Slide 1: Canon Inc. Second Quarter 2016 Results
Canon Inc. Second Quarter 2016 Results July 26, 2016 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 assumpti
Slide 2: Agenda
Agenda 2Q 2016 Results P3 – 5 FY 2016 Projections P6 – 9 Details by Business P10 – 15 Financial Situation P16 – 18 Supplementary Information P19 – 24 July 26, 2016 Canon Inc. 2
Slide 3: 2Q 2016 in Summary
2Q 2016 in Summary External Environment Global economy Gradual economic recovery of developed countries, led by the U.S. Continued economic slowdown of emerging markets Results Significant decline in laser printers Lower camera revenue Continued significant growth in both network cameras
Slide 4: Summary of Results
Summary of Results 2Q 2016 Actual (Billions of yen) 2Q 2016 2Q 2015 Pct. Change Actual Actual Net Sales 860.2 974.4 -11.7% Gross Profit 432.4 503.8 -14.2% (% Sales) 50.3% 51.7% Op. Profit 68.6 104.7 -34.5% (% Sales) 8.0% 10.7% Net Income Attributable to Canon Inc. 53.4 68.2 -21.6% (% Sales) 6.2% 7.0
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2Q 2016 Actual v. 2Q 2015 Actual (Billions of yen) Sales Op. Profit 2Q 2015 Actual 974.4 104.7 Foreign Exchange Impact Change in Exchange Rate -75.8 -30.2 (Net Sales, Cost of Sales, Expenses) •1USD: 121.47 to 108.08 yen •1EURO: 134.47 to 121.94 yen Sales Volume Imp
Slide 6: Exchange Rate Assumptions
Exchange Rate Assumptions 2016 Current Projection Average 2H16 FY16 FY15 Exchange Rate Yen-1USD 105.00 yen 107.96 yen 121.13 yen Yen-1EURO 115.00 yen 119.39 yen 134.20 yen Impact of Exchange Rate Movement (2H Impact Given a One Yen Change) Net Sales Operating Profit USD 7.2 billion yen 2.6 bil
Slide 7: Overview of Latest Projections
Overview of Latest Projections External Environment Growing uncertainty towards the future trajectory of global economy U.S. continues to be the driver of economic recovery Europe economic slowdown concern due to U.K.'s withdrawal from the EU Full-year Projection Lowered projection for both
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2016 Current Projection (Billions of yen) FY 2016 FY 2015 Pct. Change Current Projection Actual Net Sales 3,520.0 3,800.3 -7.4% Gross Profit 1,733.0 1,934.4 -10.4% (% Sales) 49.2% 50.9% Op. Profit 265.0 355.2 -25.4% (% Sales) 7.5% 9.3% Net Income Attributable to Canon
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2016 Current Projection v. FY 2016 Previous Projection (Billions of yen) Sales Op. Profit Previous Projection (Apr. 26, 2016) 3,600.0 300.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 111.05 to 107.96 yen -88.2 -36.0 •1EURO: 125.44 to 119.39 yen (Net
Slide 10: Office
2Q16 Growth Rate y/y (Unit Base) 2Q16 Color Ratio Office Color Copiers +6% Printers -2% Value Base* Copiers 57% Printers 53% Monochrome -3% -13% Unit Base 48% 18% 2Q 2016 Actual Total +1% -11% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 800 Monochrome copier
Slide 11: Office
FY16 Growth Rate y/y (Unit Base) FY16 Color Ratio Office Color Copiers +14% Printers -10% Value Base* Copiers 57% Printers 52% Monochrome +3% -11% Unit Base 49% 17% FY 2016 Projection Total +8% -11% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 3,000 Monochrom
Slide 12: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 2Q16 -1% Digital Camera Ratio * 2Q16 Digital Cameras Value Base 85% 2Q 2016 Actual Compact Digital -30% Unit Base 56% Cameras Total Digital Cameras -16% * Proportion of Total Digital Cameras IJP 0% * Value Base Incl
