Canon Inc. · TSE:7751
Canon — Q1 2008 Earnings Presentation
30 slides from Canon's earnings presentation, Apr 24, 2008
Slide 1: First Quarter 2008 Results
Canon Inc. First Quarter 2008 Results April 24, 2008 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
Slide 2: Agenda
Agenda T1Q 2008 Results P3-12 T1H&FY 2008 Projections P13-21 TSupplementary Information P22-30 April 24, 2008 Canon Inc. 2
Slide 3: 1Q 2008 in Summary
1Q 2008 in Summary (Environment and special factors) ' Exceptionally strong yen ' Greater than expected severe economic environment ' Impact from the change in depreciation method (Achievements) ' Achieved strong growth in local currency terms, reflecting strong fundamentals ' Maintained high level
Slide 4: Summary of Results
Summary of Results 1Q 2008 Actual (Billions of yen) 1Q 2008 1Q 2007 Pct. change Actual Actual Net sales 1,007.5 1,039.8 -3.1% Gross profit 499.9 533.7 -6.3% [% sales] 49.6% 51.3% Op. profit 170.8 207.4 -17.6% [% sales] 17.0% 19.9% Net income 106.6 131.3 -18.7% [% sales] 10.6% 12.6% Foreign exchange
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 1Q 2008 Actual v. 1Q 2007 Actual (Billions of yen) 1Q Sales Op. Profit 1Q 2007 Actual 1,039.8 207.4 Foreign exchange impact -56.4 -37.3 [net sales, cost of sales, expenses] -54.3 Depreciation change impact -17.0 Sales volume impact Change in Exchange Rate Office Im
Slide 6: Business Machines
Business Machines 1Q 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP ratio 300 30% 24.7% 23.6% 600 200 20% -3.3%(+2.9%) 715 692 -7.6% 300 100 10% 177 163 0 0 0% 1Q07 1Q08 1Q07 1Q08 April 24, 2008 Canon Inc. 6
Slide 7: Office Imaging Products
Office Imaging Products 1Q 2008 Actual Sales Growth rate y/y (Billions of yen) Growth rate y/y (Unit base) ( ) Local currency base Others Copying 1Q 500 machines Color Monochrome Color +19% 400 -5.9%(-2.4%) Monochrome -1% 306 Total +3% 288 300 Color ratio +9.4%(+12.1%) (Copying machines) 1Q 200 -3.7
Slide 8: Computer Peripherals
Computer Peripherals 1Q 2008 Actual Growth rate y/y (Unit base) Sales LBP 1Q (Billions of yen) Growth rate y/y Color 0% ( ) Local currency base Monochrome -7% 500 Others IJP -0.9%(+7.7%) Total -6% LBP 383 380 400 Color ratio (LBP) 1Q +6.1%(+10.0%) Value base* 38% 300 Unit base 16% *Includes consumab
Slide 9: Cameras
Cameras 1Q 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 300 OP ratio 80 40% 27.2% 200 60 30% 20.9% -1.6%(+4.7%) 40 20% 222 219 61 -24.5% 100 46 20 10% 0 0 0% 1Q07 1Q08 1Q07 1Q08 April 24, 2008 Canon Inc. 9
Slide 10: Cameras
Cameras 1Q 2008 Actual Sales Growth rate y/y (Billions of yen) Growth rate y/y (Unit base) ( ) Local currency base 1Q 350 Video cameras Digital +18% Digital cameras -1.6%(+4.7%) cameras 300 Interchangeable lenses and others 250 222 219 -16.2%(-11.3%) D SLR ratio* 200 1Q Value base 38% 150 Unit base
Slide 11: Optical and Other Products
Optical and Other Products 1Q 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP ratio 40 20% 100 30 15% 11.7% -5.1%(-2.0%) 20 10% 50 102 97 10 3.5% 5% 18 -70.4% 5 0 0 0% 1Q07 1Q08 1Q07 1Q08 *Excluding inter-segment sales *Calculatio
Slide 12: Optical and Other Products
Optical and Other Products 1Q 2008 Actual Sales (Billions of yen) Growth rate y/y ( ) Local currency base IC Stepper Unit Breakdown by Light Source 150 Others 1Q08 SPE -5.1%(-2.0%) ArF Dry 1 KrF 15 102 97 i-line 27 100 +4.3%(+7.3%) SPE (Unit sales) 1Q07 1Q08 50 IC 47 43 LCD 5 6 -14.3%(-11.1%) TTL 52
