Slide 1: FY 2021 Results
Canon Canon Inc. FY 2021 Results January 27, 2022 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 assumptions
Slide 2: Agenda
Canon Agenda m FY 2021 Results P2-3 @ FY 2022 Projection P4-6 ™ Details by Business P7-14 (FY 2021 Results & FY 2022 Projection) @ Financial Situation P15-16 @ Sustainability Measures P17 m@ Excellent Global Corporation Plan Phase VI P18 @ Supplementary Information P19- 29
Slide 3: FY 2021 results overview
In 2021, we achieved significant sales and profit growth compared with last year when both were down significantly due to the impact of COVID-19. Even though sales were significantly impacted by the unsettled situation surrounding COVID-19, production bases being shut down, and component and logisti
Slide 4: Performance of Business Units in 2021
If you look at the performance of our Business Units, you see that sales and profit were up for all 4 groups. As for Printing and Imaging, profitability recovered to a solid double-digit level, despite the impact of supply shortages. As for Medical, sales and profit were both at record highs, thanks
Slide 5: FY 2022 projection and assumptions
As for exchange rates, we assumed 112 yen to the U.S. dollar and 130 yen to the euro. As for the global situation this year, although there is concern about the Omicron variant spreading, we expect the economy to grow at a fast pace of 4.4%, following last year’s 5.9%, which reflects significant rec
Slide 6: FY 2022 projection by Business Unit
Taking a look at the situation of each Business Unit, you see that we expect all 4 of our groups to post sales and profit growth. As for Printing and Imaging, in keeping with last year, we will maintain solid double-digit profitability. For Medical, we will work to set new highs in sales and profit
Slide 7: Factors impacting operating profit
Next, factors impacting operating profit. As for sales volume, changes in Printing and Imaging as well as the expected increase in semiconductor lithography equipment unit sales due to strong demand, are projected to contribute significantly to an increase in profit. As for price reduction, we will
Slide 8: Printing equipment market and results
As for the printing equipment market, demand for printers suitable for home-use remained high, due to the steady adoption of remote working. Additionally, in 2022, we expect demand for MFDs to recover as we see continuing increase in the number of people returning to traditional offices. Furthermore
Slide 9: Office MFDs
As for office MFDs, in the United States, some large corporations are further delaying their plans to have people return to the office. Due to this and other factors, it will take some time for service revenue to recover. However, we expect print volume to recover to more than 80% of pre-COVID level
Slide 10: Laser and inkjet printers
In 2021, we were unable to sell the volume of laser and inkjet printers that we were targeting as we could not supply enough product due to such factors as lower capacity utilization rates of production sites in Southeast Asia, resulting from the re-expansion of COVID, and the impact of component sh
Slide 11: Digital commercial printing
The growing digital commercial printing market is showing healthy recovery from its COVID- induced contraction and is expected to approach the pre-COVID level of 2019 in 2022. In 2021, we received a large number of orders and achieved significant sales growth as printers like our varioPRINT iX serie
Slide 12: Imaging group
In 2020, cameras, which are a core component of the imaging group, saw significant decline in unit sales due to the impact of COVID-19. As a result, we posted a temporary decline in the profitability of this group. However, profitability recovered to a normal double-digit level in 2021. Cameras are
Slide 13: Cameras and EOS R system
We have been expanding our core product lineup by increasing the number of highly profitable EOS R systems over the years. As a result, the sustained profitability of the camera business has increased significantly, resulting in an overall 25% increase in camera sales and a significant improvement i
Slide 14: Network cameras
In 2021, the network camera market moved closer to going back to its original growth path as the economy normalized. And in 2022, we expect the market to continue growing as component shortages gradually ease, and also due to growing diversity in the way network cameras are being used, from surveill
Slide 15: Medical business
While medical institutions around the world were busy dealing with COVID-19, particularly at the beginning of the year, the market for diagnostic imaging equipment gradually recovered, thanks to a steady resumption of normal operation such as medical examination and diagnosis, and we expect this tre
Slide 16: Industrial group
Demand for devices related to our industrial group, such as semiconductors and displays, is progressively growing amid the COVID-19 crisis. Under strong demand for these devices, in 2021, we increased the sales and significantly grew the profit of our production equipment, even amid ongoing travel r
Slide 17: Semiconductor lithography equipment
In 2021, the semiconductor device market reached 500 billion dollars for the first time, and going forward, is expected to continue growing. Additionally, the market for semiconductor lithography equipment is expected to grow as countries around the world are in the process of attracting semiconduct
Slide 18: OLED vacuum deposition equipment
