Slide 1: Canon Inc. First Half 2008 Results
Canon Inc. First Half 2008 Results July 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 ref
Slide 2: Agenda
Agenda 2Q&1H 2008 Results P3 – 12 2H&FY 2008 Projections P13 – 21 Supplementary Information P22 – 31 July 24, 2008 Canon Inc. 2
Slide 3: 2Q 2008 in Summary
2Q 2008 in Summary (External Environment) 9 Weaker-than-expected business confidence, particularly in developed countries 9 Yen appreciation that exceeded that in the 1Q on a year-on-year basis 9 Higher costs due to steep increases in raw material and oil prices (Achievements) 9 Posted lower net sal
Slide 4: Summary of Results
Summary of Results 2Q&1H 2008 Actual (Billions of yen) 2008 2007 Pct. Change Current Previous Previous % Sales % Sales Actual % Sales Actual projection projection projection Net sales 1,105.9 1,112.5 1,126.9 -0.6% -1.9% Gross profit 541.6 49.0% 552.1 49.6% 573.9 50.9% -1.9% -5.6% Op. profit 160.2 14
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2Q 2008 Actual v. Previous Projection (Billions of yen) 2Q 2008 Sales Op. Profit Previous Projection (April 24, 2008) 1,112.5 153.2 Change in Exchange Rate Foreign exchange impact [net sales, cost of sales, expenses] +31.8 +19.9 •1USD: 100.00 to 104.61 yen •1EURO:
Slide 6: Business Machines
Business Machines 2Q&1H 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,500 OP ratio 450 30% 1,200 23.2% 21.7% 21.8% 20.1% 900 -4.0%(+2.6%) 300 20% 20.7% 1,447 1,389 600 -9.7% -4.6%(+2.2%) 335 150 303 10% 731 706 697 300 -12.0% 159 146
Slide 7: Office Imaging Products
Office Imaging Products 2Q&1H 2008 Actual Growth rate y/y Sales (Unit base) (Billions of yen) Growth rate y/y Copying machines ( ) Local currency base 2Q 1H 500 Others 1,000 Color +6% +12% Color Mono- Monochrome +8% +3% -4.7%(-0.3%) chrome 400 750 -5.3%(-1.3%) Total +7% +5% 327 330 632 312 599 300 +
Slide 8: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) 2Q&1H 2008 Actual LBP 2Q 1H Color +18% +8% Mono- Sales chrome +8% 0% (Billions of yen) Growth rate y/y Total +9% +1% ( ) Local currency base Color ratio (LBP) 600 Others 1,000 2Q 1H IJP -2.3%(+6.7%) LBP Value 40% 39% 761 743 base* -3.7%(+5.7%) Unit 37
Slide 9: Cameras
Cameras 2Q&1H 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 Op ratio 150 26.4% 30% 25.8% 21.5% 21.3% 400 100 22.2% 20% +1.9%(+9.0%) -18.0% 520 529 137 200 +4.5%(+12.2% 113 50 -12.9% 10% 297 304 310 77 68 67 0 0 0% 2Q07 2Q08 2Q08 1H
Slide 10: Cameras
Cameras 2Q&1H 2008 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 2Q 1H ( ) Local currency base 500 900 Digital Video cameras cameras +14% +16% Digital cameras Film cameras/Lenses 400 +4.5%(+12.2%) +1.9%(+9.0%) D SLR ratio* 297 304 310 600 2Q 1H +14.3%(+22.3%) 520 529 300
Slide 11: Optical and Other Products
Optical and Other Products 2Q&1H 2008 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 300 OP ratio 40 8% 6.9% 200 30 6% 4.1% -2.8%(+0.3%) 20 4% 100 201 195 2.2% -0.3%(+2.6%) 21 1.7% 10 -94.5% 2% 99 102 98 -74.2% 7 0.1% 6 3 0 0 0 0% 2Q07 2Q08
Slide 12: Optical and Other Products
Optical and Other Products 2Q&1H 2008 Actual Growth rate y/y Sales ( ) Local currency base (Billions of yen) (Billions of yen) IC Stepper Unit Breakdown IC Stepper Unit Breakdown by Light Source by Light Source Others 150 300 SPE -0.3%(+2.6%) 2Q08 -2.8%(+0.3%) 1H08 ArF Dry 1 ArF Dry 2 99 102 98 201
Slide 13: Assumptions
Assumptions 2H 2008 Average 2H08 FY08 FY07 Exchange Rate USD 105.00 yen 104.86 yen 117.50 yen EURO 165.00 yen 163.03 yen 161.41 yen Impact of Exchange Rate Movement (2H impact given a one yen change) Net sales Operating profit USD 9.4 billion yen 5.5 billion yen EURO 4.0 billion yen 3.1 billion yen
Slide 14: Key Points 2H&FY 2008
Key Points 2H&FY 2008 Assumptions 9 Longer than expected economic slump, mainly in developed countries. 9 Continued strong yen and high price for raw materials and oil Projections 9 Accelerate contribution of new products 9 Drive additional thorough cost reduction and expense savings 9 Overcome chal
Slide 15: Summary of Projected Results
Summary of Projected Results 2H&FY 2008 Current Projection (Billions of yen) 2008 2007 Pct. Change Current Previous Previous % Sales % Sales Actual % Sales Actual projection projection projection Net sales 2,476.6 2,450.0 2,314.6 +1.1% +7.0% Gross profit 1,219.6 49.2% 1,222.0 49.9% 1,139.4 49.2% -0.
