Slide 1: Third Quarter 2018 Results
Canon Inc. Third Quarter 2018 Results October 25, 2018 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 assump
Slide 2: Agenda
Agenda 3Q 2018 Results P2 – 4 FY 2018 Projection P5 – 12 Details by Business P13 – 19 (3Q 2018 Results & FY 2018 Projection) Financial Situation P20 – 21 Supplementary Information P22 – 28 1
Slide 3: Key Message (3Q 2018 Results)
Key Message (3Q 2018 Results) Sales and profit decline Office: Solid performance, particular new products Industry & Others: Revenue declined due to the settling down of OLED-related investment Cameras: Declined due to temporary factors Improvement in gross profit ratio Office: Cost reductio
Slide 4: FY 2018 Financial Results (3Q 2018 vs 3Q 2017)
FY 2018 Financial Results (3Q 2018 Actual versus 3Q 2017 Actual) Compared to last year (pre-reclassification basis): Decline in sales and profit, but improvement in gross profit ratio FY 2018 FY 2017 3Q 3Q 3Q Service 3Q % Change (Billions of yen) Pension Actual Pension Actual Actual Cost Actual (P
Slide 5: FY 2018 Financial Results by Business Unit
FY 2018 Financial Results by Business Unit (3Q 2018 Actual versus 3Q 2017 Actual) Overall sales and profit decline due to temporary factors impacting Imaging System and Industry & Others, partially off-set by Office maintaining growth in both sales and profit 3Q 2018 3Q 2017 (Billions of yen) % Ch
Slide 6: Interchangeable-lens Cameras (Basic Strategy)
Interchangeable-lens Cameras (Basic Strategy) Actively launched new products based on full-lineup strategy Market share on upward trend over past few years thanks to steady cultivation of new users Interchangeable-lens camera market share 50% 48% 44% 45% 40% Expand base through 35% full-lineup s
Slide 7: Interchangeable-lens Cameras (3Q 2018 Actual)
Interchangeable-lens Cameras (3Q 2018 Actual) Temporarily curtailed shipments due to a pause in entry-class DSLR purchasing Retrained buying of advanced-amateur models due to successive announcements of companies entering the full-frame sensor mirrorless camera market 6
Slide 8: Interchangeable-lens Cameras (FY 2018)
Interchangeable-lens Cameras (FY 2018) Enhanced lineup through the launch of full-frame sensor mirrorless camera Aiming for overwhelming No. 1 position, leveraging overall strength of EOS system, including lenses RF Lenses Professional 1D X Mark II Advanced- Amateur 5D Broad Range of Lens Assets
Slide 9: Key Message (FY 2018 Projection)
Key Message (FY 2018 Projection) FX Assumptions Impact of exchange rate movement （4Q impact given a one yen change） 4Q 2018 FY 2018 Net Sales Op. Profit USD/Yen 110.00 yen 109.66 yen 3.8 billion yen 1.2 billion yen EUR/Yen 130.00 yen 130.64 yen 1.8 billion yen 0.9 billion yen External Environment
Slide 10: FY 2018 Financial Projection vs FY 2017 Actual
FY 2018 Financial Projection (FY 2018 Current Projection versus FY 2017 Actual) Strive to improve profitability on a concerted Group-wide basis Aiming for second consecutive year of profit growth, exceeding all profitability measures of last year FY 2018 FY 2017 Current Full Year Current Service
Slide 11: FY 2018 Financial Projection vs Previous Projection
FY 2018 Financial Projection (FY 2018 Current Projection versus FY 2018 Previous Projection) Lowered projection for net sales and operating profit by 120 billion yen and 43 billion yen, respectively Revised projection mainly for cameras, Medical, and Industry & Others FY 2018 Current Previous Am
Slide 12: FY 2018 Financial Projection by Business Unit
FY 2018 Financial Projection by Business Unit (Full Year) Imaging System: Revised sales plan for cameras Medical and Industry & Others: Reflected changes in external environment FY 2018 FY 2018 FY 2017 % Amount (Billions of yen) Current Previous Actual Change Change Projection Projection Office
Slide 13: FY 2018 Operating Profit Analysis
FY 2018 Operating Profit Analysis (FY 2018 Current Projection versus FY 2018 Previous Projection) Profit decline due to revised sales plan Decline in cost reduction due to raise in raw material prices and lower sales volume, but improve profitability through expense curtailment (Billions of yen)
Slide 14: Office – MFDs
Office – MFDs Further raised product competitiveness through the start of service that collaborates with external cloud service providers Aiming for market exceeding growth for the full year by accelerating sales of color models (Billions of yen) 3Q Full Year 2018 2018 2018 2017 % 2017 % Amount
Slide 15: Office – Laser Printers
