Slide 1: Canon Inc. Fiscal Year 2007 Results
Canon Inc. Fiscal Year 2007 Results January 30, 2008 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 and
Slide 2: Agenda
Agenda 4Q / FY 2007 Results P3 – 16 FY 2008 Projections P17 – 27 Financial Situation P28 – 30 Supplementary Information P31 – 38 January 30, 2008 Canon Inc. 2
Slide 3: 2007 in Summary
2007 in Summary Special factors 9 Chg. in depreciation method from second quarter 2007 9 Sudden downturn in economic environment from the second half, due to subprime loan problem Achievements 9 Very strong business performance throughout the year (eighth consectutive year of net sales and profit gr
Slide 4: Summary of Results
Summary of Results 4Q/FY 2007 Actual (Billions of yen) 2007 2006 Pct. Change Actual % Sales Projection % Sales Actual % Sales Projection Actual Net sales 1,263.8 1,342.5 1,216.5 -5.9% +3.9% Gross profit 611.1 48.4% 654.1 48.7% 593.7 48.8% -6.6% +2.9% Op. profit 193.6 15.3% 209.9 15.6% 195.9 16.1% -7
Slide 5: Summary of Results (pre-depreciation change basis)
Summary of Results 4Q/FY 2007 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 1,263.8 1,263.8 1,216.5 +3.9% +3.9% Gross p
Slide 6: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 4Q 2007 Actual v. 4Q 2007 Projection (Billions of yen) 4Q 2007 Sales Op. Profit Previous Projection (Oct. 25, 2007) 1,342.5 209.9 Change in Exchange Rate Foreign exchange impact +1.3 +1.4 •1USD: 115.00 to 113.19 yen [net sales, cost of sales, expenses] •1EURO: 160.
Slide 7: Business Machines
Business Machines 4Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 900 OP ratio 300 30% 21.6% 22.8% 600 20.2% 200 20% +5.0%(+4.6%) 837 803 765 300 100 -1.9% 10% 190 166 162 0 0 0% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Previous project
Slide 8: Business Machines
Business Machines FY 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 3,000 OP ratio 900 30% 22.3% 22.8% 22.2% 2,000 +9.1%(+5.6%) 600 20% 2,969 2,936 +8.5% 2,691 1,000 678 650 300 599 10% 0 0 0% FY06 FY07 FY07 FY06 FY07 FY07 Previous Prev
Slide 9: Office Imaging Products
Office Imaging Products 4Q/FY 2007 Actual Growth rate y/y Sales (Unit base) (Billions of yen) Growth rate y/y Copying machines ( ) Local currency base 4Q FY 600 Others 1,800 Color +9% +17% Color +8.8%(+4.8%) Mono- Monochrome chrome -16% -9% 1,311 1,291 (For office (+1%) (+2%) +6.7%(+5.1%) 1,186 use)
Slide 10: Computer Peripherals
Computer Peripherals Growth rate y/y (Unit base) 4Q/FY 2007 Actual LBP 4Q FY Color -6% +13% Mono- Sales chrome +10% +22% (Billions of yen) Growth rate y/y Total +8% +20% ( ) Local currency base +9.9%(+6.8%) Color ratio (LBP) 600 Others 1,800 4Q FY IJP +3.7%(+4.4%) 1,552 1,538 Value LBP 1,398 base* 3
Slide 11: Cameras
Cameras 4Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 OP ratio 150 26.7% 27.7% 25.5% 30% 400 100 20% +0.7% +5.4%(+4.6%) 200 393 365 50 109 10% 346 93 93 0 0 0% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Previous projection projectio
Slide 12: Cameras
Cameras FY 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 1,800 OP ratio 600 27.4% 26.7% 30% 25.8% 1,200 400 20% +14.4% +10.6%(+6.6%) 600 1,181 1,153 200 10% 1,042 323 307 269 0 0 0% FY06 FY07 FY07 FY06 FY07 FY07 Previous Previous proje
Slide 13: Cameras
Cameras 4Q/FY 2007 Actual Sales Growth rate y/y (Unit base) (Billions of yen) Growth rate y/y 4Q FY ( ) Local currency base 600 1,800 Digital cameras +13% +17% Video cameras Digital cameras +5.4%(+4.6%) Interchangeable lenses and others +10.6%(+6.6%) D SLR ratio* 393 1,181 1,153 400 365 1,200 1,042
Slide 14: Optical and Other Products
