Slide 1: Canon Inc. Fiscal Year 2005 Results
Canon Inc. Fiscal Year 2005 Results January 30, 2006 Toshizo Tanaka Senior Managing Director, Group Executive Finance and Accounting Headquarters 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 ■ 4Q&FY 2005 Results P3-14 ■ 2006 Projections P15-23 ■ Financial Situation P24-25 ■ Supplementary Information P26-32 Jan. 30, 2006 Canon Inc. 2
Slide 3: Summary of Results
Summary of Results 4Q/FY 2005 Actual (Billions of yen) 2005 2004 % change Actual % sales Projection % sales Actual % sales Projection Actual Net sales 1,119.8 1,105.7 981.1 +1.3% +14.1% Gross profit 539.2 48.1% 544.1 49.2% 477.8 48.7% -0.9% +12.8% 169.3 15.1% 173.2 15.7% 132.1 13.5% -2.3% +28.1% 4Q
Slide 4: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q 2005 Actual v. 4Q 2005 Projection (Billions of yen) 4Q 2005 Sales Op. Profit Projection (Oct. 27, 2005) 1,105.7 173.2 Change in Exchange Rate Foreign exchange impact +31.0 +7.1 •1USD: 112.00 to 117.39 yen [net sales, cost of sales, expenses] •1EURO: 135.00 to 13
Slide 5: Business Machines
Business Machines 4Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP margin 300 30% 22.4% 21.2% 600 19.9% 200 20% +6.2%(+0.7%) 723 707 666 +13.2% 300 100 10% 162 150 133 0 0 0% 4Q04 4Q05 4Q05 4Q04 4Q05 4Q05 Previous Previous proje
Slide 6: Business Machines
Business Machines FY 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 3,000 OP margin 900 30% 21.8% 22.0% 21.7% 2,000 600 20% +4.8%(+3.2%) 2,518 2,502 +4.0% 2,388 1,000 300 554 542 10% 521 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Previous Pre
Slide 7: Office Imaging Products
Office Imaging Products 4Q&FY 2005 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y ( ) Local currency base Copying Machines 500 2,000 4Q FY Others Color -8% +17% Color Mono- Monochrome -16% -12% chrome 400 +3.0%(-1.3%) 1,500 +2.9%(+1.5%) Total -15% -10% 326 301 310 300 1,1
Slide 8: Computer Peripherals
Computer Peripherals 4Q&FY 2005 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y ( ) Local currency base LBP 4Q FY 500 2,000 Color +17% +34% Others +10.6%(+3.7%) Mono- IJP +4% +14% chrome LBP +8.3%(+6.4%) Total +5% +16% 400 364 367 1,500 IJP 4Q FY 332 1,242 1,245 SFP -10% +
Slide 9: Cameras
Cameras 4Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 400 OP margin 90 30% 300 21.2% 18.5% 60 20% +18.4%(+11.8%) 15.8% 200 +59.2% 276 297 251 30 63 10% 100 51 40 0 0 0% 4Q04 4Q05 4Q05 4Q04 4Q05 4Q05 Previous Previous projection proj
Slide 10: Cameras
Cameras FY 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,200 OP margin 300 30% 800 19.8% 18.8% 200 17.1% 20% +15.2%(+12.8%) +32.8% 858 879 400 763 100 10% 162 174 131 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Previous Previous projection
Slide 11: Cameras
Cameras 4Q&FY 2005 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y ( ) Local currency base Digital 500 1,500 cameras 4Q FY Video cameras Digital Digital cameras +6% +21% cameras Film cameras/Lenses 400 1,200 +18.4%(+11.8%) +15.2%(+12.8%) 297 858 879 300 276 900 251 -1.9%(-
Slide 12: Optical and Other Products
