Slide 1: Canon Inc. Third Quarter 2010 Results
Canon Inc. Third Quarter 2010 Results October 27, 2010 Toshizo Tanaka E Executive ti ViVice P President id t & 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 vi
Slide 2: Agenda
Agenda 3Q 2010 Results P3 – 7 FY 2010 Projections P8 – 13 Details by Business P14 – 21 Financial Situation P22 – 23 Supplementary pp y Information P24 – 29 Oct. 27, 2010 Canon Inc. 2
Slide 3: 3Q 2010 in Summary
3Q 2010 in Summary External Environment Continued gradual recovery of global economy Our markets remain healthy, but more challenging exchange rate environment Results Absorbed further yen’s appreciation and realized near 20% net sales growth Product lineup enhancement and sales expansion
Slide 4: Summary of Results
Summary of Results 2010 3Q & YTD Actual (Billions of yen) (For reference) Pct. 2010 2009 Change 2010 (excluding effects of new consolidation) Actual % Sales Actual % Sales Actual Actual % Sales (Growth rate) Net sales 913.2 774.3 +17.9% 838.8 ( +8.3% ) Gross profit 446.9 48.9% 349.3 45.1% +27.9% 401
Slide 5: Performance Trends
Performance Trends Net sales (Billions of yen) Operating Profit(Billions of yen) Operating Profit Ratio Gross Profit Ratio 51.3% 50.9% 50.3% 49.6% 49.0% 48 4% 48.4% 48.8% 49.0% 48.9% 48 2% 48.2% 45.1% 45.5% 43.5%43.5% 42.4% 1,264 1,040 1,127 1,051 1,106 954 1,008 986 995 970 19.9% 913 16.1%16.6%15.3
Slide 6: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2010 Actual v. 3Q 2009 Actual (Billions of yen) Sales Op. Profit 3Q 2009 Actual 774.3 60.0 Change in Exchange Rate Foreign exchange impact -69.6 -45.0 •1USD: 93.46 to 85.79 yen [net sales, cost of sales, expenses] •1EURO: 133.60 to 110.61 yen Sales volume impact
Slide 7: Expense & Inventory Situation
Expense & Inventory Situation Expenses p Inventory y (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 Effects of new 400 600 54 consolidation 37.9%37.4% 37.3% 37.3% 37.5% 52 50 35.8% 49 35.1% 47 34.5% 34.9%
Slide 8: Assumptions
Assumptions 2010 Current Projection Average 4Q10 FY10 FY09 g Rate Exchange Yen-1USD 80.00 yen 86.69 yen 93.21 yen Yen-1EURO Y 1EURO 115 00 yen 115.00 116 32 yen 130.46 116.32 130 46 yen Impact of Exchange Rate Movement (4Q impact given a one yen change) Net sales Operating profit USD 5 4 billi
Slide 9: Key Points FY 2010
Key Points FY 2010 Assumptions Global economy still on track of gradual recovery, but uncertainty t i t towards t d year-endd remains i Challenging exchange rate environment due to continued U.S. dollar weakness Projections Overcome O foreign f i exchange h impact i t and d achieve hi iincreas
Slide 10: GDP Growth Rates by Major Regions
GDP Growth Rates by Major Regions (Oct. ‘10 IMF release) (Reference) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Previous Previous Current Current projection projection projection projection Currentt C Actual Actual Actual (Jul. ‘10) (Jul. ‘10) (Oct. ‘10) (Oct. ‘10) projection (Oct. ‘10) FY 4Q FY 4Q Jap
Slide 11: Key Points FY 2010
Key Points FY 2010 Assumptions Global economy still on track of gradual recovery, but uncertainty t i t towards t d year-endd remains i Challenging exchange rate environment due to continued U.S. dollar weakness Projections Overcome O foreign f i exchange h impact i t and d achieve hi iincreas
Slide 12: 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 A t l Actual A t l Actual effects of new projection projection Projection consolidation) (Growth rate) Net sal
Slide 13: 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 (Jul. 27, 2010) 3,750.0 360.0 •1USD: 90.63 to 86.69 yen Foreign exchange impact •1EURO: 114.74 to 116.32 yen -55.6 -29.5
Slide 14: Office
Office 3Q 2010 Actual / FY 2010 Projection (Billions of yen) 3Q (Billions of yen) FY Sales 900 Growth rate y/y ( ) Local currency base 3,000 +20.6%(+27.7%) +25.6%(+35.7%) ( ) 600 2 000 2,000 300 507 1,000 1,645 2,015 1,984 1,737 404 433 0 0 3Q09 3Q10 3Q10 FY09 FY10 FY10 FY10 ( Excluding new Previous
Slide 15: Office (Copiers)
Office (Copiers) 3Q 2010 Actual / FY 2010 Projection Growth rate y/y (Unit base) Sales Copiers 3Q FY (Billions of yen) Growth rate y/y Color +38% +31% ( ) Local currency base Others Mono- M +24% 24% +13% 13% 800 2,500 chrome Other printing devices Color copiers Monochrome copiers 2,015 1,984 Total +
