07.22.14
$4.19 Billion ($7.9 B total)
KEY EXECUTIVES:
Yasuyuki Kimoto, Chairman
Hiroyuki Sasa, President & Representative Director
Akihiro Taguchi, President, Medical Group
Shinichi Nishigaki, President, Life Science & Industrial Group
Haruo Ogawa, President, Imaging Group
Karl Watanabe, President & Chief Financial Officer, Olympus America Inc.
Rick Harbuck, Group VP, Olympus America Inc.
Hidenao Tsuchiya, President, Scientific Equipment Group, Olympus Corporation of the Americas
Luke Calcraft, President, Medical Systems Group, Olympus Corporation of the Americas
NO. OF EMPLOYEES: 16,552 (30,697 total)
GLOBAL HEADQUARTERS: Tokyo, Japan.
“Right actions in the future are the best apologies for bad actions in the past.”
— Tryon Edwards
Yasuyuki Kimoto and Hiroyuki Sasa refuse to let the past define them. Having avowed their predecessors’ reprehensible crimes, apologized profusely for the malfeasance, and sought absolution with investors, the Olympus Corporation chieftains now are moving forward with their professional lives by focusing on rebuilding the company.
“My responsibility toward Olympus is to develop an environment that will enable the company to fully leverage its deep-rooted strengths and competitive edge,” Kimoto told shareholders in the multinational’s fiscal 2013 annual report. “Looking ahead, we will remain vigilant as the Olympus Group steadily advances forward, adding to its list of accomplishments and striving to once again be viewed as a trustworthy company by stakeholders and society.”
Regaining public trust won’t be easy, though. The Japanese camera and endoscope maker has yet to really disassociate itself from the 2011 corruption scandal that triggered its downfall. Last summer, a Japanese court imposed suspended sentences on three former executives, including president Tsuyoshi Kikukawa, who admitted hiding $1.7 billion in losses over 20 years. The trio’s longstanding secret was exposed nearly three years ago after former CEO Michael C. Woodford uncovered irregular accounting practices at the Tokyo-based firm (he was immediately fired for the discovery).
Japanese authorities have chastened the firm with nearly 1 billion yen in fines—700 million yen ($9.9 million U.S.) from a local court last summer, 192 million yen from the country’s Financial Services Agency and 10 million yen from the Tokyo Stock Exchange, which has continued listing the company’s stock.
But Olympus and its British unit (Gyrus Group) still face prosecution in the United Kingdom for misleading auditors in 2009 and 2010. And the company currently is mulling its defense against a civil lawsuit (its 16th) filed this past spring by six Japanese trust banks demanding an additional 28 billion yen in damages.
“Our focus until now has been the correction of problems,” said Kimoto and Sasa, the company’s president and representative director, “but from now on we will also work more actively to show how Olympus has changed...”
And there have been plenty of changes since the scandal broke, the most important of which being the election of new management and a new board as well as the appointment of a chief compliance officer to ensure top-tier executives follow Groupwide governance reforms. Olympus also has instituted a restructuring plan that involves cutting 7 percent of its total workforce and closing 12 of its 30 manufacturing plants by 2015.
The company took some big steps beyond the scandal in FY13, settling Woodford’s multimillion-dollar discrimination/unfair dismissal lawsuit and negotiating a medical device joint venture with Sony. Both firms will sell endoscopes and imaging technologies worldwide, with Sony holding a 51 percent stake in the partnership, appropriately dubbed Sony Olympus Medical Solutions.
“We will channel our imaging technologies, resources and assets into the new venture,” Sony CEO Kazuo Hirai said when the agreement was announced. “By integrating these with Olympus’ wealth of knowledge and expertise in medical technologies and business, I am confident the new company will bring innovation to the medical device industry and achieve great success.”
Olympus also climbed back into the black in fiscal 2013, booking a net profit of 8 billion yen ($85 million) through March 31, 2013, and improving its EBITDA margin to 10.6 percent from 9.5 percent in FY12. The firm’s share price, which plummeted after the initial revelations of fraud, has since recovered to pre-scandal levels.
In addition, Olympus has secured support for its core endoscope business—fending off competition from domestic rivals Fujifilm and Hoya—while seeking extra funds to beef up its balance sheet. The company secured three sets of capital infusions worth 112 billion yen ($1.1 billion U.S.) in total (two of which were led by Sony), while preserving its share of the global flexible endoscope market at roughly 70 percent.
“You have to give a lot of credit to management—this is a company that was seen as a disaster at the time of the scandal,” Claudio Aritomi, a Tokyo-based analyst at New York, N.Y.-based Macquarie Group Limited, recently told the Financial Times. “They managed to get funds because they presented a plan to those people that they thought would work.”