Optical and Other Products 4Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP margin 15 15% 100 10 10% +79.0%(+74.4%) 6.2% 116 5.3% 50 107 5 3.4% 5% 9 9 65 +148.3% 3 0 0 0% 4Q04 4Q05 4Q05 4Q04 4Q05 4Q05 Previous Previous projectio
Slide 13: Optical and Other Products
Optical and Other Products FY 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 OP margin 75 15% 400 50 10% +17.6%(+15.8%) 7.6% 7.3% 6.3% 200 373 25 +34.6% 5% 364 317 39 39 29 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Previous Previous proj
Slide 14: Optical and Other Products
Optical and Other Products 4Q&FY 2005 Actual Sales Operating Profit Growth rate y/y (Billions of yen) ( ) Local currency base (Billions of yen) IC Stepper Unit Breakdown IC Stepper Unit Breakdown By Light Source By Light Source +79.0%(+74.4%) ArF 500 +17.6%(+15.8%) ArF 150 Others 3% SPE 116 KrF 373
Slide 15: FY 2006 Assumptions
FY 2006 Assumptions Average FY 2006 FY 2005 Exchange Rate USD 115.00 yen 110.58 yen EURO 135.00 yen 137.04 yen Impact of Exchange Rate Movement (Full-year impact given a one yen change) Sales Operating Profit USD 14.0 Billion yen 7.7 Billion yen EURO 7.4 Billion yen 5.6 Billion yen Jan. 30,
Slide 16: Summary of Projected Results
Summary of Projected Results FY 2006 Projection v. FY 2005 Results (Billions of yen) FY06 FY05 % Change Projection Actual Net sales 4,060.0 3,754.2 +8.1% Gross profit 1,996.0 1,819.0 +9.7% [% sales] 49.2% 48.5% Op. profit 653.0 583.0 +12.0% [% sales] 16.1% 15.5% Net income 415.0 384.1 +8.0% [% sales
Slide 17: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2006 Projection v. FY 2005 Actual (Billions of yen) FY Sales Op. Profit 2005 3,754.2 583.0 Change in Exchange Rate Foreign exchange impact •1USD: 110.58 to 115.00 yen + 47.1 + 21.9 •1EURO: 137.04 to 135.00 yen [net sales, cost of sales, expenses] Sales volume im
Slide 18: Office Imaging Products in 2006
Office Imaging Products in 2006 Strengthen lineup of Sales Growth rate y/y office color models (Billions of yen) ( ) Local currency base Others Introduce high-speed 2,000 Color Monochrome color models for POD 1,500 +6.1%(+5.1%) Further expand solutions 1,153 1,224 +9.5%(+8.7%) business 1,000 +
Slide 19: Laser Beam Printers in 2006
Laser Beam Printers in 2006 Sales expansion through Sales Growth rate y/y the launch of competitive (Billions of yen) ( ) Local currency base products and utilization of 2,000 Others IJP full lineup LBP +10.7%(+8.4%) 1,500 1,378 Steady growth in 1,245 consumable sales through 1,000 +25.7%(+24.9%
Slide 20: Inkjet Printers in 2006
Inkjet Printers in 2006 Improvement WW Sales Growth rate y/y market share by (Billions of yen) ( ) Local currency base strengthening MFP 2,000 Others IJP lineup LBP +10.7%(+8.4%) 1,500 1,378 Accelerate consumable 1,245 sales through installed 1,000 +25.7%(+24.9%) base expansion Growth rate y/y
Slide 21: Digital Cameras in 2006
Digital Cameras in 2006 Maintain prices through Sales introduction of competitive (Billions of yen) Growth rate y/y ( ) Local currency base new products Video cameras 1,500 Expand sales of high value- Digital cameras Film cameras/Lenses added products +8.2%(+7.0%) (digital SLRs, IXY series, 1,00
Slide 22: Semiconductor Production Equipment in 2006
