishment of strategic partnerships, expansion of its global presence, and dramatic increase in revenue and profit by entering new markets. At the time of the acquisition, IDEC considered APEM’s regional characteristics, business model, and market strategy to be complementary to its own, and therefore believed making APEM a consolidated subsidiary could produce the following synergies.

Specifically, it aims to expand sales of IDEC products in Europe by taking advantage of APEM’s strong sales network, expand sales of both APEM and IDEC products to new customers in Japan and other parts of Asia by taking advantage of IDEC’s strong sales network, and substantially expand sales in North America, with the companies complementing each other in terms of sales network and fields of product application, which do not overlap.

Strong business synergies

IDEC and APEM can generate strong business synergies by leveraging APEM’s established sales network and leadership in the HMI product market in Europe, the company’s strong presence in Japan and other parts of Asia, and the two companies’ complementary market position in the US.

Increased potential for new market development

By taking advantage of APEM’s technical support, IDEC can expand its product lineup and gain opportunities to enter markets where it has had little activity, such as material handling, agricultural machinery, and other specialized machinery.

Cost synergies

IDEC and APEM can realize cost synergies through joint development of HMI products and other efficient R&D spending, joint purchasing of materials to reduce procurement costs, and optimization of manufacturing capacity (mutual use of production lines) to improve productivity.

The company anticipates these basic synergies, along with the following concomitant synergies.

Demonstration of global leadership in the HMI field and development of innovative solutions

Improved production efficiency through mutual use of production bases, leading to expanded customer service

Improved competitiveness of both companies through sharing of M&A successes

Expanding business areas and market scale through acquisition of APEM

IDEC has estimated that its global market size after acquisition of APEM is approximately JPY340.0bn. This is the sum of the potential values of the two companies’ respective business domains, minus the competing (overlapping) portion.

IDEC’s business domain: Roughly JPY150.0bn centered in the factory automation industry

APEM’s business domain: Roughly JPY230.0bn in industries including instrumentation, security, aerospace and defense, communications equipment, special vehicles, medical, and automotive

Competing portion: Roughly JPY40.0bn in industries including material handling and elevators

IDEC aims to expand its share of this post-acquisition market of JPY340.0bn [= JPY150.0bn + JPY230.0bn – JPY40.0bn]. Sharing APEM’s business domain more than doubles the size of its potential market, so IDEC expects the benefits of the acquisition to be substantial, given its access to new markets such as security and special vehicles.

Promotion of complementary M&A

IDEC has been actively pursuing M&A, including the acquisition of APEM (March 2017), to complement organic growth in its existing businesses as it seeks to expand its mainstay businesses such as Industrial Switches. The following are the company’s major M&A activities since 2013.

2014: Integration of auto-ID devices business

Overview of acquisitions

In 2013, the company made IDEC Datalogic Co., Ltd. (IDL), which was a joint venture with the major Italian auto-ID devices manufacturer and distributor Datalogic S.p.A (DL), and DL subsidiary Datalogic ADC, Inc. (ADC) into IDEC subsidiaries through share exchanges using its own treasury stock.

Background, purpose, and expected benefits of acquisitions

With these acquisitions, IDEC decided to develop its own auto-ID devices and enhance the relevant business (Auto-ID Division) mainly in Japan. The following year, in April 2014, the company merged the two subsidiaries (IDL and ADC) to form the current IDEC Auto-ID Solutions Corporation (a wholly owned subsidiary of IDEC). Since that time, IDEC has been projecting the high growth potential of the auto-ID market, and has therefore been reorganizing and integrating group companies with the aim of enhancing R&D of auto-ID devices and an accompanying sales structure. IDEC says its R&D system for auto-ID devices will be further strengthened by continuing its technical tie-up with DL.

2014: Made CONET Co., Ltd., a wholly owned subsidiary (now IDEC Factory Solutions Corporation)

Overview of acquisition

In 2014, IDEC acquired CONET Co., Ltd. and CONET System Corp., which develop control solutions businesses, and made them subsidiaries with the aim of enhancing its existing businesses. Acquisition prices were undisclosed.

Background, purpose, and expected benefits of acquisition

CONET is engaged in the design and contract production of system products related to machine tools, semiconductor manufacturing equipment, and logistics and transport equipment, and handles other control network solution business, while CONET System handles related system design. IDEC brought the CONET group, with its technical base in control solutions, under its umbrella with the objective of enhancing its own core control equipment and systems businesses. This move has strengthened IDEC’s control solution business, a focus of development, and will help it flexibly provide optimal control system products and engineering services to fulfill customer needs related to improving productivity, economizing on manpower, and realizing a safe operational environment. In 2016, IDEC changed CONET’s name to IDEC Factory Solutions Corporation.

2017: Made Welcat Inc. a wholly owned subsidiary

Overview of acquisition

In 2017, IDEC announced that it was enhancing its auto-ID business by making Welcat (Japan) a wholly owned subsidiary. The acquisition price was undisclosed. The impact of the move on IDEC’s FY03/18 results was minor.

Background, purpose, and expected benefits of acquisition

Welcat was a startup that developed auto-ID devices and software. It developed, designed, and sold barcode readers and IC tag readers, focusing on wearables and handy terminals (portable terminals for data collection and transmission that can be used without encumbering both hands), designed related software, and made system proposals. Welcat also had many customers in the area of radio frequency identification (RFID, which uses small wireless chips in identifying and managing people or goods) and other areas of the auto-ID market that IDEC saw as having significant growth potential.

