Slide 1: Canon Inc. FY 2008 Results
Canon Inc. FY 2008 Results January 28, 2009 Masahiro Osawa Managing Director, Group Executive Finance and Accounting Headquarters This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect
Slide 2: Agenda
Agenda 4Q/FY 2008 Results P3 – 13 FY 2009 Projections P14 – 23 Financial Situation P24 – 25 Supplementary Information P26 – 31 Jan. 28, 2009 Canon Inc. 2
Slide 3: 2008 in Summary
2008 in Summary External Environment 9 Unprecedented slowdown of world economy 9 Dramatic and rapid appreciation of the yen 9 Steep rise in raw material prices Results 9 First decrease in sales and profits in 9 yrs. 9 Showed ability to adapt to changing environment - thorough expense and inventory r
Slide 4: 2008 in Summary
2008 in Summary Inventories (Billions of yen) (Days) 700 Inventories 664 70 Turnover (Days) 614 600 582 58 60 563 53 507 500 47 50 47 44 400 40 300 30 Dec. 07 Mar. 08 Jun. 08 Sep. 08 Dec. 08 Jan. 28, 2009 Canon Inc. 4
Slide 5: Summary of Results
Summary of Results 4Q/FY 2008 Actual (Billions of yen) (For Reference) 2008 2008 2007 Pct. Change Actual (Excluding Forex Impact) Actual % Sales Projection % Sales Actual % Sales Projection Actual Amt. % Sales Net sales 994.7 1,150.6 1,263.8 -13.5% -21.3% 1,144.7 Gross profit 421.4 42.4% 518.4 45.1%
Slide 6: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q 2008 Actual v. Projection (Billions of yen) Sales Op. Profit 4Q 2008 Projection (Oct. 27, 2008) 1,150.6 119.8 Change in Exchange Rate Foreign exchange impact -39.6 -22.9 •1USD: 100.00 to 96.22 yen [net sales, cost of sales, expenses] •1EURO: 135.00 to 126.46 yen
Slide 7: Business Machines
Business Machines 4Q/FY 2008 Actual (Billions of yen) 4Q (Billions of yen) FY 900 3,000 Sales Growth rate y/y ( ) Local currency base 600 2,000 -9.4%(-1.6%) -22.8%(-10.1%) 2,936 803 2,714 2,660 674 620 300 1,000 0 0 4Q07 4Q08 4Q08 FY07 FY08 FY08 Previous Previous projection projection OP ratio Op. 3
Slide 8: Office Imaging Products
Office Imaging Products 4Q/FY 2008 Actual Growth rate y/y Sales (Unit base) (Billions of yen) Growth rate y/y Copying 4Q FY ( ) Local currency base machines 600 Others 2,000 Color -5% +5% Color Mono- -19% -6% Monochrome chrome 1,500 -13.3%(-7.6%) Total -16% -3% 400 1,291 353 -28.9%(-17.8%) 1,162 1,1
Slide 9: Computer Peripherals
Computer Peripherals Growth rate y/y 4Q/FY 2008 Actual (Unit base) LBP 4Q FY Sales Color -14% +2% Mono- -24% -7% (Billions of yen) Growth rate y/y chrome ( ) Local currency base 600 2,000 Total -23% -6% Others IJP -5.4%(+4.6%) LBP 1,538 421 -16.6%(-2.2%) 1,460 1,455 1,500 Color ratio (LBP) 400 356 4
Slide 10: Cameras
Cameras 4Q/FY 2008 Actual (Billions of yen) 4Q (Billions of yen) FY 500 1,500 Sales Growth rate y/y ( ) Local currency base 400 1,000 300 -9.6%(-1.0%) 200 -28.0%(-14.3%) 1,153 365 344 1,123 1,042 500 263 100 0 0 4Q07 4Q08 4Q08 FY07 FY08 FY08 Previous Previous projection projection OP ratio Op. 150 2
Slide 11: Cameras
Cameras 4Q/FY 2008 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 4Q FY ( ) Local currency base 600 Video cameras 2,000 Digital -9% +4% cameras Digital cameras Interchangeable lenses and others -28.0%(-14.3%) 1,500 -9.6%(-1.0%) D SLR ratio* 400 365 1,153 4Q FY 344 1,123 1
