Slide 1: First Half 2005 Results
FIRST HALF 2005 RESULTS July 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 uncertainties
Slide 2: Agenda
Agenda 1. Second Quarter & First Half Results • Summary of Results P. 3 • Transition in Sales and Operating Profit P. 4 • Results by Product P. 5-11 2. Second Half Projections • Assumptions P. 12 • Summary of Projected Results P. 13 • Transition in Sales and Operating Profit P. 14 • Projections by P
Slide 3: Summary of Results
Summary of Results 2Q&1H 2005 (Billions of yen) 2005 2004 % Change 2004 Actual % sales Projection % sales Actual % sales Projection Actual Net sales 912.5 901.6 850.4 +1.2% +7.3% Gross profit 440.4 48.3% 456.3 50.6% 430.3 50.6% -3.5% +2.3% 2Q Op. profit 126.9 13.9% 132.7 14.7% 119.9 14.1% -4.4% +5.9
Slide 4: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q 2005 Actual v. 2Q 2005 Projection (Billions of yen) 2Q 2005 Sales Op. Profit Projection (Apr. 27, 2005) 901.6 132.7 Change in Exchange Rate Foreign exchange impact •1USD: 105.00 to 107.71 yen + 10.2 + 5.9 •1EURO: 135.00 to 135.37 yen [net sales, cost of sa
Slide 5: Business Machines
Business Machines 2Q&1H 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 1,600 ( ) Local currency base 400 OP margin 30% 22.7% 21.3% 21.8% 21.7% 1,200 300 19.7% 20% +4.8%(+5.2%) 800 200 +4.3% 1,142 1,197 249 259 10% +3.5%(+3.7%) 400 100 -4.5% 583 615 603 124 140 119 0
Slide 6: Office Imaging Products
Office Imaging Products 2Q&1H 2005 Growth rate y/y (Unit base) Copying Sales Growth rate y/y Machines (2Q) (Billions of yen) ( ) Local currency base Color : +56% 750 Others Mono- : -7% Color +2.4%(+2.4%) chrome Monochrome 554 568 Total : -3% Copying +18.4%(+18.4%) 500 Machines (1H) +2.7%(+2.5%) Colo
Slide 7: Computer Peripherals
Computer Peripherals 2Q&1H 2005 Growth rate y/y (Unit base) LBP (2Q) Sales Growth rate y/y Color : +58% (Billions of yen) ( ) Local currency base Mono- : +25% chrome 750 Others IJP Total : +28% LBP +8.9%(+9.9%) LBP (1H) 531 578 Color : +49% Mono- : +27% 500 +3.0%(+2.7%) chrome +5.8%(+6.4%) Total : +
Slide 8: Cameras
Cameras 2Q&1H 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 500 ( ) Local currency base 100 OP margin 25% 400 20% 75 17.0% 17.4% 17.7% 16.3% 14.9% 300 +9.2%(+9.2%) 15% 50 +0.7% 200 379 10% 347 +15.3%(+15.1%) +18.0% 61 62 219 25 100 190 200 38 5% 32 30 0 0 0% 2Q04 2Q
Slide 9: Cameras
Cameras 2Q&1H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Video cameras Growth rate y/y 500 (Unit base) Digital cameras +9.2%(+9.2%) Film cameras & Lenses Digital Cameras 400 379 347-16.2%(-16.3%) 2Q : +39% 1H : +31% 300 +15.3%(+15.1%) 219 190 200 200 -18.1%(-18.6%) +16.6%(+
Slide 10: Optical and Other Products
Optical and Other Products 2Q&1H 2005 Sales Operating Profit (Billions of yen) (Billions of yen) Growth rate y/y 200 ( ) Local currency base 30 OP margin 15% 150 20 8.6% 10% 8.4% +13.1%(+12.4%) 100 6.6% 6.8% 180 +38.8% 159 10 21 5% +16.1%(+14.9%) 50 3.0% 15 77 87 90 +145.0% 11 8 3 0 0 0% 2Q04 2Q05 2
Slide 11: Optical and Other Products
Optical and Other Products 2Q&1H 2005 Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) +13.1%(+12.4%) 150 Others +16.1%(+14.9%) 200 180 IC Stepper Unit Breakdown SPE IC Stepper Unit Breakdown By Light Source 159 By Light Source i-line 150 +4.2%(+4.5%) ArF 4% i-line 1
Slide 12: Assumptions
Assumptions 2H 2005 Average Exchange Rate 2H05 FY05 FY04 Yen-1USD 110.00 yen 108.18 yen 108.12 yen Yen-1EURO 132.00 yen 133.94 yen 134.57 yen Impact of Exchange Rate Movement (2H impact given a one yen change) Sales Operating Profit Yen-1USD 6.8 Billion yen 3.6 Billion yen Yen-1EURO 3.6 Billion yen
