Slide 1: Canon Inc. Fiscal Year 2006 Results
Canon Inc. Fiscal Year 2006 Results January 29, 2007 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 uncertaint
Slide 2: Agenda
Agenda 4Q/FY 2006 Results P3 – 14 FY 2007 Projections P15 – 23 Financial Situation P24 – 25 Supplementary Information P26 – 33 Jan. 29, 2007 Canon Inc. 2
Slide 3: Summary of Results
Summary of Results 4Q/FY 2006 Actual (Billions of yen) 2006 2005 % change Actual % sales Projection % sales Actual % sales Projection Actual Net sales 1,216.5 1,199.8 1,119.8 +1.4% +8.6% Gross profit 593.7 48.8% 583.2 48.6% 539.2 48.1% +1.8% +10.1% 195.9 16.1% 179.8 15.0% 169.3 15.1% +8.9% +15.7% 4Q
Slide 4: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q 2006 Actual v. 4Q 2006 Projection (Billions of yen) 4Q 2006 Sales Op. Profit Projection (Oct. 26, 2006) 1,199.8 179.8 Change in Exchange Rate Foreign exchange impact +17.3 +13.3 •1USD: 115.00 to 117.81 yen [net sales, cost of sales, expenses] •1EURO: 148.00 to 1
Slide 5: Business Machines 4Q 2006 Actual
Business Machines 4Q 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP ratio 300 30% 21.2% 21.6% 600 21.2% 200 20% +8.2%(+5.5%) 750 765 707 300 +10.2% 100 10% 150 159 166 0 0 0% 4Q05 4Q06 4Q06 4Q05 4Q06 4Q06 Projection Projection Ja
Slide 6: Business Machines FY 2006 Actual
Business Machines FY 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 3,000 OP ratio 900 30% 22.2% 22.3% 21.7% 2,000 600 20% +7.5%(+3.0%) 2,676 2,691 2,502 +10.6% 1,000 300 593 599 10% 542 0 0 0% FY05 FY06 FY06 FY05 FY06 FY06 Projection P
Slide 7: Office Imaging Products
Office Imaging Products 4Q/FY 2006 Actual Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 600 Others 1,800 Copying machines Color 4Q FY Monochrome +2.8%(-1.1%) Color +36% +16% +6.6%(+3.4%) 1,186 400 1,200 1,153 1,193 Mono- -7% -10% chrome 338 331 +12.3%(+8
Slide 8: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) LBP 4Q FY 4Q/FY 2006 Actual Color +46% +49% Mono- +34% +15% Sales chrome Growth rate y/y Total +35% +19% (Billions of yen) ( ) Local currency base Color ratio (LBP) 600 Others 1,800 +12.3%(+7.1%) 4Q FY IJP +10.5%(+8.2%) Value 34% 34% LBP 1,377 1,398 b
Slide 9: Cameras 4Q 2006 Actual
Cameras 4Q 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 500 OP ratio 120 40% 400 26.7% 90 30% 23.7% 300 +16.7%(+13.0%) 21.2% 60 +46.9% 20% 200 338 346 93 297 80 30 63 10% 100 0 0 0% 4Q05 4Q06 4Q06 4Q05 4Q06 4Q06 Projection Projection
Slide 10: Cameras FY 2006 Actual
Cameras FY 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,500 OP ratio 300 30% 24.8% 25.8% 1,000 19.8% 200 20% +54.7% +18.5%(+13.1%) 256 269 500 1,033 1,042 879 100 10% 174 0 0 0% FY05 FY06 FY06 FY05 FY06 FY06 Projection Projection Ja
Slide 11: Cameras 4Q/FY 2006 Actual
Cameras 4Q/FY 2006 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y ( ) Local currency base Digital 500 1,500 cameras 4Q FY Video cameras Digital Digital cameras+16.7%(+13.0%) +21% +25% +18.5%(+13.1%) cameras Film cameras/Lenses 400 338 346 1,033 1,042 D SLR ratio* 297 +5.9
Slide 12: Optical and Other Products 4Q 2006
