Slide 1: Canon Inc. FY 2017 Results
Canon Inc. FY 2017 Results January 30, 2018 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 assumptions forme
Slide 2: Agenda
Agenda FY 2017 Results P2 - 7 FY 2018 Projection P8 - 12 Details by Business P13 - 19 (FY 2017 Results & FY 2018 Projection) Financial Situation P20 - 21 Supplementary Information P22 - 31 (FY 2017 / 4Q 2017 Results) 1
Slide 3: Key Message (FY 2017 Results)
Key Message (FY 2017 Results) Sales and profit growth, first time in 4 years Made further progress in transforming business structures through recovery of existing businesses and expansion of new ones Existing Businesses Achieved sales and profit growth in all businesses, thoroughly strengthened
Slide 4: Change in New Businesses Composition Ratio
Change in New Businesses Composition Ratio Increased sales composition through strong sales growth Doubled net sales, more than 20% growth even w/o new consolidation benefit Net Sales Composition FY 2017 Growth Rate +105% w/o new consolidation benefit +23% 3
Slide 5: FY 2017 Financial Results (Full Year)
FY 2017 Financial Results (Full Year) Against last year: Sales and profit growth, first time in 4 years, rapid recovery in profitability of existing businesses Against projection: Profit lower than projected due to impairment loss on goodwill related to commercial printing business FY 2017 FY 20
Slide 6: Regarding Impairment Loss (Commercial Printing Business)
Regarding Impairment Loss (Commercial Printing Business) Change in the business environment • Increasingly intense competition • Change in technology trend (Toner ⇒ Ink) Temporary decline in profit due to continued investment into product developed targeting growth ⇒ Recognized impairment loss o
Slide 7: FY 2017 Financial Results by Business Unit
FY 2017 Financial Results by Business Unit (Full Year) Office and Imaging System BU benefit from recovery in laser printers and cameras, which are sources of profit Industry & Others BU driven by lithography and OLED vacuum deposition equip. FY 2017 FY 2017 FY 2016 % Previous % (Billions of yen)
Slide 8: FY 2017 Operating Profit Analysis
FY 2017 Operating Profit Analysis (Full Year comparison against FY 2016) Sales volume: Profit growth driven by sales expansion in all businesses Continued cost savings absorbs impact of price reduction Excluding the impact of new consolidations, operating expenses down mainly thanks to lower R
Slide 9: Key Message (FY 2018 Projection)
Key Message (FY 2018 Projection) FX Assumptions 1 US$ = 110 yen, 1 Euro = 130 yen External Environment Global economy - Remains on path of modest recovery FY 2018 Outlook Existing businesses: Increase market share and thoroughly strengthen profitability via successive launch of strategic product
Slide 10: FY 2018 Financial Projection (Full Year)
FY 2018 Financial Projection (Full Year) Aiming for second consecutive year of sales and profit growth Projecting 2nd highest level of sales (Highest set in 2007) Expect operating profit to reach 400 billion yen level, first time since 2008 FY 2018 FY 2017 % (Billions of yen) Projection Actual
Slide 11: FY 2018 Financial Projection (Reclassification)
FY 2018 Financial Projection (Full Year) Service revenue related reclassification: Op. expenses to COS (110.0 billion yen) Pension accounting reclassification: COS & Op. expenses to Non-operating income (16.0 billion yen) Reclassification has no impact on Income before taxes & Net income FY 20
Slide 12: FY 2018 Financial Projection by Business Unit
FY 2018 Financial Projection by Business Unit (Full Year) Office: Expand MIF via strategic models, enhance profitability Imaging System: Improve product mix, promote in-house production and automation Industry & Others: Sales of lithography equipment and OLED vacuum deposition equipment to rem
Slide 13: FY 2018 Operating Profit Analysis
FY 2018 Operating Profit Analysis (Full Year comparison against FY 2017) Sales volume: Improvement in all businesses via increased volume and improved product mix Impact of price reduction offset with cost savings (Billions of yen) Change in Net Sales, excluding FX Details FX impact, for referen
Slide 14: Office – MFDs
Office – MFDs 2017 - Positive growth via expanded sales of next-generation color devices 2018 - Further expansion of sales via versions upgraded with enhanced software Improve profitability of the entire business through a higher mix of color FY 2017 FY 2016 % FY 2017 % FY 2018 FY 2017 % Previ
Slide 15: Office – Laser Printers
Office – Laser Printers 2017 - Completion of new product lineup, strong recovery 2018 - Raise new product ratio, expand consumable sales FY 2017 FY 2016 % FY 2017 % FY 2018 FY 2017 % Previous (Billions of yen) Actual Actual Change Change Projection Actual Change Projection MFDs 694 676 +2.6% 706
