Slide 1: Second Quarter 2018 Results
Canon Inc. Second Quarter 2018 Results July 26, 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 assumpti
Slide 2: Agenda
Agenda 2Q 2018 Results P2 – 5 FY 2018 Projection P6 – 11 Details by Business P12 – 18 (2Q 2018 Results & FY 2018 Projection) Financial Situation P19 – 20 Supplementary Information P21 – 25 1
Slide 3: Key Message (2Q 2018 Results)
Key Message (2Q 2018 Results) Sales and profit growth, improved profitability Sales and profit growth in 1H as well, driven by new products 2Q net sales exceeds one trillion yen for first time in 10 years, since 2008 Existing Businesses Sales of lithography equipment remain strong Sales of o
Slide 4: FY 2018 Financial Results
FY 2018 Financial Results (2Q 2018 Actual versus 2Q 2017 Actual) Compared to last year (pre-reclassification basis): Returned to sales and profit growth, achieved an operating profit ratio exceeding 10% FY 2018 FY 2017 2Q 2Q 2Q Service 2Q % Change (Billions of yen) Pension Actual Pension Actual Ac
Slide 5: FY 2018 Financial Results by Business Unit
FY 2018 Financial Results by Business Unit (2Q 2018 Actual versus 2Q 2017 Actual) Amid a decline in Imaging System, Office and Industry & Others contributed significantly to overall performance in terms of both sales and profit 2Q 2018 2Q 2017 (Billions of yen) % Change Actual Actual Office Net Sa
Slide 6: FY 2018 Operating Profit Analysis
FY 2018 Operating Profit Analysis (2Q 2018 Actual versus 2Q 2017 Actual) Sales volume: Impact from lower camera volume absorbed by Industry & Others BU Price reduction: Efforts made to keep it at a lower level than last year (Billions of yen) Change in Net Sales, excluding FX Details FX impact,
Slide 7: Key Message (FY 2018 Projection)
Key Message (FY 2018 Projection) FX Assumptions Impact of exchange rate movement （2H impact given a one yen change） 2H 2018 FY 2018 Net Sales Op. Profit USD/Yen 110.00 yen 109.34 yen 7.5 billion yen 2.7 billion yen EUR/Yen 130.00 yen 130.71 yen 3.4 billion yen 1.6 billion yen External Environment
Slide 8: FY 2018 Financial Projection
FY 2018 Financial Projection (FY 2018 Current Projection versus FY 2017 Actual) Second highest level of net sales since 2007 Project all profit margins to improve compared to last year FY 2018 FY 2017 Current Full Year Current Service Full year % Change (Billions of yen) Pension Projection Pensi
Slide 9: FY 2018 Operating Profit Analysis
FY 2018 Operating Profit Analysis (FY 2018 Current Projection versus FY 2017 Actual) Sales volume: Absorb the impact of lower volumes on Imaging System through sales expansion of mainly new products in each business Price reduction: Same level as last year and absorbed through cost reduction Cha
Slide 10: FY 2018 Financial Projection vs Previous Projection
FY 2018 Financial Projection (FY 2018 Current Projection versus FY 2018 Previous Projection) Lowered projection for sales and op. profit by 180 and 25.5 billion yen, respectively Average selling price decline mainly due to growth in sales of affordably priced MFDs and cameras Industry & Others
Slide 11: FY 2018 Operating Profit Analysis
FY 2018 Operating Profit Analysis (FY 2018 Current Projection versus FY 2018 Previous Projection) Sales volume: Average selling price decline, impact from lower compact camera volumes, revision of medical treatment fees, postponement of industrial equip. investment Maintaining previous projectio
Slide 12: FY 2018 Financial Projection by Business Unit
FY 2018 Financial Projection by Business Unit (Full Year) Vs. previous projection: Lowered projection for mainly Imaging System and Industry & Others Vs. last year: Sales and profit growth through expanded sales of new products and progress made in cost reduction FY 2018 FY 2018 FY 2017 % Amount
Slide 13: Office – MFDs
