Slide 1: Canon Inc. FY 2020 Results
Canon Canon Inc. FY 2020 Results January 28, 2021 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
Slide 2: Agenda
Canon Agenda m@ FY 2020 Results P2-4 m@ FY 2021 Projection P5-8 ™ Details by Business P9- 16 (FY 2020 Results & FY 2021 Projection) @ Financial Situation P17-18 @ Sustainability Measures P19 m@ Supplementary Information P20 - 33
Slide 3: Review of 2020 and impact of COVID-19
At the beginning of the year, we assumed the global economy was heading towards a general recovery, driven by developed countries. Under this assumption, we mapped out a plan to achieve sales and profit growth by improving the profitability of existing businesses and accelerating the growth of new o
Slide 4: FY 2020 results exceeded previous projection
In 2020, we posted figures that exceeded our previous projection, in particular profit, mainly thanks to the Imaging System Business Unit. We exceeded our previous projection for net sales, operating profit, and net income by 20.2 billion yen, 46.5 billion yen and 31.3 billion yen, respectively. Com
Slide 5: FY 2020 results by business unit
As for Imaging System, mainly thanks to new products and a rise in average selling price, we posted an increase in profit not only in the third- and fourth-quarter, but also for the full year, achieving a double-digit profit ratio. As for Industry and Others, although we made progress installing lit
Slide 6: FY 2021 assumptions and outlook
Our assumed foreign exchange rates are 105 yen to the U.S. dollar, and 120 yen to the euro. In addition to expecting government spending and monetary easing to continue, we expect to move towards COVID-19 containment in the first half of the year as vaccines are rolled out. From this, we expect the
Slide 7: FY 2021 sales and profit projection
We expect net sales to grow by 7.6% to 3 trillion 400.0 billion yen, operating profit to grow by 43.4% to 158.5 billion yen, and net income to grow by 38.0% to 115.0 billion yen, which represent growth in both sales and profit for the first time in four years. In 2021, we aim to raise profitability
Slide 8: FY 2021 projection by business unit
In all Business Units, we project sales and profit growth. As for Office, in addition to a recovery in sales, thanks to new products and an increase in people returning to the office as a place of work, we expect profitability to improve, reflecting the effects of structural reform measures implemen
Slide 9: FY 2021 operating profit change factors
In 2021, where we expect sales to increase, the impact of changes in sales volume is expect to improve at the same time, we will work to raise profit by limiting price reduction and cutting costs. Moreover, we will strengthen our investment in product development and our investment in sales & market
Slide 10: Office: MFDs
Due to COVID-19 many offices were closed in 2020. As a result, the office equipment market, which includes MFDs and laser printers, declined significantly. In 2021, although we do not expect the market to return to its pre-COVID-19 level, mainly due to remote working taking hold, we do expect the ma
Slide 11: Office: laser printers
As for laser printers, although some of the expanding demand resulting from working and learning from home was met by low-speed models, overall sales in 2020 were down as sales of medium- and high-speed models as well as consumables decreased significantly. However, thanks to an increase in people r
Slide 12: Office: commercial printing
As for commercial printing, our sales decreased in 2020 due to COVID-19, which mainly impacted demand for products used in printing posters and other materials in the graphic arts space. Although it is difficult to expect the market to return to a pre-COVID-19 level in 2021, we do expect the market
