Canon Inc. · TSE:7751
Canon — H1 2007 Earnings Presentation
32 slides from Canon's earnings presentation, Jul 26, 2007
Slide 1: Canon Inc. First Half 2007 Results
Canon Inc. First Half 2007 Results July 26, 2007 Masahiro Osawa 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 uncertainties and ref
Slide 2: Agenda
Agenda Change in Method of Depreciation P3 2007 Results & FY 2007 Projections P4 – 5 2Q&1H 2007 Results P6 – 13 2H 2007 Projections P14 – 21 Supplementary Information P22 – 32 July 26, 2007 Canon Inc. 2
Slide 3: Change in Method of Depreciation
Change in Method of Depreciation Applied new depreciation method that provides a better picture of actual business performance Details Assets Covered: PP&E, including those acquired before 2Q 2007 Effective Date: Applicable from 2Q 2007 New Method: 250% declining balance method (Straight line m
Slide 4: Summary of Results
Summary of Results 2Q 2007 Actual & FY 2007 Current Projection v. 2006 Actual (Billions of yen) 2007 2006 Pct. Change Pre- Post- Pre- Post- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Net sales 1,126.9 1,126.9 1,029.0 +9.5% +9.5% Gro
Slide 5: Summary of Results
Summary of Results 2Q 2007 Actual & FY 2007 Current Projection v. 2007 Previous Projection (Billions of yen) 2007 Pct. Change Pre- Post- Pre- Post- Previous depreciation % Sales depreciation % Sales % Sales depreciation depreciation Projection Change Change Change Change Net sales 1,126.9 1,126.9 1,
Slide 6: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2Q 2007 Actual v. 2Q 2007 Previous Projection (Billions of yen) 2Q 2007 Sales Op. Profit Previous Projection (April 24, 2007) 1,120.2 184.6 Foreign exchange impact Change in Exchange Rate +30.5 +20.0 •1USD: 117.00 to 120.75 yen [net sales, cost of sales, expenses]
Slide 7: Business Machines
Business Machines 2Q&1H 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,500 Op ratio 450 30% 1,200 23.8% 23.2% 22.4% 22.9% 22.9% 21.7% 21.7% 900 300 20% +12.4%(+6.9%) Pre-dep. chg. Pre-dep. chg. +17.7% +16.8% 1,447 Post-dep. chg. Post-
Slide 8: Office Imaging Products
Office Imaging Products 2Q&1H 2007 Actual Growth rate y/y Sales (Unit base) (Billions of yen) Growth rate y/y Copying machines ( ) Local currency base 2Q 1H 500 Others 1,000 Color +24% +19% Color Mono- 400 Monochrome +9.3%(+2.6%) +8.0%(+2.5%) chrome -16% -14% (For office (-2%) (+1%) 750 329 327 632
Slide 9: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) 2Q&1H 2007 Actual LBP 2Q 1H Color +12% +43% Mono- Sales chrome +20% +39% (Billions of yen) Growth rate y/y Total +19% +40% ( ) Local currency base Color ratio (LBP) 500 Others 1,000 +17.6%(+11.9%) 2Q 1H IJP +14.5%(+7.5%) Value LBP 378 761 37% 36% 400
Slide 10: Cameras
Cameras 2Q&1H 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 OP ratio 150 30% 26.4% 26.8% 26.4% 25.8% 24.9% 24.1% 23.6% 400 Pre-dep. chg. +21.4% 100 Post-dep. chg. 20% +12.9%(+6.3%) +18.7% 520 139 137 460 200 +10.8%(+3.1%) 109 Pre-d
Slide 11: Cameras
Cameras 2Q&1H 2007 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 2Q 1H ( ) Local currency base 500 600 +12.9%(+6.3%) Digital Video cameras cameras +17% +18% Digital cameras 520 Film cameras/Lenses -9.9%(-15.6%) 400 460 +10.8%(+3.1%) D SLR ratio* 297 400 2Q 1H 292 300 268
Slide 12: Optical and Other Products
Optical and Other Products 2Q&1H 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) Pre-dep. chg. ( ) Local currency base +12.9% 300 OP ratio Post-dep. chg. -7.8% 45 12% Pre-dep. chg. 8.5% 200 -5.5% 7.9% 30 Post-dep. chg. 8% 6.9% -60.9% 5.7% 5.3% 5.3% -2.3%(-4.2%)
Slide 13: Optical and Other Products
Optical and Other Products 2Q&1H 2007 Actual Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) IC Stepper Unit Breakdown IC Stepper Unit Breakdown Others by Light Source by Light Source 150 300 SPE -6.4% (-8.8%) 2Q07 1H07 -2.3%(-4.2%) 105 105 ArF 0% ArF 0% 99 KrF 32%
Slide 14: Assumptions
Assumptions 2H 2007 Average 2H07 FY07 FY06 Exchange Rate USD 120.00 yen 120.03 yen 116.43 yen EURO 160.00 yen 159.89 yen 146.51 yen Impact of Exchange Rate Movement (2H impact given a one yen change) Net sales Operating profit USD 8.3 billion yen 4.8 billion yen EURO 4.1 billion yen 3.2 billion yen
Slide 15: Summary of Projected Results
Summary of Projected Results 2007 Current Projection v. 2006 Actual (Billions of yen) 2007 Current Projection 2006 Pct. Change Pre- Post- Pre- Post- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Net sales 2,413.3 2,413.3 2,204.5 +9.5%
Slide 16: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2H 2007 Current Projection v. 2H 2007 Previous Projection (Billions of yen) 2H 2007 Sales Op. Profit Previous Projection (April 24, 2007) 2,380.0 398.0 Foreign exchange impact Change in Exchange Rate [net sales, cost of sales, expenses] +47.7 +31.5 •1USD: 117.00 to
Slide 17: Office Imaging Products
Office Imaging Products 2H 2007 Current Projection Sales Growth rate y/y (Billions of yen) Growth rate y/y (Unit base) ( ) Local currency base 1,250 Others Copying machines Color 2H Monochrome Color +20% 1,000 Monochrome -8% +14.5%(+10.9%) (For office use) (+2%) 750 687 Total -4% 668 600 +27.0%(+24.
