Slide 1: First Quarter 2005 Results
FIRST QUARTER 2005 RESULTS April 27, 2005 Toshizo Tanaka Senior Managing Director, Group Executive Finance and Accounting Headquarters Canon Inc. This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertaint
Slide 2: Agenda
Agenda 1. First Quarter Results • Summary of Results P.3 • Transition in Sales and Operating Profit P.4 • Results by Product P.5-13 2. 2Q&FY Projections • Assumptions P.14 • Summary of Projected Results P.15 • Transition in Sales and Operating Profit P.16 • Projections by Product P.17-26 3. Suppleme
Slide 3: Summary of Results
Summary of Results 1Q 2005 (Billions of yen) 1Q 2005 1Q 2005 1Q 2004 % change 1Q 2004 Results Projection Results Projection Results Net sales 843.4 825.0 798.1 + 2.2% + 5.7% Gross profit 409.7 412.0 395.5 - 0.6% + 3.6% % sales 48.6% 49.9% 49.6% Op. profit 143.3 135.0 133.5 + 6.1% + 7.3% % sales 17.0
Slide 4: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 1Q 2005 Actual v. 1Q 2005 Projection (Billions of yen) 1Q 2005 Sales Op. Profit Projection (Jan. 28, 2005) 825.0 135.0 Change in Exchange Rate Foreign exchange impact •1USD: 103.00 to 104.58 yen + 8.6 + 5.2 •1EURO: 135.00 to 137.04 yen [net sales, cost of sal
Slide 5: Business Machines
Business Machines 1Q 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 1,000 ( ) Local currency base 300 OP margin 30% 23.0% 23.7% 22.3% 750 200 20% 500 +6.1%(+6.9%) +13.0% 100 10% 559 581 594 250 133 141 125 0 0 0% 1Q04 1Q05 1Q05 1Q04 1Q05 1Q05 Projection Projection Ap
Slide 6: Office Imaging Products
Office Imaging Products 1Q 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Others Growth rate y/y 400 (Unit base) Color Monochrome +2.1(+2.3%) Copying 279 Machines 300 269 275 Color : +11% +20.5%(+20.7%) Mono- : -20% chrome 200 +19.5%(+19.2%) Total : -18% 100 -8.1%(-7.8%) 0 1Q04
Slide 7: Computer Peripherals
Computer Peripherals 1Q 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Others Growth rate y/y 400 (Unit base) IJP +12.1%(+13.5%) LBP LBP 278 292 300 Color : +37% 261 Mono- : +29% +2.5%(+2.6%) chrome 200 Total : +30% IJP 100 +17.3%(+19.3%) SFP : +16% MFP : +7% Total : +14% 0 1Q0
Slide 8: Cameras
Cameras 1Q 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 250 ( ) Local currency base 100 OP margin 30% 200 75 18.6% 20% 150 15.9% 14.9% 50 100 +1.7%(+2.1%) 157 158 160 -18.4% 10% 25 50 29 25 24 0 0 0% 04.1Q 05.1Q 05.1Q 1Q04 1Q05 1Q05 Projection Projection April 27,
Slide 9: Cameras
Cameras 1Q 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Growth rate y/y 300 Video Cameras (Unit base) Digital Cameras Digital Cameras Film Cameras/Lenses +21% +1.7%(+2.1%) 200 157 158 160 -13.7%(-13.4%) 100 +7.1%(+7.5%) 0 -6.3%(-5.7%) 1Q04 1Q05 1Q05 Projection April 27, 2005
Slide 10: New Digital SLR Camera
New Digital SLR Camera EOS Kiss Digital N (EOS Digital Rebel XT, in U.S., EOS 350D Digital, in Europe) (Previous Model) • Internally developed CMOS sensor • Internally developed CMOS sensor approx. 6.3 megapixels approx. 8.0 megapixels • DIGIC image processor • DIGIC II image processor • Smallest in
Slide 11: Optical and Other Products
Optical and Other Products 1Q 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 200 ( ) Local currency base 20 15% OP margin 16 10.5% 150 10.1% 9.4% 10% 12 100 8 +7.9% +10.3%(10.1%) 13 5% 12 11 50 90 82 87 4 0 0 0% 1Q04 1Q05 1Q05 1Q04 1Q05 1Q05 Projection Projection *Ex
Slide 12: Optical and Other Products
Optical and Other Products 1Q 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base 150 Others IC Stepper Unit Breakdown SPE By Light Source ArF +10.3%(+10.1%) 9% KrF 36% 55% i-line 100 87 90 82 IC Stepper 300mm Ratio (Units) -1.5%(-0.9%) 300mm 48% 50 +16.5%(+16.0%) SPE (Unit sales) 1
