Slide 1: Canon Inc. FY 2014 Results
Canon Inc. FY 2014 Results January 28, 2015 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 4Q/FY 2014 Results P3 – 5 FY 2015 Projections P6 – 9 Details by Business P10 – 17 (4Q/FY 2014 Results and FY 2015 Projections) Financial Situation P18 – 20 Supplementary Information P21 – 26 January 28, 2015 Canon Inc. 2
Slide 3: FY 2014 in Summary
FY 2014 in Summary External Environment Global economy - Remained at its lowest rate of growth since the collapse of Lehman Brothers and its aftermath Our markets - Were also challenging Exchange rates - Correction of the strong yen Results Increased profits, but sales declined Camera sale
Slide 4: Summary of Results
Summary of Results 4Q/FY 2014 Actual (Billions of yen) 4Q FY 2014 2013 Pct. 2014 2013 Pct. Actual Actual Change Actual Actual Change Net Sales 1,059.9 1,034.7 +2.4% 3,727.3 3,731.4 -0.1% Gross Profit 515.0 488.0 +5.5% 1,861.5 1,798.4 +3.5% (% Sales) 48.6% 47.2% 49.9% 48.2% Op. Profit 98.5 93.5 +5.3%
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2014 Actual v. Projection (Billions of yen) Sales Op. Profit FY 2014 Projection (Oct. 27, 2014) 3,740.0 370.0 Foreign Exchange Impact Change in Exchange Rate +43.7 +22.4 (Net Sales, Cost of Sales, Expenses) •1USD: 104.39 to 106.18 yen •1EURO: 138.83 to 140.62 ye
Slide 6: Assumptions
Assumptions FY 2015 Projection Average FY15 FY14 Exchange Rate Yen-1USD 120.00 yen 106.18 yen Yen-1EURO 135.00 yen 140.62 yen Impact of Exchange Rate Movement (FY15 Impact Given a One Yen Change) Net Sales Operating Profit USD 15.8 billion yen 5.7 billion yen EURO 6.5 billion yen 2.9 billion
Slide 7: Key Points
Key Points FY 2015 Projection External Environment Global economy - Excluding the U.S., sluggish Canon markets - Recovery in second half of the year Outlook Increased sales and profits Successive launch of new office products and cameras January 28, 2015 Canon Inc. 7
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2015 Projection (Billions of yen) FY 2015 FY 2014 Pct. Change Projection Actual Net Sales 3,900.0 3,727.3 +4.6% Gross Profit 1,945.0 1,861.5 +4.5% (% Sales) 49.9% 49.9% Op. Profit 380.0 363.5 +4.5% (% Sales) 9.7% 9.8% Net Income Attributable to Canon Inc. 260.0 254.8
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2015 Projection v. FY 2014 Actual (Billions of yen) Sales Op. Profit FY 2014 Actual 3,727.3 363.5 Change in Exchange Rate Foreign Exchange Impact •1USD: 106.18 to 120.00 yen +167.1 +52.6 •1EURO: 140.62 to 135.00 yen (Net Sales, Cost of Sales, Expenses) Sales Vol
Slide 10: Office
Growth Rate y/y (Unit Base) Color Ratio Office Copiers 4Q14 FY14 Printers 4Q14 FY14 Copiers Printers 4Q14 FY14 4Q14 FY14 Color +17% +9% +9% +9% Value Base* 57% 55% 48% 49% 2014 Actual Monochrome -7% -6% +3% -2% Unit Base 44% 40% 14% 15% Total +2% 0% +3% -1% (Billions of yen) 800 Sales Growth Rate y/
Slide 11: Office
Growth Rate y/y (Unit Base) Color Ratio Office Copiers FY14 FY15(P) Printers FY14 FY15(P) Copiers FY14 FY15(P) Printers FY14 FY15(P) Color +9% +17% +9% +5% Value FY 2014 Projection Monochrome -6% +3% -2% +2% Base* 55% 56% 49% 50% Unit Total 0% +9% -1% +2% 40% 43% 15% 16% Base (P)=Projection *Include
Slide 12: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens 4Q14 -18% FY14 -17% Digital Camera Ratio * 4Q14 FY14 Digital Cameras Value Base 81% 82% 2014 Actual Compact Digital -34% -32% Unit Base 40% 41% Cameras * Proportion of Total Digital Cameras -29% -26% (Billions of ye
Slide 13: Imaging System Top Priority Factors
Imaging System FY 2015 Projection Factors entry users considered important at the time of purchase (Based on a survey conducted by a third party firm) Top Priority Factors • High image quality/High resolution Factors Increasing in Priority • Improvement in auto focus, speed, etc. • Usability • Siz