Slide 12: Optical and Other Products
Optical and Other Products 4Q/FY 2008 Actual (Billions of yen) 4Q (Billions of yen) FY Sales 200 Growth rate y/y 600 ( ) Local currency base 150 400 100 -0.2%(+4.0%) +17.2%(+26.8%) 133 200 393 413 392 50 96 112 0 0 4Q07 4Q08 4Q08 FY07 FY08 FY08 Previous Previous projection projection OP ratio OP rat
Slide 13: Optical and Other Products
Optical and Other Products 4Q/FY 2008 Actual Sales Growth rate y/y (Billions of yen) ( ) Local currency base IC Stepper Unit Breakdown IC Stepper Unit Breakdown by Light Source 200 by Light Source 600 SPE Others -0.2%(+4.0%) FY08 4Q08 +17.2%(+26.8%) ArF dry 5 150 ArF dry 3 133 393 413 392 KrF 37 112
Slide 14: Assumptions
Assumptions FY 2009 Average FY09 FY08 Exchange Rate Yen-1USD 90.00 yen 103.23 yen Yen-1EURO 120.00 yen 151.46 yen Impact of Exchange Rate Movement (FY09 impact given a one yen change) Net sales Operating profit USD 16.5 billion yen 9.1 billion yen EURO 6.9 billion yen 5.0 billion yen Jan. 28
Slide 15: Key Points
Key Points FY 2009 Assumptions 9 Continued weakness in global economy 9 Strong yen against the U.S. dollar and euro Projections 9 Lower sales and profits, under a severe environment 9 Timely launch of better targeted new products 9 Optimal control of inventory, capital expenditures, expenses, throug
Slide 16: Summary of Projected Results
Summary of Projected Results FY 2009 Current Projection (Billions of yen) (For Reference) FY 2009 FY 2008 FY2009 Projection Actual Pct. change Projection (excluding forex impact) Net sales 3,500.0 4,094.2 -14.5% 3,902.8 Gross profit 1490.0 1,938.0 -23.1% 1,859.6 [% sales] 42.6% 47.3% 47.6% Op. profi
Slide 17: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2009 Current Projection v. FY 2008 Actual (Billions of yen) Sales Op. Profit FY 2008 Actual 4,094.2 496.1 Foreign exchange impact -402.8 -269.4 Change in Exchange Rate [net sales, cost of sales, expenses] •1USD: 113.23 to 90.00 yen Sales volume impact •1EURO: 15
Slide 18: 2009 Office Imaging Products
2009 Office Imaging Products Copying Machines – First significant step toward aggressive growth strategy Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Others Color Copying FY machines Monochrome Color +3% 1,500 Mono- -8% 1,120 -12.2%(-0.8%) chrome
Slide 19: 2009 Computer Peripherals (LBP)
2009 Computer Peripherals (LBP) Enhance SCM to swiftly respond to environmental changes Growth rate y/y Sales (Unit base) LBP FY (Billions of yen) Growth rate y/y ( ) Local currency base Color -14% 2,500 Others Mono- -23% IJP chrome LBP Total -21% 2,000 -15.5%(-2.4%) 1,455 Color ratio (LBP) 1,500 1,
Slide 20: 2009 Computer Peripherals (IJP)
2009 Computer Peripherals (IJP) Further expansion of print volume Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,500 Others IJP FY LBP IJP 0% 2,000 -15.5%(-2.4%) 1,455 1,500 1,229 1,000 -8.1%(+5.3%) 500 -18.1%(-5.2%) 0 FY08 FY09 Projection Jan. 28, 2009
Slide 21: 2009 Cameras
