Slide 1: Canon Inc. First Quarter 2016 Results
Canon Inc. First Quarter 2016 Results April 26, 2016 Toshizo Tanaka Executive Vice President & CFO 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 assumpti
Slide 2: Agenda
Agenda 1Q 2016 Results P3 – 5 FY 2016 Projections P6 – 9 Details by Business P10 – 16 Financial Situation P17 – 19 Supplementary Information P20 – 25 April 26, 2016 Canon Inc. 2
Slide 3: 1Q 2016 in Summary
1Q 2016 in Summary External Environment Global economy Developed countries - Gradual recovering Emerging markets - Weak due to weakness in China and low oil price Results Increased lithography equipment and network camera revenue Recorded significant decrease in laser printer revenue Pos
Slide 4: Summary of Results
Summary of Results 1Q 2016 Actual (Billions of yen) 1Q 2016 1Q 2015 Pct. Change Actual Actual Net Sales 797.2 857.4 -7.0% Gross Profit 404.7 438.6 -7.7% (% Sales) 50.8% 51.1% Op. Profit 40.1 66.2 -39.4% (% Sales) 5.0% 7.7% Net Income Attributable to Canon Inc. 28.0 33.9 -17.5% (% Sales) 3.5% 4.0% Fo
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 1Q 2016 Actual v. 1Q 2015 Actual (Billions of yen) Sales Op. Profit 1Q 2015 Actual 857.4 66.2 Foreign Exchange Impact Change in Exchange Rate -31.0 -13.3 (Net Sales, Cost of Sales, Expenses) •1USD: 119.25 to 114.91 yen •1EURO: 133.89 to 127.01 yen Sales Volume Impa
Slide 6: Exchange Rate Assumptions
Exchange Rate Assumptions 2016 Current Projection Average 2Q-4Q16 FY16 FY15 Exchange Rate Yen-1USD 110.00 yen 111.05 yen 121.13 yen Yen-1EURO 125.00 yen 125.44 yen 134.20 yen Impact of Exchange Rate Movement (2Q-4Q Impact Given a One Yen Change) Net Sales Operating Profit USD 11.1 billion yen
Slide 7: Overview of Latest Projections
Overview of Latest Projections External Environment Slower than expected pace of global economic recovery Protracted economic slowdown in China and emerging markets Appreciation of the yen due to delayed hike in U.S. interest rates Full-year Projection Lowered projection for laser printers
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2016 Current Projection (Billions of yen) FY 2016 FY 2015 Pct. Change Current Projection Actual Net Sales 3,600.0 3,800.3 -5.3% Gross Profit 1,804.0 1,934.4 -6.7% (% Sales) 50.1% 50.9% Op. Profit 300.0 355.2 -15.5% (% Sales) 8.3% 9.3% Net Income Attributable to Canon
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2016 Current Projection v. FY 2016 Previous Projection (Billions of yen) Sales Op. Profit Previous Projection (Jan. 27, 2016) 3,850.0 360.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 120.00 to 111.05 yen -158.1 -61.2 •1EURO: 130.00 to 125.44 yen (Net
Slide 10: Office
1Q16 Growth Rate y/y (Unit Base) 1Q16 Color Ratio Office Color Copiers +11% Printers -14% Value Base* Copiers 57% Printers 51% Monochrome -6% -22% Unit Base 48% 17% 1Q 2016 Actual Total +1% -21% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 800 Monochrome copi
Slide 11: Office: Laser Printer Market Trends and Our Strategy
Office Laser Printer: Mkt. Trends and Our Strategy Laser Printer Market Trends Ongoing shift to color and multifunction Weak market (economic slowdown in emerging markets, delayed recovery in developed countries) Market bottoming out in the second half of 2016 and turns toward gradual Our Sale
Slide 12: Office
FY16 Growth Rate y/y (Unit Base) FY16 Color Ratio Office Color Copiers +14% Printers -10% Value Base* Copiers 56% Printers 51% Monochrome +3% -11% Unit Base 49% 17% FY 2016 Projection Total +8% -11% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 3,000 Monochrom