Office – Laser Printers Continued sales growth in 3Q by demonstrating product advantages Maintaining previous plan due to solid sales (Billions of yen) 3Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous Actual Actual Change Actual Change Change Projection Projection MFDs 161.2 164
Slide 16: Office – Others
Office – Others Sales of new products that target the graphic arts segment remain solid Working to further expand sales by enhancing dedicated sales force (Billions of yen) 3Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous Actual Actual Change Actual Change Change Projection Proj
Slide 17: Imaging System – Cameras
Imaging System – Cameras Interchangeable-lens cameras: Revised projection for the market and own unit sales Compact cameras: Maintaining previous projection (Billions of yen) 3Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous Actual Actual Change Actual Change Change Projection Pr
Slide 18: Imaging System – Inkjet Printers
Imaging System – Inkjet Printers 3Q: Although revenue was impacted by consumable sales, hardware exceeded last year Aiming to exceed unit sales of last year through refillable ink tank models and new models released in the second half (Billions of yen) 3Q Full Year 2018 2018 2018 2017 % 2017 % A
Slide 19: Medical System
Medical System 3Q: Although impacted by restrained buying in domestic market, overseas sales remained solid FY: Aiming for sales and profit growth, accelerating the rollout of strong selling new products overseas Working to lower cost through synergy effect, leveraging Canon’s production techn
Slide 20: Industry & Others
Industry & Others Semiconductor litho. equipment: Revised full-year plan to reflect change in market situation FPD litho. equipment: Maintained full-year plan as sales have been in line with expectations Network cameras: Double-digit growth thanks partially to the contribution of new cloud ser
Slide 21: Inventory
Inventory Imaging System and Medical: Inventory increase linked to sales expansion in 4Q Office and Industry & Others: Maintained appropriate level FY 2017 FY 2018 (Billions of yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q Amt. 206.9 211.1 222.4 205.1 207.5 209.9 224.6 Office Days 42 43 46 41 41 42 46 Amt. 142.7 14
Slide 22: Cash Flow (Full Year)
Cash Flow (Full Year) Comprehensive cash flow management Cash on hand: Continue to secure roughly 2 months of net sales Capital expenditures: Control within the range of depreciation FY 2018 FY 2018 FY 2017 Current Previous Actual (Billions of yen) Projection Projection Net cash provided by op
Slide 23: Supplementary Information
Supplementary Information 22
Slide 24: FY 2018 Operating Profit Analysis (3Q Actual)
FY 2018 Operating Profit Analysis (3Q 2018 Actual versus 3Q 2017 Actual) Change in Net Sales, excluding FX impact, for reference (Billions of yen) Office: +3.3 Imaging System: -32.2 Medical System: -3.5 FX Details Industry & Others: -22.2 Net Sales: -2.5 Total: -54.6 Cost of Sales: -0.7 Op. Expenses
Slide 25: FY 2018 Operating Profit Analysis (Projection vs FY 2017)
FY 2018 Operating Profit Analysis (FY 2018 Current Projection versus FY 2017 Actual) Change in Net Sales, excluding FX impact, for reference Office: +24.4 Imaging System: -72.0 Medical System: +9.0 (Billions of yen) Industry & Others: -2.7 Total: -41.3 FX Details Net Sales: -8.7 Cost of Sales: +8.3
Slide 26: Change in Pension Accounting Standard
Impact of Change in Pension Accounting Standard Reclassification of CoS, SG&A and Other income (deductions) (Full-year impact 9.9 billion yen) No impact on IBT or net income Pension accounting - Pre-standard change Pension accounting - Post-standard change FY 2017 FY 2017 FY 2017 FY 2017 FY 2017
Slide 27: Net Sales Growth Rate of Hardware & Non-hardware
Net Sales Growth Rate of Hardware & Non-hardware FY 2018 FY 2017 3Q Full Year 3Q Full Year Actual Projection Actual Actual MFDs Hardware -3% +1% +8% +2% JPY Non-hardware -1% 0% +7% +3% Hardware -3% +1% 0% -2% LC Non-hardware -1% 0% 0% +1% LPs Hardware +1% 0% +5% +6% JPY Non-hardware +1% 0% +16% +6%
Slide 28: Color Ratio (MFDs & LPs)
Color Ratio (MFDs & LPs) FY 2018 FY 2017 3Q Full Year 3Q Full Year Actual Projection Actual Actual Net Sales 58% 59% 58% 58% MFDs QTY 56% 57% 54% 55% Net Sales 52% 52% 54% 52% LPs QTY 19% 19% 18% 18% Sales Growth by Monochrome & Color MFDs FY 2018 FY 2017 3Q Full Year 3Q Full Year Actual Projection
Slide 29: Interchangeable-Lens Camera Ratio; IC Stepper Unit Breakdown
Interchangeable-Lens Camera Ratio FY 2018 FY 2017 3Q Full Year 3Q Full Year Actual Projection Actual Actual Value Base 85% 86% 86% 85% Unit Base 60% 63% 61% 58% * Value base includes interchangeable lenses IC Stepper Unit Breakdown by Light Source FY 2018 FY 2017 3Q Full Year 3Q Full Year Actual Pro