Slide 1: Canon Inc. Second Quarter 2010 Results
Canon Inc. Second Quarter 2010 Results July 27, 2010 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 2010 Results P3 – 9 FY 2010 Projections P10 – 15 Details by Business P16 – 23 Financial Situation P24 – 25 Supplementary Information P26 – 31 July 27, 2010 Canon Inc. 2
Slide 3: 2Q 2010 in Summary
2Q 2010 in Summary External Environment 9 Gradual global economic recovery continues 9 Steep euro’s depreciation, but no change in market situation Results 9 Realized net sales growth of more than 20% 9 Strong consumer, steady recovery in office-related businesses 9 Posted gross profit ratio of 49.0
Slide 4: Summary of Results
Summary of Results 2Q 2010 Actual (Billions of yen)(For reference) 2Q 2010 2Q 2010 2Q 2009 Pct. Change Actual (excluding effects of Actual Actual new consolidation) Net sales 970.4 793.8 +22.2% 898.1 Gross profit 475.4 345.5 +37.6% 427.9 [% sales] 49.0% 43.5% 47.6% Op. profit 113.4 44.9 +152.6% 117.
Slide 5: Summary of Results
Summary of Results 1H 2010 Actual , 1H 2009 Actual and FY 2009 Actual (Billions of yen) 1H 2010 1H 2009 FY 2009 Actual Actual Actual Net sales 1,725.9 1,480.8 3,209.2 Gross profit 843.9 644.3 1,427.4 [% sales] 48.9% 43.5% 44.5% Op. profit 200.3 64.9 217.1 [% sales] 11.6% 4.4% 6.8% Net income attribu
Slide 6: Summary of Results: Trend in Net Sales and Op. Profit
Summary of Results Trend in Net Sales and Op. Profit Net sales (Billions of yen) 17.9% Operating profit (Billions of yen) Op. profit ratio (% sales) 15.9% 15.7% 11.6% 8.3% 8.8% 2,314 2,167 2,113 1,981 1,728 1,726 1,481 389 368 4.4% 331 165 152 200 65 1H07 2H07 1H08 2H08 1H09 2H09 1H10 July 27, 2010
Slide 7: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2Q 2010 Actual v. 2Q 2009 Actual (Billions of yen) Sales Op. Profit 2Q 2009 Actual 793.8 44.9 Change in Exchange Rate Foreign exchange impact -47.8 -32.0 •1USD: 97.19 to 91.96 yen [net sales, cost of sales, expenses] •1EURO 132.90 to 116.34 yen : Sales volume impac
Slide 8: Steady Recovery in Performance
Steady Recovery in Performance Gross & Operating Profit Ratios (Gross Profit Ratio) (Operating Profit Ratio) 55% Excluding 25% effect of new consolidation (47.6%) 49.6% 49.0% 50% 48.8% 49.0% 20% 48.2% 45.5% 17.0% 45.1% 45% 43.5% 43.5% 15% 14.5% 13.1% 42.4% 11.7% 40% 11.5% 10% 9.7% Excluding effect o
Slide 9: Expense & Inventory Situation
Expense & Inventory Situation Expenses Inventory (Billions of yen) (Billions of yen) 500 Operating expenses 45% 700 Amount Expense to sales ratio Turnover (days) 40.6% Excluding 38.8% 40% 58 effect of new 400 37.9% 600 consolidation 37.4% 37.3% 37.3% 53 54 52 50 49 35.8% 47 35.1% 34.5% 45 35% Exclud
Slide 10: Assumptions
Assumptions 2010 Current Projection Average 2H10 FY10 FY09 Exchange Rate Yen-1USD 90.00 yen 90.63 yen 93.21 yen Yen-1EURO 110.00 yen 114.74 yen 130.46 yen Impact of Exchange Rate Movement (2H impact given a one yen change) Net sales Operating profit USD 9.8 billion yen 4.7 billion yen EURO 4
Slide 11: Key Points FY 2010
Key Points FY 2010 Assumption 9 Continuing trend of gradual economic recovery amid hints of growing uncertainty Projections 9 Achieve sales and profit growth of all businesses, leveraging competitive product portfolio and offsetting exchange rate impact 9 Firmly achieve full year projections, throug
Slide 12: GDP Growth Rates by Major Regions