Optical and Other Products 4Q 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 150 OP ratio 20 10% 100 10 5% 2.5% -9.1%(-9.3%) 105 113 4 1 50 96 0 0% -3 0.3% -1.7% 0 -10 -5% 4Q06 4Q07 4Q07 4Q06 4Q07 4Q07 Previous Previous projection proje
Slide 15: Optical and Other Products
Optical and Other Products FY 2007 Actual Sales Operating Profit (Billions of yen) Growth rate y/y (Billions of yen) ( ) Local currency base 600 OP ratio 60 10% 400 6.7% -7.2%(-8.5%) 3.8% 30 5% 3.3% 200 424 411 393 41 -49.2% 24 21 0 0 0% FY06 FY07 FY07 FY06 FY07 FY07 Previous Previous projection pro
Slide 16: Optical and Other Products
Optical and Other Products 4Q/FY 2007 Actual 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 -7.2%(-8.5%) -9.1% (-9.3%) 600 SPE 4Q07 FY07 113 ArF 0% 105 ArF 0% 424 411 393 96 KrF 28% KrF 32
Slide 17: Assumptions
Assumptions FY 2008 Projection Average Exchange Rate FY 2008 FY 2007 Yen-1USD 107.00 yen 117.50 yen Yen-1EURO 157.00 yen 161.41 yen Impact of Exchange Rate Movement (FY impact given a one yen change) Net sales Operating profit USD 16.9 billion yen 9.9 billion yen EURO 7.6 billion yen 5.6 billion yen
Slide 18: Key Points – 2008
Key Points – 2008 Assumptions 9 Strong yen against the U.S. dollar and euro 9 Tough economic environment in first half, but recovery towards year-end 9 Impact from chg. in depreciation method in the first quarter Projections 9 Realize net sales and profit growth of all businesses through continued b
Slide 19: Summary of Projected Results
Summary of Projected Results FY 2008 Projection (Billions of yen) FY 2008 FY 2007 % change Projection Actual Net sales 4,720.0 4,481.3 +5.3% Gross profit 2,350.0 2,247.0 +4.6% [% sales] 49.8% 50.1% Op. profit 800.0 756.7 +5.7% [% sales] 16.9% 16.9% Net income 520.0 488.3 +6.5% [% sales] 11.0% 10.9%
Slide 20: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2008 Projection v. FY 2007 Actual (Billions of yen) FY Sales Op. Profit 2007 Actual 4,481.3 756.7 Change in Exchange Rate Foreign exchange impact -216.0 -129.4 •1USD: 117.50 to 107.00 yen [net sales, cost of sales, expenses] •1EURO: 161.41 to 157.00 yen Sales vo
Slide 21: 2008 Office Imaging Products
2008 Office Imaging Products Further color sales growth through lineup expansion Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,500 Others Copying machines (FY) Color Color +20% 2,000 Monochrome Mono- 0% +3.3%(+5.8%) chrome 1,500 1,291 1,333 Total +5% +
Slide 22: 2008 Laser Beam Printers
2008 Laser Beam Printers Further expansion of profit through high-PV strategy Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,500 Others LBP (FY) IJP +4.8%(+9.7%) Color +27% Mono- -2% 2,000 LBP chrome 1,611 1,538 Total +2% 1,500 +7.1%(+9.4%) Color ratio
Slide 23: 2008 Inkjet Printers
2008 Inkjet Printers Leverage product competitiveness to expand PV Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,500 Others IJP (FY) IJP Total +8% +4.8%(+9.7%) 2,000 LBP 1,538 1,611 1,500 +7.1%(+9.4%) 1,000 +4.3%(+10.1%) 500 0 FY07 FY08 Projection Janu
Slide 24: 2008 Digital Cameras
2008 Digital Cameras Further sales growth through launch of strategic new products Sales (Billions of yen) Growth rate y/y Growth rate y/y ( ) Local currency base (Unit base) 2,000 Video cameras Digital cameras (FY) Digital cameras Digital +20% +6.9%(+10.6%) cameras Interchangeable lenses and others
Slide 25: 2008 Cameras
2008 Cameras Further sales growth through launch of strategic new products EOS Kiss X2 IXY DIGITAL 20 IS iVIS HF10 • Proprietary 12.2 • 8 million pixel CCD • Proprietary full HD million pixel CMOS sensor CMOS sensor sensor • Motion Detection • Flash memory • Live view shooting technology recording m
Slide 26: 2008 Semiconductor Product Equip.
