Slide 1: Canon Inc. Third Quarter 2016 Results
Canon Inc. Third Quarter 2016 Results October 26, 2016 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 2016 Results P3 – 5 FY 2016 Projections P6 – 9 Details by Business P10 – 15 Financial Situation P16 – 18 Supplementary Information P19 – 24 October 26, 2016 Canon Inc. 2
Slide 3: 3Q 2016 in Summary
3Q 2016 in Summary External Environment Global economy - Gradual growth continued U.S. recovery – Gradual Economic weakness in emerging countries –Continued Results Sales and profit decline, mainly due to yen's appreciation and lower sales of laser printers October 26, 2016 Canon Inc. 3
Slide 4: Summary of Results
Summary of Results 3Q 2016 Actual (Billions of yen) 3Q 2016 3Q 2015 Pct. Change Actual Actual Net Sales 778.8 925.8 -15.9% Gross Profit 376.6 469.2 -19.7% (% Sales) 48.4% 50.7% Op. Profit 40.0 77.3 -48.2% (% Sales) 5.1% 8.3% Net Income Attributable to Canon Inc. 24.4 49.2 -50.4% (% Sales) 3.1% 5.3%
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2016 Actual v. 3Q 2015 Actual (Billions of yen) Sales Op. Profit 3Q 2015 Actual 925.8 77.3 Foreign Exchange Impact Change in Exchange Rate -103.9 -36.4 (Net Sales, Cost of Sales, Expenses) •1USD: 122.12 to 102.33 yen •1EURO: 135.93 to 114.25 yen Sales Volume Imp
Slide 6: Exchange Rate Assumptions
Exchange Rate Assumptions 2016 Current Projection Average 4Q16 FY16 FY15 Exchange Rate Yen-1USD 100.00 yen 106.00 yen 121.13 yen Yen-1EURO 113.00 yen 118.75 yen 134.20 yen Impact of Exchange Rate Movement (4Q Impact Given a One Yen Change) Net Sales Operating Profit USD 3.7 billion yen 1.4 bil
Slide 7: Overview of Latest Projections
Overview of Latest Projections External Environment Global economy U.S. - Continues to head toward recovery Europe - Increasing sense of economic slowdown Full-year Projection - Sales and profit decline Impact of lower laser printer and compact camera sales and significant yen's appreciation
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2016 Current Projection (Billions of yen) FY 2016 FY 2015 Pct. Change Current Projection Actual Net Sales 3,360.0 3,800.3 -11.6% Gross Profit 1,657.0 1,934.4 -14.3% (% Sales) 49.3% 50.9% Op. Profit 235.0 355.2 -33.8% (% Sales) 7.0% 9.3% Net Income Attributable to Cano
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2016 Current Projection v. FY 2016 Previous Projection (Billions of yen) Sales Op. Profit Previous Projection (Jul. 26, 2016) 3,520.0 265.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 107.96 to 106.00 yen -30.3 -10.2 •1EURO: 119.39 to 118.75 yen (Net
Slide 10: Office
3Q16 Growth Rate y/y (Unit Base) 3Q16 Color Ratio Office Color Copiers +8% Printers -1% Value Base* Copiers 57% Printers 51% Monochrome -5% -3% Unit Base 49% 18% 3Q 2016 Actual Total +1% -3% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 750 Monochrome copiers
Slide 11: Office
FY16 Growth Rate y/y (Unit Base) FY16 Color Ratio Office Color Copiers +10% Printers -1% Value Base* Copiers 58% Printers 52% Monochrome -4% -6% Unit Base 49% 18% FY 2016 Projection Total +2% -5% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 3,000 Monochrome c