Slide 13: Operating Profit by Product
Operating Profit by Product 1Q 2005 v. 1Q 2004 (Billions of yen) 1Q05 1Q04 Change Business Machines 140.8 124.6 +16.2 % sales 23.7% 22.3% Cameras 23.8 29.2 -5.4 % sales 14.9% 18.6% Optical and Other Products 12.7 11.7 +0.9 % sales 10.1% 10.5% Corporate and Eliminations -34.0 -32.0 -2.0 Total 143.3 1
Slide 14: Assumptions
Assumptions 2-4Q Average Exchange Rate 2-4Q Avg. FY05 FY04 Yen - 1USD 105.00 yen 104.90 yen 108.12 yen Yen - 1EURO 135.00 yen 135.44 yen 134.57 yen Impact of Exchange Rate Movement (2-4Q impact given a one yen change) Sales Operating Profit Yen - 1USD 10.0 Billion yen 5.5 Billion yen Yen - 1EURO 5.3
Slide 15: Summary of Projected Results
Summary of Projected Results 2Q&FY 2005 (Billions of yen) 2005 2004 % change Current Previous Previous 2004 % sales % sales Results % sales projection projection projection Results Net sales 901.6 900.0 850.4 + 0.2% + 6.0% Gross profit 456.3 50.6% 452.0 50.2% 430.3 50.6% + 1.0% + 6.0% 2Q Op. profit
Slide 16: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q/FY 2005 Current Projection v. 2Q/FY 2005 Previous Projection (Billions of yen) 2Q FY Sales Op. Profit Sales Op. Profit Previous projection (Jan, 28, 2005) 900.0 130.0 3,630.0 573.0 Foreign exchange impact + 7.9 + 3.9 + 32.9 + 17.4 Change in Exchange Rate (
Slide 17: Office Imaging Products
Office Imaging Products 2Q&FY 2005 Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) Others Growth rate y/y 500 1,500 (Unit base) Color +4.6%(+5.3%) Monochrome Copying 400 +5.0%(+5.7%) 1,121 1,163 1,172 Machines (2Q) +18.4%(+19.1%) Color : +73% 285 292 299 1,000 Mono-
Slide 18: Steady Progress Toward Colorization
Steady Progress Toward Colorization Transition in Unit Sales of Transition in Color Ratio Color Copying Machines (Base year 2002 equals 100) 40% Value base (includes consumables) 400 367 Unit base 32% 30% 28% 23% 283 300 20% 18% iRC3200 iRC3100 12% iRC3220 200 180 9% iRC2620 iRC5800 10% 5% iRC6800 3
Slide 19: Computer Peripherals
Computer Peripherals 2Q&FY 2005 Growth rate y/y (Unit base) LBP (2Q) Growth rate y/y Sales ( ) Local currency base Color : +88% (Billions of yen) (Billions of yen) Mono- : +26% chrome 500 Others 1,500 +8.4%(+10.2%) Total : +32% IJP LBP 1,228 1,246 LBP (FY) 400 1,150 Color : +55% +7.9%(+10.2%) Mono-
Slide 20: Steady Increase in Unit Sales of Color LBPs
Steady Increase in Unit Sales of Color LPBs Transition in Unit Sales of Transition in Color Ratio Color LBPs (Base year 2002 equals 100) 400 371 40% Value base (includes consumables) 34% Unit base 31% 30% 300 $499 model 23% 240 20% 16% 13% 200 10% 10% 5% 5% 110 100 0% FY02 FY03 FY04 FY05 FY02 FY03 F
Slide 21: Computer Peripherals
Computer Peripherals 2Q&FY 2005 Growth rate y/y (Unit base) LBP (2Q) Growth rate y/y Sales ( ) Local currency base Color : +88% (Billions of yen) (Billions of yen) Mono- : +26% chrome 500 Others 1,500 +8.4%(+10.2%) Total : +32% IJP LBP 1,228 1,246 LBP (FY) 400 1,150 Color : +55% +7.9%(+10.2%) Mono-
Slide 22: Steady Increase in IJP Unit Sales
Steady Increase in IJP Unit Sales Transition in Unit Sales of IJP (Base year 2002 equals 100) 500 MFP 458 200 SFP 400 Released 8 models 300 150 247 132 Released 15 models 120 200 145 109 100 100 FY02 FY03 FY04 FY05 FY02 FY03 FY04 FY05 Current Current *the above growth rate includes inkjet facsimiles
Slide 23: Cameras