Slide 13: Imaging System: cameras
In 2020, the size of the camera market was around 6 million units, 100 thousand units higher than our previous projection. This better-than-expected recovery reflects the creation of new demand for goods to be consumed inside the house, resulting from COVID-19 as well as the willingness of people to
Slide 14: Imaging System: inkjet printers
In 2020, the inkjet printer market grew, driven by working and learning from home in regions and countries such as Europe, the United States and China. In line with this trend, our sales increased as well, thanks to sales growth of both hardware and consumables. As for the market in 2021, we expect
Slide 15: Medical System
In 2020, the business environment deteriorated as medical institutions worked feverishly to deal with COVID-19. Except for some equipment used to detect for pneumonia, the diagnostic imaging equipment market was significantly impacted. Under these market conditions, we captured opportunities created
Slide 16: Industry & Others: lithography equipment
As for IC lithography equipment, supported by a recovery in investment in memory chips used in data centers and PCs, our 2020 sales significantly increased compared to the previous year to 122 units. In 2021 as well, with 5G networks becoming more widespread, and due to the further deployment of aut
Slide 17: Industry & Others: OLED vacuum deposition equipment
In 2020, the installation of OLED vacuum deposition equipment at customer sites was suspended due to overseas travel restrictions. However, we achieved sales growth, making headway in installation by tightly managing the schedules of overseas travel and personnel. As for 2021, amid an increase in sm
Slide 18: Industry & Others: network cameras
As for the network camera market in 2020, although it shrank in the second quarter due to economic slowdown in each country, its recovery has been swift due to the universal need for safety and security. As a result, from the second half of the year, it has returned to a path of growth. Under these
Slide 19: Inventory
In 2020, amid disturbances in the supply chain and sudden changes in demand related to COVID-19, we focused on maintaining an appropriate level of inventory. While sales declined significantly, inventory at the end of 2020 was 22.0 billion yen lower and turnover in days was a similar 60 days, when c
Slide 20: Cash flow and shareholder returns
Amid the severe business environment caused by COVID-19, we posted a decrease in profit. However, due to improvement in working capital and maintenance of capital investment within the range of depreciation, free cash flow was 178.4 billion yen in 2020, which exceeds that of 2019. In 2021, through e
Slide 21: Sustainability measures
In 2008, we set an environmental target of achieving an average 3% per year improvement in the index of lifecycle CO2 emissions per product unit, which we have been working on ever since. In 2020, we achieved an improvement of around 2.5% through the development and sales of energy-saving products,
Slide 22: New 5-year plan: Phase VI of Excellent Global Corporation Plan
Although 2020 was a year in which we were greatly affected by COVID-19, our business performance has steadily improved thanks to a concerted group-wide effort to tackle this difficult situation. In 2021, we will launch a new 5-year plan, "Phase VI of the Excellent Global Corporation Plan." By furthe
Slide 23: Supplementary Information
Supplementary Information 20
Slide 24: FY 2020 Operating Profit Analysis (vs FY 2019)
FY 2020 Operating Profit Analysis Canon (FY 2020 Actual versus FY 2019 Actual) Change in Net Sales, excluding FX FX Details impact, for reference (Billions of yen) Net Sales: -27.2 Office: -291.2 Cost of Sales: +12.4 Imaging System: -93.8 Op. Expenses: +8.4 Medical System: +38 Industry & Others: -21