Slide 14: Imaging System Products and Marketing
Imaging System FY 2015 Projection 2015 Key Strategies Products • Launch new DSLR and Mirrorless cameras • Enhance lineup of interchangeable-lenses • Strengthen network affinity (Ex. Connect Station) Marketing • Expand photography workshops • New users • Users looking to upgrade to next level • Rol
Slide 15: Imaging System
Growth Rate y/y (Unit Base) Interchangeable Lens Imaging System Interchangeable Lens FY14 -17% FY15(P) +1% Digital Camera Ratio * FY14 FY15(P) Digital Cameras Value Base 82% 84% FY 2015 Projection Compact Digital -32% -14% Unit Base 41% 45% Cameras * Proportion of Total Digital Cameras -26% -8% Tota
Slide 16: Industry and Others
Industry and Others Lithography Equipment (Unit Sales) IC Stepper Unit Breakdown by Light Source 4Q13 FY13 4Q14 FY14 2014 Actual 4Q13 FY13 4Q14 FY14 ArF 0 0 0 0 IC 16 43 12 54 KrF 4 6 4 14 Growth Rate y/y i-line 12 37 8 40 FPD 16 16 5 22 (Billions of yen) 180 Sales ( ) Local Currency Base 15 30.0% S
Slide 17: Industry and Others
Industry and Others Lithography Equipment IC Stepper Unit Breakdown by Light Source FY 2015 Projection (Unit Sales) ArF FY14 0 FY15(P) 0 FY14 FY15(P) IC 54 56 KrF 14 11 FPD 22 35 i-line 40 45 (P)=Projection (Billions of yen) Growth Rate y/y Sales ( ) Local Currency Base Op. Profit 600 40 15.0% Sales
Slide 18: Inventories
Inventories (Billions of yen) 800 Amount (Billions of yen) 90 Turnover (Days) 700 61 60 59 70 57 58 52 53 54 50 608 50 600 589 582 569 552 554 550 30 533 528 500 10 -10 400 -30 300 -50 4QE12 1QE13 2QE13 3QE13 4QE13 1QE14 2QE14 3QE14 4QE14 January 28, 2015 Canon Inc. 18
Slide 19: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 1,000 Increase in PP&E Operating C/F Net Income Attributable to Canon Inc. Free C/F Depreciation Investing C/F 750 750 500 500 315 210 260 255 230 257 225 171 584 515 507 250 250 384 305 275 275 270 269 264 258 250 213 205
Slide 20: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Dividend 1500 5 200 120.0% Cash-on hand (Billions of yen) Regular Dividend (Yen) Cash-on-hand Commemorative Dividend marking the 75th 110.0% (In months of 2nd-half net sales, except FYE15, 4 Anniversary of the Company's Establishment wh
Slide 21: Supplementary Information
Supplementary Information January 28, 2015 Canon Inc. 21
Slide 22: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 4Q/FY 2014 Actual v. 4Q/FY 2013 Actual (Billions of yen) 4Q FY Sales Op. Profit Sales Op. Profit 2013 Actual 1,034.7 93.5 3,731.4 337.3 Change in Exchange Rate(4Q) Foreign Exchange Impact +72.2 +28.3 +186.0 +65.5 •1USD: 100.50 to 114.78 yen (Net Sales, Cost o
Slide 23: Gross Profit Variance Analysis
Gross Profit Variance Analysis 4Q 2014 Actual v. 4Q 2013 Actual (Billions of yen) 4Q14 4Q13 Change (Billions of yen) Gross Profit 515.0 488.0 +27.0 % Sales 48.6% 47.2% +1.4pt. 200 100 72.2 27.0 9.0 0 -7.2 -22.7 -24.3 -100 -200 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction
Slide 24: Operating Profit Variance Analysis
Operating Profit Variance Analysis 4Q 2014 Actual v. 4Q 2013 Actual (Billions of yen) 4Q14 4Q13 Change Op. Profit 98.5 93.5 +5.0 (Billions of yen) % Sales 9.3% 9.0% +0.3pt. 200 100 27.0 5.0 0 -2.4 -19.6 -100 -200 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Excludi
Slide 25: Interest Bearing Debt
Interest Bearing Debt (Billions of yen) 50 5.0% Debt Debt/Total Assets 40 4.0% 30 3.0% 20 2.0% 11 12 10 1.0% 0.3% 0.3% 4 3 2 0.1% 0.1% 0.0% 0 0.0% FYE10 FYE11 FYE12 FYE13 FYE14 Supplementary Information January 28, 2015 Canon Inc. 25
Slide 26: Financial Ratios
Financial Ratios (Yen) 900 15% 9.6% 8.7% 600 10% 8.4% 8.7% 8.6% 6.3% 5.7% 5.6% 5.9% 5.8% 300 5% 229.03 238.13 204.49 191.34 200.78 0 0% FY11 FY12 FY13 FY14 FY15 Projection EPS(Basic) ROE ROA (Attributable to Canon Inc.) Supplementary Information January 28, 2015 Canon Inc. 26