GDP Growth Rates by Major Regions (Jul. ‘10 IMF release) (Reference) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Past Past Previous Current Current Actual Actual Actual projections Projections projection projection projection (Oct. ’09) (Jan. ‘10) (Apr. ‘10) (Jul. ‘10) (Jul. ‘10) Japan +2.4% -1.2% -5.2%
Slide 13: Key Points FY 2010
Key Points FY 2010 Assumption 9 Continuing trend of gradual economic recovery amid hints of growing uncertainty Projections 9 Achieve sales and profit growth of all businesses, leveraging competitive product portfolio and offsetting exchange rate impact 9 Firmly achieve full year projections, throug
Slide 14: Summary of Projected Results
Summary of Projected Results FY 2010 Current Projection (Billions of yen) (For reference) FY 2010 FY 2010 FY 2010 FY 2009 Pct. Change Current projection Current Previous Previous (excluding Actual Actual effects of new projection projection Projection consolidation) Net sales 3,750.0 3,750.0 3,209.2
Slide 15: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2010 Current Projection v. FY 2010 Previous Projection (Billions of yen) FY 2010 Sales Op. Profit Change in Exchange Rate Previous Projection (Apr. 26, 2010) 3,750.0 360.0 •1USD: 90.14 to 90.63 yen Foreign exchange impact •1EURO: 125.01 to 114.74 yen -102.5 -52.
Slide 16: Office
Office 2Q 2010 Actual / FY 2010 Projection (Billions of yen) 2Q (Billions of yen) FY Sales 900 Growth rate y/y ( ) Local currency base 3,000 +22.5%(+27.5%) +31.3%(+38.1%) 600 2,000 300 522 1,000 1,645 2,043 2,015 1,767 398 450 0 0 2Q09 2Q10 2Q10 FY09 FY10 FY10 FY10 ( Excluding new Previous Current C
Slide 17: Office (Copiers)
Office (Copiers) 2Q 2010 Actual / FY 2010 Projection Growth rate y/y (Unit base) Sales Copiers 2Q FY (Billions of yen) Growth rate y/y Color +39% +29% ( ) Local currency base Others Mono- +21% +10% 800 2,500 chrome Other printing devices Color copiers Monochrome copiers 2,043 2,015 Total +26% +15% 2
Slide 18: Office (Other Printing Devices)
Office (Other Printing Devices) 2Q 2010 Actual / FY 2010 Projection Growth rate y/y (Unit base) Sales LP 2Q FY Growth rate y/y (Billions of yen) ( ) Local currency base Color +80% +50% Others 2,500 Mono- +98% +65% 800 Other printing devices chrome Color copiers Monochrome copiers 2,043 2,015 Total +
Slide 19: Consumer
Consumer 2Q 2010 Actual / FY 2010 Projection (Billions of yen) 2Q (Billions of yen) FY Sales 600 Growth rate y/y ( ) Local currency base 2,000 +7.6%(+13.3%) +9.8%(+17.1%) 1,500 400 1,000 200 332 364 1,301 1,385 1,400 500 0 0 2Q09 2Q10 FY09 FY10 Previous FY10 Current projection projection Op. OP rati
Slide 20: Consumer (Cameras)
Consumer (Cameras) 2Q 2010 Actual / FY 2010 Projection Sales (Billions of yen) Growth rate y/y ( ) Local currency base Growth rate y/y 500 Others 2,000 (Unit base) IJP Cameras 2Q FY 400 364 Digital +9% +10% 332 1,500 1,301 1,385 1,400 cameras D SLR ratio* 300 2Q FY 1,000 Value 65% 64% base 200 Unit
Slide 21: Consumer (IJP)
Consumer (IJP) 2Q 2010 Actual / FY 2010 Projection Sales (Billions of yen) Growth rate y/y ( ) Local currency base Growth rate y/y 500 Others 2,000 (Unit base) IJP Cameras 2Q FY 400 364 IJP +4% +3% 1,500 1,400 1,385 1,385 332 1,301 300 +4.4%(+10.4%) +5.8%(+10.9%) 1,000 200 500 100 0 0 2Q09 2Q10 FY09
Slide 22: Industry and Others
Gross Sales (Includes sales Industry and Others among Group businesses) Net Sales Sales Elimination (Sales among 2Q 2010 Actual / FY 2010 Projection Group businesses) (Billions of yen) 2Q (Billions of yen) FY Gross Sales Sales 150 Growth rate y/y Gross Sales +14.4%(+15.4%) ( ) Local currency base +2
Slide 23: Industry and Others (Litho.Equip.)