By making Welcat a subsidiary, IDEC felt it could enhance its selling capabilities by providing fixed terminals from IDEC Auto-ID Solutions Corporation (IDEC subsidiary in the auto-ID business) together with Welcat’s handy terminals in a package format. It also intended to strengthen its capabilities in selling RFID-related systems through software development and increase revenue through mutual customer referrals. Further, IDEC aimed to expand synergies in the auto-ID market by reducing production costs through cooperation with Welcat and promoting collaboration in overseas development.

In April 2020, IDEC merged Welcat with IDEC Auto-ID Solutions Corporation. IDEC Auto-ID Solutions Corporation took over all of Welcat’s auto-ID business, and Welcat was dissolved.

2018: Made Tokyo Sensor Co., Ltd., a wholly owned subsidiary

Overview of acquisition

In May 2018, the company announced that it was making Tokyo Sensor Co., Ltd., a wholly owned subsidiary. The acquisition price was undisclosed. The impact of the move on IDEC’s FY03/19 results was minor.

Background, purpose, and expected benefits of acquisition

Tokyo Sensor’s core technology was a tape switch that allows the switch length to be changed freely, and it had a range of distinctive switches applying this technology, including edge switches, bumper switches, and mat switches, that were not a part of IDEC’s product lineup in its Industrial Switches business. By making Tokyo Sensor a subsidiary, IDEC felt it could enhance its product and technology lineups for switches and safety equipment solutions and further strengthen its HMI business by providing more solutions for safety and security. In addition, IDEC aimed to leverage its sales network to maximize synergies with Tokyo Sensor. In April 2019, the company conducted an absorption-type merger with Tokyo Sensor, which was dissolved as a result.

2021: Acquired business from SQUSE Inc.

Overview of acquisition

In April 2021, the company announced that its wholly owned subsidiary IDEC Factory Solutions Corporation would take over all business from SQUSE Inc.

Background, purpose, and expected benefits of acquisition

IDEC intends to enhance its System business by leveraging SQUSE’s system development capabilities (including system development for automating production processes in factories). Labor shortages and other factors are triggering growing need for automation in the food industry, where the bulk of SQUSE’s customers operate, and IDEC aims to increase sales to the food industry, one of the nine industries it intends to focus on, by taking over SQUSE’s operations. In addition, IDEC believes the acquisition will enable it to offer total solutions (proposals that combine its products and solutions) to SQUSE’s existing customers. It intends to further expand its operations by pairing SQUSE’s system development capabilities with its own knowledge of control and safety technologies cultivated since its founding.

IDEC Factory Solutions, the subsidiary that took over SQUSE’s operations, is engaged in the design and contract production—with a core of control technology—of system products related to machine tools, semiconductor and LCD manufacturing equipment, and logistics and transport equipment. It also handles other control network solution business and robotic systems. Since the business the subsidiary took over from SQUSE complements and augments its businesses, a variety of synergies can be expected.

2021: Established joint venture together with Alps Alpine

Overview of joint venture agreement

In July 2021, IDEC announced that it had entered into a joint venture agreement with Alps Alpine Co., Ltd. While this agreement is different from the M&A activities IDEC has been actively pursuing since 2013, the aim of combining its own technologies with those of another company to achieve business expansion is much the same. Under the agreement, the two companies established a joint venture named IDEC ALPS Technologies Co., Ltd., on September 1, 2021. Its business activities include business planning and the planning, development, manufacture, and sale of industrial sensing products, HMI products, safety products, and wireless communication technology. IDEC holds a 51% stake and Alps Alpine a 49% stake in the joint venture.

Background, purpose, and expected benefits of establishing joint venture

According to press releases from the two companies, the factory automation industry has in recent years been rapidly moving toward a smart factory model on a global scale, thanks to advances in robotics and other technology. In addition, the convergence of a range of technologies is creating new business models not confined to specific industries or sectors. To respond to this rapidly changing business environment, IDEC and Alps Alpine determined that they would both benefit through collaboration, since they can complement each other with their different characteristics and strengths. It was based on this belief that IDEC and Alps Alpine decided to establish IDEC ALPS Technologies through joint investment.

The two companies agreed to establish the joint venture for the following purposes.

To leverage their respective expertise in human-machine interface (HMI), safety, sensing, and wireless communication

To develop new products and establish a solution-oriented business model for the factory automation and industrial machinery fields

IDEC ALPS Technologies will carry out business planning and the planning, development, manufacture, and sale of products for the industrial machinery industry by leveraging the strengths of IDEC and Alps Alpine. The plan is for the new company to develop products for launch in FY03/23.

IDEC and Alps Alpine have in common an ability to develop HMI technology. IDEC is strong in the factory automation industry and is a leader in safety technology, while Alps Alpine is strong in automotive, game console, and smartphone applications, and has sensing technology that is leading the industry toward a smart factory model. Since the two companies’ business domains do not overlap, IDEC believes they can complement and strengthen each other. From IDEC’s perspective, Alps Alpine’s sensing technology can be used to develop and deploy new products, while from Alps Alpine’s perspective, the factory automation industry has ample room for business expansion. The two companies plan to speed up their R&D to provide products and solutions that meet various industry needs by collaborating via IDEC ALPS Technologies on product development centered on HMI.

IDEC holds a 51% stake and Alps Alpine a 49% stake in the joint venture, so IDEC ALPS Technologies is a consolidated subsidiary of the IDEC group, but the impact on IDEC’s performance is yet to be determined. The company will provide further information on the contribution of the joint venture in its new medium-term management plan to be announced in spring 2022.