Optical and Other Products 4Q 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP ratio 15 15% 100 10 10% -9.2%(-10.2%) 6.3% 116 112 5.3% 50 105 5 10 5% 9 2.5% 4 0 0 -54.2% 0% 4Q05 4Q06 4Q06 4Q05 4Q06 4Q06 Projection Projection *Exclu
Slide 13: Optical and Other Products FY 2006
Optical and Other Products FY 2006 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 OP ratio 60 15% 400 40 10% 7.7% +13.7%(+11.7%) 7.3% 6.7% 430 424 47 200 373 41 20 39 5% +6.8% 0 0 0% FY05 FY06 FY06 FY05 FY06 FY06 Projection Projection *E
Slide 14: Optical and Other Products 4Q/FY 2006
Optical and Other Products 4Q/FY 2006 Actual Sales (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base IC Stepper Unit Breakdown 200 Others IC Stepper Unit Breakdown 750 Others By Light Source By Light Source SPE SPE +13.7%(+11.7%) FY06 4Q06 150 -9.2% (-10.2%) ArF 2% 116 ArF
Slide 15: Assumptions FY 2007
Assumptions FY 2007 Average Exchange Rate FY 2007 FY 2006 1Q 2007 Yen-1USD 115.00 yen 116.43 yen 117.00 yen Yen-1EURO 150.00 yen 146.51 yen 152.00 yen Impact of Exchange Rate Movement (FY impact given a one yen change) Net sales Operating profit USD 15.5 billion yen 9.0 billion yen EURO 7.6 billion
Slide 16: Summary of Projected Results
Summary of Projected Results FY 2007 Projection (Billios of yen) FY 2007 FY 2006 % change Projection Actual Net sales 4,450.0 4,156.8 +7.1% Gross profit 2,242.0 2,060.5 +8.8% [% sales] 50.4% 49.6% Op. profit 765.0 707.0 +8.2% [% sales] 17.2% 17.0% Net income 495.0 455.3 +8.7% [% sales] 11.1% 11.0% F
Slide 17: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2007 Projection v. FY 2006 Actual (Billions of yen) FY Sales Op. Profit 2006 Actual 4,156.8 707.0 Change in Exchange Rate Foreign exchange impact +4.1 +5.0 •1USD: 116.43 to 115.00 yen [net sales, cost of sales, expenses] •1EURO: 146.51 to 150.00 yen Sales volume
Slide 18: 2007 Office Imaging Products
2007 Office Imaging Products Expand sales of new color products (Office, POD) Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Other Copying machines Color (FY) Monochrome +7.7%(+7.3%) Color +15% Mono- -7% 1,500 1,277 chrome 1,186 Total -4% +12.7%(+12
Slide 19: 2007 Laser Beam Printers
2007 Laser Beam Printers Maintain strong position in the expanding market Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Other LBP (FY) IJP +8.1%(+8.3%) LBP Color +21% 1,511 Mono- +16% 1,500 1,398 chrome Total +17% +12.2%(+11.7%) 1,000 Color ratio (
Slide 20: 2007 Inkjet Printers
2007 Inkjet Printers Increase market share by utilizing strong product lineup Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Other IJP (FY) IJP +8.1%(+8.3%) LBP SFP -7% 1,511 MFP +48% 1,500 1,398 Total +15% +12.2%(+11.7%) MFP ratio (IJP) 1,000 FY Un
Slide 21: 2007 Digital Cameras
2007 Digital Cameras Maintain our top brand position and profitability Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 1,500 Video cameras Digital cameras (FY) Digital cameras +7.1%(+7.0%) Digital +14% cameras Film cameras / lenses 1,116 1,042 D SLR ratio*
Slide 22: 2007 Semiconductor Product Equip.
