Canon Inc. · TSE:7751
Canon — Q2 2020 Earnings Presentation
26 slides from Canon's earnings presentation, Jul 28, 2020
Slide 1: Canon Inc. Second Quarter 2020 Results
Canon Inc. Second Quarter 2020 Results July 28, 2020 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 2020 Results P2 – 5 FY 2020 Projection P6 – 9 Business Direction Post-COVID-19 P10 Details by Business P11 – 18 (2Q 2020 Results & FY 2020 Projection) Financial Situation P19 – 20 Sustainability Measures P21 Supplementary Information P22 – 25 1
Slide 3: Key Message (2Q 2020 Results)
Key Message (2Q 2020 Results) External Environment Impact from COVID-19 growing more serious as it has persisted longer and become more widespread compared with 1Q Record GDP decline in major countries and regions Business Performance Sank into the red for the first time on a quarterly basis d
Slide 4: FY 2020 Financial Results (2Q 2020 Actual versus 2Q 2019 Actual)
FY 2020 Financial Results (2Q 2020 Actual versus 2Q 2019 Actual) Impact of COVID-19 directly hit performance 2Q 2020 2Q 2019 (Billions of yen) % Change Actual Actual Net Sales 673.3 905.9 -25.7% Gross Profit 275.3 406.4 -32.3% (% of Net Sales) 40.9% 44.9% Op. Expenses 293.1 363.3 Op. Profit -17.8
Slide 5: FY 2020 Financial Results by Business Unit
FY 2020 Financial Results by Business Unit (2Q 2020 Actual versus 2Q 2019 Actual) Office and Industry & Others: In the red Imaging System: Secured profit despite significant sales decline, Medical System: Profit growth 2Q 2020 2Q 2019 (Billions of yen) % Change Actual Actual Office Net Sales 307
Slide 6: FY 2020 Operating Profit Analysis (2Q)
FY 2020 Operating Profit Analysis (2Q 2020 Actual versus 2Q 2019 Actual) Sales volume: All business units record net sales decline Op. expenses: Decline in those related to sales & marketing due to reduced demand and restrained sales and equipment installation Change in Net Sales, excluding FX i
Slide 7: Key Message (FY 2020 Projection)
Key Message (FY 2020 Projection) FX Assumptions Impact of exchange rate movement （2H impact given a one yen change） 2H 2020 FY 2020 Net Sales Op. Profit USD/Yen 105.00 yen 106.60 yen 5.3 billion yen 1.7 billion yen EUR/Yen 118.00 yen 118.72 yen 2.7 billion yen 1.1 billion yen External Environment
Slide 8: FY 2020 Financial Projection (Full Year)
FY 2020 Financial Projection (Full Year) Double-digit sales decline and significant decline in profit due to COVID-19 FY 2020 FY 2019 (Billions of yen) Current % Change Actual Projection Net Sales 3,080.0 3,593.3 -14.3% Gross Profit 1,318.4 1,610.0 -18.1% (% of Net Sales) 42.8% 44.8% Op. Expenses
Slide 9: FY 2020 Financial Projection by Business Unit
FY 2020 Financial Projection by Business Unit (Full Year) Office, Imaging System, and Industry & Others: Sales & profit decline Medical System: Sales & profit growth FY 2020 FY 2019 (Billions of yen) Current % Change Actual Projection Office Net Sales 1,423.4 1,752.1 -18.8% Op. Profit 82.6 165.0
Slide 10: FY 2020 Operating Profit Analysis (Full Year)
FY 2020 Operating Profit Analysis (FY 2020 Current Projection versus FY 2019 Actual) Sales volume: Significant decline due to lower Office and Imaging System sales Op expenses: Lower sales, expense efficiency, benefit from structural reform Change in Net Sales, excluding FX impact, for reference
Slide 11: Business Direction Post-COVID-19
Business Direction Post-COVID-19 Office / Inkjet Support remote work Respond to diverse needs with rich product lineup Cameras Accelerate measures to streamline operations Expand business areas that utilize optical technology Medical / Network cameras Cultivate into core businesses by conc
Slide 12: Office – MFDs
Office – MFDs 2Q: Significant decline in both hardware sales and service revenue due to office closures Hit bottom in 2Q, expect gradual recovery from 3Q (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual Change Actual Change Projection MFDs 99.7 166.4 -40.1% 512.8 645.