Production and sales structures after acquisition of APEM

IDEC acquired APEM in 2017, in another step toward becoming a global company. It expects a wide range of synergies from the acquisition of APEM, and the post-acquisition status of production and sales is as follows.

Production

Production bases by region

The IDEC group produces switches and other control equipment in Japan and other parts of Asia, EMEA (Europe, Middle East, and Africa), and the US, including APEM’s production bases acquired in 2017. Prior to the acquisition, IDEC had just four production bases, one each in Japan, Taiwan, China, and Thailand (in order of establishment). APEM’s production facilities in EMEA have now been added.

Only IDEC uses the production bases in Japan and only APEM uses those in EMEA and the Americas, while both companies use bases in Asia Pacific (mainly in China). Due to the many product variations in the case of control equipment, it is difficult to indicate production capacity in terms of volume (for example 200,000 units per annum) as can be done with automakers. However, based on the value of past shipments and other data, IDEC estimates that its global production capacity breaks down roughly as 50% in Japan, 30% at APEM, and 20% in Asia Pacific. The 30% belonging to APEM includes bases in EMEA, Asia, and the Americas, but the key region is EMEA.

Breakdown of production by region

In FY03/21, production valued at JPY49.4bn (selling price basis) broken down by region was JPY28.2bn in Japan (57.1% of total), JPY3.2bn in the Americas (6.5%), JPY9.5bn in EMEA (19.3%), and JPY8.4bn in Asia Pacific (17.1%), so overseas operations accounted for 42.9% of production. Production declined 5.0% YoY in FY03/21 due to the COVID-19 pandemic. In comparison, FY03/20 production ratios were 59.0% in Japan, 7.0% in the Americas, 20.0% in EMEA, and 14.0% in Asia Pacific, for an overseas ratio of 41.0%.

Until the acquisition of APEM, IDEC only carried out production in Japan and the Asia Pacific region (Taiwan, China, and Thailand). In FY03/17, just prior to including APEM in the scope of consolidation, production (selling price basis) was JPY35.4bn, of which JPY26.0bn was in Japan (73.4% of total) and JPY9.4bn in Asia Pacific (26.6%). This means the ratio of overseas sales rose 16.3pp in four years (comparing FY03/21 to FY03/17) with the acquisition of APEM, giving IDEC a more global production system. However, the ratio of production in the Americas (only APEM) is lower than in the other regions.

Sales

Sales breakdown by region (revenue by customer location)

Of the JPY54.0bn in revenue IDEC reported in FY03/21, Japan accounted for JPY24.6bn (45.6% of total), the Americas for JPY8.5bn (15.7%), EMEA for JPY8.9bn (16.4%), and Asia Pacific for JPY12.0bn (22.2%). Revenue generated overseas was roughly 54.4% of the total. Revenue declined 7.5% YoY in FY03/21 due to the pandemic. With the acquisition of APEM, overseas revenue is beginning to balance out among the Americas, EMEA, and Asia Pacific. IDEC projects that the ratio of overseas revenue will eventually exceed 60%.

IDEC’s and APEM’s overseas sales structures

In general, IDEC plans to continue selling products under the individual IDEC and APEM brands overseas, rather than moving to a unified brand. In addition, there are separate sales companies for each region. The reason for not using a unified brand is that IDEC and APEM have different customer bases (the former being strong in the factory automation industry and the latter in instrumentation, communications equipment, special vehicles, and other industries), and the individual brands are already well-known in their respective industries and regions. IDEC believes synergies with APEM in regard to sales, involving review and partial integration of sales structures, will be realized from 2022 onward.

Overview and main products of each business

Industrial Switches

Business overview

IDEC’s core and largest business is Industrial Switches, which accounted for 46.4% of consolidated revenue in FY03/21. With the Industrial Switches business, based on the control technology it has cultivated since its founding in 1945, the company aims to contribute to the realization of a safe and secure society, in the context of both factory automation and familiar scenes of everyday life both at home and abroad.

In the Industrial Switches business, IDEC has operated mainly in Japan, but also in North America, Europe, and Asia. In 2017, the company acquired the French industrial switch manufacturer APEM (making it a wholly owned subsidiary), and began expanding its operations in Europe under both its own IDEC brand and the APEM brand. For detail, please refer to “Acquisition of major industrial switch manufacturer APEM (France).”

Main products

Due to the wide range of products in Industrial Switches, the company does not disclose revenue by product. Main products handled in the Industrial Switches business are as follows. For greater detail, please refer to “Definitions, types, and categories of switches.”

Control switches and pilot lights

IDEC has been manufacturing and selling control switches since 1958. Types of control switches include pushbutton switches, illuminated pushbutton switches, selector switches, and key selector switches. These are available in a variety of sizes, shapes, and colors to meet a wide range of customer needs. APEM (France), acquired in March 2017, also produces and sells control switches mainly in the European market. While IDEC products use plastic, APEM’s use metal.

Emergency stop (e-stop) switches

These switches use IDEC’s proprietary safety technology, such as Safety Potential Structure and Safe Break Action. The company’s highly reliable products with safety assurance functions can be used for a variety of applications. In addition to safety, IDEC has a policy of adopting designs that take hygiene and ergonomics into account. E-stop switches are one of its most popular switch types, and it holds a roughly 68% share of the Japanese e-stop switch market.

Single-board control panels

IDEC offers a variety of solutions to meet diverse customer needs, one of which is single-board control panels. The company combines various switches with various panels (including sheet panels, sheet metal panels, and plastic panels made with molds), and proposes single-board control panels with unique designs and quality, aiming to improve the efficiency of circuit wiring and contribute to reducing assembly and wiring man-hours.

