Canon Inc. · TSE:7751
Canon — Q1 2021 Earnings Presentation
28 slides from Canon's earnings presentation, Apr 26, 2021
Slide 1: Canon Inc. First Quarter 2021 Results
Canon Canon Inc. First Quarter 2021 Results April 26, 2021 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 as
Slide 2: Agenda
Canon Agenda m™ Changes to Segments P2 B 1Q 2021 Results P3-5 @ FY 2021 Projection P6-9 ™ Details by Business P10-—17 (1Q 2021 Results & FY 2021 Projection) H@ Financial Situation P18-19 @ Sustainability Measures P20 @ Supplementary Information P21-26
Slide 3: Changes to Segments
This year, we reorganized and are now managing and operating our businesses by industrial segments of which there are four, namely Printing, Imaging, Medical, and Industrial & Others. The first of major changes is inkjet printers. In order to operate our printing business as a whole, we established
Slide 4: First quarter results overview
In the first quarter, the effects of COVID-19 remained strong. However, even under such conditions, the markets for cameras and laser printers, which had been shrinking until recently, began to show signs of bottoming out. As we have also seen stabilization in our business performance, the growth of
Slide 5: Q1 results by business segment
As for Printing, even amid weak demand for office print, we posted stable profit, supported by not only home demand, mainly addressed through inkjet printers, but also the effect of structural reform taken so far. As for Imaging, still benefiting from the effects of new camera bodies, unit sales of
Slide 6: Operating profit analysis for Q1
Changes in exchange rates, particularly the yen’s depreciation against the euro, had a positive impact on net sales and operating profit of 7.9 billion yen and 6.0 billion yen, respectively. As for cost reduction, improvement was made mainly in fixed costs, reflecting, among others, last year’s decl
Slide 7: FY2021 projection assumptions
First, our exchange rate assumptions, which are 105 yen to the U.S. dollar and 125 yen to the euro. Although we are currently seeing another wave of COVID-19 infections, countries around the world are rapidly ramping up vaccinations. Based on this, our view that the global economy will accelerate to
Slide 8: Raised FY2021 projection
Compared to our previous projection, we raised our outlook for net sales by 100.0 billion yen, operating profit by 39.5 billion yen and net income by 25.0 billion yen, and now expect net sales to increase 10.8% to 3.5 trillion yen, operating profit to increase 79.1% to 198.0 billion yen, and net inc
Slide 9: FY2021 projection by business unit
We raised our projection and expect all four of our Business Units to achieve sales and profit growth. As for Printing, we raised our outlook to reflect continued strong home demand for inkjet and laser printers, which is lasting longer than expected. We are able to flexibly respond to changes in th
Slide 10: FY2021 operating profit projection factors
As for the impact of changes in exchange rates, as the yen was actually weaker in the first quarter than we projected, and now that we expect the yen to be 5 yen weaker against the euro from April, operating profit increased 24.0 billion yen. As for cost reduction, we expect a negative impact of 5 b
Slide 11: Office MFD market and results
As for the Office MFD market, although print volume was temporarily impacted by another wave of COVID-19, we expect it to gradually recover, similar to hardware sales as people return to the office thanks to more people being vaccinated. As we originally expected the first quarter to be somewhat slu
Slide 12: Laser and inkjet printers (Prosumer)
As for laser and inkjet printers, in the Prosumer market, demand for office products was weak, as it will take a little more time before we see a recovery in people returning to the office, demand for home products remained strong, particularly in developed countries, thanks to remote working and le
Slide 13: Production printing
As for Production in 2021, in the commercial printing market, unlike major printing companies, which are relatively stable financially, small- and medium-sized printing companies that prioritized cash conservation have begun to gradually resume investment as the economy recovers. Based on this, we e
Slide 14: Cameras
As for cameras, even amid continued restrictions on people’s movement, demand for cameras remains solid, supported by the need for high-quality visual expression. Based on this, we still expect the 2021 camera market to be up slightly or 5.8 million units. In the first quarter, revenue was significa