Slide 16: Office (Other Printing Devices)
Office (Other Printing Devices) 3Q 2010 Actual / FY 2010 Projection Growth rate y/y ( (Unit base)) Sales LP 3Q FY Growth rate y/y (Billions of yen) ( ) Local currency base Color +26% +47% Others 2,500 Mono- +64% +67% 800 Other printing devices chrome Color copiers Monochrome copiers 2,015 1,984 Tota
Slide 17: Consumer
Consumer 3Q 2010 Actual / FY 2010 Projection (Billions of yen) 3Q (Billions of yen) FY Sales 600 Growth rate y/y ( ) Local currency base 2,000 +6.9%(+14.4%) +3.3%(+14.0%) ( ) 1,500 400 1,000 200 1,301 1,400 1,391 314 325 500 0 0 3Q09 3Q10 FY09 FY10 Previous FY10 Current projection j ti projection j
Slide 18: Consumer (Cameras)
Consumer (Cameras) 3Q 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 3Q FY Cameras 400 1,400 1,391 Digital +10% +11% 1,500 cameras 314 325 1,301 300 D SLR ratio* 1,000 3Q FY Value 66% 65% 200 base Unit
Slide 19: Consumer (IJP)
Consumer (IJP) 3Q 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 3Q FY Cameras 400 1,400 1,391 IJP -2% +3% 1,500 314 325 1,301 300 -2.9%(+6.4%) +4.8%(+10.7%) 1,000 200 500 100 0 0 3Q09 3Q10 FY09 FY10 F
Slide 20: Industry and Others
Gross Sales (Includes sales Industry and Others among Group businesses) Net Sales Sales Elimination (Sales among 3Q 2010 Actual / FY 2010 Projection Group businesses) (Billions of yen) 3Q (Billions of yen) FY Gross Sales Sales Gross Sales 150 Growth rate y/y +31.7%(+34.5%) 450 +19.6%(+21.2%) ( ) Loc
Slide 21: Industry and Others (Litho.Equip.)
Industry and Others (Litho.Equip.) 3Q 2010 Actual / FY 2010 Projection S l Sales Growth rate y/y (Billions of yen) ( ) Local currency base IC Stepper Unit Breakdown IC Stepper St U Unit it B Breakdown kd by Light Source 200 Others by Light Source Lithography Equipment 600 FY10 Corporate and eliminat
Slide 22: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow E Expenditure dit (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 88 48 4 144 335 309 241 500 500 300 240 245 839 132 5 675 8 617 7 611 610 473 250 429 250 432
Slide 23: Cash on Hand
Cash on Hand (Billions of yen) Cash-on-hand Cash on hand 3.1 Cash-on-hand (In months of 2nd-half Net sales) 2.8 24 2.4 25 2.5 1,156 24 2.4 2.1 944 795 835 810 679 FYE06 FYE07 FYE08 FYE09 FYE10 FYE10 Current Previous ( 1 ) ( 1,2 ) projection p j projection p j * In 2007, 450 billion yen was used to a
Slide 24: Supplementary Information
S Supplementary l Information I f i Oct. 27, 2010 Canon Inc. 24
Slide 25: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2010 Current C rrent Projection v. FY 2009 Act Actual al (Billions of yen) Sales Op. Profit FY 2009 Actual 3,209.2 217.1 Foreign exchange impact -201.9 -139.0 [net sales, cost of sales, expenses] Sales volume impact Office +198.6 Change in Exchange Rate Co
Slide 26: Gross Profit Variance Analysis
Gross Profit Variance Analysis y 3Q 2010 Actual v. 3Q 2009 Actual (Billions of yen) 3Q10 3Q09 Change g (Billions of yen) Gross Profit 446.9 349.3 +97.6 % sales 48.9% 45.1% +3.8 pt. 150 97.6 100 71.9 47.8 45.9 50 10.5 0 -8.9 50 -50 -69.6 -100 Forex Sales Price Forex Cost New Total -150 impact volume
Slide 27: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2010 Actual v. 3Q 2009 Actual (Billions of yen) 3Q10 3Q09 Change Op. Profit 104.4 60.0 +44.4 (Billions of yen) % sales 11.4% 7.7% +3.7 pt. 200 150 97.6 100 44 4 44.4 50 14.1 0 -17.5 -50 -49.8 -100 Total change g in Change in g in SG&A Change New Total change g i
Slide 28: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 50 Debt Debt/Total Assets 5% 40 4% 31 30 27 3% 20 2% 14 13 0.7% 10 10 0.6% 1% 0.4% 0.3% 0.3% 0 0% FYE06 FYE07 FYE08 FYE09 3QE10 Excluding effects of new consolidation ( %) (0.3%) Supplementary Information Oct. 27, 2010 Canon Inc. 28
Slide 29: Financial Ratios
Financial Ratios (Yen) 1,000 20% 16.3% 16.5% 800 15% 11.1% 10.6% 10.8% 600 9.1% 10% 7 3% 7.3% 4.9% 377.59 400 341.95 6.2% 5% 246 21 246.21 3.4% 198.43 200 106.64 0% 0 -5% FY06 FY07 FY08 FY09 FY10 Current Projection EPS (B (Basic) i ) ROE ROA (Attributable to Canon Inc) Note 1: EPS (Basic) has been a