CANON : ANNUAL REPORT 2025

CANON ANNUAL REPORT 2025

Fiscal Year Ended December 31, 2025

TABLE OF CONTENTS

Strategy 1 Financial Highlights

2 To Our Shareholders

Business Strategy 12 At a Glance

14 Business Strategy

22 Research & Development

24 Production & Quality

ESG 28 Environment

32 Social

35 Governance

Financial Overview 40 Financial Overview

56 Ten-Year Financial Summary

Financial Section 60 Consolidated Balance Sheet

61 Consolidated Statement of Income

1. Consolidated Statement of Comprehensive Income

2. Consolidated Statement of Equity

3. Consolidated Statement of Cash Flows

4. Notes to Consolidated Financial Statements

105 Consolidated Supplementary Schedule

106 Management's Report on Internal Control Over Financial Reporting

107 Independent Auditor's Report

Corporate Data 113 Transfer and Registrar's Office

113 Shareholder Information

113 Major Consolidated Subsidiaries

Cover Photo:

Products representing Canon's four new businesses;

Continuous feed presses: Printing

Multi-position computed tomography (CT) system: Medical

Network cameras: Imaging

Nanoimprint semiconductor manufacturing equipment: Industrial

FINANCIAL HIGHLIGHTS

Millions of yen

(except per share amounts)

Thousands of U.S. dollars

(except per share amounts)

Notes:

1. Canon's consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.

2. U.S. dollar amounts are translated from yen at the rate of JPY157 = U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of December 30, 2025, solely for the convenience of the reader.

Net Sales (Billions of yen) Net Income Attributable to Canon Inc. (Billions of yen)

5,000 400

4,000

3,000

2,000

1,000

0

300

200

100

0

2021 2022 2023 2024

2025

2021 2022 2023 2024

2025

Cash Flows (Billions of yen) ROE/ROA (%)

0

200

400

600 10

8

6

4

2

2021 2022 2023 2024

Net cash provided by operating activities

2025

0

2021 2022 2023 2024 2025

ROE ROA

Net cash used in investing activities

Free cash flow

TO OUR SHAREHOLDERS

Achieved record-high in net sales last year, driven mainly by cameras and network cameras

Looking back at economic conditions in 2025, despite the impact of U.S. tariff policies spreading worldwide, the U.S. economy remained firm, driven by AI-related demand and other factors. Though China's economic slowdown persisted, and Europe's economic recovery lacked strength, the global economy as a whole experienced modest growth throughout the year.

Under these conditions, we not only posted double-digit growth in our camera business, with the launch of new products, and our network camera business, amid strong demand, but also increased sales in our medical, office MFD, and inkjet printer businesses.

As a result, 2025 net sales increased by 2.5% to 4,624.7 billion yen, exceeding our previous record-high set in 2024.

Net sales and net income attributable to Canon Inc.

(Billions of yen)

5,000

500

Canon Inc. dividend per share

(Yen)

150

4,000

400

120

3,000

2,000

1,000

300 90

200 60

100 30

0 0

2021 2022 2023 2024 2025

0

96 00

05 10

15 20 25

Net sales (left axis)

Net income attributable to Canon Inc. (right axis)

Interim dividend

Year-end dividend Commemorative dividend

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Over 250 billion yen in capital expenditure for future growth

Owing to improved profitability, operating cash flow was at a high level of 475.9 billion yen. We invested 262.2 billion yen in capital expenditure for future growth, including the construction of a new plant at our production site in Utsunomiya for semiconductor lithography equipment, an

area where further growth is expected. As for shareholder returns, we restored our annual dividend per share to the pre-COVID-19 pandemic level of 160 yen and acquired 300 billion yen worth of our own shares.

Achieved target one year ahead of schedule despite unexpected events

The five-year period of Phase VI of the Excellent Global Corporation Plan, which commenced in 2021, was marked by a series of truly unexpected events. Among these were the COVID-19 pandemic and ongoing conflicts like Russia's invasion of Ukraine. Amid dwindling supplies of energy, grain, and other essential commodities, and with severe inflation, the second Trump administration, advocating an "America First" agenda, took office in 2025. As high tariffs and ultra-protectionist policies took hold, the global eco-

nomic order built around postwar globalization collapsed, leaving the international community facing an unprecedented level of uncertainty. Even in the face of such challenges, each and every Canon Group employee persevered and showed ingenuity, further strengthening the competitiveness of many products, which enabled us to achieve the net sales target we had for 2025, the final year of Phase VI, one year ahead of schedule.