Slide 15: Network cameras
As for the network camera market, we expect it to grow at a double-digit rate in 2021, returning to its original growth path, as factors limiting economic activities in each country are eased. The need for people's safety and security is strong, and as a consequence of COVID-19, non- face-to-face an
Slide 16: Medical
As for Medical, although we are still feeling the effects of COVID-19, on sales to medical institutions, and on equipment installation activity, as more people become vaccinated, we expect the operation of medical institutions to return to normal from the second half of the year. And with this, we e
Slide 17: Semiconductor and FPD lithography equipment
As for semiconductor lithography equipment, we expect the market to be at a record high level in 2021. This reflects the continuation from last year of strong investment towards memory used in data centers, PCs, and other devices as well as growing demand for other integrated circuits such as power
Slide 18: Industrial equipment (OLED)
As for industrial equipment, we expect the OLED panel market to grow steadily, thanks to the growing number of smartphone models with OLED displays, and a shift towards using large- and medium-sized OLED panels in devices like TVs, laptops, and tablets. As a result of increasing demand for panels du
Slide 19: Inventory
At the end of last year, we saw a stronger than expected recovery in sales of some products, particularly cameras. Consequently, we ended 2020 with inventory at a level where we had back orders. Inventory at the end of March, reflects progress in resolving these shortages by raising production capac
Slide 20: Cash flow and dividends
We now expect net income to be higher than our previous projection and operating cash flow to be 400 billion yen. From this, we expect to secure 200 billion yen in free cash flow, which is higher than last year, while allocating sufficient funds for capital expenditures and other investments that we
Slide 21: Sustainability measures
While tackling various social issues such as climate change and the COVID-19 pandemic, we feel it is important to have constructive communication with stakeholders to raise long-term corporate value. Our sustainability report, the latest Japanese version of which was posted to our website today is c
Slide 22: Closing remarks on Phase VI plan
In recent years, the shrinking market for cameras and laser printers, which have had a significant impact on our performance, has begun to show signs of bottoming out. And the results of steadily implemented business portfolio transformation and structural reform are beginning to show up in the way
Slide 23: Supplementary Information
Supplementary Information
Slide 24: Major Products in Each Segment
Major Products in Each Segment Canon Printing Office Office multifunction devices (MF Ds), Document solutions Prosumer Laser multifunction printers (MFPs), Laser printers, Inkjet printers, Image scanners, Calculators Production Digital continuous feed presses, Digital sheet-fed presses, Wide-format
Slide 25: FY 2021 Operating Profit Analysis
FY 2021 Operating Profit Analysis Canon (FY 2021 Current Projection versus FY 2020 Actual) Change in Net Sales, excluding FX impact, for reference Printing: +146.5 (Billions of yen) Imaging: +69.7 Medical: +24.1 Industrial & Others: +87.3 Total: +3276 i +16.5 FX Details +159.7 =— Net Sales: +23.1 -1
Slide 26: Net Sales Growth Rate of Printing
Net Sales Growth Rate of Printing Hardware & Non-hardware Canon FY 20, FY 2020 1Q Full Year Actual Actual Jpy Hardware +9% +21% -19% -21% Office MEDs Non-hardware -21% +4%| -3% -20% Hardware +7% +19% -17% -20% tc Non-hardware -22% +4%| -1% -20% Jpy Hardware +3% +15% -21% -21% LPs Non-hardware -6% +4
Slide 27: Color Ratio (Office MFDs & LPs)
Color Ratio (Office MFDs & LPs Canon FY 2020 Full Y 1Q Full Year Projectio Actual Actual Office meps |N&t Sales 60% 61% 59% 59% Units 59% 61% 58% 59% LPs Net Sales 51% 52% 53% 51% Units 19% 21% 21% 21% Sales Growth by Monochrome & Color Office MFDs FY 2021 FY 2020 7 Full Year 1a Full Year Projection
Slide 28: Interchangeable lens ratio and lithography unit breakdown
Canon FY 2020 1Q Full Year Actual Actual DILC Ratio Net Sales * 83% 87% Units 60% 65% DCC Units (Millions) 0.40 1.48) * Net Sales Includes Interchangeable Lenses Semiconductor Lithography Equipment Unit Breakdown by Light (Units) u Fy 2020 Full Year 1Q Full Year Projection Actual Actual KrF 4 37] 3