Slide 13: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 1Q16 0% Digital Camera Ratio * 1Q16 Digital Cameras Value Base 84% 1Q 2016 Actual Compact Digital -22% Unit Base 49% Cameras Total Digital Cameras -12% * Proportion of Total Digital Cameras IJP -1% * Value Base Incl
Slide 14: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY16 -7% Digital Camera Ratio * FY16 Digital Cameras Value Base 85% FY 2016 Projection Compact Digital -24% Unit Base 51% Cameras Total Digital Cameras -16% * Proportion of Total Digital Cameras IJP 0% * Value Base
Slide 15: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) 1Q15 1Q16 1Q 2016 Actual 1Q15 1Q16 ArF 0 0 IC 18 19 KrF 2 6 FPD 0 8 i-line 16 13 (Billions of yen) Sales Growth rate y/y ( ) Local currency base 210 Sales Eliminations Industry and Others Lithography
Slide 16: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) FY16 FY16 FY 2016 Projection FY16 FY16 FY15 Previous Current FY15 Previous Current Projection Projection Projection Projection ArF 0 0 0 (Billions of yen) Sales Growth rate y/y ( ) Local currency bas
Slide 17: Inventories
Inventories (Billions of yen) 800 90 Amount (Billions of yen) Turnover (Days) 700 59 70 58 57 53 54 54 52 50 47 50 591 595 600 569 563 550 30 533 528 521 502 500 10 -10 400 -30 300 -50 1QE14 2QE14 3QE14 4QE14 1QE15 2QE15 3QE15 4QE15 1QE16 April 26, 2016 Canon Inc. 17
Slide 18: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 1,000 Operating C/F Increase in PP&E Free C/F Net Income Attributable to Canon Inc. Investing C/F Depreciation 750 21 500 250 930 315 257 584 550 500 507 475 454 510 250 269 300 230 255 230 220 200 0 250 -420 275 264 273 28
Slide 19: Cash on Hand
Cash on Hand Cash on Hand (Year-end) (Billions of yen) 1,500 4 Cash-on-hand (Billions of yen) Cash-on-hand (In months of 2nd-half net sales, except FYE16, 3.5 which is based on full-year net sales) 3 2.6 1,000 2.4 2.3 2.4 2.5 2.2 845 1.9 789 2 720 667 690 634 1.5 500 1 0.5 0 0 FYE12 FYE13 FYE14 FYE1
Slide 20: Supplementary Information
Supplementary Information April 26, 2016 Canon Inc. 20
Slide 21: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2016 Current Projection v. FY 2015 Actual (Billions of yen) Sales Op. Profit FY 2015 Actual 3,800.3 355.2 Foreign Exchange Impact -217.3 -88.5 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 121.13 to 111.05 yen •1EURO: 134.20 to 125.44
Slide 22: Gross Profit Variance Analysis
Gross Profit Variance Analysis 1Q 2016 Actual v. 1Q 2015 Actual (Billions of yen) 1Q16 1Q15 Change (Billions of yen) Gross Profit 404.7 438.6 -33.9 % Sales 50.8% 51.1% -0.3pt. 50 8.5 6.4 0 -4.8 -13.0 -31.0 -33.9 -50 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction Change on I
Slide 23: Operating Profit Variance Analysis
Operating Profit Variance Analysis 1Q 2016 Actual v. 1Q 2015 Actual (Billions of yen) 1Q16 1Q15 Change Op. Profit 40.1 66.2 -26.1 (Billions of yen) % Sales 5.0% 7.7% -2.7pt. 50 9.2 0 -1.4 -26.1 -33.9 -50 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Excluding (Forex
Slide 24: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 45 30.0% 661 Debt Debt/Total Assets 25.0% 20.0% 13.7% 15.0% 10.0% 5.0% 4 3 2 2 0 0.0% 0.1% 0.1% 0.0% 0.0% FYE12 FYE13 FYE14 FYE15 1QE16 Supplementary Information April 26, 2016 Canon Inc. 24
Slide 25: Financial Ratios
Financial Ratios (Yen) 900 15% 600 10% 8.7% 8.4% 8.7% 7.4% 6.8% 5.7% 5.6% 5.9% 5.0% 300 4.2% 5% 229.03 191.34 200.78 201.65 183.14 0 0% FY12 FY13 FY14 FY15 FY16 Current Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information April 26, 2016 Canon Inc. 25