Canon Inc. · TSE:7751
Canon — Q1 2022 Earnings Presentation
24 slides from Canon's earnings presentation, Apr 26, 2022
Slide 1: First Quarter 2022 Results
Canon Canon Inc. First Quarter 2022 Results April 26, 2022 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 assumptions formed by available information. All
Slide 2: Agenda
Canon Agenda @ 1Q 2022 Results P2-4 @ FY 2022 Projection P5-7 ™@ Details by Business P8 - 14 (1Q 2022 Results & FY 2022 Projection) @ Financial Situation P15 - 16 @ Sustainability Measures P17 @ Excellent Global Corporation Plan Phase VI P18 @ Supplementary Information P19 - 21
Slide 3: 1Q 2022 results overview
During the quarter, countries prioritized economic activity even as the Omicron variant spread. Despite this, the global economy outlook became increasingly unclear due to accelerated inflation caused by supply shortages as well as the Ukraine issues. In response to continuing parts shortages and lo
Slide 4: 1Q 2022 situation by business unit
Next, a look at the situation of Business Units. As for Printing, we posted an increase in net sales and maintained double-digit profitability. However, profit decreased due to a lower percentage of inkjet sales attributable to consumables. As for Imaging, although we posted an increase in net sales
Slide 5: Factors impacting operating profit
Next, factors impacting operating profit. Changes in exchange rates, in particular the yen’s depreciation against the U.S. dollar, had a positive impact on operating profit of 11.0 billion yen. As for costs, although the impact was negative due to the rise in parts pricing and logistical costs, we w
Slide 6: FY 2022 projection outlook
We expect inflation to continue in the form of higher prices for resources, energy, and food, resulting from the conflict in Ukraine and the prolonged impact of COVID-19, For these reasons the IMF lowered its world economic outlook for growth this year to 3.6%. However, the movement of countries tow
Slide 7: FY 2022 projection by business unit
For all four Business Units, we project sales and profit growth and within this, we expect double-digit profitability for Printing, Imaging and Industrial & Others. As for Medical, we aim to raise profitability to 7.7%, renewing the all-time high performance we set last year. 6
Slide 8: Change in operating profit from previous projection
Next, the changes in operating profit from our previous projection. Changes in exchange rate assumptions, in particular expectations that the yen will remain weak against the U.S. dollar, is forecasted to have a positive 25.2 billion yen impact on operating profit, As for costs, we will absorb the s
Slide 9: Printing equipment market
As for the printing equipment market, the situation of product supply not catching up with demand due to parts shortages continues, This reflects the trend of people working from home taking hold, and recovery in the number of people returning to offices. For the full year, we will work to significa
Slide 10: Office MFDs
As for office MFDs, first quarter hardware revenue declined due to parts shortages that lead to lower unit sales. On the other hand, service revenue continued to recover steadily, despite being impacted by the Omicron variant. As a result, we were able to secure an increase in total sales, which inc
Slide 11: Prosumer printers
In the first quarter, prosumer sales were up as we were able to produce and sell both laser printers and inkjet printers in line with our plan. For the full year, we aim to increase unit sales by more than 30% to make up for the decline in unit sales last year due to shortages in product supply. Uti
Slide 12: Production printing
Digital commercial printing is an area where continuous growth is expected due to the shift away from analog printing, and this year, we expect the market size to recover to the pre-COVID level of 2019. In the first quarter, production sales grew 15.7%, thanks to growth in the sales of high-speed in
Slide 13: Imaging: interchangeable-lens cameras
Demand, mainly coming from professionals and advanced amateurs, continues to be strong as full-frame mirrorless cameras released by each company stimulates the market. As a result, we expect the 2022 market to grow by 5% compared to last year to 5.65 million units, which also includes some carry ove
Slide 14: Network cameras
Our sales in the first quarter were in line with the same period last year due to the impact of product supply shortages. However, through design changes and other measures we are promoting, we aim to grow more than 15% for the full year. Going forward, we expect the network camera market to continu
Slide 15: Medical: diagnostic imaging equipment
As for the diagnostic imaging equipment market in 2022, although we expect sales in Japan to be lower, due to the impact of last year’s purchasing, which was supported by the government’s supplementary budget, we expect growth in the United States, Europe, and other areas, even with the impact of ma
Slide 16: Industrial & Others: lithography equipment
The market for products that are related to our industrial group is expected to grow at a double-digit rate in 2022, as we expect the use of semiconductor devices to continue expanding thanks to their use in IoT and in-vehicle systems. As for panels, we expect demand to continue growing driven by gr
Slide 17: Inventory
As for inventory at the end of March, work-in-process inventory increased due to swift actions we took to secure parts for our production sites amid little prospect of resolving the parts shortage. Also, due to the increase in the production volume of inkjet and laser printers from the middle of Mar
Slide 18: Cash flow and financial position
Operating cash flow is expected to recover to 495.0 billion yen, an increase of more than 40.0 billion yen from last year. We plan to generate free cash flow of 255.0 billion yen while allocating sufficient funds to capital investment and M&A for growth. While securing 400.0 billion yen as cash on h
Slide 19: Sustainability measures
We seek to contribute to solving social issues by creating new value through our business activities. And as a tool to help stakeholders understand these measures, we posted on our website today the Canon Sustainability Report 2022. This year's report has been expanded to include specific examples t
Slide 20: Excellent Global Corporation Plan Phase VI
In the first quarter, despite the still severe situation of part shortages and logistical constraints, we achieved an increase in sales and profit by leveraging our comprehensive capabilities as a company from production to sales, and started the second year of Phase VI by maintaining the positive t
Slide 21: Supplementary Information
Supplementary Information
Slide 22: FY 2022 Operating Profit Analysis
FY 2022 Operating Profit Analysis Canon (FY 2022 Current Projection versus FY 2021 Actual) Change in Net Sales, excluding FX impact, for reference Printing: +240.3 (Billions of yen) Imaging: +63.7 Medical: +5.5 Industrial & Others: +35.9 7 Eliminations: -4.2 FX Details Total: +3412 Net Sales: +112.2
Slide 23: Printing — Net Sales Growth Rate Y/Y
Printing — Net Sales Growth Rate Y/Y (Hardware & Non-hardware) Canon FY 2021 1Q Full Year Actual Actual spy rerouwre -4% +31% +9% +7% Non-hardware +6% +12%| -21% +3%| Office MFDs te Hardware -9% +27% +7% +3% Non-hardware +3% +10% -22% 0% spy Hardware +7% +44% +3% +2% LPs Non-hardware +11% +8%) -6% +
Slide 24: Office/Prosumer — Net Sales by Product Category
Office/Prosumer — Net Sales by Product Category (Billions of yen) FY FY 2021 1Q Full Year 1Q Full Year tual rojectior Actual Actual Office MFDs 117.2 577.4 115.8 478.4 Office [Others 77.8 303.6 69.2 278.7 195.0 881.0 185.0 757.1 LPs 150.2 676.5 136.9 563.1 Prosumer |IJPs 86.3 374.3 84.1 329.4 236.5