Cameras 2Q&FY 2005 Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) Video Cameras Growth rate y/y 500 1,500 (Unit base) Digital Cameras Film Cameras/Lenses Digital Cameras 400 2Q : +45% +4.6%(+5.7%) FY : +20% 1,000 300 +5.4%(+6.4%) 763 803 798 +4.1%(+5.0%) 200 190 20
Slide 24: Continued Growth of Digital Cameras
Continued Growth of Digital Cameras Transition in Unit Sales Digital SLR Ratio of Digital Cameras (Millions of units) Approx. Mkt. (Canon est.) 20% 40% Value base 37% 100 Canon 19% 20% Share in units Unit base >80 30% 14% 17% >70 30% 75 15% 21% 52 50 10% 20% 13% 30 11% 9% 25 5% 10% 7% 14.0 16.8 8.6
Slide 25: Optical and Other Products
Optical and Other Products 2Q&FY 2005 Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) +12.1%(+11.5%) +5.5%(+5.0%) 150 Others 400 IC Stepper Unit Breakdown 339 334 IC Stepper Unit Breakdown SPE By Light Source 317 By Light Source i-line 300 ArF i-line 100 87 87 KrF +
Slide 26: Operating Profit by Product
Operating Profit by Product 2005 Current Projection v. 2004 (Billions of yen) 2005 2004 Current Projection 2Q FY 2Q FY Business Machines 139.7 600.3 124.2 521.1 % sales 22.7% 23.8% 21.3% 21.8% Cameras 29.9 124.7 32.2 130.8 % sales 14.9% 15.6% 17.0% 17.1% Optical and Other Products 10.6 30.7 3.4 28.8
Slide 27: Supplementary Information
Supplementary Information April 27, 2005 Canon Inc. 27
Slide 28: Gross Profit Variance Analysis
Gross Profit Variance Analysis 1Q 2005 v. 1Q 2004 (Billions of yen) 1Q05 1Q04 Change (Billions of yen) Gross Profit 409.7 395.5 + 14.2 90 % sales 48.6% 49.6% - 1.0pt 60 +42 30 +14 +2 +4 0 -2 -2 -30 -30 Forex Sales Price Forex Cost Others Total -60 impact volume change impact reduction change on impa
Slide 29: Operating Profit Variance Analysis
Operating Profit Variance Analysis 1Q 2005 v. 1Q 2004 (Billions of yen) 1Q05 1Q04 Change (Billions of yen) Op. Profit 143.3 133.5 + 9.8 90 % sales 17.0% 16.7% + 0.3pt 60 30 +14 +10 +0 0 -4 -30 Total change in Change in Change in Total change in -60 gross profit SG&A SG&A forex operating (excluding f
Slide 30: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 1Q 2005 v. 1Q 2004 (Billions of yen) 1Q Sales Op. Profit 2004 actual 798.1 133.5 Change in Exchange Rate Foreign exchange impact •1USD: 107.43 to 104.58 yen - 2.3 - 0.7 •1EURO: 134.02 to 137.04 yen [net sales, cost of sales, expenses] Sales volume impact Offi
Slide 31: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q/FY 2005 Current Projection v. 2Q/FY 2004 Actual (Billions of yen) 2Q FY Sales Op. Profit Sales Op. Profit 2004 actual 850.4 119.9 3,467.9 543.8 Foreign exchange impact - 8.2 - 4.2 - 29.9 - 16.9 Change in Exchange Rate (2Q) [net sales, cost of sales, expens
Slide 32: Inventories Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) 800 Inventories 90 Debt 15% Turn-over (Days) Debt/Total Assets 400 75 600 10.4% 57 52 51 49 60 300 10% 49 400 45 200 5.0% 296 516 30 5% 489 448 444 432 200 3.1% 100 148 15 1.1% 1.1% 98 39 38 0 0 0 0% FY01 FY02 FY03 FY04 1Q0
Slide 33: Capital Expenditure Free Cash Flow
Capital Expenditure Free Cash Flow (Billions of yen) (Billions of yen) 700 700 Capex Operating C/F 600 Net income 600 215 Free C/F 500 Depreciation 500 Investing C/F 309 400 367 400 635 343 300 562 300 420 200 253 375 200 100 319 105 50 55 98 77 210 193 100 0 47 93 44 84 92 -21 55 04 05 04 05 FY FY
Slide 34: Financial Ratios
Financial Ratios (Yen) 600 EPS (Basic) 20% Dividends per share 16.8% ROE 15.9% 15.5% 500 ROA 413.79 15% 12.2% 12.5% 387.80 400 313.81 300 10% 217.56 10.1% 9.8% 191.29 9.0% 200 6.6% 5% 5.9% 100 50 65 65 25 30 0 0% FY01 FY02 FY03 FY04 FY05 Current projection April 27, 2005 Canon Inc. Supplementary Inf