Slide 1: Canon Inc. Second Quarter 2019 Results
Canon Inc. Second Quarter 2019 Results July 24, 2019 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 2019 Results P2 – 4 FY 2019 Projection P5 – 9 Details by Business P10 – 16 (2Q 2019 Results & FY 2019 Projection) Financial Situation P17 – 18 Canon’s Sustainability Activities P19 – 20 Supplementary Information P21 – 24 1
Slide 3: Key Message (2Q 2019 Results)
Key Message (2Q 2019 Results) Decrease in sales and profit due to impact of external environment, which shows no signs of improvement External environment (Billions of yen) 2Q 2019 2Q 2018 % Change Actual Actual Prolonged U.S.-China trade friction Net Sales 905.9 1,006.4 -10.0% Economic slowdown
Slide 4: FY 2019 Financial Results by Business Unit
FY 2019 Financial Results by Business Unit (2Q 2019 Actual versus 2Q 2018 Actual) Decrease in sales and profit of Office, Imaging System, and Industry & Others Double-digit growth in new business of Medical System 2Q 2019 2Q 2018 (Billions of yen) % Change Actual Actual Office Net Sales 427.9 46
Slide 5: FY 2019 Operating Profit Analysis (2Q Actual vs 2Q 2018)
FY 2019 Operating Profit Analysis (2Q 2019 Actual versus 2Q 2018 Actual) Changes in Sales Volume – although sales of medical and network cameras grew, the overall impact on net sales was negative due to the influence of changes in external environment on other businesses Expenses held to below l
Slide 6: Key Message (FY 2019 Projection)
Key Message (FY 2019 Projection) Impact of exchange rate movement FX Assumptions （2H impact given a one yen change） 2H 2019 FY 2019 Net Sales Op. Profit USD/Yen 105.00 yen 107.37 yen 6.8 billion yen 2.5 billion yen EUR/Yen 120.00 yen 122.05 yen 3.2 billion yen 1.5 billion yen External Environment
Slide 7: FY 2019 Financial Projection (Full Year)
FY 2019 Financial Projection (Full Year) Sales and profit decline, partially due to significant impact of yen appreciation Lowered projection for net sales and operating profit by 105.0 and 59.0 billion yen, respectively FY 2019 FY 2019 FY 2018 Amount (Billions of yen) Current % Change Previous
Slide 8: FY 2019 Financial Projection by Business Unit
FY 2019 Financial Projection by Business Unit (Full Year) Medical – Y/Y sales and profit growth as well as steady improvement in profitability Lowered full-year projection due to impact of external environment FY 2019 FY 2019 FY 2018 Amount (Billions of yen) Current % Change Previous Actual Chan
Slide 9: FY 2019 Operating Profit Analysis (vs FY 2018 Actual)
FY 2019 Operating Profit Analysis (FY 2019 Current Projection versus FY 2018 Actual) FX – Significant impact on sales and profit due to yen appreciation Changes in sales volume – Decrease due to impact of cameras and industrial equipment, despite medical and network camera growth Change in Net S
Slide 10: FY 2019 Operating Profit Analysis (vs Previous Projection)
FY 2019 Operating Profit Analysis (FY 2019 Current Projection versus FY 2019 Previous Projection) Changes in sales volume – Lowered projection for all business units Pricing - Additional amount added to reflect challenging environment Expense – Additional amount added to accelerate structural
Slide 11: Office – MFDs
Office – MFDs 2Q: Unit sales growth of color models thanks to steady market penetration of new products FY: Targeting profitability improvement by expanding sales of new production models (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Act
Slide 12: Office – Laser Printers
Office – Laser Printers 2Q: Decrease in net sales due to consumable inventory adjustment by OEM partner 2H: Accelerate sales expansion of new products and brand protection activities (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Actual C
Slide 13: Office – Others
