Slide 1: Canon Inc. Third Quarter 2017 Results
Canon Inc. Third Quarter 2017 Results October 24, 2017 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 2017 Results P03 – 06 FY 2017 Projections P07 – 10 Details by Business P11 – 17 Financial Situation P18 – 21 Supplementary Information P22 – 27 October 24, 2017 Canon Inc. 2
Slide 3: Key Messages
Key Messages Recovery of existing businesses accelerating, New businesses expanding “Further progress in business structure transformation" Third quarter 3rd consecutive quarter of significant YoY sales and profit growth Full-year projection Previous projection raised again Net sales +30 billion
Slide 4: 3Q 2017 in Summary
3Q 2017 in Summary 3rd consecutive quarter of YoY sales and profit growth starting from Q1, first time in 7 years Continued recovery of laser printer business Firm sales of cameras, particularly new models Continued expansion of FPD lithography equipment and OLED vacuum deposition equipment sa
Slide 5: Summary of Results
Summary of Results 3Q 2017 Actual (Billions of yen) 3Q 2017 3Q 2016 Pct. Change Actual Actual Net Sales 994.5 778.8 +27.7% Gross Profit 482.2 376.6 +28.0% (% Sales) 48.5% 48.4% Op. Profit 80.5 40.0 +101.1% (% Sales) 8.1% 5.1% Net Income Attributable to Canon Inc. 63.1 24.4 +158.6% (% Sales) 6.3% 3.1
Slide 6: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2017 Actual v. 3Q 2016 Actual (Billions of yen) Sales Op. Profit 3Q 2016 Actual 778.8 40.0 Foreign Exchange Impact Change in Exchange Rate +57.3 +19.1 •1USD: (Net Sales, Cost of Sales, Expenses) 102.33 to 110.93 yen •1EURO: 114.25 to 130.42 yen Sales Volume Impa
Slide 7: Exchange Rate Assumptions
Exchange Rate Assumptions 2017 Current Projection Average 4Q17 FY17 FY16 Exchange Rate Yen-1USD 112.00 yen 111.88 yen 108.58 yen Yen-1EURO 132.00 yen 126.49 yen 120.25 yen Impact of Exchange Rate Movement (4Q Impact Given a One Yen Change) Net Sales Operating Profit USD 3.8 billion yen 1.3 bil
Slide 8: Overview of Current Projection
Overview of Current Projection Full-year projection “Further progress in business structure transformation” Versus last year Sales and profit growth – First time in 4 years Existing businesses - Recovery of Laser printer and camera businesses, Lithography equipment New businesses - 20% growth
Slide 9: Summary of Projected Results
Summary of Projected Results FY 2017 Current Projection (Billions of yen) FY 2017 FY 2016 Pct. Change Current Projection Actual Net Sales 4,080.0 3,401.5 +19.9% Gross Profit 1,984.0 1,673.8 +18.5% (% Sales) 48.6% 49.2% Op. Profit 350.0 228.9 +52.9% (% Sales) 8.6% 6.7% Net Income Attributable to Cano
Slide 10: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2017 Current Projection v. FY 2017 Previous Projection (Billions of yen) Sales Op. Profit Previous Projection (Jul. 27, 2017) 4,050.0 330.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 112.14 to 111.88 yen +21.0 +9.3 •1EURO: 123.39 to 126.49 yen (Net S
Slide 11: Office
3Q17 Growth Rate y/y (Unit Base) 3Q17 Color Ratio Office Color Copiers +11% Printers -6% Value Base* Copiers 58% Printers 54% Monochrome -2% -8% Unit Base 54% 18% 3Q 2017 Actual Total +4% -8% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 600 Monochrome copiers
Slide 12: Office
FY17 Growth Rate y/y (Unit Base) FY17 Color Ratio Office Color Copiers +8% Printers +3% Value Base* Copiers 59% Printers 52% Monochrome -3% -2% Unit Base 54% 18% FY 2017 Projection Total +3% -1% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 2,500 Monochrome co
Slide 13: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 3Q17 -5% Digital Camera Ratio * 3Q17 Digital Cameras Value Base 86% 3Q 2017 Actual Compact Digital +13% Unit Base 61% Cameras Total Digital Cameras +2% * Proportion of Total Digital Cameras (Billions of yen) Sales I
