Slide 1: Canon Inc. Second Quarter 2014 Results
Canon Inc. Second Quarter 2014 Results July 24, 2014 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 2014 Results P3 – 5 FY 2014 Projections P6 – 9 Details by Business P10 – 15 Financial Situation P16 – 18 Supplementary pp y Information P19 – 24 July 24, 2014 Canon Inc. 2
Slide 3: 2Q 2014 in Summary
2Q 2014 in Summary External Environment Gradual global economic recovery Our markets Interchangeable-lens camera – Delayed recovery Office and Industrial Equip. q p – Solid Results Increased profit despite decreased net sales Decreased net sales due to lower camera sales Achieved fifth
Slide 4: Summary of Results
Summary of Results 2Q 2014 Actual (Billions of yen) 2Q 2014 2Q 2013 Pct Change Pct. Actual Actual Net Sales 926.8 966.9 -4.1% Gross Profit 483.5 477.4 +1.3% (% Sales) 52 2% 52.2% 49 4% 49.4% Op. Profit 110.5 98.4 +12.4% (% Sales) 11.9% 10.2% Net Income Attributable to Canon Inc. 80 8 80.8 66 5 66.5
Slide 5: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit 2Q 2014 Actual v. 2Q 2013 Actual (Billions of yen) S l Sales O Profit Op. P fit 2Q 2013 Actual 966.9 98.4 Foreign Exchange Impact Change in Exchange Rate +26.7 +8.7 (Net Sales, Cost of Sales, Expenses) •1USD: 98.80 to 102.13 yen •1EURO: 129.02 to 139.94 yen Sales V
Slide 6: Assumptions
Assumptions 2014 Current Projection Average 2H14 FY14 FY13 g Rate Exchange Yen-1USD 100.00 yen 101.14 yen 97.84 yen Yen-1EURO Y 1EURO 135 00 yen 137.57 135.00 137 57 yen 130.01 130 01 yen Impact of Exchange Rate Movement (2H Impact Given a One Yen Change) Net Sales Operating Profit USD 8 4 bil
Slide 7: Key Points FY2014
Key Points FY2014 E t External lEEnvironment i t Global economy – Recovery later than previously expected t d Our markets – Timing of recovery delayed Outlook Maintained M i t i d profit fit projection, j ti llowered d projection j ti ffor net sales Achieve A hi second d consecutive ti year
Slide 8: Summary of Projected Results
Summary of Projected Results FY 2014 Current Projection (Billions of yen) FY 2014 FY 2013 Pct. Change Current Projection Actual Net Sales 3,780.0 3 780 0 3,731.4 3 731 4 +1 3% +1.3% Gross Profit 1,844.0 1,798.4 +2.5% (% S Sales) l ) 48 8% 48.8% 48 2% 48.2% Op. Profit 365.0 337.3 +8.2% (% S Sales) l
Slide 9: Transition in Sales and Op. Profit
Transition in Sales and Op. Profit FY 2014 Current Projection v. FY 2014 Previous Projection (Billions of yen) S l Sales O Profit Op. P fit Previous Projection (Apr. 24, 2014) 3,860.0 365.0 Change in Exchange Rate Foreign Exchange Impact •1USD: 1USD: 100.61 100 61 tto 101 101.14 14 yen +14.2 +5.2 •1
Slide 10: Office
Office 2Q14 Growth Rate y/y (Unit Base) 2Q14 Color Ratio Copiers Printers Copiers Printers Color -2% +1% Value Base* 55% 50% Monochrome -8% -8% 2Q 2014 Actual Unit Base 39% 16% Total -6% -6% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 800 Monochrome copiers
Slide 11: Office
Office FY14 Growth Rate y/y (Unit Base) FY14 Color Ratio Copiers Printers Copiers Printers Color +15% +12% Value Base* 56% 47% Monochrome +7% -1% FY 2014 Projection Unit Base 39% 16% Total +10% +1% *Includes Consumables (Billions of yen) Sales Growth rate y/y ( ) Local currency base 3,000 Monochrome
Slide 12: Imaging System
Imaging System Growth Rate y/y (Unit Base) Interchangeable Lens Digital Camera Ratio * 2Q14 Interchangeable Lens 2Q14 -19% 19% Di it l C Digital Cameras Value V l B Base 82% 2Q 2014 Actual Compact Digital -38% Unit Base 42% Cameras Total Digital Cameras -31% * Proportion of Total Digital Cameras IJP
