Slide 1: Canon Inc. Third Quarter 2005 Results
Canon Inc. Third Quarter 2005 Results October 27, 2005 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 uncertai
Slide 2: Agenda
Agenda ■Third Quarter Results P3-4 ■Full-Year Projections P5-7 ■Details by Product P8-20 ■Supplementary Information P21-28 Oct. 27, 2005 Canon Inc. 2
Slide 3: Summary of Results
Summary of Results 3Q 2005 Actual (Billios of yen) 3Q 2005 3Q 2005 3Q 2004 % change 3Q 2004 Actual Projection Actual Projection Actual Net sales 878.5 855.0 838.3 +2.7% +4.8% Gross profit 429.9 414.0 409.8 +3.8% +4.9% [% sales] 48.9% 48.4% 48.9% Op. profit 143.6 136.0 158.3 +5.6% -9.3% [% sales] 16.
Slide 4: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2005 Actual v. 3Q 2005 Projection (Billions of yen) 3Q 2005 Sales Op. Profit Projection (Jul. 27, 2005) 855.0 136.0 Change in Exchange Rate Foreign exchange impact •1USD: 110.00 to 111.23 yen + 10.0 + 6.8 •1EURO: 132.00 to 135.73 yen [net sales, cost of sales, e
Slide 5: Assumption (Foreign Exchange)
Assumption (Foreign Exchange) 4Q 2005 Projection Average Exchange Rate 4Q05 FY05 FY04 Yen-1USD 112.00 yen 109.07 yen 108.12 yen Yen-1EURO 135.00 yen 135.71 yen 134.57 yen Impact of Exchange Rate Movement (4Q impact given a one yen change) Sales Operating Profit USD 3.8 Billion yen 2.1 Billion yen EU
Slide 6: Summary of Projected Results
Summary of Projected Results FY 2005 Projection (Billios of yen) FY05 FY05 FY04 % change Current Previous Previous FY04 Actual projection projection projection Actual Net sales 3,740.0 3,680.0 3,467.9 + 1.6% +7.8% Gross profit 1,824.0 1,783.0 1,713.3 + 2.3% + 6.5% [% sales] 48.8% 48.5% 49.4% Op. pro
Slide 7: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2005 Current Projection v. FY 2005 Previous Projection (Billions of yen) FY 2005 Sales Op. Profit Previous projection (Jul. 27, 2005) 3,680.0 578.0 Change in Exchange Rate Foreign exchange impact •1USD: 108.18 to 109.07 yen +23.9 +16.1 •1EURO: 133.94 to 135.71 y
Slide 8: Business Machines
Business Machines 3Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 300 30% OP margin 24.1% 23.4% 22.1% 600 200 20% +3.1%(+2.1%) 300 580 604 598 100 -5.2% 10% 140 142 132 0 0 0% 3Q04 3Q05 3Q05 3Q04 3Q05 3Q05 Previous Previous projec
Slide 9: Business Machines
Business Machines FY 2005 Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 3,000 1,000 30% OP margin 21.8% 22.5% 22.0% 750 2,000 20% +5.5%(+4.8%) 500 2,388 2,520 2,518 +6.3% 1,000 10% 521 566 554 250 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Pr
Slide 10: Office Imaging Products
Office Imaging Products 3Q 2005 Actual & FY 2005 Projection Sales Growth rate y/y ( ) Local currency base (Billions of yen) 500 Others 2,000 Growth rate y/y (Unit base) Color Monochrome Copying Machines 400 (3Q) 1,500 +4.3%(+3.7%) Color : +23% +3.7%(+2.7%) Mono- 285 1,178 1,169 chrome : -6% 300 266
Slide 11: Computer Peripherals
Computer Peripherals 3Q 2005 Actual & FY 2005 Projection Growth rate y/y Sales Growth rate y/y (Unit base) ( ) Local currency base (Billions of yen) LBP(3Q) Color : +33% 500 Others 2,000 Mono- IJP chrome : +3% LBP Total : +6% 400 +8.0%(+7.3%) LBP(FY) +4.4%(+3.3%) 1,500 Color : +39% 296 1,239 1,242 M
Slide 12: Cameras
Cameras 3Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 300 90 30% OP margin 24.0% 200 60 18.0% 17.2% 20% +23.1%(+21.9%) +63.9% 100 203 30 10% 165 180 49 30 31 0 0 0% 3Q04 3Q05 3Q05 3Q04 3Q05 3Q05 Previous Previous projection projecti
Slide 13: Cameras
Cameras FY 2005 Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,500 300 30% OP margin 18.8% 1,000 200 17.1% 17.1% 20% +12.5%(+11.4%) +23.6% 500 100 10% 820 858 162 763 140 131 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Previous Current Previo
Slide 14: Cameras
Cameras 3Q 2005 Actual & FY 2005 Projection Sales Growth rate y/y ( ) Local currency base (Billions of yen) 300 Video Cameras 1,200 Growth rate y/y Digital Cameras (Unit base) Film cameras/Lenses +12.5%(+11.4%) +23.1%(+21.9%) Digital Cameras 820 858 3Q : +31% 203 200 800 763 -1.1%(-2.1%) FY : +21% 1
Slide 15: Transition in Unit Sales of Digital Cameras and D-SLR Ratio