Slide 16: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2H&FY 2008 Current Projection v. Previous Projection (Billions of yen) 2H FY Sales Op. Profit Sales Op. Profit 2008 Previous Projection (April 24, 2008) 2,450.0 446.0 4,570.0 770.0 Foreign exchange impact +79.1 +39.9 +110.9 +59.8 [net sales, cost of sales, expenses
Slide 17: Office Imaging Products
Office Imaging Products 2H&FY 2008 Current Projection Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base -2.2%(+1.0%) (Unit base) 1,250 Others 1,500 Copying 2H FY Color 1,291 1,290 1,262 machines Monochrome 1,250 Color +12% +12% 1,000 +5.9%(+8.1%) Monochrome -4% -1% +0.7
Slide 18: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) 2H&FY 2008 Current Projection LBP 2H FY Color +33% +19% Mono- Sales chrome +1% 0% (Billions of yen) Growth rate y/y Total +5% +3% ( ) Local currency base Color ratio (LBP) 1,250 Others 2,000 IJP +2.2%(+10.0%) 2H FY LBP Value 1,000 +6.6%(+13.3%) 1,538
Slide 19: Cameras
Cameras 2H&FY 2008 Current Projection Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y ( ) Local currency base 2H FY 1,250 Video cameras 1,500 +5.9%(+11.5%) Digital +23% +20% cameras Digital cameras 1,221 1,000 Film cameras/Lenses 1,250 1,153 1,179 +10.1%(+15.7%) D SLR ratio* +9.2
Slide 20: Optical and Other Products
Optical and Other Products 2H&FY 2008 Current Projection Sales IC Stepper Unit Breakdown Growth rate y/y by Light Source IC Stepper Unit Breakdown (Billions of yen) by Light Source ( ) Local currency base (Billions of yen) Others 400 SPE 2H08 600 +11.7%(+14.2%) FY08 +26.7%(+28.8%) ArF ArF 1 1 Immers
Slide 21: Operating Profit by Product
Operating Profit by Product 2H&FY 2008 Current Projection (Billions of yen) 2008 Current Projection 2007 Pct. Change Current Previous Previous % Sales % Sales Actual % Sales Actual projection projection projection Bus. Machines 345.9 22.4% 349.8 22.8% 314.8 21.1% -1.1% +9.9% Cameras 184.5 26.7% 194.
Slide 22: Supplementary Information
Supplementary Information July 24, 2008 Canon Inc. 22
Slide 23: 2Q 2008 Sales and profit (excluding foreign exchange impact)
2Q 2008 Sales and profit (excluding foreign exchange impact) (Billions of yen) 2Q 2008 2Q 2007 Foreign Actual Actual exchange (excluding forex Actual impact Impact) Net sales 1,105.9 -60.9 1,166.8 1,126.9 Gross profit 541.6 -45.3 586.9 573.9 [% sales] 49.0% 50.3% 50.9% Op. profit 160.2 -33.8 194.0 1
Slide 24: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2Q&1H 2008 Actual v. 2Q&1H 2007 Actual (Billions of yen) 2Q 1H Sales Op. Profit Sales Op. Profit 2007 Actual 1,126.9 181.5 2,166.7 388.9 Foreign exchange impact -60.9 -33.8 -117.3 -71.1 [net sales, cost of sales, expenses] Sales volume impact Change in Exchan
Slide 25: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2008 Actual v. 2Q 2007 Actual (Billions of yen) 2Q08 2Q07 Change (Billions of yen) Gross Profit 541.6 573.9 -32.3 90 % sales 49.0% 50.9% -1.9 pt. 60 29.1 30 15.6 8.8 0 -1.3 -30 -23.6 -32.3 -60 -60.9 -90 Forex Sales Price Forex Cost Others Total impact volume change
Slide 26: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2008 Actual v. 2Q 2007 Actual (Billions of yen) 2Q08 2Q07 Change (Billions of yen) Op. Profit 160.2 181.5 -21.3 60 % sales 14.5% 16.1% -1.6 pt. 30 11.5 -0.5 0 -30 -21.3 -32.3 -60 Total change in Change in Change in SG&A Total change in gross profit SG&A forex im
Slide 27: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 2H&FY 2008 Current Projection v. 2H&FY 2007 Actual (Billions of yen) 2H FY Sales Op. Profit Sales Op. Profit 2007 Actual 2,314.6 367.8 4,481.3 756.7 Foreign exchange impact -91.6 -49.2 -208.9 -120.3 [net sales, cost of sales, expenses] Sales volume impact Cha
Slide 28: 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 60 49 53 47 45 100 4% 44 400 40 614 563 539 510 489 50 2% 200 20 1.1% 0.8% 0.7% 39 0.6% 0.6% 32 31 27 26 0 0 0 0% FYE04 FYE05 FYE06 FYE07 2QE08 FYE04 FYE0
Slide 29: Free Cash Flow and Capital Expenditure
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 Investing C/F 750 750 407 235 500 488 234 205 455 500 500 839 384 740 695 606 505 461 250 250 432 429 430 401 384 380 365 342 262 226 0 0 FY05 FY06 FY07 FY08 FY05 F
Slide 30: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Dividend *Figures in parenthesis represent dividend per share expressed on a pre- 3-for-2 forward stock split basis (effective date July 1, 2006) (Billions of yen) Dividends per share (Yen) 24.4% Payout ratio 28.8% 27.7% (Consolidated 1
Slide 31: Financial Ratios
Financial Ratios * Common stock held by stockholders as of June 30, 2006, were split on a 3-for-2 basis. EPS (Basic) has been adjusted to retroactively reflect the forward stock split. (Yen) 1,000 16.8% 16.5% 20% 15.9% 16.0% 16.3% 16.4% 800 15% 10.1% 10.1% 10.6% 10.8% 10.8% 600 9.0% 10% 377.59 396.4