2009 Cameras Maintain No. 1 position in industry Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Video cameras FY Digital cameras Digital -7% interchangeable lenses and others cameras 1,500 D SLR ratio* -17.6%(-4.1%) FY 1,042 858 Value 48% 1,000 base
Slide 22: 2009 Optical and Other Products (SPE)
2009 Optical and Other Products (SPE) Accelerate development of next-generation equipment Sales (Billions of yen) Growth rate y/y ( ) Local currency base 750 IC Stepper Unit Breakdown Others by Light Source FY09 SPE projection ArF immersion 3 500 -11.6%(-6.7%) ArF dry 0 KrF 2 392 347 i-line 11 SPE (
Slide 23: Operating Profit by Segment
Operating Profit by Segment FY 2009 Projection v. FY 2008 Actual (Billions of yen) (For Reference) FY 2009 FY 2008 FY 2009 Projection Actual Projection (excluding forex impact) Business machines 301.9 544.6 % Sales 13.2% 20.5% 18% Cameras 44.0 187.8 % Sales 5.1% 18.0% 14% Optical and Other Products
Slide 24: Capital Expenditure Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 Increase in PP&E 1,000 Operating C/F Net income Free C/F Depreciation Investing C/F 750 750 407 488 234 144 309 455 500 500 839 345 100 98 695 617 473 461 445 432 250 250 429 380 362 350 342 341 315 262 0 0 FY06 FY07 FY08 F
Slide 25: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Dividend (Billions of yen) *Figures in parenthesis represent dividend per share expressed on a pre- 3-for-2 forward stock split basis (effective date July 1, 2006) Cash on hand 3.4 3.2 Cash on hand (In months of full-year net sales) Div
Slide 26: Supplementary Information
Supplementary Information Jan. 28, 2009 Canon Inc. 26
Slide 27: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 4Q/FY 2008 Actual v. 4Q/FY 2007 Actual (Billions of yen) 4Q FY Sales Op. Profit Sales Op. Profit 2007 Actual 1,263.8 193.6 4,481.3 756.7 Foreign exchange impact [net sales, cost of sales, expenses] -150.0 -95.9 -299.5 -181.0 Sales volume impact Change in Exch
Slide 28: Gross Profit Variance Analysis
Gross Profit Variance Analysis 4Q 2008 Actual v. 4Q 2007 Actual 4Q08 4Q07 Change (Billions of yen) Gross Profit 421.4 611.1 -189.7 % sales 42.4% 48.4% -6.0 pt. 100 50 19.4 10.4 0 -15.0 -15.7 -50 -38.8 -100 -150 -150.0 -200 -189.7 Forex Sales Price Forex Cost Others Total -250 impact volume change im
Slide 29: Operating Profit Variance Analysis
Operating Profit Variance Analysis 4Q 2008 Actual v. 4Q 2007 Actual 4Q08 4Q07 Change Op. Profit 35.8 193.6 -157.8 (Billions of yen) % sales 3.6% 15.3% -11.7 pt. 100 50 34.7 0 -2.8 * -50 -100 -150 -157.8 -200 -189.7 Total change in Change in Change in SG&A Total change in -250 gross profit SG&A forex
Slide 30: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) Debt 50 5% Debt/Total Assets 39 40 4% 32 31 30 27 3% 20 2% 14 1.1% 0.8% 0.7% 10 0.6% 1% 0.4% 0 0% FYE 04 FYE 05 FYE 06 FYE 07 FYE 08 Supplementary Information Jan. 28, 2009 Canon Inc. 30
Slide 31: Financial Ratios
Financial Ratios (Yen) 1,000 16.8% 20% 16.0% 16.3% 16.5% 800 15% 11.1% 10.1% 10.1% 10.6% 10.8% 600 7.3% 10% 377.59 3.7% 400 341.95 5% 258.53 288.63 2.5% 246.21 200 0% 79.39 0 -5% FY04 FY05 FY06 FY07 FY08 FY09 Projection EPS (Basic) ROE ROA * EPS (Basic) has been adjusted to reflect a 3-for-2 forward