And for the most part, management’s plan has worked. While Olympus’ FY13 total revenues fell 12.3 percent to 743.8 billion yen ($7.89 billion) and operating income slipped 1.2 percent to 35 billion yen ($372.1 million), the company posted solid increases in each of its sales regions (Japan, North America, Europe and Asia/Oceania).
Its Medical business performed particularly well domestically, but relinquished those gains to the strong U.S. dollar. Net sales, for instance, jumped 13 percent in local currency (394.7 billion yen) but declined 2.3 percent to $4.1 billion. Likewise, endoscope proceeds ballooned 14 percent domestically (191.7 billion yen) but slid 0.4 percent to $2.32 billion, though foreign exchange rates worked in the company’s favor in overseas endoscope sales (surging 15.7 percent to 147.9 billion yen and 0.5 percent to $1.8 billion).
Executives attributed the company’s strong endoscope sales (in yen) to new product introductions, including the Evis Exera III gastrointestinal video endoscopy system in Europe and the United States, as well as Evis Lucera Elite in Japan.
The Evis Exera III system works seamlessly with a wide range of endoscopes across specialties to provide easier data management and cost efficiencies. The system is compatible with all Olympus endoscopes used in bronchoscopy, endo-bronchial ultrasound, gastroenterology, laparoscopic and arthroscopic surgery, urology, anesthesiology and ENT (ear, nose, throat). The flexibility of this widespread platform helps facilities reduce their need for multiple video systems, thereby improving asset management by meeting the needs for endoscopic observation and minimally invasive surgery throughout the hospital, the company claims.
Surgical and endotherapy revenue suffered the same fate as its sister product category, rising 11.8 percent in local currency (157.4 billion yen) but falling 2.1 percent to $1.8 billion. Domestic revenue was up in yen (15.1 percent) and dollars (0.5 percent) while overseas proceeds lost 2.7 percent to the U.S. dollar.
The surgical and endotherapy unit also matched its sibling in new product launches, unveiling the Thunderbeat and Visera Elite.
The Thunderbeat combines advanced bipolar and ultrasonic energies into a single, multi-functional hand instrument, allowing surgeons to rapidly and simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread.
The Visera Elite platform is equipped with high-definition television imaging capability and advanced image processing to provide the best possible image for surgical equipment across multiple specialties. Its light source filter configuration is optimized to increase the brightness of the narrow band imaging (NBI) light by 1.2 times, enabling surgeons to operate under NBI visualization.
KEY EXECUTIVES:
Yasuyuki Kimoto, Chairman
Hiroyuki Sasa, President & Representative Director
Akihiro Taguchi, President, Medical Group
Shinichi Nishigaki, President, Life Science & Industrial Group
Haruo Ogawa, President, Imaging Group
Karl Watanabe, President & Chief Financial Officer, Olympus America Inc.
Rick Harbuck, Group VP, Olympus America Inc.
Hidenao Tsuchiya, President, Scientific Equipment Group, Olympus Corporation of the Americas
Luke Calcraft, President, Medical Systems Group, Olympus Corporation of the Americas
NO. OF EMPLOYEES: 16,552 (30,697 total)
GLOBAL HEADQUARTERS: Tokyo, Japan.
“Right actions in the future are the best apologies for bad actions in the past.”
— Tryon Edwards
Yasuyuki Kimoto and Hiroyuki Sasa refuse to let the past define them. Having avowed their predecessors’ reprehensible crimes, apologized profusely for the malfeasance, and sought absolution with investors, the Olympus Corporation chieftains now are moving forward with their professional lives by focusing on rebuilding the company.
“My responsibility toward Olympus is to develop an environment that will enable the company to fully leverage its deep-rooted strengths and competitive edge,” Kimoto told shareholders in the multinational’s fiscal 2013 annual report. “Looking ahead, we will remain vigilant as the Olympus Group steadily advances forward, adding to its list of accomplishments and striving to once again be viewed as a trustworthy company by stakeholders and society.”
Regaining public trust won’t be easy, though. The Japanese camera and endoscope maker has yet to really disassociate itself from the 2011 corruption scandal that triggered its downfall. Last summer, a Japanese court imposed suspended sentences on three former executives, including president Tsuyoshi Kikukawa, who admitted hiding $1.7 billion in losses over 20 years. The trio’s longstanding secret was exposed nearly three years ago after former CEO Michael C. Woodford uncovered irregular accounting practices at the Tokyo-based firm (he was immediately fired for the discovery).
Japanese authorities have chastened the firm with nearly 1 billion yen in fines—700 million yen ($9.9 million U.S.) from a local court last summer, 192 million yen from the country’s Financial Services Agency and 10 million yen from the Tokyo Stock Exchange, which has continued listing the company’s stock.