Slide 13: Summary of Projected Results
Summary of Projected Results 2H 2005 (Billions of yen) 2H 2005 2H 2005 2H 2004 % Change Current Previous Previous 2H 2004 Actual projection projection projection Actual Net sales 1,924.2 1,905.0 1,819.4 + 1.0% + 5.8% Gross profit 933.0 940.0 887.6 -0.7% + 5.1% % sales 48.5% 49.3% 48.8% Op. profit 30
Slide 14: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2H 2005 Current Projection v. 2H 2005 Previous Projection (Billions of yen) 2H05 Sales Op. Profit Previous projection (Apr. 27, 2005) 1,905.0 308.0 Change in Exchange Rate Foreign exchange impact •1USD: 105.00 to 110.00 yen + 23.5 + 10.9 •1EURO: 135.00 to 132
Slide 15: Office Imaging Products
Office Imaging Products 2H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Others Growth rate y/y 800 (Unit base) Color +7.7%(+7.9%) Monochrome Copying 598 610 600 567 Machines +17.2%(+17.4%) Color : +40% Mono- : -9% +18.4%(+19.0%) chrome 400 Total : -4% 200 +0.8%(+0.9%) 0 2H04
Slide 16: Colorization of Copying Machines
Colorization of Copying Machines Transition in Unit Sales of Transition in Color Ratio Color Copying Machines (Base year 2002 equals 100) 40% Value base 387 (includes consumables) 33% 400 Unit base 30% 28% 23% 283 300 iRC3170 20% 18% iRC2570 iRC3200 13% iRC3100 iRC3220 200 180 9% iRC2620 iRC5800 10%
Slide 17: Computer Peripherals/LBP
Computer Peripherals/LBP 2H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Others Growth rate y/y 1,000 (Unit base) IJP LBP LBP +6.8%(+6.2%) 750 663 661 Color : +35% 619 Mono- : +2% chrome +21.9%(+22.3%) 500 Total : +5% IJP 250 +1.4%(+0.3%) SFP : +5% MFP : +91% Total : +18% 0 2
Slide 18: Steady Increase in Unit Sales of Color LBPs
Steady Increase in Unit Sales of Color LBPs Transition in Unit Sales of Transition in Color Ratio Color LBPs (Base year 2002 equals 100) 400 40% Value base $399 model (includes consumables) 35% 338 Unit base 31% 30% 300 $499 model 23% 240 20% 16% 12% 200 10% 10% 5% 5% 110 100 0% FY02 FY03 FY04 FY05
Slide 19: Computer Peripherals/IJP
Computer Peripherals/IJP 2H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Others Growth rate y/y 1,000 (Unit base) IJP LBP LBP +6.8%(+6.2%) 750 663 661 Color : +35% 619 Mono- : +2% chrome +21.9%(+22.3%) 500 Total : +5% IJP 250 +1.4%(+0.3%) SFP : +5% MFP : +91% Total : +18% 0 2
Slide 20: Cameras
Cameras 2H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base Video Cameras Growth rate y/y 600 (Unit base) Digital Cameras +6.1%(+6.0%) Film Cameras/Lenses Digital Cameras 416 438 441 +13% 400 +10.0%(+9.9%) +6.0%(+6.0%) 200 +2.6%(+2.3%) 0 2H04 2H05 2H05 Previous Current Projection
Slide 21: 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 100 Canon 19% 20% Share in units Unit base 33% >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 22: Optical and Other Products
Optical and Other Products 2H 2005 Sales Growth rate y/y (Billions of yen) ( ) Local currency base 250 Others SPE IC Stepper Unit Breakdown By Light Source 200 +1.3%(-0.4%) 160 KrF 46% 54% i-line 158 158 150 IC Stepper 300mm Ratio (Units) +3.0%(+2.7%) 100 300mm 54% 50 +0.2%(-2.3%) SPE (Unit sales) 2
Slide 23: Summary of Projected Results
Summary of Projected Results 2005 Current Projection v. 2004 Actual (Billions of yen) 2005 Current Projection 2004 Actual % Change 1H 2H FY 1H 2H FY 1H 2H FY Actual Projection Projection Net sales 1,755.8 1,924.2 3,680.0 1,648.4 1,819.4 3,467.9 +6.5% +5.8% +6.1% Gross profit 850.0 933.0 1,783.0 825.
