Slide 1: Canon Inc. Third Quarter 2014 Results
Canon Inc. Third Quarter 2014 Results October 27, 2014 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 2014 Results P3 – 5 FY 2014 Projections P6 – 9 Details by Business P10 – 15 Financial Situation P16 – 18 Supplementary Information P19 – 24 October 27, 2014 Canon Inc. 2
Slide 3: 3Q 2014 in Summary
3Q 2014 in Summary External Environment Delayed global economic recovery Evident in Europe, Emerging Markets, and Japan Our markets Delayed recovery of interchangeable-lens camera market Results Lower sales and profits Lower sales of cameras October 27, 2014 Canon Inc. 3
Slide 4: Summary of Results
Summary of Results 3Q 2014 Actual (Billions of yen) 3Q 2014 3Q 2013 Pct. Change Actual Actual Net Sales 872.2 913.1 -4.5% Gross Profit 431.5 447.1 -3.5% (% Sales) 49.5% 49.0% Op. Profit 71.8 90.6 -20.7% (% Sales) 8.2% 9.9% Net Income Attributable to Canon Inc. 58.2 58.8 -1.0% (% Sales) 6.7% 6.4% For
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2014 Actual v. 3Q 2013 Actual (Billions of yen) Sales Op. Profit 3Q 2013 Actual 913.1 90.6 Foreign Exchange Impact Change in Exchange Rate +30.5 +11.4 (Net Sales, Cost of Sales, Expenses) •1USD: 98.91 to 104.22 yen •1EURO: 131.09 to 137.78 yen Sales Volume Impac
Slide 6: Assumptions
Assumptions 2014 Current Projection Average 4Q14 FY14 FY13 Exchange Rate Yen-1USD 108.00 yen 104.39 yen 97.84 yen Yen-1EURO 137.00 yen 138.83 yen 130.01 yen Impact of Exchange Rate Movement (4Q Impact Given a One Yen Change) Net Sales Operating Profit USD 4.3 billion yen 1.6 billion yen EURO
Slide 7: Key Points FY2014
Key Points FY2014 External Environment Later than expected global economic recovery Recovery in our markets also delayed Outlook Raised projection for profits, but lowered net sales outlook Achieve two consecutive years of sales and profit growth October 27, 2014 Canon Inc. 7
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2014 Current Projection (Billions of yen) FY 2014 FY 2013 Pct. Change Current Projection Actual Net Sales 3,740.0 3,731.4 +0.2% Gross Profit 1,855.0 1,798.4 +3.1% (% Sales) 49.6% 48.2% Op. Profit 370.0 337.3 +9.7% (% Sales) 9.9% 9.0% Net Income Attributable to Canon I
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2014 Current Projection v. FY 2014 Previous Projection (Billions of yen) Sales Op. Profit Previous Projection (Jul. 24, 2014) 3,780.0 365.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 101.14 to 104.39 yen +62.9 +27.2 •1EURO: 137.57 to 138.83 yen (Net
Slide 10: Office
3Q14 Growth Rate y/y (Unit Base) 3Q14 Color Ratio Office Color Copiers +13% Printers 0% Value Base* Copiers 54% Printers 49% Monochrome -7% -2% Unit Base 40% 15% 3Q 2014 Actual Total 0% -2% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 800 Monochrome copiers C
Slide 11: Office
FY14 Growth Rate y/y (Unit Base) FY14 Color Ratio Office Color Copiers +13% Printers +8% Value Base* Copiers 56% Printers 49% Monochrome -3% -2% Unit Base 41% 15% FY 2014 Projection Total +3% 0% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 3,000 Monochrome co
Slide 12: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 3Q14 -20% Digital Camera Ratio * 3Q14 Digital Cameras Value Base 82% 3Q 2014 Actual Compact Digital -22% Unit Base 41% Cameras Total Digital Cameras -21% * Proportion of Total Digital Cameras IJP -1% * Value Base In