But Olympus and its British unit (Gyrus Group) still face prosecution in the United Kingdom for misleading auditors in 2009 and 2010. And the company currently is mulling its defense against a civil lawsuit (its 16th) filed this past spring by six Japanese trust banks demanding an additional 28 billion yen in damages.
“Our focus until now has been the correction of problems,” said Kimoto and Sasa, the company’s president and representative director, “but from now on we will also work more actively to show how Olympus has changed...”
And there have been plenty of changes since the scandal broke, the most important of which being the election of new management and a new board as well as the appointment of a chief compliance officer to ensure top-tier executives follow Groupwide governance reforms. Olympus also has instituted a restructuring plan that involves cutting 7 percent of its total workforce and closing 12 of its 30 manufacturing plants by 2015.
The company took some big steps beyond the scandal in FY13, settling Woodford’s multimillion-dollar discrimination/unfair dismissal lawsuit and negotiating a medical device joint venture with Sony. Both firms will sell endoscopes and imaging technologies worldwide, with Sony holding a 51 percent stake in the partnership, appropriately dubbed Sony Olympus Medical Solutions.
“We will channel our imaging technologies, resources and assets into the new venture,” Sony CEO Kazuo Hirai said when the agreement was announced. “By integrating these with Olympus’ wealth of knowledge and expertise in medical technologies and business, I am confident the new company will bring innovation to the medical device industry and achieve great success.”
Olympus also climbed back into the black in fiscal 2013, booking a net profit of 8 billion yen ($85 million) through March 31, 2013, and improving its EBITDA margin to 10.6 percent from 9.5 percent in FY12. The firm’s share price, which plummeted after the initial revelations of fraud, has since recovered to pre-scandal levels.
In addition, Olympus has secured support for its core endoscope business—fending off competition from domestic rivals Fujifilm and Hoya—while seeking extra funds to beef up its balance sheet. The company secured three sets of capital infusions worth 112 billion yen ($1.1 billion U.S.) in total (two of which were led by Sony), while preserving its share of the global flexible endoscope market at roughly 70 percent.
“You have to give a lot of credit to management—this is a company that was seen as a disaster at the time of the scandal,” Claudio Aritomi, a Tokyo-based analyst at New York, N.Y.-based Macquarie Group Limited, recently told the Financial Times. “They managed to get funds because they presented a plan to those people that they thought would work.”
And for the most part, management’s plan has worked. While Olympus’ FY13 total revenues fell 12.3 percent to 743.8 billion yen ($7.89 billion) and operating income slipped 1.2 percent to 35 billion yen ($372.1 million), the company posted solid increases in each of its sales regions (Japan, North America, Europe and Asia/Oceania).
Its Medical business performed particularly well domestically, but relinquished those gains to the strong U.S. dollar. Net sales, for instance, jumped 13 percent in local currency (394.7 billion yen) but declined 2.3 percent to $4.1 billion. Likewise, endoscope proceeds ballooned 14 percent domestically (191.7 billion yen) but slid 0.4 percent to $2.32 billion, though foreign exchange rates worked in the company’s favor in overseas endoscope sales (surging 15.7 percent to 147.9 billion yen and 0.5 percent to $1.8 billion).
Executives attributed the company’s strong endoscope sales (in yen) to new product introductions, including the Evis Exera III gastrointestinal video endoscopy system in Europe and the United States, as well as Evis Lucera Elite in Japan.
The Evis Exera III system works seamlessly with a wide range of endoscopes across specialties to provide easier data management and cost efficiencies. The system is compatible with all Olympus endoscopes used in bronchoscopy, endo-bronchial ultrasound, gastroenterology, laparoscopic and arthroscopic surgery, urology, anesthesiology and ENT (ear, nose, throat). The flexibility of this widespread platform helps facilities reduce their need for multiple video systems, thereby improving asset management by meeting the needs for endoscopic observation and minimally invasive surgery throughout the hospital, the company claims.
Surgical and endotherapy revenue suffered the same fate as its sister product category, rising 11.8 percent in local currency (157.4 billion yen) but falling 2.1 percent to $1.8 billion. Domestic revenue was up in yen (15.1 percent) and dollars (0.5 percent) while overseas proceeds lost 2.7 percent to the U.S. dollar.
The surgical and endotherapy unit also matched its sibling in new product launches, unveiling the Thunderbeat and Visera Elite.
The Thunderbeat combines advanced bipolar and ultrasonic energies into a single, multi-functional hand instrument, allowing surgeons to rapidly and simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread.
The Visera Elite platform is equipped with high-definition television imaging capability and advanced image processing to provide the best possible image for surgical equipment across multiple specialties. Its light source filter configuration is optimized to increase the brightness of the narrow band imaging (NBI) light by 1.2 times, enabling surgeons to operate under NBI visualization.