Joysticks (APEM brand)

Joysticks provide directional input via levers and are used in the operation of industrial equipment and special vehicles for agriculture and construction. They are one of APEM’s mainstay products, and have helped APEM capture a large customer base with proprietary technology. With the acquisition of APEM, IDEC has added a wide variety of joysticks to its product lineup, which it produces and sells under the APEM brand, mainly in EMEA and Asia Pacific.

Industrial Relays & Components

Business overview

Industrial Relays & Components accounted for 18.2% of consolidated revenue in FY03/21, making it IDEC’s second largest business in terms of revenue after Industrial Switches. Although the company does not disclose revenue by region for this business, company data indicate that key markets are the Americas (mainly the US), Asia Pacific (mainly China), and Japan. Sales of control relays and other control equipment in the US have a particularly large impact on consolidated results. In Japan, this business plays an important role when the company proposes solutions to customers (for resolving their technical challenges), helping to boost sales of various switches. Production for the Industrial Relays & Components business occurs in Japan, Thailand, China, and Taiwan.

IDEC defines industrial components generally as any of various electrical devices that are incorporated into control panels at production sites. The term control panel refers to a box (board) that contains equipment for efficiently operating and controlling machinery and production lines, and the contents of a box can be divided into two categories: power circuits and control circuits. Industrial components are installed or embedded, for example, in machine tools and semiconductor manufacturing equipment, and are used in factories (production lines) in various industries. They are also used in buildings for elevator control and other facility management functions, and in automated warehouses.

There is growing need to make equipment and facilities more intelligent (faster processing speed, multifunctional operation, and so on) and save space at the production sites of the company’s customers in various industries. Customers are also increasingly demanding more uniform and stable quality in their production items. In light of these changing needs, IDEC aims to help solve a variety of issues by adding new technology to various devices in control panels to improve work efficiency and provide a more convenient and comfortable production environment.

Main products

In the Industrial Relays & Components business, IDEC produces and sells products including switching power supplies, terminal blocks, control relays and sockets, circuit protectors, and LED illumination units. Main products handled are as follows.

Control relays

A mainstay product of the Industrial Relays & Components business, control relays use electromagnets to open and close (turn on or off) a contact. They are used in various types of machinery, from home appliances to industrial equipment. IDEC’s control relays have a feature of using the push-in connection method in addition to the screw connection method. While the screw connection method has been the standard in the control equipment industry for some time, the company is promoting the use of the push-in method instead, since it can significantly reduce the man-hours required for wiring and maintenance work, and also allows streamlining of equipment. By offering a wide range of products, IDEC plans to promote the push-in method for control panels, switchboards, and other in-board devices.

Terminal blocks

Terminal blocks are mechanical components that integrate multiple terminals for connecting, branching, and relaying wires. IDEC’s lineup includes screw-type products suitable for various uses that also improve convenience, such as by reducing man-hours during wiring, as well as spring clamp-type products with superior vibration resistance and space-saving qualities. In addition, in March 2019, the company signed a strategic partnership agreement with US company Weidmüller, which boasts the largest share of the global terminal block market, and became the exclusive distributor for Weidmüller’s DIN rail terminal blocks in Japan.

Switching power supplies

In general, electronic devices require a stable direct current with little voltage fluctuation, so there is persistent need for switching power supplies, which convert commercial alternating current into direct current. IDEC provides the global market with switching power supplies that have a slimmer design that reduces space requirements in control panels while also achieving ease of use and functionality and helping to achieve miniaturization and lower costs.

Circuit protectors

Circuit protectors provide overcurrent protection, opening contacts when current exceeds the rated level so as to protect circuits. IDEC’s lineup meets miniaturization and space reduction needs. Ideal for protecting control circuits, its products reduce wiring man-hours and have a safe design that prevents electric shock.

LED illumination units

Since they are installed on equipment such as machine tools, IDEC’s LED illumination units have dust and water resistance that make them suitable for the harsh environments of industrial machinery. When it comes to industrial lighting, customers demand a product lineup that provides good visibility in addition to brightness. They also demand environment-resistant products that help make machines smaller and more functional. This is why IDEC provides a lineup of high-performance products for machine tools that can even withstand exposure to cutting scraps and coolant that may fly around when the tools are in operation.

Automation & Sensing

Business overview

Automation & Sensing accounted for 15.2% of consolidated revenue in FY03/21, putting it behind Industrial Switches at 46.4% and Industrial Relays & Components at 18.2%. Although IDEC does not disclose revenue by region for this business, company data indicate that key markets are the Americas (mainly the US), Asia Pacific (mainly China), and Japan. In Japan, this business plays an important role when the company proposes solutions to customers (for resolving technical challenges), helping to boost sales of various switches. Production for the Automation & Sensing business takes place in Japan, Thailand, and Taiwan. Product development occurs mainly in Japan.

Since the beginning of the 2010s, many companies in various industries have been making use Internet of Things (IoT) technology at their production sites, and there is increasing need for remote monitoring and control. IDEC has been strengthening its product lineup in response to growing demand for products that can serve as key devices to improve work efficiency and promote automation as the workforce shrinks and technology advances.