Slide 13: Imaging System
Imaging System Growth Rate y/y (Unit Base) Interchangeable Lens Digital Camera Ratio * FY14 Interchangeable Lens FY14 -9% 9% Di it l C Digital Cameras Value V l B Base 83% FY 2014 Projection Compact Digital -28% Unit Base 42% Cameras Total Digital Cameras -21% * Proportion of Total Digital Cameras I
Slide 14: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown by y Light g Source 2Q 2014 Actual (Unit Sales) 2Q13 2Q14 ArF 2Q13 0 2Q14 0 IC 12 17 KrF 2 5 FPD 0 7 i-line 10 12 (Billions of yen) Sales Growth rate y/y ( ) Local currency base 180 Sales Eliminations Lithography Equipment Other
Slide 15: Industry and Others
Industry and Others Lithography Equipment IC Lithography Unit Breakdown byy Light g Source FY 2014 Projection (Unit Sales) FY14 FY14 FY13 FY14 FY14 Previous Current FY13 Previous Current Projection Projection Projection j Projection j ArF 0 0 0 (Billions of yen) S Sales l Growth rate y/y ( ) Local c
Slide 16: Inventories
Inventories ((Billions of yyen)) 800 Amount (Billions of yen) 90 Turnover (Days) 700 63 61 60 59 70 57 57 54 52 53 608 50 600 591 589 582 82 542 552 554 550 30 533 500 10 -10 400 -30 300 -50 2QE12 3QE12 4QE12 1QE13 2QE13 3QE13 4QE13 1QE14 2QE14 July 24, 2014 Canon Inc. 16
Slide 17: 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 750 750 500 500 235 210 230 240 249 240 257 225 213 171 1 525 510 507 250 250 470 384 300 290 275 270 270 265 61
Slide 18: Cash on Hand
Cash on Hand Cash on Hand (Year (Year-end) end) 1500 4 Cash-on-hand (Billions of yen) Cash-on-hand (In months of 2nd-half net sales) 3.5 3 1000 25 2.5 25 2.5 2.4 2.4 2.3 2.3 2.5 841 789 2 773 775 750 667 1.5 500 1 0.5 0 0 FYE10 FYE11 FYE12 FYE13 FYE14 FYE14 Previous Current Projection Projection Not
Slide 19: Supplementary Information
S Supplementary l Information I f i July 24, 2014 Canon Inc. 19
Slide 20: Transition in Sales and Operating Profit
Transition in Sales and Operating Profit FY 2014 C Current rrent Projection v. FY 2013 Act Actual al (Billions of yen) Sales Op. Profit FY 2013 Actual 3,731.4 337.3 F i E Foreign Exchange h IImpactt +82.5 +21.2 Change in Exchange Rate (Net Sales, Cost of Sales, Expenses) •1USD: 97.84 to 101.14 yen •
Slide 21: Gross Profit Variance Analysis
Gross Profit Variance Analysis 2Q 2014 Actual v. 2Q 2013 Actual (Billions of yen) 2Q14 2Q13 Change g (Billions of yen) Gross Profit 483.5 477.4 +6.1 % Sales 52.2% 49.4% +2.8pt. 100 50 26.7 9.3 6.1 0 -2.9 -7.9 -19.1 -50 -100 Forex Sales Price Forex Cost Total Impact Volume Change Impact Reduction Cha
Slide 22: Operating Profit Variance Analysis
Operating Profit Variance Analysis 2Q 2014 Actual v. 2Q 2013 Actual (Billions of yen) 2Q14 2Q13 Change Op. Profit 110.5 98.4 +12.1 (Billions of yen) % Sales 11.9% 10.2% +1.7pt. 100 50 16.1 12.1 6.1 0 -10.1 -50 -100 Total Change in Change in Total Change in SG & A SG & A Change in Gross Profit (Exclu
Slide 23: 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% 4 3 0.3% 0.3% 0.1% 2 0.1% 0.1% 0 0.0% FYE10 FYE11 FYE12 FYE13 2QE14 Supplementary Information July 24, 2014 Canon Inc. 23
Slide 24: Financial Ratios
Financial Ratios (Yen) 900 15% 9.2% 9.6% 600 10% 8.7% 8.4% 8.3% 6.3% 6.3% 5.7% 5.6% 5.7% 300 5% 199.71 204.49 200.78 215.31 191.34 0 0% FY10 FY11 FY12 FY13 FY14 Current Projection EPS(Basic) ( ) ROE ROA (Attributable to Canon Inc.) Supplementary Information July 24, 2014 Canon Inc. 24