Slide 13: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY16 -1% Digital Camera Ratio * FY16 Digital Cameras Value Base 86% FY 2016 Projection Compact Digital -39% Unit Base 58% Cameras Total Digital Cameras -22% * Proportion of Total Digital Cameras IJP 0% * Value Base
Slide 14: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) 2Q15 2Q16 2Q 2016 Actual 2Q15 2Q16 ArF 0 0 IC 19 12 KrF 7 2 FPD 7 10 i-line 12 10 (Billions of yen) Sales Growth rate y/y ( ) Local currency base 210 Sales Eliminations Industry and Others Lithograph
Slide 15: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by Light Source (Unit Sales) FY16 FY16 FY 2016 Projection FY16 FY16 FY15 Previous Current FY15 Previous Current Projection Projection Projection Projection ArF 0 0 0 (Billions of yen) Sales Growth rate y/y ( ) Local currency bas
Slide 16: Inventories
Inventories (Billions of yen) 800 90 Amount (Billions of yen) Turnover (Days) 700 59 70 58 57 54 54 52 53 50 47 50 591 595 600 569 563 30 533 528 521 502 479 500 10 -10 400 -30 300 -50 2QE14 3QE14 4QE14 1QE15 2QE15 3QE15 4QE15 1QE16 2QE16 July 26, 2016 Canon Inc. 16
Slide 17: Capital Expenditure Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 1,000 Operating C/F Increase in PP&E Free C/F Net Income Attributable to Canon Inc. Investing C/F Depreciation 750 21 500 930 892 315 257 584 500 507 475 454 510 477 250 269 230 255 220 200 180 0 250 -420 -415 275 264 273 2
Slide 18: 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 3.5 (In months of 2nd-half net sales, except FYE16 Previous Projection, which is based on full-year net sales) 3 2.6 1,000 2.4 2.3 2.4 2.5 845 1.9 1.9 789 2 667 690 634 1.5 590 500 1 0.5 0 0 FY
Slide 19: Supplementary Information
Supplementary Information July 26, 2016 Canon Inc. 19
Slide 20: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2016 Current Projection v. FY 2015 Actual (Billions of yen) Sales Op. Profit FY 2015 Actual 3,800.3 355.2 Foreign Exchange Impact -308.9 -121.1 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 121.13 to 107.96 yen •1EURO: 134.20 to 119.3
Slide 21: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2016 Actual v. 2Q 2015 Actual (Billions of yen) 2Q16 2Q15 Change (Billions of yen) Gross Profit 432.4 503.8 -71.4 % Sales 50.3% 51.7% -1.4pt. 100 50 22.4 5.6 0 -8.4 -15.2 -50 -75.8 -71.4 -100 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction C
Slide 22: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2016 Actual v. 2Q 2015 Actual (Billions of yen) 2Q16 2Q15 Change Op. Profit 68.6 104.7 -36.1 (Billions of yen) % Sales 8.0% 10.7% -2.7pt. 100 50 23.2 12.1 0 -36.1 -50 -71.4 -100 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Excl
Slide 23: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 45 30.0% 611 Debt Debt/Total Assets 25.0% 20.0% 13.2% 15.0% 10.0% 5.0% 4 3 2 2 0 0.0% 0.1% 0.1% 0.0% 0.0% FYE12 FYE13 FYE14 FYE15 2QE16 Supplementary Information July 26, 2016 Canon Inc. 23
Slide 24: Financial Ratios
Financial Ratios (Yen) 900 15% 600 10% 8.7% 8.4% 8.7% 7.4% 6.3% 5.7% 5.6% 5.9% 5.0% 300 4.0% 5% 229.03 191.34 200.78 201.65 164.82 0 0% FY12 FY13 FY14 FY15 FY16 Current Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information July 26, 2016 Canon Inc. 24