Main products

Programmable logic controllers (PLCs)

PLCs are devices that control the movement of equipment or machinery according to a programmed sequence or situational conditions. They have internal microprocessors, controlling equipment by means of user-modifiable programs. PLCs can be programmed for specific applications and can handle complex operations, making it possible to automate a range of equipment, including factory production facilities, thereby reducing labor requirements. IDEC has strengths mainly in compact products, so with the arrival of the IoT era, it is expanding its lineup of internet-ready products for remote monitoring and control, and developing unique display-integrated products that reduce the wiring, space, and man-hour requirements of user applications.

Operator interfaces

Operator interfaces are terminals that can display and be operated with a touch screen. They can be used both in manufacturing and in everyday life settings. IDEC is improving display performance by incorporating high-resolution liquid crystals and high-luminosity LED backlighting into its products, enhancing communication performance, and providing screen sizes suited to various applications. The company aims to create new operating environments by expanding its range of product variations.

Teaching pendants

Teaching pendants are input and operation devices for programming, activation, and teaching of robots and various kinds of devices and equipment, including machine tools. Demand for teaching pendants is particularly high in regard to robots. IDEC’s pendants come with three-position enabling switches (for which it has a global market share of 80% or more) to strengthen safety and operability (ease of use). At the same time, the company intends to expand its product lineup with models that are more shock- and environment-resistant, along with ones that are smaller and lighter.

Automatic identification (auto-ID) devices

Auto-ID devices can read 1D and 2D barcodes, and also RFID. IDEC uses auto-ID devices to provide solutions in response to customer requirements and market characteristics in a range of industries, including retail, healthcare, factory automation, and distribution and logistics. The company aims to provide customers with the optimal auto-ID systems for their needs with an extensive lineup that includes both proprietary products and wearable and handy terminals from the former Welcat (acquired in 2017 and merged into an IDEC group company in 2020).

Sensors

IDEC is currently strengthening its lineup of sensors, which includes ones that detect objects by the amount of reflected or blocked light, as well as photoelectric switches and proximity switches. IDEC’s unique optical design and production technologies enable stable detection, and the company’s broad range of products includes water- and dust-resistant protective structures and sensors capable of detecting transparent objects.

IDEC ALPS Technologies Co., Ltd., a joint venture established by IDEC and Alps Alpine, is responsible for business planning and the planning, development, manufacture, and sale of industrial sensing products, HMI products, safety products, and wireless communication technology.

Safety & Explosion Protection

Safety & Explosion Protection accounted for 12.1% of consolidated revenue in FY03/21. IDEC has been enhancing its development of safety-related technology, while also promoting the development of products related to explosion protection. The Safety & Explosion Protection business includes support technology and many products related to the Industrial Switches, Industrial Relays & Components, and Automation & Sensing businesses, in addition to technology and products it handles independently. The business is closely related to the company’s control equipment, including switches.

Safety

Since its founding, IDEC has focused on safe environments for human interaction with machines, and to that end has developed safety-related devices thoroughly dedicated to safety, reliability, and ease of use. It provides safety solutions that enhance safety and productivity for a wide range of customers.

Automation and robotics are increasingly common at production sites, so the company began applying the next-generation safety philosophy Collaborative Safety (Safety 2.0), which is aimed at coordinating safety between humans and machines. This philosophy is not just about keeping humans out of harm’s way, but helps the company provide collaborative safety equipment applications that allow the machines to sense danger to humans in order to better control risk and create safe environments. IDEC is also focusing on efforts to promote safety, such as creating new safety standards and providing safety consulting.

Development of products for Collaborative Safety (Safety 2.0)

IDEC will work to expand sales of its Safety 1.0 products that support production sites, while also developing innovative Safety 2.0 products (such as wearable stop switches).

In the relationship between humans and machines, Safety 0.0 is defined as safety based on human attention, Safety 1.0 as safety achieved by keeping humans and machines apart, and Safety 2.0 as safety based on information sharing (collaborative safety). Today, various devices are connected using, for example, information and communication technology (ICT), and there is a trend toward having people and machines (including cleaning, transport, and production robots) operating in the same spaces. In spaces where humans and machines coexist, conventional safety concepts based on keeping humans and machines apart (Safety 1.0) have only limited applicability. Safety 2.0 covers this problem. Collaboration between humans, machines, and the environment makes it possible to maintain a high level of safety, not only in the respective spaces where humans and machines operate, but in spaces where they coexist. Nikkei Business Publications, Inc., advocated Safety 2.0, and the Institute of Global Safety Promotion (IGSAP), as the scheme owner, designed the Safety 2.0 Conformity Assessment and Registration System with the aim of spreading the Safety 2.0 concept in society to prevent various disasters and accidents, including industrial accidents. Japan Certification Corporation operates the assessment system.

The company promotes Vision Zero by supporting safety-oriented construction of various types of machinery and equipment that comply with international safety standards, such as safety laser scanners that detect people approaching or entering work areas and safety fences, interlock switches that detect the opening and closing of equipment doors and safety fence gates, and enabling switches that comply with international standards, and also by making total environment proposals that put safety first.

Vision Zero is an occupational health and safety campaign advocated by the International Social Security Association (ISSA) under the International Labour Organization (ILO), a specialized agency of the United Nations. It is an approach led by top management at companies to pursue safety, health, and well-being. In 2018, IDEC became the first company in Japan to endorse, register with, and promote the campaign.

Interlock switches

Interlock switches are devices used to prevent problems that occur during equipment operation (such as malfunction or equipment getting out of control). Customers (users) install them on the front doors of machine tools or the gates of safety fences around industrial robots, where they detect if the door or gate is opened or closed. IDEC has a series of products that can be used for a variety of applications in manufacturing settings, on food-related machinery, and so on. Its broad product lineup includes some of the world’s smallest interlock switches.