2007 Semiconductor Product Equip. Launch leading-edge equipment and secure market position Sales IC Stepper Unit Breakdown By Light Source (Billions of yen) Growth rate y/y FY07 Projection ( ) Local currency base ArF 2% Other KrF 28% 750 i-line 70% SPE +2.4%(+2.4%) IC Stepper 300mm Ratio (Units) 500
Slide 23: Operating Profit by Product
Operating Profit by Product FY 2007 Projection vs. FY 2006 Actual (Billions of yen) FY 2007 FY 2006 Projection Actual Business machines 640.0 599.2 % sales 22.1% 22.3% Cameras 287.8 268.7 % sales 25.8% 25.8% Optical and other products 54.2 41.5 % sales 8.6% 6.7% Corp. and eliminations -217.0 -202.4
Slide 24: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Return to Shareholders (Billions of yen) (Yen) 1,500 150 Dividend per share 30% Cash on hand 26.9% Payout ratio (Consolidated basis) 24.4% 1,156 23.1% (150)* 1,005 16.8% 100 1,000 100 (125) 20% 888 15.9% (100) 83 690 13.8% 67 (65) 521 (
Slide 25: Jan. 29, 2007 Canon Inc.
=> Innovation Sound Growth Jan. 29, 2007 Canon Inc. 25
Slide 26: Supplementary Information
Supplementary Information Jan. 29, 2007 Canon Inc. 26
Slide 27: Summary of Projected Results 1Q 2007
Summary of Projected Results 1Q 2007 Projection (Billios of yen) 1Q 2007 1Q 2006 % change Projection Actual Net sales 1,000.0 923.3 +8.3% Gross profit 511.0 468.5 +9.1% [% sales] 51.1% 50.7% Op. profit 185.0 170.1 +8.7% [% sales] 18.5% 18.4% Net income 120.0 108.3 +10.8% [% sales] 12.0% 11.7% Foreig
Slide 28: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 4Q&FY 2006 Actual v. 4Q&FY 2005 Actual (Billions of yen) 4Q FY Sales Op. Profit Sales Op. Profit 2005 Actual 1,119.8 169.3 3,754.2 583.0 Foreign exchange impact [net sales, cost of sales, expenses] +26.0 +14.3 +138.7 +78.2 Change in Exchange Rate (4Q) Sales v
Slide 29: Gross Profit Variance Analysis
Gross Profit Variance Analysis 4Q 2006 Actual v. 4Q 2005 Actual (Billions of yen) 4Q06 4Q05 Change (Billions of yen) Gross Profit 593.7 539.2 +54.5 % sales 48.8% 48.1% +0.7 pt. 80 61 55 40 32 26 1 0 -4 -40 -61 -80 Forex Sales Price Forex Cost Others Total impact volume change impact reduction change
Slide 30: Operating Profit Variance Analysis
Operating Profit Variance Analysis 4Q 2006 Actual v. 4Q 2005 Actual (Billions of yen) 4Q06 4Q05 Change (Billions of yen) Op. Profit 195.9 169.3 +26.6 % sales 16.1% 15.1% +1.0 pt. 60 55 27 30 0 -8 -30 -20 Total change in Change in Change in SG&A Total change in gross profit SG&A forex impact operatin
Slide 31: 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 51 60 150 6% 49 49 47 5.0% 45 3.1% 400 40 100 4% 148 539 510 489 444 432 200 20 50 98 1.1% 2% 0.8% 0.7% 39 32 31 0 0 0 0% FYE02 FYE03 FYE04 FYE05 FYE06 FY
Slide 32: Capital Expenditure Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 800 Capex 800 Operating C/F Net income Free C/F Depreciation Investing C/F 265 234 600 600 495 205 455 384 309 760 400 400 343 695 606 562 495 480 461 401 384 380 200 200 319 300 262 253 226 193 0 0 FY04 FY05 FY06 FY07 FY04 FY05
Slide 33: 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) 800 EPS (Basic) 20% ROE 16.8% 16.3% 15.9% 16.0% 15.6% ROA 600 15% 12.5% 10.1% 10.1% 10.6% 10.5% 9.0% 400 10%