Slide 13: Assumptions
Assumptions 2Q-4Q 2008 Average 2Q-4Q08 FY08 FY07 Exchange Rate T Yen-1USD 100.00 yen 101.05 yen 117.50 yen T Yen-1EURO 157.00 yen 157.13 yen 161.41 yen Impact of Exchange Rate Movement (2-4Q impact given a one yen change) Net sales Operating profit T USD 13.8 billion yen 7.9 billion yen T EURO 6.0 b
Slide 14: Key Points 2Q-4Q 2008
Key Points 2Q-4Q 2008 Assumptions ' Continued strong yen ' Gradual economic recovery toward year end Projections ' New products contribution to be accelerated in second half of the year ' Thorough cost and expense reduction ' Overcome challenging environment and achieve ninth consecutive year of sal
Slide 15: Summary of Projected Results
Summary of Projected Results 1H&FY 2008 Current Projection (Billions of yen) 2008 2007 Pct. Change Current Previous Previous % Sales % Sales Actual % Sales Actual projection projection projection Net sales 2,120.0 2,230.0 2,166.7 -4.9% -2.2% Gross profit 1,052.0 49.6% 1,130.0 50.7% 1,107.6 51.1% -6.
Slide 16: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 1H&FY 2008 Current Projection v. 1H&FY 2008 Previous Projection (Billions of yen) 1H FY Sales Op. Profit Sales Op. Profit 2008 Previous projection(Jan.30, 2008) 2,230.0 390.0 4,720.0 800.0 Foreign exchange impact [net sales, cost of sales, expenses] -39.7 -22
Slide 17: Office Imaging Products
Office Imaging Products 1H&FY 2008 Current Projection Growth rate y/y Sales (Unit base) Copying 1H FY (Billions of yen) Growth rate y/y machines ( ) Local currency base 900 1,800 Color +21% +19% Others Color -2.3%(+3.3%) -0.1%(+5.8%) Mono- +9% +5% chrome Monochrome 632 637 618 1,291 1,333 1,290 Tota
Slide 18: Computer Peripherals
Computer Peripherals 1H&FY 2008 Current Projection Growth rate y/y (Unit base) Sales LBP 1H FY (Billions of yen) Growth rate y/y Color +13% +26% ( ) Local currency base Mono- +4% +3% 1,200 Others chrome IJP Total +5% +6% LBP -4.0%(+6.6%) 2,000 +0.4%(+11.1%) 761 786 1,611 1,544 Color ratio (LBP) 800
Slide 19: Cameras
Cameras 1H&FY 2008 Current Projection Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 1H FY ( ) Local currency base 1,000 2,000 Digital +17% +20% Video cameras cameras Digital cameras +2.3%(+11.1%) 750 Interchangeable 1,500 D SLR ratio* lenses and others 1,233 +0.7%(+9.5%) 1,179
Slide 20: Optical and Other Products
Optical and Other Products 1H&FY 2008 Current Projection Sales (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 300 600 Others +16.3%(+19.8%) SPE -0.7% (+2.7%) 439 457 201 206 199 IC Stepper Unit Breakdown 393 IC Stepper Unit Breakdown 200 by Light Source 400 by Light Sour
Slide 21: Operating Profit by Product
Operating Profit by Product 1H&FY 2008 Current Projection v. 1H&FY 2007 Actual (Billions of yen) 2008 2007 Current Projection Actual 1H FY 1H FY Business 309.4 659.2 335.5 650.3 machines % sales 22.1% 22.5% 23.2% 22.2% Cameras 113.3 308.1 137.3 307.4 % sales 21.7% 26.1% 26.4% 26.7% Optical and other
Slide 22: Supplementary Information
Supplementary Information April 24, 2008 Canon Inc. 22
Slide 23: 1Q 2008 Sales and profit (excluding foreign exchange and depreciation change impact)
1Q 2008 Sales and profit (excluding foreign exchange and depreciation change impact) (Billions of yen) 1Q 2008 1Q 2007 Foreign Actual Actual Depreciation Actual exchange change impact (excluding forex impact and dep. Impact) Net sales 1,007.5 -56.4 1,063.9 1,039.8 Gross profit 499.9 -45.1 -12.6 557.