Enabling switches

Enabling switches are safety devices incorporated into portable operating devices such as robot teaching pendants. IDEC’s enabling switches allow hazards caused by a robot or other machine’s unexpected operation (malfunction or runaway operation) to be avoided, whether the hazard is due to an intentional action or reflexive (unconscious) action by the operator. The company’s enabling switches are suitable for international safety environments and help ensure safety in spaces where people and robots work together.

IDEC has effectively created an international standard (safety standard common worldwide) with its enabling switches, so it has the largest share (over 80%) of the global three-position enabling switch market.

An enabling switch is a safety device that stops a robot or other machine in case of malfunction or runaway operation, for example when robots are installed on production lines or when a worker is conducting teaching operations (inputting motion programming) on machine tools or other devices. With the three-position type, position 1 is when the operator has not touched the switch or has released it (OFF); position 2 is when the switch is lightly pressed (ON; only in this position can the robot or machine be used); and position 3 is when the switch is pressed strongly (OFF). The fact that the robot or machine cannot be operated in positions 1 or 3 ensures safety. IDEC produces and sells control components for three-position enabling switches.

Safety laser scanners

Safety laser scanners are devices that ensure safety by detecting people approaching or entering machines and people remaining in hazardous locations. Specifically, they are equipped with functions to sound an alarm before a person approaches a machine and allow only workpieces to pass, so as to avoid stopping the production line. When used on transport equipment in factories, safety laser scanners can produce information on the surrounding environment that is needed for autonomous driving, for example by detecting people for collision avoidance.

Safety controllers

Safety controllers are devices that control machinery activation based on signals received from safety input devices (such as e-stop and interlock switches). They are equipped with control logic that will not permit machinery activation if safety cannot be confirmed or a system malfunction occurs. IDEC’s safety controllers simultaneously help reduce man-hours and maintain safety.

Explosion protection

IDEC has been conducting R&D into explosion protection technology for more than 70 years, keeping abreast of various changes in production sites (such as a shift to factory automation and an increasingly multinational workforce). Based on this accumulated technology, the company has developed a wide range of explosion protection equipment to meet customer needs, for use in petroleum plants, chemical plants, warehouses, and other locations that handle flammable gases. In addition to improving safety in explosion protection environments, the company helps customers reduce labor and improve efficiency at their production sites.

Explosion protection control boxes

IDEC meets global demand by providing products that have been certified by IECEx, ATEX, and UL, which are the most optimal certifications for overseas plants. The company aims to satisfy a diverse range of needs by providing a full line of control units for pushbutton switches, pilot lights, meters, and much more.

Explosion protection barriers

Explosion protection barriers limit electrical energy so they do not themselves become a source of ignition in hazardous locations where flammable gas is present. IDEC’s lineup of barriers includes ones that can be used safely even in areas classified as “Zone 0,” the highest hazard level. The barriers are used in connection with switches of intrinsically safe explosion-proof construction, lamps, buzzers, and analog signal instrumentation devices. IDEC satisfies diverse needs by carrying many product variations, each suited to specific requirements.

Flameproof LED illumination units

The company’s flameproof LED illumination units generates savings in terms of energy and maintenance at business establishments and warehouses that handle flammable gases. IDEC offers an extensive assortment of types for everything from high ceilings to low ceilings and fluoroscopic tank lights. They are small and lightweight yet constructed to withstand explosions.

Systems

Subsidiary IDEC Factory Solutions handles systematization of IDEC products to meet various customer needs. In recent years, the company has been aggressively promoting collaborative safety robot systems, which combine its strengths in safety-related equipment and technology with optimal robots.

Collaborative safety robot systems

Business overview

IDEC Factory Solutions develops collaborative safety robot systems that combine IDEC’s safety-related equipment and safety systems with collaborative robots, vision sensors, AI, and autonomous mobile robots (AMRs) developed and produced by various robot manufacturers in Japan and overseas. Neither IDEC nor IDEC Factory Solutions manufactures robots. Instead, they act as system integrators, providing comprehensive solutions encompassing collaborative robot system design and installation and operation support.

Business prospects

This business targets small and medium-sized companies, which typically have less automation in their production lines than larger companies. IDEC is especially working to introduce collaborative robots to the food industry, and one example of that effort is its acquisition in April 2021 of business from SQUSE Inc. For many small and medium-sized companies, financial issues may hinder the introduction of robots to automate production lines. IDEC aims to provide package solutions, including rental options.

In its medium-term strategy announced in March 2017, the company announced the collaborative robot business as one key new business, regarding which it planned the following initiatives.

Create safety concepts and standards for collaborative robot use

Use IDEC’s Collaborative Safety Robot Technical Center to provide a full lineup of solutions

Support the adoption of highly safe collaborative robots by various companies and industries

In its new medium-term management plan to be announced in spring 2022, the company plans to review the details of its approach, but will maintain its earlier intention of making collaborative robots a key business.

Others

After peaking at JPY5.8bn in FY03/17 (13.2% of consolidated revenue), revenue in the Others business has been in a downtrend, falling to JPY891mn in FY03/21 (1.7% of consolidated revenue). The main reason for this decline is that the solar power generation business, which accounted for the largest share of revenue in Others, was affected by a shrinking market.