Slide 13: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY14 -15% Digital Camera Ratio * FY14 Digital Cameras Value Base 82% FY 2014 Projection Compact Digital -28% Unit Base 41% Cameras Total Digital Cameras -23% * Proportion of Total Digital Cameras IJP -2% * Value Bas
Slide 14: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) 3Q13 3Q14 3Q 2014 Actual 3Q13 3Q14 ArF 0 0 IC 10 13 KrF 0 2 FPD 0 8 i-line 10 11 (Billions of yen) Sales Growth rate y/y ( ) Local currency base 180 Sales Eliminations Lithography Equipment Others 15
Slide 15: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) FY14 FY14 FY 2014 Projection FY14 FY14 FY13 Previous Current FY13 Previous Current Projection Projection Projection Projection ArF 0 0 0 (Billions of yen) Sales Growth rate y/y ( ) Local currency bas
Slide 16: Inventories
Inventories (Billions of yen) 800 Amount (Billions of yen) 90 Turnover (Days) 700 63 61 60 70 57 59 58 52 53 54 608 50 600 591 589 582 569 552 554 550 30 533 500 10 -10 400 -30 300 -50 3QE12 4QE12 1QE13 2QE13 3QE13 4QE13 1QE14 2QE14 3QE14 October 27, 2014 Canon Inc. 16
Slide 17: Capital Expenditure Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 1,000 Increase in PP&E Operating C/F Net Income Attributable to Canon Inc. Free C/F Depreciation Investing C/F 750 750 500 500 255 235 230 250 249 240 257 225 213 171 545 525 507 250 250 470 384 290 290 275 270 265 265 261
Slide 18: Cash on Hand
Cash on Hand Cash on Hand (Year-end) 1500 4 Cash-on-hand (Billions of yen) Cash-on-hand (In months of 2nd-half net sales) 3.5 3 1000 2.5 2.5 2.4 2.4 2.3 2.3 2.5 841 773 789 790 2 750 667 1.5 500 1 0.5 0 0 FYE10 FYE11 FYE12 FYE13 FYE14 FYE14 Previous Current Projection Projection Note 1: Approx. 50,
Slide 19: Supplementary Information
Supplementary Information October 27, 2014 Canon Inc. 19
Slide 20: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2014 Current Projection v. FY 2013 Actual (Billions of yen) Sales Op. Profit FY 2013 Actual 3,731.4 337.3 Foreign Exchange Impact +145.2 +46.8 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 97.84 to 104.39 yen •1EURO: 130.01 to 138.83
Slide 21: Gross Profit Variance Analysis
Gross Profit Variance Analysis 3Q 2014 Actual v. 3Q 2013 Actual (Billions of yen) 3Q14 3Q13 Change (Billions of yen) Gross Profit 431.5 447.1 -15.6 % Sales 49.5% 49.0% +0.5pt. 100 50 30.5 9.2 0 -9.6 -15.6 -23.4 -22.3 -50 -100 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction C
Slide 22: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2014 Actual v. 3Q 2013 Actual (Billions of yen) 3Q14 3Q13 Change Op. Profit 71.8 90.6 -18.8 (Billions of yen) % Sales 8.2% 9.9% -1.7pt. 100 50 6.3 0 -9.5 -15.6 -18.8 -50 -100 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Excludi
Slide 23: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 50 5.0% Debt Debt/Total Assets 40 4.0% 30 3.0% 20 2.0% 11 12 10 1.0% 4 3 3 0.3% 0.3% 0.1% 0.1% 0.1% 0 0.0% FYE10 FYE11 FYE12 FYE13 3QE14 Supplementary Information October 27, 2014 Canon Inc. 23
Slide 24: Financial Ratios
Financial Ratios (Yen) 900 15% 9.2% 9.6% 600 10% 8.7% 8.4% 8.5% 6.3% 6.3% 5.7% 5.6% 5.9% 300 5% 204.49 224.28 199.71 191.34 200.78 0 0% FY10 FY11 FY12 FY13 FY14 Current Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information October 27, 2014 Canon Inc. 24