Slide 1: Canon Inc. Second Quarter 2023 Results
Canon Canon Inc. Second Quarter 2023 Results July 27, 2023 This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management's views and assumptions formed by available information. All
Slide 2: Agenda
Canon Agenda @ 2Q 2023 Results P2 -3 m@ FY 2023 Projection P4-5 ™@ Details by Business P6 - 12 (2Q 2023 Results & FY 2023 Projection) @ Financial Situation P13-14 @ Sustainability Measures P15 @ Excellent Global Corporation Plan Phase VI P16 @ Supplementary Information P17 - 21
Slide 3: Second quarter and first half results overview
As for the global economy in the second quarter, due to the continued hike in interest rates to curb inflation, a sense of uncertainty regarding the future direction of the economy remained. However, we have not seen a significant change from the previous quarter as consumer spending and employment
Slide 4: Results in the second quarter and first half by Business Unit
Our results in the second quarter and first half of this year by Business Unit. First, Printing. Though office MFD revenue increased thanks to significant unit sales growth from last year, business unit profit was down due to lower sales of laser printers. As for Imaging, by expanding sales of new m
Slide 5: Full-year performance outlook
Our full-year performance outlook. We changed our exchange rate assumptions for the second half of the year to 135 and 145 yen against the U.S. dollar and euro, respectively. This represents a 5 yen weakening of the yen against both currencies compared to our previous assumptions. Amid uncertainty,
Slide 6: Full-year outlook by Business Unit
Our full-year outlook by Business Unit. Our plan calls for all four Business Units to post sales and profit growth compared to last year and for Printing, Imaging and Industrial to post double-digit profitability. Additionally, for Medical, we aim to renew our record high performance of last year in
Slide 7: Office MFDs
As for office MFDs, due to their superior image quality, print speed, and durability, demand for them remains solid as the core printing device in offices. And this year, we expect the market to grow at a rate of around 5%. In the second quarter, although product supply stabilized and backorders wer
Slide 8: Laser and inkjet printers
As for laser printers in the second quarter, sales of both hardware and consumables were down. This reflects continued shipment adjustments, linked to tough market conditions from the second half of last year, and the high level of sales in 2022, during which product supply was recovering. From the
Slide 9: Production market printing
As for the production market, although some companies were cautious about investing due to continued high inflation, overall, printing companies are going ahead with their purchasing of printing equipment as planned, and print volumes have been firm. In the second quarter, sales grew, driven by larg
Slide 10: Cameras
As for cameras, we expect the market to grow slightly to 5.85 million units in 2023, as user demand is stimulated by new mirrorless cameras launched by each company. Since last year, we have launched 6 mirrorless cameras, from entry class to advanced amateur models, in an effort to strengthen our EO
Slide 11: Network cameras
The network camera market continues to expand as their range of applications broadens from security to marketing, production process management etc. And, under this market environment, we achieved double-digit sales growth also in our second quarter. To ensure that we are able to capture growing dem
Slide 12: Medical diagnostic imaging equipment
As for the diagnostic imaging equipment market in 2023, we expect it to grow at a cruising rate of 2%, thanks to recovering investment in large-size equipment, which was held back due to COVID. In the second quarter, although the installation of large-size equipment was partially delayed due to the
Slide 13: Industrial: semiconductor lithography equipment
The semiconductor device market is expected to temporarily decline this year due to the weak market for memory devices. However, from a long-term perspective, growth is expected. With the tailwind of domestic production efforts by various countries from the viewpoint of economic security and manufac
Slide 14: Inventory
Inventory at the end of June increased approximately 40.0 billion yen compared to the end of March. This reflects the impact of revaluation of foreign currency- denominated assets due to yen depreciation. If the impact of foreign exchange rates is excluded, inventory was basically around the same le
Slide 15: Cash flow and shareholder returns
As for operating cash flow, in addition to net income, which is close to 300.0 billion yen, by reducing inventory in the second half of the year, we expect to generate 633.0 billion yen in cash, which is significantly more than last year. As for investing cash flow, we plan to use 257.0 billion yen
Slide 16: Sustainability measures: plastics recycling technology
We have been making efforts to reduce the size and weight of our products as well as reuse and recycle them, with the aim of contributing to the development of a circular economy, which has been designated one of the most important issues we face. In July, we announced a new technology that enables
Slide 17: Excellent Global Corporation Plan Phase VI
In the first half of this year, which marks the halfway point of "Phase VI of the Global Excellent Corporate Group Plan," we got off to a good start, with double- digit sales growth in our new businesses and high revenue contributions from our existing businesses, resulting in increased sales and pr
Slide 18: Supplementary Information
Supplementary Information
Slide 19: FY 2023 Operating Profit Analysis (2Q actual vs 2Q 2022)
FY 2023 Operating Profit Analysis (2Q 2023 Actual versus 2Q 2022 Actual) ™ Changes in sales volume: Negative due to lower printer sales ™ Expenses: Increased due to rise in selling-related expenses linked to sales growth, and R&D expenses (Billions of yen) Canon +12.0 +9.3 ae 22 14.4 ——_ “ -15.3 . C
Slide 20: FY 2023 Operating Profit Analysis (Current Projection vs FY 2022)
FY 2023 Operating Profit Analysis Canon (FY 2023 Current Projection versus FY 2022 Actual) ™ Changes in sales volume: Increase in profit, as all four business units expected to post sales growth ™ Expenses: Increase due to sales expansion and R&D investment to expand future performance (Billions of
Slide 21: FY 2023 Operating Profit Analysis (vs Previous Projection)
FY 2023 Operating Profit Analysis Canon (FY 2023 Current Projection versus Previous Projection) (Billions of yen) +35.5 45.6 +13.8 -33.1 -1.8 Change in Net Sales, excluding FX FX Details impact, for reference Net Sales: +92.4 Printing: 22.9 400.0 380.0 Costof Sales: -30.1 Imaging: -11.8 Op. Expenses
Slide 22: Printing Net Sales Growth Rate Y/Y
Canon Printing — Net Sales Growth Rate Y/Y (Hardware & Non-hardware) FY 2022 2Q Full Year E Actual Actual spy Hardware +21% +13%| +10% +30% Office MFDs Non-hardware +8% +6% +7% + 10%!) ic Hardware +15% +10%| -1% +17%| Non-hardware +3% +4%| 0% +2% spy Hardware -6% +5%| +47% | +34% LPs Non-hardware -2
Slide 23: Office/Prosumer Net Sales by Product Category
Canon Office/Prosumer - Net Sales by Product Categor Billions of yen) FY 2022 2Q Full Year Actual Actual Office MFDs 137.3 567.8) Office [Others 77.4 321.1 214.7 888.9 LPs 176.2 651.2) Prosumer |IJPs 91.5 370.1 267.7 1,021.3 Semiconductor Lithography Equipment- Unit Breakdown by Light Source (Units)