Office – Others Continuously enhancing the competitiveness of new products – Handling a wider range of media etc. Improve sales and profit through sales acceleration (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Actual Change Change Proj
Slide 14: Imaging System – Cameras
Imaging System – Cameras Maintained full-year outlook for the market and own unit sales Raise presence in the market further and link this to mirrorless camera sales (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Actual Change Change Proj
Slide 15: Imaging System – Inkjet Printers
Imaging System – Inkjet Printers 2Q: Decrease in sales due to continued market contraction 2H: Accelerate sales of refillable ink tank models and new A3 MFDs (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Actual Change Change Projection P
Slide 16: Medical System
Medical System 2Q: Double-digit sales growth, driven by new products aided by improved awareness FY: Advancing cost reduction initiatives and targeting sales and profit growth (Billions of yen) 2Q Full Year 2019 2019 2019 2018 % 2018 % Amount Current Previous Actual Actual Change Actual Change C
Slide 17: Industry & Others
Industry & Others IC lithography equipment - Revised full-year plan to reflect market conditions surrounding memory OLED vacuum deposition equipment – preparing for phase of market recovery Network cameras – Maintain growth, leveraging rich lineup (Billions of yen) 2Q Full Year 2019 2019 2019
Slide 18: Inventory
Inventory Imaging System – Lower to an appropriate level by year end Medical and Industry & Others – Building inventory for future sales expansion FY 2018 FY 2019 (Billions of yen) 1Q 2Q 3Q 4Q 1Q 2Q Amt. 207.5 209.9 224.6 206.1 215.2 205.8 Office Days 41 42 46 42 44 44 Amt. 140.5 145.2 173.8 139
Slide 19: Cash Flow (Full Year)
Cash Flow (Full Year) Expect to secure funds for growth and maintain cash-on-hand in line with previous projection Improvement in free cash flow compared with last year FY 2019 FY 2019 FY 2018 Current Previous Actual (Billions of yen) Projection Projection Net cash provided by operating activiti
Slide 20: Environmental & CSR Activities and "SDGs"
Sustainability Measures Environmental & CSR Activities and “SDGs” Canon’s Corporate Philosophy Kyosei and “SDGs” envisage the Realization of a same society better society Canon Group contributes to achievement of “SDGs” through environmental & CSR activities via business activities Canon Group C
Slide 21: Environmental & CSR activities and Management Integration
Sustainability Measures Environmental & CSR activities and Management Integration Integration of environmental & CSR activities with management and business activities Consolidated Performance Group Global Summit Environment Activity Report Evaluation System Performance of each business HQs,
Slide 22: Supplementary Information
Supplementary Information 21
Slide 23: Net Sales Growth Rate of Hardware & Non-hardware
Net Sales Growth Rate of Hardware & Non-hardware FY 2019 FY 2018 2Q Full Year 2Q Full Year Actual Projection Actual Actual MFDs Hardware -8% -1% +4% -1% JPY Non-hardware -6% -4% 0% -1% Hardware -6% +3% +3% -2% LC Non-hardware -4% -1% -2% -2% LPs Hardware -3% -5% -2% +1% JPY Non-hardware -23% -9% +4%
Slide 24: Color Ratio (MFDs & LPs)
Color Ratio (MFDs & LPs) FY 2019 FY 2018 2Q Full Year 2Q Full Year Actual Projection Actual Actual Net Sales 59% 60% 59% 59% MFDs QTY 59% 59% 59% 58% Net Sales 52% 52% 51% 51% LPs QTY 20% 20% 16% 18% Sales Growth by Monochrome & Color MFDs FY 2019 FY 2018 2Q Full Year 2Q Full Year Actual Projection
Slide 25: Interchangeable Lens Digital Camera Ratio; IC Lithography Equipment Unit Breakdown
Interchangeable Lens Digital Camera Ratio FY 2019 FY 2018 2Q Full Year 2Q Full Year Actual Projection Actual Actual Value Base 85% 85% 87% 85% Unit Base 61% 62% 62% 61% * Value Base Includes Interchangeable Lenses IC Lithography Equipment Unit Breakdown by Light Source (Units) FY 2019 FY 2018 2Q Ful