Slide 16: Office – Others
Office – Others Market - Expansion trend, particular in graphic art areas 2018 - Expand sales through already launched strategic products FY 2017 FY 2016 % FY 2017 % FY 2018 FY 2017 % Previous (Billions of yen) Actual Actual Change Change Projection Actual Change Projection MFDs 694 676 +2.6% 70
Slide 17: Imaging System – Cameras
Imaging System – Cameras 2017 - Achieved sales growth via launch of 6 models, most in industry 2018 - Maintain sales growth, driven by mirrorless cameras where double-digit growth continues FY 2017 FY 2016 % FY 2017 % FY 2018 FY 2017 % Previous (Billions of yen) Actual Actual Change Change Proje
Slide 18: Imaging System – Inkjet Printers
Imaging System – Inkjet Printers Market - Slightly up due to recovery in Asia Sales expansion of compact models and large ink tank models in both 2017 and 2018 FY 2017 FY 2016 % FY 2017 % FY 2018 FY 2017 % Previous (Billions of yen) Actual Actual Change Change Projection Actual Change Projection
Slide 19: Medical System
Medical System 2017 - Strong sales of new CT and Ultrasound diagnostic systems 2018 - Expand both sales and profit, promoting the strength of our products as well as expanding sales overseas Accelerate measures to reduce costs through enhanced group cooperation ■年度決算用（P17） FY 2017 FY 2016 % FY
Slide 20: Industry & Others
Industry & Others 2017 - Unit sales of FPD lithography equip. grew thanks to OLED panel demand 2018 - Unit sales of IC lithography equip. doubled thanks to expanding demand for memory Maintain double-digit growth in both OLED vacuum deposition equipment and network cameras ■年度決算用（P18） FY 2017
Slide 21: Inventory
Inventory Inventory turnover in days significantly shorter • Improving performance of Office and Industry & Others BU FY 2016 FY 2017 (Bilions of yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Yen 227 211 211 206 207 211 223 205 Office Days 42 42 44 42 40 42 44 40 Yen 168 138 144 127 143 149 164 130 Imaging System
Slide 22: Cash Flow (Full Year)
Cash Flow (Full Year) 2017 - Generated 400.0 billion yen in FCF, worked to pay down debt 2018 - Plan to invest in the growth of new businesses, and strive for comprehensive cashflow management FY 2018 FY 2017 FY 2016 (Billions of yen) Projection Actual Actual Net cash provided by operating activ
Slide 23: Supplementary Information
Supplementary Information 22
Slide 24: FY 2017
FY 2017 23
Slide 25: FY 2017 Operating Profit Analysis (vs Previous Projection)
FY 2017 Operating Profit Analysis (Full Year Comparison against FY 2017 Previous Projection) FX Details Net Sales: +5.9 (Billions of yen) Cost of Sales: -1.2 Op. Expenses: -1.3 Change in Net Sales, excluding FX impact, for reference Office: -7.6 Imaging System: -1.0 Medical System: -3.2 Industry & O
Slide 26: Dividend
Dividend Regular Dividend ma Commemorative Dividend -O=Dividend Payout Ratio Canon 160 150 150 150 130 130 1087% =o o— 74.4% 67.2% 64.6% 64.6% _ 1.4% FY12 FY13 FY14 FY15 FY16 FY17 Plan 25
Slide 27: 4Q 2017
4Q 2017 26
Slide 28: FY 2017 Financial Results (4Q 2017)
FY 2017 Financial Results (4Q 2017) 4Q 2017 4Q 2017 4Q 2016 % Previous % Billions of yen Actual Actual Change Projection Change Net Sales 1,120.3 965.2 +16.1% 1,120.3 0.0% Gross Profit 546.6 460.1 +18.8% 537.9 +1.6% (% of Net Sales) 48.8% 47.7% 48.0% Op. Profit 79.0 80.2 -1.4% 97.6 -19.0% (% of Net
Slide 29: FY 2017 Financial Results by Business Unit (4Q 2017)
FY 2017 Financial Results by Business Unit (4Q 2017) 4Q 2017 4Q 2017 4Q 2016 % Previous % (Billions of yen) Actual Actual Change Projection Change Office Net Sales 493.2 485.9 +1.5% 494.4 -0.2% Op. Profit 27.3 48.6 -43.9% 57.1 -52.2% Imaging Net Sales 340.9 324.7 +5.0% 337.8 +0.9% System Op. Profit
Slide 30: 4Q 2017 Operating Profit Analysis
4Q 2017 Operating Profit Analysis (Quarterly comparison against 4Q 2016) (Billions of yen) FX Details Mainly reflects Net Sales: +41.1 consolidation Cost of Sales: -12.4 of CMSC Op. Expenses: -14.9 Change in Net Sales, excluding FX impact, for reference Office: -8.3 Imaging System: -2.2 Medical Syst
Slide 31: Office / Imaging System (4Q 2017)
Office / Imaging System (4Q 2017) Office 4Q 2017 4Q 2017 4Q 2016 % % Net Sales Growth Rate Y/Y Previous Actual Actual Change Change (Local Currency) ■台数伸び率（補足：P26 Unit Growth Rate Y/Y (Billions of yen) Projection MFDs 188 179 +5.4% 200 -6.0% 4Q 2017 4Q 2017 4Q 2017 LPs 178 184 -3.0% 162 +9.7% MFDs L
Slide 32: Medical System / Industry & Others (4Q 2017)
Medical System / Industry & Others (4Q 2017) Medical System 4Q 2017 4Q 2016 % 4Q 2017 % Previous (Billions of yen) Actual Actual Change Change Projection Net Sales 104 - - 106 -2.6% Op. Profit 5 - - 4 +25.5% (% of Net Sales) 4.8% - 3.7% Industry & Others 4Q 2017 4Q 2016 % 4Q 2017 % Net Sales Growth