Environmental energy-related business

Business overview

The centerpiece of the environmental energy-related business is the mega-solar power business. The company aims to be a one-stop provider of mega-solar facilities, in which the IDEC group acts as a supplier and wholesaler of industrial solar power generation facilities, builds the facilities, and uses them to supply electricity. In the process, the company plans to accumulate a range of knowledge about mega-solar operations, which it will use to develop its solar power generation business. As a concrete example, IDEC, in a joint effort with the local government of Sayo, Hyogo, has already started an industrial mega-solar power generation project with a capacity of 5MW on a 100,000sqm site. Power generation data for this Sayo IDEC Mosuyama Solar Power Plant can be viewed online in real time. In addition, the company has started an own-use solar power generation business (where the owner uses in-house the electricity generated by the array).

IDEC is also taking on the challenge of creating a new industry by promoting the creation of international standards for its world-leading ultrafine bubble generation technology. This technology is now being applied in a wide range of fields. For example, it is being used for cleaning in industrial settings and stimulating growth in the context of agriculture and fisheries.

Business prospects

The business environment for solar power generation, including IDEC’s own business, is becoming increasingly severe year by year due to excessive competition from an increasing number of players and lower selling prices for electricity. IDEC will therefore focus on own-use solar power generation, where solar arrays can be installed on rooftops or in other unused spaces for providing electricity directly to the array owner, and on power supply as part of business continuity plan (BCP) measures. In addition, the company aims to solve diverse social challenges on a global level by using the control technology and environmental technology it has cultivated over the years. One example is its store solutions encompassing the entire supply chain from production to logistics and retail outlets.

Earnings by region			FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
(JPYmn)			Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.
Revenue			29,343	36,319	42,173	43,468	43,426	59,783	62,757	58,355	53,983
	YoY		-9.9%	23.8%	16.1%	3.1%	-0.1%	37.7%	5.0%	-7.0%	-7.5%
	Japan		20,141	24,591	28,730	29,248	29,956	31,122	31,806	30,401	27,209
		YoY	-13.6%	22.1%	16.8%	1.8%	2.4%	3.9%	2.2%	-4.4%	-10.5%
	The Americas		-	-	-	6,060	5,406	9,511	10,160	9,477	8,681
		YoY	-	-	-	-	-10.8%	75.9%	6.8%	-6.7%	-8.4%
	EMEA		-	-	-	854	766	10,005	11,092	10,377	8,831
		YoY	-	-	-	-	-10.3%	1,206.1%	10.9%	-6.4%	-14.9%
	Asia Pacific		4,642	5,992	6,843	7,304	7,296	9,143	9,697	8,098	9,260
		YoY	-5.9%	29.1%	14.2%	6.7%	-0.1%	25.3%	6.1%	-16.5%	14.3%
	North America		3,955	4,943	5,742	-	-	-	-	-	-
		YoY	8.3%	25.0%	16.2%	-	-	-	-	-	-
	Europe		603	793	856	-	-	-	-	-	-
		YoY	-8.6%	31.5%	7.9%	-	-	-	-	-	-
Operating profit			1,434	2,342	2,910	3,176	3,547	6,112	5,728	4,704	4,041
	YoY		-48.2%	63.3%	24.3%	9.1%	11.7%	72.3%	-6.3%	-17.9%	-14.1%
	Operating profit margin		4.9%	6.4%	6.9%	7.3%	8.2%	10.2%	9.1%	8.1%	7.5%
	Japan		409	1,123	1,489	1,766	2,120	3,509	3,096	2,539	2,033
		YoY	-71.8%	174.6%	32.6%	18.6%	20.0%	65.5%	-11.8%	-18.0%	-19.9%
		Operating profit margin	2.0%	4.6%	5.2%	6.0%	7.1%	11.3%	9.7%	8.4%	7.5%
	The Americas		-	-	-	414	388	779	804	544	544
		YoY	-	-	-	-	-6.3%	100.8%	3.2%	-32.3%	-
		Operating profit margin	-	-	-	6.8%	7.2%	8.2%	7.9%	5.7%	6.3%
	EMEA		-	-	-	12	113	688	627	585	-252
		YoY	-	-	-	-	841.7%	508.8%	-8.9%	-6.7%	-
		Operating profit margin	-	-	-	1.4%	14.8%	6.9%	5.7%	5.6%	-2.9%
	Asia Pacific		641	661	805	687	734	1,271	1,056	810	1,517
		YoY	-22.1%	3.1%	21.8%	-14.7%	6.8%	73.2%	-16.9%	-23.3%	87.3%
		Operating profit margin	13.8%	11.0%	11.8%	9.4%	10.1%	13.9%	10.9%	10.0%	16.4%
	North America		313	412	506	-	-	-	-	-	-
		YoY	5.0%	31.6%	22.8%	-	-	-	-	-	-
		Operating profit margin	7.9%	8.3%	8.8%	-	-	-	-	-	-
	Europe		39	66	52	-	-	-	-	-	-
		YoY	-26.4%	69.2%	-21.2%	-	-	-	-	-	-
		Operating profit margin	6.5%	8.3%	6.1%	-	-	-	-	-	-
	Adjustments		31	78	56	295	191	-135	143	223	198
USD			-	100.17	109.77	120.15	108.38	110.86	110.93	108.72	106.10
	YoY		-	-	9.6%	9.5%	-9.8%	2.3%	0.1%	-2.0%	-2.4%
EUR			-	-	-	-	118.79	129.66	128.44	122.03	121.88
	YoY		-	-	-	-	-	9.2%	-0.9%	-5.0%	-0.1%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Revenue by product category			FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22
(JPYmn)			Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Est.
Revenue			29,343	36,319	42,173	43,468	43,426	59,783	62,757	58,355	53,983	69,000
	YoY		-9.9%	23.8%	16.1%	3.1%	-0.1%	37.7%	5.0%	-7.0%	-7.5%	27.8%
	Industrial Switches		-	-	-	-	12,881	28,212	29,685	27,329	25,054	32,400
		YoY	-	-	-	-	-	119.0%	5.2%	-7.9%	-8.3%	29.3%
		% of total	-	-	-	-	29.7%	47.2%	47.3%	46.8%	46.4%	47.0%
	Industrial Relays & Components		-	-	-	-	10,607	11,324	11,444	10,339	9,803	13,900
		YoY	-	-	-	-	-	6.8%	1.1%	-9.7%	-5.2%	41.8%
		% of total	-	-	-	-	24.4%	18.9%	18.2%	17.7%	18.2%	20.1%
	Automation & Sensing		-	-	-	-	6,084	8,184	8,755	8,958	8,203	9,200
		YoY	-	-	-	-	-	34.5%	7.0%	2.3%	-8.4%	12.2%
		% of total	-	-	-	-	14.0%	13.7%	14.0%	15.4%	15.2%	13.3%
	Safety & Explosion Protection		-	-	-	-	5,250	6,359	6,934	6,657	6,513	8,500
		YoY	-	-	-	-	-	21.1%	9.0%	-4.0%	-2.2%	30.5%
		% of total	-	-	-	-	12.1%	10.6%	11.0%	11.4%	12.1%	12.3%
	Systems		-	-	-	-	2,850	3,002	3,476	3,047	3,516	4,000
		YoY	-	-	-	-	-	5.3%	15.8%	-12.3%	15.4%	13.8%
		% of total	-	-	-	-	6.6%	5.0%	5.5%	5.2%	6.5%	5.8%
	Other		-	-	-	-	5,751	2,699	2,460	2,021	891	1,000
		YoY	-	-	-	-	-	-53.1%	-8.9%	-17.8%	-55.9%	12.2%
		% of total	-	-	-	-	13.2%	4.5%	3.9%	3.5%	1.7%	1.4%
Revenue by previous product category			FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22
(JPYmn)			Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Est.
Revenue			29,343	36,319	42,173	43,468	43,426
	YoY		-9.9%	23.8%	16.1%	3.1%	-0.1%
	Control equipment		16,819	19,416	22,572	24,055	23,975
		YoY	-5.2%	15.4%	16.3%	6.6%	-0.3%
		% of total	57.3%	53.5%	53.5%	55.3%	55.2%
	Control and factory automation equipment		3,438	4,301	6,162	6,191	6,372
		YoY	-18.4%	25.1%	43.3%	0.5%	2.9%
		% of total	11.7%	11.8%	14.6%	14.2%	14.7%
	Control peripherals		4,592	4,930	5,206	5,341	4,838
		YoY	-10.8%	7.4%	5.6%	2.6%	-9.4%
		% of total	15.6%	13.6%	12.3%	12.3%	11.1%
	Explosion protection and disaster prevention equipment		1,534	1,594	1,605	1,652	1,760
		YoY	5.8%	3.9%	0.7%	2.9%	6.5%
		% of total	5.2%	4.4%	3.8%	3.8%	4.1%
	Others		2,958	6,076	6,627	6,226	6,479
		YoY	-26.1%	105.4%	9.1%	-6.1%	4.1%
		% of total	10.1%	16.7%	15.7%	14.3%	14.9%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.
Note: IDEC has adjusted some product categories from FY03/22, and the results for FY03/21 are retroactively adjusted.