Transition in Unit Sales of Digital Cameras and D-SLR Ratio Transition in Unit Sales of Canon’s D-SLR Ratio Digital Cameras (Millions of units) 125 Mkt. (Canon est.) 25% 40% Unit base Approx. 35% Canon Value base Share in units 20% 19% 30% 100 20% 17% 30% >80 14% >70 21% 75 15% 20% 52 50 10% 13% 11%
Slide 16: Optical and Other Products
Optical and Other Products 3Q 2005 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 15 10% OP margin 7.9% 7.8% 8% 100 10 6% 4.5% -9.8% 4% -17.3%(-19.2%) 50 5 10 93 9 71 77 2% 5 0 0 0% 3Q04 3Q05 3Q05 3Q04 3Q05 3Q05 Previous Previous project
Slide 17: Optical and Other Products
Optical and Other Products FY 2005 Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 75 10% OP margin 7.6% 8% 6.9% 6.3% 400 50 6% +14.8%(+13.5%) 4% 200 25 +36.0% 340 364 317 39 34 2% 29 0 0 0% FY04 FY05 FY05 FY04 FY05 FY05 Previous Curr
Slide 18: Optical and Other Products
Optical and Other Products 3Q 2005 Actual & FY 2005 Projection Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) IC Stepper Unit Breakdown IC Stepper Unit Breakdown 150 By Light Source 500 By Light Source +14.8%(+13.5%) -17.3%(-19.2%) ArF 3% i-line 400 340 364 ArF 3%
Slide 19: Sales by Product
Sales by Product 3Q 2005 Actual & FY 2005 Projection Sales: 3Q05 Actual Sales: FY05 Current Projection (Billions of yen) Growth rate y/y (Billions of yen) +7.8%(+7.0%) ( ) Local currency base 1,500 Optical and Other Products 4,000 3,740 Cameras 3,468 Business Information Products 364 +14.8%(+13.5%)
Slide 20: Operating Profit by Segment
Operating Profit by Segment 3Q 2005 Actual & FY 2005 Projection (Billions of yen) FY 2005 FY 2004 % change FY 3Q Actual 3Q Actual FY Actual 3Q FY Current projection Business 132.4 554.0 139.6 521.1 -5.2% +6.3% Machines [% sales] 22.1% 22.0% 24.1% 21.8% Cameras 48.8 161.7 29.8 130.8 +63.9% +23.6% [%
Slide 21: Supplementary Information
Supplementary Information Oct. 27, 2005 Canon Inc. 21
Slide 22: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2005 Actual v. 3Q 2004 Actual (Billions of yen) 3Q Sales Op. Profit 2004 Actual 838.3 158.3 Change in Exchange Rate Foreign exchange impact •1USD: 109.97 to 111.23 yen + 10.7 + 7.7 •1EURO: 134.37 to 135.73 yen [net sales, cost of sales, expenses] Sales volume im
Slide 23: Gross Profit Variance Analysis
Gross Profit Variance Analysis 3Q 2005 Actual v. 3Q 2004 Actual (Billions of yen) 3Q05 3Q04 Change Gross Profit 429.9 409.8 ＋20.1 (Billions of yen) % sales 48.9% 48.9% - 90 60 +40 30 +18 +20 +11 0 -1 -8 -30 -40 -60 Forex Sales Price Forex Cost Others Total -90 impact volume change impact reduction c
Slide 24: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2005 Actual v. 3Q 2004 Actual (Billions of yen) 3Q05 3Q04 Change (Billions of yen) Op. Profit 143.6 158.3 - 14.7 90 % sales 16.3% 18.9% - 2.6pt 60 30 +20 0 -2 -30 -15 -33 -60 Total change in Change in Change in Total change in -90 gross profit SG&A SG&A forex op
Slide 25: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2005 Projection v. FY 2004 Actual (Billions of yen) FY Sales Op. Profit 2004 Actual 3,467.9 543.8 Change in Exchange Rate Foreign exchange impact •1USD: 108.12 to 109.07 yen + 32.0 + 20.9 •1EURO: 134.57 to 135.71 yen [net sales, cost of sales, expenses] Sales vo
Slide 26: Inventories Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) Inventories 800 90 Debt 15% Turn-over (Days) Debt/Total Assets 75 400 10.4% 600 55 57 51 49 60 10% 49 400 45 200 5.0% 538 30 489 5% 296 448 444 432 200 3.1% 15 148 1.1% 1.3% 98 39 49 0 0 0 0% FY01 FY02 FY03 FY04 3Q05 FY01 F
Slide 27: Capital Expenditure Free Cash Flow
Capital Expenditure Free Cash Flow (Billions of yen) (Billions of yen) 700 700 Capex Operating C/F 600 600 Free C/F 190 Net Investing C/F 500 i 500 384 309 400 400 343 80 620 276 562 212 300 300 263 430 405 387 369 200 200 319 289 286 253 220 220 193 175 100 159 100 137 0 0 1-3Q04 1-3Q05 FY04 FY05 1
Slide 28: Financial Ratios
Financial Ratios (Yen) 600 EPS (Basic) 20% Dividends per share 16.8% ROE 15.9% 16.1% 500 ROA 432.73 15% 12.2% 12.5% 387.80 400 313.81 300 10% 217.56 10.1% 10.1% 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 Oct. 27, 2005 Canon Inc. Supplementary Inf