Slide 24: Gross Profit Variance Analysis
Gross Profit Variance Analysis 1Q 2008 Actual v. 1Q 2007 Actual (Billions of yen) 1Q08 1Q07 Change (Billions of yen) Gross Profit 499.9 533.7 -33.8 90 % sales 49.6% 51.3% -1.7 pt. 60 24.9 30 14.4 11.3 10.7 0 -12.6 -30 -26.1 -56.4 -33.8 -60 Forex Sales Price Forex Cost Dep. Others Total impact volume
Slide 25: Operating Profit Variance Analysis
Operating Profit Variance Analysis 1Q 2008 Actual v. 1Q 2007 Actual (Billions of yen) 1Q08 1Q07 Change (Billions of yen) Op. Profit 170.8 207.4 -36.6 60 % sales 17.0% 19.9% -2.9 pt. 30 7.8 0 -6.2 -4.4 -30 -33.8 -36.6 Total change in Change in Change in SG&A Dep. Total change in gross profit SG&A for
Slide 26: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 1H&FY 2008 Current Projection v. 1H&FY 2007 Actual (Billions of yen) 1H FY Sales Op. Profit Sales Op. Profit 2007 Actual 2,166.7 388.9 4,481.3 756.7 Foreign exchange impact [net sales, cost of sales, expenses] -154.8 -96.1 -324.8 -198.7 Sales volume impact Ch
Slide 27: Inventories and Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) 800 Inventories 80 150 Debt 6% Turnover (Days) Debt/Total Assets 600 47 60 45 44 49 47 100 4% 400 40 582 563 539 510 489 50 2% 1.1% 200 20 0.8% 0.7% 0.6% 0.6% 39 32 31 27 27 0 0 0 0% FYE04 FYE05 FYE06 FYE07 1QE08 FYE04 FYE0
Slide 28: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 Capex 1,000 Operating C/F Net income Free C/F Depreciation 800 Investing C/F 750 407 255 500 488 234 600 205 455 500 839 384 745 400 695 606 490 461 435 432 429 250 401 384 380 370 342 200 262 226 0 0 FY05 FY06 FY07 FY08 FY
Slide 29: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Return to Shareholders 2 200 40% Dividend per share (Yen) Cash on hand Payout ratio (Billions of yen) (Consolidated basis) 1,156 28.8% 150 27.7% 30% 1,005 1 944 960 888 23.1% 24.4% 100 110 110 20% (165) (165)* 16.8% 83 1 67 (125) 50 10%
Slide 30: Financial Ratios
Financial Ratios * EPS (Basic) has been adjusted to reflect a 3-for-2 forward stock split (effective date July 1, 2006) (Yen) 1,000 20% 16.8% 16.3% 16.5% 16.4% 15.9% 16.0% 800 15% 10.1% 10.1% 10.6% 10.8% 10.8% 9.0% 600 10% 377.59 396.50 400 341.95 5% 288.63 258.53 209.21 200 0% 0 -5% FY03 FY04 FY05