2008 Semiconductor Product Equip. IC steppers: First step towards 30% share of immersion market in 2010 LCD aligner: Securing an overwhelming No.1 position amid significant turnaround in market situation Sales IC Stepper Unit Breakdown By Light Source (Billions of yen) Growth rate y/y FY08 Projectio
Slide 27: Operating Profit by Product
Operating Profit by Product FY 2008 Projection v. FY 2007 Actual (Billions of yen) FY 2008 FY 2007 Projection Actual Business machines 676.9 650.3 % sales 22.2% 22.2% Cameras 335.6 307.4 % sales 27.2% 26.7% Optical and other products 40.5 21.1 % sales 5.9% 3.3% Corp. and eliminations -253.0 -222.1 T
Slide 28: Capital Expenditure / 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 800 800 407 488 234 600 600 205 455 839 384 309 400 400 343 695 606 562 461 432 429 401 384 380 200 342 200 319 262 253 226 193 0 0 FY04 FY05 FY06 FY0
Slide 29: Cash on Hand and Return to Shareholders
Cash on Hand and Return to Shareholders Cash on Hand (Year-end) Return to Shareholders (Billions of yen) (Yen) 150 Dividend per share 28.8% 30% Cash on hand Payout ratio 1,156 (Consolidated basis) 23.1% 1,005 24.4% (165)* 944 888 100 110 20% 15.9% (125) 690 16.8% (100) 83 67 50 (65) 10% (50) 43 33 0
Slide 30: January 30, 2008 Canon Inc.
January 30, 2008 Canon Inc. 30
Slide 31: Supplementary Information
Supplementary Information January 30, 2008 Canon Inc. 31
Slide 32: Summary of Projected Results
Summary of Projected Results 1H 2008 Projection (Billions of yen) 1H 2008 1H 2007 % change Projection Actual Net sales 2,230.0 2,166.7 +2.9% Gross profit 1,130.0 1,107.6 +2.0% [% sales] 50.7% 51.1% Op. profit 390.0 388.9 +0.3% [% sales] 17.5% 17.9% Net income 256.0 255.2 +0.3% [% sales] 11.5% 11.8%
Slide 33: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit 4Q&FY 2007 Actual v. 4Q &FY 2006 Actual (Billions of yen) 4Q FY Sales Op. Profit Sales Op. Profit 2006 Actual 1,216.5 195.9 4,156.8 707.0 Foreign exchange impact [net sales, cost of sales, expenses] +2.7 +7.8 +125.5 +79.8 Sales volume impact Change in Exchang
Slide 34: Gross Profit Variance Analysis
Gross Profit Variance Analysis 4Q 2007 Actual v. 4Q 2006 Actual (Billions of yen) 4Q07 4Q06 Change (Billions of yen) Gross Profit 611.1 593.7 +17.4 90 % sales 48.4% 48.8% -0.4 pt. 60 50.7 29.3 30 17.4 2.7 1.3 3.7 0 -30 -15.2 -60 -55.1 Forex Sales Price Forex Cost Dep. Others Total impact volume chan
Slide 35: Operating Profit Variance Analysis
Operating Profit Variance Analysis 4Q 2007 Actual v. 4Q 2006 Actual (Billions of yen) 4Q07 4Q06 Change (Billions of yen) Op. Profit 193.6 195.9 -2.3 60 % sales 15.3% 16.1% -0.8 pt. 30 17.4 0 -4.4 -2.3 -7.1 -8.2 -30 Total change in Change in Change in SG&A Dep. Total change in gross profit SG&A forex
Slide 36: Inventories Interest Bearing Debt
Inventories Interest Bearing Debt (Billions of yen) (Days) (Billions of yen) 800 Inventories 80 150 Debt 6% Turnover (Days) Debt/Total Assets 600 60 49 49 47 100 4% 45 44 3.1% 400 40 563 539 510 489 50 98 2% 444 200 20 1.1% 0.8% 0.7% 39 0.6% 32 31 27 0 0 0 0% FYE03 FYE04 FYE05 FYE06 FYE07 FYE03 FYE0
Slide 37: Capital Expenditure 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 800 750 300 407 520 488 234 600 205 455 500 839 384 800 400 695 606 500 461 440 432 250 429 401 384 380 375 200 342 262 226 0 0 FY05 FY06 FY07 FY08 FY
Slide 38: Financial Ratios
Financial Ratios * EPS (Basic) has been adjusted to reflect a 3-for-2 forward stock split (effective date July 1, 2006) (Yen) 1,000 16.8% 16.5% 16.6% 20% 15.9% 16.0% 16.3% 800 15% 10.1% 10.1% 10.6% 10.8% 11.0% 9.0% 600 10% 377.59 412.36 400 341.95 5% 258.53 288.63 209.21 200 0% 0 -5% FY03 FY04 FY05