Slide 18: Computer Peripherals
Computer Peripherals 2H 2007 Current Projection Growth rate y/y (Unit base) LBP 2H Sales Color +4% (Billions of yen) Growth rate y/y Monochrome +4% ( ) Local currency base Others Total +4% 1,250 IJP Color ratio (LBP) LBP 1,000 +7.6%(+4.2%) 2H Value base* 38% 792 809 752 Unit base 14% 750 *Includes c
Slide 19: Cameras
Cameras 2H 2007 Current Projection Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) Video cameras 1,000 2H Digital cameras Film cameras/Lenses Digital +10.2%(+6.4%) cameras +11% 750 628 641 582 D SLR ratio* -6.4%(-9.9%) 2H 500 Value base 35% Unit base 12% +
Slide 20: Optical and Other Products
Optical and Other Products IC Stepper Unit Breakdown IC Stepper 300mm Ratio 2H 2007 Current Projection 2H by Light Source (Units) 2H07 2H07 Current Current projection projection Sales ArF 2% 300mm 87% Growth rate y/y KrF 28% (Billions of yen) ( ) Local currency base i-line 70% SPE (Unit sales) 400 O
Slide 21: Operating Profit by Product
Operating Profit by Product FY 2007 Current Projection v. FY 2006 Actual (Billions of yen) 2007 Current Projection 2006 Pct. Change Pre- Post- Pre- Post- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Bus. Machines 366.7 23.6% 345.0 22.
Slide 22: Supplementary Information
Supplementary Information July 26, 2007 Canon Inc. 22
Slide 23: Summary of Results
Summary of Results 1H 2007 Actual (Billions of yen) 1H 2007 Actual 1H 2006 Pct. Change Pre- Post- Pre- Post- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Net sales 2,166.7 2,166.7 1,952.3 +11.0% +11.0% Gross profit 1,120.3 51.7% 1,107
Slide 24: Summary of Projected Results
Summary of Projected Results 3Q 2007 Current Projection (Billions of yen) 3Q 2007 Current Projection 3Q 2006 Pct. Change Pre- Post- Pre- Post- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Net sales 1,075.0 1,075.0 988.0 +8.8% +8.8% Gr
Slide 25: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q&1H 2007 Actual v. 2Q&1H 2006 Actual (Billions of yen) 2Q 1H Sales Op. Profit Sales Op. Profit 2006 Actual 1,029.0 168.3 1,952.3 338.5 Foreign exchange impact +63.4 +39.0 +99.5 +62.1 [net sales, cost of sales, expenses] Sales volume impact Office Imaging Pr
Slide 26: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2007 Actual v. 2Q 2006 Actual (Billions of yen) 2Q07 2Q06 Change Gross Profit 586.6 510.2 +76.4 Pre-depreciation change % sales 52.1% 49.6% +2.5 pt. (Billions of yen) Gross Profit 573.9 510.2 +63.7 Post-depreciation change % sales 50.9% 49.6% +1.3 pt. 90 76 63 64 60
Slide 27: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2007 Actual v. 2Q 2006 Actual (Billions of yen) 2Q07 2Q06 Change Operating Profit 200.8 168.3 +32.5 Pre-depreciation change % sales 17.8% 16.4% +1.4 pt. (Billions of yen) Operating Profit 181.5 168.3 +13.2 Post-depreciation change % sales 16.1% 16.4% -0.3 pt. 90
Slide 28: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2H&FY 2007 Current Projection v. 2H&FY 2006 Actual (Billions of yen) 2H FY Sales Op. Profit Sales Op. Profit 2006 Actual 2,204.5 368.6 4,156.8 707.0 Foreign exchange impact +67.5 +45.8 +167.0 +107.9 [net sales, cost of sales, expenses] Sales volume impact Off
Slide 29: Inventories Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) 800 Inventories 80 200 Debt 8% Turnover (Days) Debt/Total Assets 600 60 150 6% 49 49 47 48 45 400 40 100 4% 3.1% 575 539 510 489 444 1.1% 200 20 50 98 2% 0.8% 0.7% 0.5% 39 32 31 22 0 0 0 0% FYE03 FYE04 FYE05 FYE06 2QE07 FYE
Slide 30: Free Cash Flow Capital Expenditure
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 Capex 1,000 Operating C/F Net income Free C/F Depreciation Investing C/F 800 800 380 500 234 600 600 205 455 384 831 309 400 400 343 695 606 562 461 451 450 401 384 380 360 200 200 319 253 262 226 193 0 0 FY04 FY05 FY06 FY0
Slide 31: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Dividend *Figures in parenthesis represent dividend per share expressed on a pre- 3-for-2 forward stock split basis (effective date July 1, 2006) (Billions of yen) Dividends per share 26.0% Payout ratio (Consolidated basis) 1,156 1,181
Slide 32: Financial Ratios
Financial Ratios * Common stock held by stockholders as of June 30, 2006, were split on a 3-for-2 basis. EPS (Basic) has been adjusted to retroactively reflect the forward stock split. (Yen) 1,000 (Pre-dep. chg.: 17.2%) 20% 16.8% 16.3% 15.9% 16.0% 16.0% 800 15% (Pre-dep. chg.: 11.5%) 10.1% 10.1% 10.