Slide 1: Third Quarter 2007 Results
Canon Inc. Third Quarter 2007 Results October 25, 2007 Masahiro Osawa Managing Director, Group Executive Finance and Accounting Headquarters This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties a
Slide 2: Agenda
Agenda Third Quarter Results / FY 2007 Current P3 – 5 Projections 4Q 2007 Current Projections P6 – 8 Details by Product P9 – 20 FY2007 Current Projections P21 – 22 Supplementary Information P23 – 30 Oct. 25, 2007 Canon Inc. 2
Slide 3: Summary of Results
Summary of Results 3Q 2007 Actual & FY 2007 Current Projection v. 2006 Actual (Billions of yen) 2007 2006 Pct. Change 3Q Actual/FY Previous Previous Current % Sales % Sales Actual % Sales Actual Projection Projection Projection Net sales 1,050.8 1,075.0 988.0 -2.2% +6.4% Gross profit 528.4 50.3% 544
Slide 4: Summary of Results (pre-depreciation change basis)
Summary of Results 3Q 2007 Actual & FY 2007 Current Projection v. 2006 Actual (on a pre-depreciation change basis) (Billions of yen) 2007 2006 Pct. Change Post- Pre- Post- Pre- depreciation % Sales depreciation % Sales Actual % Sales depreciation depreciation Change Change Change Change Net sales 1,
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2007 Actual v. 3Q 2007 Previous Projection (Billions of yen) 3Q 2007 Sales Op. Profit Previous Projection (Jul. 26, 2007) 1,075.0 179.0 Change in Exchange Rate Foreign exchange impact -5.3 -2.6 •1USD: 120.00 to 117.67 yen [net sales, cost of sales, expenses] •1E
Slide 6: Assumptions
Assumptions 4Q 2007 Current Projection Average 4Q07 FY07 FY06 Exchange Rate USD 115.00 yen 117.98 yen 116.43 yen EURO 160.00 yen 160.29 yen 146.51 yen Impact of Exchange Rate Movement (4Q impact given a one yen change) Net sales Operating profit USD 4.7 billion yen 2.9 billion yen EURO 2.4 billion y
Slide 7: Summary of Projected Results
Summary of Projected Results 4Q 2007 Current Projection (Billions of yen) 4Q 2007 4Q 2007 4Q 2006 % Change Current Previous Previous Actual Actual Projection Projection Projection Net sales 1,342.5 1,338.3 1,216.5 +0.3% +10.4% Gross profit 654.1 648.4 593.7 +0.9% +10.2% [% sales] 48.7% 48.5% 48.8% O
Slide 8: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q 2007 Current Projection v. 4Q 2007 Previous Projection (Billions of yen) 4Q 2007 Sales Op. Profit Previous Projection (Jul. 26, 2007) 1,338.3 198.1 Change in Exchange Rate Foreign exchange impact -24.7 -14.4 •1USD: 120.00 to 115.00 yen [net sales, cost of sales,
Slide 9: Business Machines
Business Machines 3Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP ratio 300 30% 23.0% 22.2% 21.8% 600 200 20% +7.2%(+4.0%) 715 686 300 639 100 +9.5% 10% 164 152 139 0 0 0% 3Q06 3Q07 3Q07 3Q06 3Q07 3Q07 Previous Previous project
Slide 10: Business Machines
Business Machines 4Q 2007 Current Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP ratio 300 30% 22.8% 21.6% 21.6% 600 +9.4%(+8.9%) 200 20% 839 837 765 +15.0% 300 100 10% 181 190 166 0 0 0% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Cur
Slide 11: Office Imaging Products
Office Imaging Products 3Q 2007 Actual / 4Q 2007 Current Projection Growth rate y/y Sales (Unit base) (Billions of yen) Growth rate y/y Copying machines ( ) Local currency base 3Q 4Q 500 Others 500 Color +24% +18% Color +12.8%(+11.6%) Mono- Monochrome chrome +11% -2% 400 +13.2%(+9.5%) 400 370 373 (F
Slide 12: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) 3Q 2007 Actual / 4Q 2007 Current Projection LBP 3Q 4Q Color -14% -6% Mono- Sales chrome +6% +11% (Billions of yen) Growth rate y/y Total +3% +9% ( ) Local currency base +7.3%(+7.5%) Color ratio (LBP) 500 Others 500 437 3Q 4Q IJP +2.9%(0.0%) 435 LBP 40
Slide 13: Cameras
Cameras 3Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 500 OP ratio 28.7% 29.2% 28.7% 120 30% 400 300 80 20% +14.0% +14.0%(+10.0%) 200 268 40 75 77 10% 235 257 67 100 0 0 0% 3Q06 3Q07 3Q07 3Q06 3Q07 3Q07 Previous Previous projection
Slide 14: Cameras
Cameras 4Q 2007 Current Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 500 OP ratio 120 26.7% 26.7% 27.7% 30% 400 300 80 20% +13.5%(+12.5%) +17.5% 200 384 393 102 109 346 93 40 10% 100 0 0 0% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Curren
Slide 15: Cameras
Cameras 3Q 2007 Actual / 4Q 2007 Current Projection Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 3Q 4Q ( ) Local currency base 500 500 Digital Video cameras cameras +20% +19% +13.5%(+12.5%) Digital cameras Film cameras/Lenses 384 393 400 400 +14.0%(+10.0%) 346 -15.7%(-16.6%) D
Slide 16: Optical and Other Products