Industry and Others (Litho.Equip.) 2Q 2010 Actual / FY 2010 Projection Sales Growth rate y/y (Billions of yen) ( ) Local currency base IC Stepper Unit Breakdown IC Stepper Unit Breakdown by Light Source 200 Others by Light Source Lithography Equipment 600 FY10 Corporate and eliminations 2Q10 150 ArF
Slide 24: Capital Expenditure Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) Increase in PP&E Operating C/F 1,000 Net income attributable to Canon Inc. 1,000 Free C/F Depreciation Investing C/F 750 750 407 488 144 309 241 500 500 240 300 240 240 839 132 617 611 610 590 473 250 429 250 432 362 370 350 342
Slide 25: Cash on Hand
Cash on Hand (Billions of yen) Cash-on-hand 3.1 Cash-on-hand (In months of 2nd-half Net sales) 2.8 2.8 2.4 2.5 1,156 2.1 944 800 835 795 679 FYE06 FYE07 FYE08 FYE09 FYE10 FYE10 Previous Current * Projection Projection Note 1: In 2007, 450 billion yen was used to acquire own share. In 2008, 100 billi
Slide 26: Supplementary Information
Supplementary Information July 27, 2010 Canon Inc. 26
Slide 27: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2010 Current Projection v. FY 2009 Actual (Billions of yen) Sales Op. Profit FY 2009 Actual 3,209.2 217.1 Foreign exchange impact -150.3 -107.6 [net sales, cost of sales, expenses] Sales volume impact Office +221.9 Change in Exchange Rate (FY) Consumer +20
Slide 28: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2010 Actual v. 2Q 2009 Actual (Billions of yen) 2Q10 2Q09 Change (Billions of yen) Gross Profit 475.4 345.5 +129.9 % sales 49.0% 43.5% +5.5 pt. 200 150 129.9 106.1 100 47.5 50 35.9 5.5 0 -7.0 -10.3 -50 -47.8 Forex Sales Price Forex Cost New Others Total -100 impact
Slide 29: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2010 Actual v. 2Q 2009 Actual (Billions of yen) 2Q10 2Q09 Change Op. Profit 113.4 44.9 +68.5 (Billions of yen) % sales 11.7% 5.7% +6.0 pt. 200 150 129.9 100 68.5 50 10.3 0 -20.0 -50 -51.7 -100 Total change in Change in Change in SG&A New Total change in gross pr
Slide 30: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 50 Debt Debt/Total Assets 5% 40 4% 31 30 27 3% 20 2% 14 12 10 10 0.7% 0.6% 1% 0.4% 0.3% 0.3% 0 0% FYE06 FYE07 FYE08 FYE09 2QE10 Excluding effects of new consolidation (0.3%) Supplementary Information July 27, 2010 Canon Inc. 30
Slide 31: Financial Ratios
Financial Ratios (Yen) 1,000 20% 16.3% 16.5% 800 15% 11.1% 10.6% 10.8% 600 8.8% 10% 7.3% 4.9% 377.59 400 341.95 6.0% 5% 246.21 3.4% 193.53 200 106.64 0% 0 -5% FY06 FY07 FY08 FY09 FY10 Current Projection EPS (Basic) ROE ROA (Attributable to Canon Inc) Note 1: EPS (Basic) has been adjusted to reflect