Slide 12: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 3Q16 +8% Digital Camera Ratio * 3Q16 Digital Cameras Value Base 89% 3Q 2016 Actual Compact Digital -52% Unit Base 65% Cameras Total Digital Cameras -25% * Proportion of Total Digital Cameras IJP -6% * Value Base Inc
Slide 13: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY16 -1% Digital Camera Ratio * FY16 Digital Cameras Value Base 86% FY 2016 Projection Compact Digital -39% Unit Base 58% Cameras Total Digital Cameras -22% * Proportion of Total Digital Cameras IJP 0% * Value Base
Slide 14: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) 3Q15 3Q16 3Q 2016 Actual 3Q15 3Q16 ArF 0 0 IC 20 14 KrF 4 5 FPD 12 7 i-line 16 9 (Billions of yen) Sales Growth rate y/y ( ) Local currency base 210 Sales Eliminations Industry and Others Lithography
Slide 15: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) FY16 FY16 FY 2016 Projection FY16 FY16 FY15 Previous Current FY15 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 90 Amount (Billions of yen) Turnover (Days) 700 59 70 58 57 55 54 52 53 50 47 50 591 595 600 569 563 30 528 521 502 494 500 479 10 -10 400 -30 300 -50 3QE14 4QE14 1QE15 2QE15 3QE15 4QE15 1QE16 2QE16 3QE16 October 26, 2016 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 Operating C/F Increase in PP&E Free C/F Net Income Attributable to Canon Inc. Investing C/F Depreciation 750 21 500 315 892 879 257 584 500 507 475 454 477 447 250 269 230 255 220 180 165 0 250 -415 -432 275 264 273 2
Slide 18: Cash on Hand
Cash on Hand Cash on Hand (Year-end) (Billions of yen) 1,500 4 Cash-on-hand (Billions of yen) Cash-on-hand 3.5 (In months of 2nd-half net sales) 3 2.6 1,000 2.3 2.4 2.5 845 2.0 1.9 1.9 789 2 667 634 1.5 590 500 560 1 0.5 0 0 FYE12 FYE13 FYE14 FYE15 FYE16 FYE16 Previous Current Note : Approx. 150, 50
Slide 19: Supplementary Information
Supplementary Information October 26, 2016 Canon Inc. 19
Slide 20: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2016 Current Projection v. FY 2015 Actual (Billions of yen) Sales Op. Profit FY 2015 Actual 3,800.3 355.2 Foreign Exchange Impact -330.3 -129.1 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 121.13 to 106.00 yen •1EURO: 134.20 to 118.7
Slide 21: Gross Profit Variance Analysis
Gross Profit Variance Analysis 3Q 2016 Actual v. 3Q 2015 Actual (Billions of yen) 3Q16 3Q15 Change (Billions of yen) Gross Profit 376.6 469.2 -92.6 % Sales 48.4% 50.7% -2.3% 150 100 50 34.6 8.0 0 -8.3 -23.0 -50 -100 -92.6 -103.9 -150 Forex Sales Price Forex Cost Total Impact Volume Change Impact Red
Slide 22: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2016 Actual v. 3Q 2015 Actual (Billions of yen) 3Q16 3Q15 Change Op. Profit 40.0 77.3 -37.3 (Billions of yen) % Sales 5.1% 8.3% -3.2% 150 100 50 32.9 22.4 0 -50 -37.3 -100 -92.6 -150 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit
Slide 23: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 45 30.0% 611 Debt Debt/Total Assets 25.0% 20.0% 13.5% 15.0% 10.0% 5.0% 4 3 2 2 0 0.0% 0.1% 0.1% 0.0% 0.0% FYE12 FYE13 FYE14 FYE15 3QE16 Supplementary Information October 26, 2016 Canon Inc. 23
Slide 24: Financial Ratios
Financial Ratios (Yen) 900 15% 600 10% 8.7% 8.4% 8.7% 7.4% 5.7% 5.6% 5.9% 5.8% 5.0% 300 5% 229.03 3.7% 191.34 200.78 201.65 151.09 0 0% FY12 FY13 FY14 FY15 FY16 Current Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information October 26, 2016 Canon Inc. 24