Revenue by destination				FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
(JPYmn)				Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.
Revenue				29,343	36,319	42,173	43,468	43,426	59,783	62,757	58,355	53,983
	YoY			-9.9%	23.8%	16.1%	3.1%	-0.1%	37.7%	5.0%	-7.0%	-7.5%
	Japan			-	23,108	26,529	27,579	27,939	28,158	29,373	28,032	24,638
		YoY		-	-	14.8%	4.0%	1.3%	0.8%	4.3%	-4.6%	-12.1%
		% of total		-	63.6%	62.9%	63.4%	64.3%	47.1%	46.8%	48.0%	45.6%
	Overseas			-	13,211	15,644	15,888	15,486	31,625	33,383	30,322	29,344
		YoY		-	-	18.4%	1.6%	-2.5%	104.2%	5.6%	-9.2%	-3.2%
		% of total		-	36.4%	37.1%	36.6%	35.7%	52.9%	53.2%	52.0%	54.4%
		The Americas		-	-	-	-	5,495	9,265	9,909	9,203	8,509
			YoY	-	-	-	-	-	68.6%	7.0%	-7.1%	-7.5%
			% of total	-	-	-	-	12.7%	15.5%	15.8%	15.8%	15.8%
		EMEA		-	-	-	-	1,513	9,999	11,011	10,276	8,869
			YoY	-	-	-	-	-	560.9%	10.1%	-6.7%	-13.7%
			% of total	-	-	-	-	3.5%	16.7%	17.5%	17.6%	16.4%
		Asia Pacific		-	6,140	7,879	7,977	8,476	12,360	12,462	10,841	11,965
			YoY	-	-	28.3%	1.2%	6.3%	45.8%	0.8%	-13.0%	10.4%
			% of total	-	16.9%	18.7%	18.4%	19.5%	20.7%	19.9%	18.6%	22.2%
		North America		-	4,894	5,698	5,872	-	-	-	-	-
			YoY	-	-	16.4%	3.1%