Slide 25: FY 2020 Operating Profit Analysis (vs previous projection)
FY 2020 Operating Profit Analysis Canon (FY 2020 Actual versus FY 2020 Previous Projection) Change in Net Sales, excluding FX impact, for reference (Billions of yen) Office: +6.7 Imaging System: +19.9 FX Details Medical System: +45 Net Sales: -0.5 Industry & Others: -16.1 Cost of Sales: +0.7 Total:
Slide 26: Change in New Businesses Sales Composition Ratio
Change in New Businesses Sales Composition Ratio Canon 100% @ New Businesses Exsiting Businesses FY 2019 FY 2020 Actual Actual FY 2021 Projection 23
Slide 27: Net Sales Growth Rate of Hardware & Non-hardware
Net Sales Growth Rate of Hardware & Non-hardware Canon FY 2 FY 2019 4Q 4Q Full Year Actual Actual Actual MFDs spy Hardware +21% -11% -22%| -10% -1% Non-hardware +9% -18% -20% -5% -5% ic Hardware +22% -11% -21% -6% -4% Non-hardware +10% - 18%! -20% -2% -2% LPs spy Hardware +3% -15%| -21% -13% -5% Non
Slide 28: Color Ratio (MFDs & LPs)
Color Ratio (MFDs & LPs) Canon FY FY 2019 Full Y Full Year 4Q Full Year Projection Actual Actual Actual Actual MFEDs Net Sales 61%| 61%! 60%| 60% 59% Units 61% 60%; 59% 58% 59% LPs Net Sales 52% 51% 51% 51% 52% Units 23%! 21% 21% 21% 20% FY 2020 FY 2019 4Q Full Year 4Q Full Year Actual Actual Actual
Slide 29: DILC Ratio / DCC Units / IC Lithography Units
DILC Ratio / Digital Compact Camera (DCC) Units Canon FY 2021 FY 2019 Full 4Q Full Year Projection Actual Actual DILC Ratio Net Sales * 87% 86% 85% Units 69% 64% 62% [pcc Units (Millions) 1.25 0.46 148} 0.71 2.57 * Net Sales Includes Interchangeable Lenses IC Lithography Equipment Unit Breakdown by
Slide 30: Net Sales Growth Rate Y/Y by Segment (JPY)
Net Sales Growth Rate Y/Y by Segment (JPY) Canon Hardware -18.4% -40.3% -17.7% -11.0% -22.0%| Non-hardware -1.9% -39.9% -20.7% - 18.0% 20.2% MFDs -9.1% -40.1% -193% -14.8% -21.0% Hardware -21.1% -30.8% -16.0% -14.9% -20.8% Non-hardware -7.2%) -26.1% -38.0% -5.8% -18,8% LPs -12.8% -28.1% -28.9% -9.2%
Slide 31: 4Q 2020
4Q 2020
Slide 32: FY 2020 Financial Results (4Q 2020)
(4Q 2020) FY 2020 Financial Results (Billions of yen) a 4Q 2019 Actual % Change Net Sales 945.7 953.5 -0.8% Gross Profit 414.3 423.4 -2.1% (% of Net Sales) 43.8% 44.4% Op. Expenses 338.1 371.0 (% of Net Sales) 35.7% 38.9% Op. Profit 76.2 52.4 +45.4% (% of Net Sales) 8.1% 5.5% IBT 80.2 51.3 +56.4% Ne
Slide 33: FY 2020 Financial Results by Business Unit (4Q 2020)
FY 2020 Financial Results by Business Unit Canon (4Q 2020) (Billions of yen) ine % Change Office Net Sales 399.2 447.0 -10.7% Op. Profit 33.9 39.8 -15.0% (%) (8.5%) (8.9%) Imaging Net Sales 233.4 237.2 -1.6% System Op. Profit 43.2 20.7 +108.7% (%) (18.5%) (8.7%) Medical Net Sales 122.8) 110.0 +11.6%
Slide 34: FY 2020 Operating Profit Analysis (4Q 2020 vs 4Q 2019)
FY 2020 Operating Profit Analysis Canon (4Q 2020 Actual versus 4Q 2019 Actual) Change in Net Sales, excluding FX impact, for reference Office: -46.0 (Billions of yen) Imaging System: -4.9 oo Medical System: +14.2 FX Details meustty & Others: +317 Net Sales: -5.6 . : Cost of Sales: +5.5 +33.0 Op. Exp
Slide 35: Office / Imaging System
Office / Imaging System Canon Office Gitions of en 4Q Net Sales Growth Rate Y/Y Unit Growth Rate Y/Y S19 xz (Local Currency) Actual | Change a as MeDs a 2020 » a saa MFDs 1429] 167.8) -148% vs a ve LPs 141.7 156.2 -9.2%| MFDs -14.9% Monochrome -11% Monochrome 5% Others 1146] 123.0/ 69%] LPs 72% Colo
Slide 36: Medical System / Industry & Others
Medical System / Industry & Others (4Q 2020) Canon Medical System (Billions of yen) 4Q Net Sales Growth Rate Y/Y sor % (Local Currency) Actual | Change 4Q 2020 Actual Net Sales 122.8 110.0 +11.6% Op. Profit 10.3 7.6) +35.0%| Total 4+129% (% of Net Sales) 8.4%) 6.9%| Industry & Others (Billions of ye