The OLED panel market is expected to grow at an annual rate of over 10% in terms of area. However, due to delay in the full-fledged rollout of 5G, the next-generation communications standard, reflecting the impact of COVID-19, the replacement of smartphones has not progressed, and panel manufacturer
Slide 19: Inventory
Inventory at the end of 2021 increased from the end of September. This mainly reflects increases in work-in-process and product inventories in-transit to sales companies, which was a result of efforts to recover from product supply shortages caused by difficulties in procuring parts and declines in
Slide 20: Cash flow and shareholder returns
In 2021, amidst significant recovery in our performance from the pandemic, operating cash flow increased and free cash flow was 243.8 billion yen, significantly exceeding that of 2020. Additionally, we worked to strengthen our financial constitution by prioritizing the repayment of debt based on cas
Slide 21: Sustainability measures
In 2021, we established a division for the promotion of sustainability. Through the Sustainability Headquarters, we have reformulated and clearly stated our approach to sustainability, which is based on kyosei, the corporate philosophy we have followed since 1988. As for the environment, we declared
Slide 22: Excellent Global Corporation Plan Phase VI
Last year, which was the first year of our 5-year initiative, “Phase VI of the Global Excellent Corporation Plan,” was a good start, with profit exceeding pre-COVID 2019, even amid the impact of product supply shortages. This year, in the second year of our plan, we will work to accelerate growth in
Slide 23: Supplementary Information
Supplementary Information
Slide 24: FY 2021 Operating Profit Analysis (vs FY 2020)
FY 2021 Operating Profit Analysis Canon (FY 2021 Actual versus FY 2020 Actual) (Billions of yen) FX Details Net Sales: +110.8 417.7 Cost of Sales: -29.0 +152.9 05 Op. Expenses: -36.3 . ——— -44.2 Change in Net Sales, excluding FX impact, for reference +45.5 Printing: +52.3 at Imaging: +80.1 Medical:
Slide 25: FY 2021 Operating Profit Analysis (vs Previous Projection)
FY 2021 Operating Profit Analysis Canon (FY 2021 Actual versus FY 2021 Previous Projection) (Billions of yen) FX Details Net Sales: +85 Cost of Sales: -2.9 Op. Expenses: -2.0 +3.6 +21.1 +3.3 +3.4 — -21.5 Change in Net Sales, excluding FX impact, for reference Printing: -76.2 Imaging: -19.9 Medical:
Slide 26: New Businesses Sales Composition Ratio
Change in . ; Canon New Businesses Sales Composition Ratio @ New Businesses Exsiting Businesses 100% 80% 60% 40% 20% 28% 28% 0% FY 2019 FY 2020 FY 2021 FY 2022 Actual Actual Actual Projection
Slide 27: Printing - Net Sales Growth Rate Y/Y
Canon Printing - Net Sales Growth Rate Y/Y (Hardware & Non-hardware) FY 2020 Full Year 4Q Full Year Actual Actual Actual JPY Hardware +27% -9% -21% Office MFDs Non-hardware +14%, +6% +3% -18%| -20%| Ic Hardware +27%| -12% +3% -10%| -20%| Non-hardware +13%| +2% 0%) -18% -20%| Jpy Hardware +35%) +22%
Slide 28: Office/Prosumer - Net Sales by Product Category
Office/Prosumer - Net Sales by Product Category Billions of yen) Canon FY 2020 4Q Full Year Actual Actual Office MFDs 573.5 1278 4784 1275 4567 Office [Others 295. 76.1 2787 679 2663 868.5 203.9 757.1 195.4 723.0 LPs 639.5 147.7 563.1 141.6 5044] Prosumer |UUPs 362.4) 84.0 3294 92.5 3265 1,001.9 231
Slide 29: Office MFDs/LPs - Color Ratio
Canon Office MFDs/LPs - Color Ratio FY 2020 4Q Full Year Actual Actual Office MFDs Net Sales 60% 60%| 60% 59% Units 63% 59% 60% 59%| LPs Net Sales 48% 51%| 51% 51% Units 14% 16%| 21% 21%| Office MFDs - Net Sales Growth Rate Y/Y (Monochrome & Color) FY FY 2020 4Q Full Year Actual Actual spy Monochrom
Slide 30: 4Q 2021
4Q 2021
Slide 31: FY 2021 Financial Results (4Q 2021)
FY 2021 Financial Results (4Q 2021) Canon (Billi f yen) = % Ch illions of yen: aati ange Net Sales 955.4 945.7 +1.0% Gross Profit 437.9 414.3 +5.7% (% of Net Sales) 45.8% 43.8% Op. Expenses 362.5 338.1 (% of Net Sales) 37.9% 35.7% Op. Profit 75.4 76.2 -1.1% (% of Net Sales) 7.9% 8.1% IBT 71.6 80.2 -
Slide 32: Financial Results by Business Unit (4Q 2021)
FY 2021 Financial Results by Business Unit Canon (4Q 2021) —_ 4Q 2020 (Billions of yen) pa % Change 3 Net Sales 520.7 503.1 +3.5% Printing : Op. Profit 48.4 55.4 -12.5% (%) (9.3%) (11.0%) . Net Sales 181.3 185.3 -2.2% Imaging . Op. Profit 21.9 23.8 -8.0% (%) (12.1%) (12.9%) . Net Sales 128.5 122.8 +
Slide 33: Operating Profit Analysis (4Q 2021)
FY 2021 Operating Profit Analysis Canon (4Q 2021 Actual versus 4Q 2020 Actual) Change in Net Sales, excluding FX impact, for reference Printing: 14.9 Imaging: -14.9 (Billions of yen) Medical: +12 Industrial & Others: 8.9 Eliminations: -2.9 Total: ~40.4 +6.7 +133 wet coee EEE EE -14.3 a -11.8 FX Deta
Slide 34: Printing / Imaging (4Q 2021)
Printing / Imaging (4Q 2021) Canon Printing Gillions of yen) 4Q Net Sales Growth Rate Y/Y Unit Growth Rate Y/Y 2020 % (Local Currency) Actual | Change 4Q 2021 4Q 2021 I i] Office 203.9) 195.4] +44% Actua Actua Prosumer 231.7 234.1 -1.0%| “Office 40.3% Office MFDs “15% Production 85.1 73.6] +15.6% Pr
Slide 35: Medical / Industrial & Others (4Q 2021)
Medical / Industrial & Others (4Q 2021) Canon Medical @illions of yen) 4Q Net Sales Growth Rate Y/Y 2020 % (Local Currency) Actual Change 4Q 2021 Net Sales 128.5) 122.8 +4.6% Actual Op. Profit 8.2 10.3 -20.0%] Total | +1.0% (% of Net Sales) 6.4% 8.4% Industrial & Others Gillions of yen) 4a Net Sales