Slide 24: Operating Profit by Segment
Operating Profit by Segment 2005 Current Projection v. 2004 Actual (Billions of yen) 2005 Current Projection 2004 Actual % Change 1H 2H FY Actual Projection Projection 1H 2H FY 1H 2H FY Business 259.5 306.4 565.9 248.8 272.3 521.1 +4.3% +12.5% +8.6% Machines % sales 21.7% 23.2% 22.5% 21.8% 21.9% 21.
Slide 25: Supplementary Information
Supplementary Information July 27, 2005 Canon Inc. 25
Slide 26: Summary of Projected Results
Summary of Projected Results 3Q 2005 (Billions of yen) 3Q05 3Q04 % Current Projection Actual Change Net sales 855.0 838.3 +2.0% Gross profit 414.0 409.8 +1.0% % sales 48.4% 48.9% Op. profit 136.0 158.3 -14.1% % sales 15.9% 18.9% Net income 84.0 101.8 -17.5% % sales 9.8% 12.1% Foreign Exchange Rate Y
Slide 27: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q/1H 2005 Actual v. 2Q/1H 2004 Actual (Billions of yen) 2Q 1H Sales Op. Profit Sales Op. Profit 2004 Actual 850.4 119.9 1,648.4 253.4 Change in Exchange Rate (2Q) Foreign exchange impact + 3.4 + 3.8 + 1.1 + 3.1 •1USD: 109.67 to 107.71 Yen [net sales, cost of
Slide 28: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2005 v. 2Q 2004 (Billions of yen) 2Q05 2Q04 Change Gross Profit 440.4 430.3 + 10.1 (Billions of yen) % sales 48.3% 50.6% - 2.3pt 90 +66 60 +25 30 +10 +3 +1 0 -30 -14 -60 -71 Forex Sales Price Forex Cost Others Total -90 impact volume change impact reduction change o
Slide 29: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2005 v. 2Q 2004 (Billions of yen) 2Q05 2Q04 Change (Billions of yen) Op. Profit 126.9 119.9 + 7.0 90 % sales 13.9% 14.1% - 0.2pt 60 30 +10 +7 +0 0 -3 -30 -60 Total change in Change in Change in Total change in -90 gross profit SG&A SG&A forex operating (excludin
Slide 30: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2H/FY 2005 Current Projection v. 2H/FY 2004 Actual (Billions of yen) 2H FY Sales Op. Profit Sales Op. Profit 2004 Actual 1,819.4 290.4 3,467.9 543.8 Change in Exchange Rate (2H) Foreign exchange impact •1USD: 107.70 to 110.00 Yen + 4.4 - 1.7 + 5.5 + 1.4 [net
Slide 31: 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 75 400 600 10.4% 57 51 51 49 60 10% 49 400 45 200 5.0% 30 5% 489 486 296 448 444 432 200 3.1% 148 15 1.1% 1.0% 98 39 37 0 0 0 0% FY01 FY02 FY03 FY04 2Q05 FY01 F
Slide 32: 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 600 200 Free C/F Depreciation 500 500 Investing C/F 309 400 367 400 343 630 562 300 300 430 181 77 188 200 405 298 99 175 200 258 253 87 161 319 100 215 193 177 110 100 134 0 0 04 05 04
Slide 33: Financial Ratios
Financial Ratios (Yen) 600 EPS (Basic) 20% Dividends per share 16.8% ROE 15.9% 15.5% 500 ROA 413.65 15% 12.2% 12.5% 387.80 400 313.81 300 10% 217.56 10.1% 9.7% 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 July 27, 2005 Canon Inc. Supplementary Info