Slide 13: Office – Laser Printers
Office – Laser Printers 2Q: Significant sales decline due to lower demand for medium- to high- speed office equipment and consumables 2H: Recovery signs already appearing, but lack strength (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual Change Actual Change Projecti
Slide 14: Office – Others
Office – Others 2Q: Sales decline due to restrained printing equipment installation and sales & marketing activity 2H: Recovery in sales of mainly new products while utilizing online demonstrations (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual Change Actual Change
Slide 15: Imaging System – Cameras
Imaging System – Cameras Significant decline in net sales this year as fewer image capturing opportunities leads to significant market decline Launch of "EOS R5" and "EOS R6.” Accelerate shift to high added-value products Role of cameras expanding from image capturing and sharing device to com
Slide 16: Imaging System – Inkjet Printers
Imaging System – Inkjet Printers 2Q: Sales growth mainly in developed countries due to expansion of remote working and learning Full-year sales growth as home print volume increase acts as tailwind (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual Change Actual Change
Slide 17: Medical System
Medical System 2Q: Secured increase in profit through comprehensive expense management 2H: Capture recovering demand and aim for full-year sales and profit growth (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual Change Actual Change Projection Net Sales 101.9 105.1 -3
Slide 18: Industry & Others – Lithography Equipment
Industry & Others – Lithography Equipment Increase in semiconductor lithography equipment unit sales by capturing demand for memory related devices Decrease in FPD lithography equipment unit sales due to overseas travel restrictions (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current
Slide 19: Industry & Others – Others
Industry & Others – Others Aiming to increase full-year sales by advancing installation work of OLED vacuum deposition equipment Extend network camera growth over the medium- to long-term through solutions enhancement (Billions of yen) 2Q Full Year 2020 2020 2019 % 2019 % Current Actual Actual C
Slide 20: Inventory
Inventory Imaging System: Reduced inventory in terms of value through camera production adjustment Industry & Others: Increase caused by delay in installation due to travel restrictions FY 2019 FY 2020 (Billions of yen) 1Q 2Q 3Q 4Q 1Q 2Q Amt. 215.5 206.1 201.3 191.9 194.9 191.6 Office Days 43 43
Slide 21: Cash Flow (Full Year)
Cash Flow (Full Year) Significant drop in free cash flow due to unprecedented economic downturn Interim dividend 40 yen per share in order to secure sufficient cash-on-hand to invest in growth FY 2020 FY 2019 Current Actual (Billions of yen) Projection Net cash provided by operating activities 1
Slide 22: Sustainability Measures
Sustainability Measures Canon's COVID-19 Response Canon is working to prevent the spread of COVID-19, and is also actively providing locally rooted support and services around the world, under the corporate philosophy of kyosei. India UK Netherlands USA Japan Donations of food and X-ray CTs loaded o
Slide 23: Supplementary Information
Supplementary Information 22
Slide 24: Net Sales Growth Rate of Hardware & Non-hardware
Net Sales Growth Rate of Hardware & Non-hardware FY 2020 FY 2019 2Q Full Year 2Q Full Year Actual Projection Actual Actual MFDs Hardware -40% -22% -8% -7% JPY Non-hardware -40% -20% -6% -5% Hardware -39% -20% -6% -4% LC Non-hardware -39% -18% -4% -2% LPs Hardware -31% -21% -3% -5% JPY Non-hardware -
Slide 25: Color Ratio (MFDs & LPs); Sales Growth by Monochrome & Color MFDs
Color Ratio (MFDs & LPs) FY 2020 FY 2019 2Q Full Year 2Q Full Year Actual Projection Actual Actual Net Sales 59% 60% 59% 59% MFDs QTY 60% 58% 59% 59% Net Sales 52% 52% 52% 52% LPs QTY 23% 21% 20% 20% Sales Growth by Monochrome & Color MFDs FY 2020 FY 2019 2Q Full Year 2Q Full Year Actual Projection
Slide 26: Interchangeable Lens Digital Camera Ratio; IC Stepper Unit Breakdown
Interchangeable Lens Digital Camera Ratio FY 2020 FY 2019 2Q Full Year 2Q Full Year Actual Projection Actual Actual Value Base 86% 86% 85% 85% Unit Base 66% 64% 61% 62% * Value Base Includes Interchangeable Lenses IC Stepper Unit Breakdown by Light Source (Units) FY 2020 FY 2019 2Q Full Year 2Q Full