Optical and Other Products 3Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP ratio 20 8.8% 10% 100 -14.4%(-15.4%) 10 5% 3.1% 113 50 103 97 14 -83.6% 1.4% 5 2 0 0 0% 3Q06 3Q07 3Q07 3Q06 3Q07 3Q07 Previous Previous projection proje
Slide 17: Optical and Other Products
Optical and Other Products 4Q 2007 Current Projection Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP ratio 10 5% 2.5% 100 -85.6% 4 0.3% +7.4%(+7.4%) 0 1 0% 116 113 -4 50 105 -2.2% 0 -10 -5% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Current Prev
Slide 18: Optical and Other Products
Optical and Other Products 3Q 2007 Actual / 4Q 2007 Current Projection Sales Growth rate y/y (Billions of yen) ( ) Local currency base IC Stepper Unit Breakdown IC Stepper Unit Breakdown by Light Source 150 Others by Light Source +7.4%(+7.4%) 150 SPE -14.4% (-15.4%) 3Q07 4Q07 113 ArF 0% 116 113 ArF
Slide 19: Sales by Product
Sales by Product FY 2007 Current Projection (Billions of yen) Growth rate y/y ( ) Local currency base +9.7%(+6.3%) 5,000 4,580 4,560 4,157 420 411 -3.1%(-4.3%) 4,000 424 1,160 1,181 +13.3%(+9.2%) 1,042 3,000 111 106 -0.8%(-2.7%) 107 +11.0%(+7.7%) 2,000 1,570 1,552 Optical and Other 1,398 Products Ca
Slide 20: Operating Profit by Segment
Operating Profit by Segment FY 2007 Current Projection (Billions of yen) FY 2007 FY 2007 FY 2006 % Change Current Previous Previous Actual Actual Projection Projection Projection Business 678.3 680.5 599.2 -0.3% +13.2% machines [% sales] 22.8% 22.7% 22.3% Cameras 323.0 314.9 268.7 +2.6% +20.2% [% sa
Slide 21: Summary of Projected Results
Summary of Projected Results FY 2007 Current Projection (Billions of yen) FY 2007 FY 2007 FY 2006 % Change Current Previous Previous Actual Actual Projection Projection Projection Net sales 4,560.0 4,580.0 4,156.8 -0.4% +9.7% Gross profit 2,290.0 2,300.0 2,060.5 -0.4% +11.1% [% sales] 50.2% 50.2% 49
Slide 22: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Dividend *Figures in parenthesis represent dividend per share expressed on a pre- 3-for-2 forward stock split basis (effective date July 1, 2006) (Billions of yen) Dividends per share 25.6% Payout ratio (Consolidated basis) 1,156 24.4%
Slide 23: Supplementary Information
Supplementary Information Oct. 25, 2007 Canon Inc. 23
Slide 24: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 3Q 2007 Actual v. 3Q 2006 Actual (Billions of yen) 3Q Sales Op. Profit 2006 Actual 988.0 172.7 Change in Exchange Rate Foreign exchange impact +23.2 +9.9 •1USD: 116.29 to 117.67 yen [net sales, cost of sales, expenses] •1EURO: 148.19 to 161.82 yen Sales volume impa
Slide 25: Gross Profit Variance Analysis
Gross Profit Variance Analysis 3Q 2007 Actual v. 3Q 2006 Actual (Billions of yen) 3Q07 3Q06 Change (Billions of yen) Gross Profit 528.4 488.0 +40.4 90 % sales 50.3% 49.4% +0.9 pt. 60 40.4 34.2 30 23.2 16.4 8.4 0 -5.9 -12.5 -30 -23.4 Forex Sales Price Forex Cost Dep. Others Total impact volume change
Slide 26: Operating Profit Variance Analysis
Operating Profit Variance Analysis 3Q 2007 Actual v. 3Q 2006 Actual (Billions of yen) 3Q07 3Q06 Change (Billions of yen) Op. Profit 174.2 172.7 +1.5 90 % sales 16.6% 17.5% -0.9 pt. 60 40.4 30 1.5 0 -7.5 -8.5 -30 -22.9 Total change in Change in Change in SG&A Dep. Total change in gross profit SG&A fo
Slide 27: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2007 Current Projection v. FY 2006 Actual (Billions of yen) FY Sales Op. Profit 2006 Actual 4,156.8 707.0 Change in Exchange Rate Foreign exchange impact +128.9 +76.7 •1USD: 116.43 to 117.98 yen [net sales, cost of sales, expenses] •1EURO: 146.51 to 160.29 yen S
Slide 28: Inventories and Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) 800 Inventories 80 200 Debt 8% Turnover (Days) Debt/Total Assets 600 51 60 150 6% 49 49 47 45 400 40 100 3.1% 4% 608 539 510 489 444 1.1% 200 20 50 98 2% 0.8% 0.7% 0.5% 39 32 31 21 0 0 0 0% FYE03 FYE04 FYE05 FYE06 3QE07 FYE
Slide 29: Capital Expenditure and Free Cash Flow
Capital Free Cash Flow Expenditure (Billions of yen) (Billions of yen) 1,000 Capex 1,000 Operating C/F Net income Free C/F Depreciation Investing C/F 800 800 360 500 234 600 600 205 455 384 309 808 400 400 343 695 606 562 461 448 440 401 384 380 355 200 200 319 262 253 226 193 0 0 FY04 FY05 FY06 FY0
Slide 30: Financial Ratios
Financial Ratios * Common stock held by stockholders as of June 30, 2006, were split on a 3-for-2 basis. EPS (Basic) has been adjusted to retroactively reflect the forward stock split. (Yen) 1,000 16.8% 16.8% 20% 15.9% 16.0% 16.3% 800 15% 10.6% 11.0% 10.1% 10.1% 600 9.0% 10% 396.49 400 341.95 5% 258