Semiconductor Production Equipment in 2006 Est. market size in 2006 IC steppers: approx. 450 units LCD aligners: approx. 125 units Sales Growth rate y/y Improve profitability through (Billions of yen) ( ) Local currency base cost reduction and shortened 750 Others lead-time SPE Ensure successf
Slide 23: Operating Profit by Segment
Operating Profit by Segment FY 2006 Projection v. FY 2005 Results (Billions of yen) FY 2006 Projection FY 2005 Actual Business Machines 598.9 542.0 [% sales] 22.2% 21.7% Cameras 206.0 173.7 [% sales] 21.7% 19.8% Optical & Other Products 33.1 38.8 [% sales] 5.6% 7.3% Corporate and Eliminations -185.0
Slide 24: Balance Sheet Major Items
Balance Sheet Major Items (Billions of yen) Cash and Marketable Securities (Billions of yen) Inventories (Days) 1,500 900 Inventories Turn-over (Days) 75 57 51 49 49 47 1,000 600 50 500 1,005 300 25 888 489 510 690 448 432 444 506 521 0 0 0 FY01 FY02 FY03 FY04 FY05 FY01 FY02 FY03 FY04 FY05 (Billions
Slide 25: Return to Shareholders
Return to Shareholders (Yen) 150 Dividend per Share 30% 125 Payout ratio 23.1% 25% 16.8% 100 100 20% 15.9% 75 13.1% 13.8% 65 15% 50 50 10% 25 30 25 5% 0 0% FY01 FY02 FY03 FY04 FY05 Projection Jan. 30, 2006 Canon Inc. 25
Slide 26: Supplementary Information
Supplementary Information Jan. 30, 2006 Canon Inc. 26
Slide 27: Summary of Projected Results
Summary of Projected Results 1Q 2006 Projection v. 1Q 2005 Actual (Billions of yen) 1Q06 1Q05 % Change Projection Actual Net sales 900.0 843.4 +6.7% Gross profit 439.0 409.7 +7.2% [% sales] 48.8% 48.6% Op. profit 153.0 143.3 +6.8% [% sales] 17.0% 17.0% Net income 98.0 93.1 +5.3% [% sales] 10.9% 11.0
Slide 28: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q&FY 2005 Actual v. 4Q&FY 2004 Actual (Billions of yen) 4Q FY Sales Op. Profit Sales Op. Profit 2004 Actual 981.1 132.1 3,467.9 543.8 Change in Exchange Rate (4Q) Foreign exchange impact + 54.5 + 36.5 + 66.4 + 47.1 •1USD: 105.86 to 117.39 Yen [net sales, cost of s
Slide 29: Gross Profit Variance Analysis
Gross Profit Variance Analysis 4Q 2005 Actual v. 4Q 2004 Actual (Billions of yen) (Billions of yen) 4Q05 4Q04 Change Gross Profit 539.2 477.8 + 61.4 90 % sales 48.1% 48.7% - 0.6pt +61 +55 +54 60 +25 30 0 -10 -10 -30 -60 -53 Forex Sales Price Forex Cost Others Total impact volume change impact reduct
Slide 30: Operating Profit Variance Analysis
Operating Profit Variance Analysis 4Q 2005 Actual v. 4Q 2004 Actual (Billions of yen) (Billions of yen) 4Q05 4Q04 Change Op. Profit 169.3 132.1 + 37.2 90 % sales 15.1% 13.5% + 1.6pt +61 60 +37 30 0 -8 -16 -30 -60 Total change in Change in Change in Total change in gross profit SG&A SG&A forex operat
Slide 31: Free Cash Flow Capital Expenditure
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 800 Capex 800 Operating C/F Net income Free C/F Depreciation Investing C/F 200 600 600 205 415 384 309 400 400 343 690 266 276 606 562 490 466 465 401 384 200 200 319 253 240 226 210 200 193 184 0 0 FY03 FY04 FY05 FY06 FY03 FY04
Slide 32: Financial Ratios
Financial Ratios (Yen) 800 EPS (Basic) 20% ROE 16.8% 15.9% 16.0% 15.1% ROA 600 15% 9.8% 10.1% 10.1% 12.5% 9.0% 400 10% 6.6% 432.94 467.55 200 387.80 5% 313.81 217.56 0 0% FY02 FY03 FY04 FY05 FY06 Projection Supplementary Information Jan. 30, 2006 Canon Inc. 32