Slide 14: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY17 -3% Digital Camera Ratio * FY17 Digital Cameras Value Base 85% FY 2017 Projection Compact Digital -1% Unit Base 58% Cameras Total Digital Cameras -2% * Proportion of Total Digital Cameras (Billions of yen) Sale
Slide 15: Medical System
Medical System 3Q 2017 Actual & FY 2017 Projection (Billions of yen) 500 Sales Op. Profit 15.0% 440 439 Op.Profit(Billions of yen) Op.Profit Ratio 400 10.0% 300 7.5% 6.7% 200 4.7% 4.9% 5.0% 132 112 100 89 21 22 10 0.2% 7 0 0 0.0% 1Q17 2Q17 3Q17 FY17 FY17 1Q17 2Q17 3Q17 FY17 FY17 Previous Current Pre
Slide 16: Industry and Others
Industry and Others IC Lithography Unit Lithography Equipment Breakdown by Light Source 3Q 2017 Actual (Unit Sales) 3Q16 3Q17 3Q16 3Q17 ArF 0 0 IC 14 15 KrF 5 4 (Billions of yen) Sales FPD 7 29 i-line 9 11 Growth rate y/y ( ) Local currency base 250 Sales Eliminations Industry and Others Lithography
Slide 17: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) FY17 FY17 FY 2017 Projection FY17 FY17 FY16 Previous Current FY16 Previous Current Projection Projection Projection Projection ArF 0 0 0 (Billions of yen) Sales IC 64 74 73 KrF 19 24 24 Growth rate y
Slide 18: Inventories
Inventories (Billions of yen) 800 90 Amount (Billions of yen) Turnover (Days) 700 59 70 57 55 54 55 57 52 53 47 621 50 595 597 600 569 561 30 521 502 494 500 479 10 -10 400 -30 300 -50 3QE15 4QE15 1QE16 2QE16 3QE16 4QE16 1QE17 2QE17 3QE17 October 24, 2017 Canon Inc. 18
Slide 19: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 1,000 Increase in PP&E Operating C/F Net Income Attributable to Canon Inc. Free C/F Depreciation Investing C/F 750 500 21 315 295 837 330 584 550 550 500 475 454 500 269 255 220 255 220 245 220 151 0 250 -337 264 273 250 26
Slide 20: 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 (In months of 2nd-half net sales.) 3.5 3 2.6 1,000 2.4 2.5 2.2 845 1.9 789 1.8 2 1.7 634 630 640 600 1.5 500 1 0.5 0 0 FYE13 FYE14 FYE15 FYE16 FYE17 FYE17 Previous Current Note : Approx. 50, 15
Slide 21: Dividend
Dividend (Yen) Regular Dividend 200 Commemorative Dividend 120% 108.7% 180 Dividend Payout Ratio 160 100% 160 150 150 150 10 140 130 130 80% 120 10 74.4% 70.5% 100 67.2% 60% 64.6% 64.6% 80 40% 60 40 20% 20 0 0% FY12 FY13 FY14 FY15 FY16 FY17 Plan October 24, 2017 Canon Inc. 21
Slide 22: Supplementary Information
Supplementary Information October 24, 2017 Canon Inc. 22
Slide 23: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2017 Current Projection v. FY 2016 Actual (Billions of yen) Sales Op. Profit FY 2016 Actual 3,401.5 228.9 Foreign Exchange Impact +89.8 +31.6 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 108.58 to 111.88 yen •1EURO: 120.25 to 126.49
Slide 24: Gross Profit Variance Analysis
Gross Profit Variance Analysis 3Q 2017 Actual v. 3Q 2016 Actual (Billions of yen) 3Q17 3Q16 Change (Billions of yen) Gross Profit 482.2 376.6 +105.6 % Sales 48.5% 48.4% +0.1pt. 120 105.6 80 57.3 60.5 40 10.3 0 -3.9 -18.6 -40 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction Ch
Slide 25: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2017 Actual v. 3Q 2016 Actual (Billions of yen) 3Q17 3Q16 Change Op. Profit 80.5 40.0 +40.5 (Billions of yen) % Sales 8.1% 5.1% +3.0pt. 120 105.6 60 40.5 0 -19.6 -45.5 -60 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Excluding
Slide 26: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 45 30.0% Debt Debt/Total Assets 613 603 25.0% 20.0% 15.0% 11.9% 11.6% 10.0% 5.0% 3 2 2 0 0.0% 0.1% 0.0% 0.0% FYE13 FYE14 FYE15 FYE16 3QE17 Supplementary Information October 24, 2017 Canon Inc. 26
Slide 27: Financial Ratios
Financial Ratios (Yen) 900 15% 600 10% 8.7% 8.8% 8.4% 7.4% 5.6% 5.9% 5.0% 5.2% 4.8% 300 5% 3.1% 229.03 225.71 200.78 201.65 137.95 0 0% FY13 FY14 FY15 FY16 FY17 Current Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information October 24, 2017 Canon Inc. 27