Office – MFDs 2Q: Next-generation color models continue to be the main driver of sales growth Full year: Aiming for market exceeding growth, enhancing support system for dealers (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous Actual Actual Ch
Slide 14: Office – Laser Printers
Office – Laser Printers 2Q: Achieved increase in overall revenue as sales of consumables returned to positive growth Full year: Maintaining previous projection due to strong hardware sales in 1H (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous
Slide 15: Office – Others
Office – Others 2Q: Grew unit sales of new products designed for graphic arts Full year: Further expand sales through the strengthening of sales organization etc. (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Previous Actual Actual Change Actual Cha
Slide 16: Imaging System – Cameras
Imaging System – Cameras 2Q: Increased market share in each region, driven by new camera "EOS M50" Full year: Increase sales, capturing new users and strengthening sales of advanced – amatuer models (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 % 2017 % Amount Current Prev
Slide 17: Imaging System – Inkjet Printers
Imaging System – Inkjet Printers 2Q: Unit sales below last year due to impact from reviewing sales channels Full year: Aiming to post unit sales growth, strengthening sales of models that fit the special needs of each region (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 %
Slide 18: Medical System
Medical System 2Q: Achieved sales and profit growth, driven by overseas sales Full year: Improving profitability through sales expansion of new products and the pushing forward of measures to raise earnings (Billions of yen) (Billions of yen) 2Q Full Year 2018 2018 2018 2017 % 2017 % Amount Curr
Slide 19: Industry & Others
Industry & Others 2Q: Market for semiconductor litho. equip. remains strong, significant growth in unit sales Full year: Lowered projection for FPD litho. Equip. and OLED vacuum deposition equip. due to impact from temporary adjustment to overheated OLED investment (Billions of yen) (Billions of
Slide 20: Inventory
Inventory Continued to maintain appropriate level of inventory in 2Q Compared with the end of June 2017, inventory was basically flat not only in monetary terms, but also in days turnover Compared with the end of March 2018, the inventory increase reflects preparation for the selling period in
Slide 21: Cash Flow (Full Year)
Cash Flow (Full Year) Comprehensive cash flow management Planning to invest in growth of new businesses Capital investment within range of depreciation FY 2018 FY 2018 FY 2017 Current Previous Actual (Billions of yen) Projection Projection Net cash provided by operating activities 540.0 550.0
Slide 22: Supplementary Information
Supplementary Information 21
Slide 23: Impact of 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 24: Net Sales Growth Rate of Hardware & Non-hardware
Net Sales Growth Rate of Hardware & Non-hardware FY 2018 FY 2017 2Q Full Year 2Q Full Year Actual Projection Actual Actual MFDs Hardware +4% +5% -2% +2% JPY Non-hardware 0% +1% +1% +3% Hardware +3% +5% -4% -2% LC Non-hardware -2% +1% +1% +1% LPs Hardware -2% 0% +12% +6% JPY Non-hardware +4% 0% +8% +
Slide 25: Color Ratio (MFDs & LPs)
Color Ratio (MFDs & LPs) FY 2018 FY 2017 2Q Full Year 2Q Full Year Actual Projection Actual Actual Net Sales 59% 60% 58% 58% MFDs QTY 59% 57% 54% 55% Net Sales 51% 52% 52% 52% LPs QTY 16% 19% 17% 18% Sales Growth by Monochrome & Color MFDs FY 2018 FY 2017 2Q Full Year 2Q Full Year Actual Projection
Slide 26: Interchangeable-Lens Camera Ratio; IC Stepper Unit Breakdown
Interchangeable-Lens Camera Ratio FY 2018 FY 2017 2Q Full Year 2Q Full Year Actual Projection Actual Actual Value Base 87% 87% 86% 85% Unit Base 62% 65% 57% 58% * Value base includes interchangeable lenses IC Stepper Unit Breakdown by Light Source FY 2018 FY 2017 2Q Full Year 2Q Full Year Actual Pro