Overcame impact of COVID-19 through fruits of major portfolio transformation

Another reason we were able to exceed our target is that, guided by the belief that "change is progress, transformation is advancement," we have continually adapted to the rapidly changing industrial landscape through technological innovation. Looking back, the widespread adoption of smartphones and cloud computing in the 2010s, which triggered a sharp decline in demand for cameras and office equipment, was an enormous test for Canon. Even in

this environment, we identified growth industries where we could leverage our strongest assets, our people and our technology, and conducted large-scale M&As to buy time and established what are now the four pillars of our business: Printing, Medical, Imaging, and Industrial.

Transformation was not an easy process, but because we faced it with determination, we overcame the pandemic and were able to steadily grow our profits.

Aiming even higher in an era of dramatic change

The global economy is now undergoing dramatic changes that no longer follow past trajectories. Looking ahead over the next five years, I am keenly aware of three major trends.

The first trend is the progression of global fragmentation.

In this era of rising nationalism, both economic blocs and people's values are becoming fragmented and multipolar,

and competition among nations is intensifying.

In this environment, the time when decisions could be made solely on economic rationale has ended. We have now entered a time when management must navigate with far greater sophistication, incorporating geopolitical risks into every decision.

TO OUR SHAREHOLDERS

The second trend is the rapid adoption of AI across society.

AI has already become a part of daily life and now serves as a "real-world infrastructure" that is fundamentally transforming the industrial landscape. The speed of its adoption surpasses that of the internet and smartphones in the past.

Also, what sets AI apart from previous digital innovations is that it can directly substitute for roles long performed by people. In light of this reality, our task is not to fear AI, but to find ways to coexist with it. This means harnessing AI's

capabilities to the fullest, establishing a new division of roles between people and AI, and working together to build a better world.

The third trend is the worsening labor shortage.

In Japan and other developed countries, declining birth-rates and aging populations are making it increasingly difficult to secure talented personnel. Furthermore, even in emerging economies, labor shortages are becoming

evident, and production systems that rely on low-cost labor are no longer viable. Now, the advancement of AI and

robotics is driving the substitution of simple labor. On the other hand, demand for highly skilled personnel that create new value is stronger than ever before, which is intensifying global competition among companies to attract talent, a decisive factor that determines corporate competitiveness.

Change does bring risks, but if we have the resolve to jump into the wave of change and transform ourselves, we can turn it into a great opportunity. We, anticipating the accelerated advancement of AI and other major shifts,

made significant changes to our business portfolio, reorganized our structure, and built our operations around four industry-oriented business pillars. This enabled us to regain our growth potential. In addition, we strengthened the essential foundation of the company, including our globally expanding sales network, robotics-driven production engineering, and performance-based HR system, creating a solid and resilient platform for future growth. With Phase VII beginning this year, we will build on this strong foundation and evolve into a company of an even higher level.

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Learning the importance of profit from blue-chip companies

In 1996, the year after I became president, we launched the Excellent Global Corporation Plan. We set forth a long-term vision to become a truly excellent global corporation that contributes to solving social challenges, boasts an overwhelmingly strong earnings structure, creates value with

a highly skilled and select workforce, and allows each and every employee to feel pride and fulfillment. By formulating and implementing strategies every five years based on this vision, we have shaped the Canon you see today. When I

was assigned to our U.S. subsidiary in 1966, there were already blue-chip companies in the U.S. practicing this. At that time, Canon and other Japanese companies could not even come close. Awakened by a local tax official's comment along the lines of "a company that can't earn profits above the deposit interest rate should be liquidated," I spent 23 years in the U.S. desperately striving to catch up with those truly outstanding blue-chip companies. That passion remains just as strong in me today.

Driving production innovation through AI and robotics technology

We will make full use of AI as we strive to become a truly excellent global corporation. We will equip our factory robots with AI to push automation even further. We will also enhance our simulation technology not only for the production process, but also for development and prototype process, drastically reducing both time-to-market and costs. We will also promote centralized management of intellectual property, which is scattered across various sites, through a

company-wide shared platform, and use AI analysis to come up with new solutions. We are also considering offering services that use AI to analyze operating data from printing and medical equipment to further enhance the productivity of our customers. We will exhaustively implement AI education throughout the company in an effort to create value that is unique to Canon.

Our commitment to high-wage for high-efficiency

In Phase VII, I will emphasize the key theme of "high-wages for high-efficiency." This stems from my belief that we must create high added value with a highly skilled and select workforce. More specifically, the talented employees at truly outstanding U.S. blue-chip companies, which I have long regarded as a model, continually grow and strive for excellence without changing jobs. Not only are wage levels high, but employees take great pride in being part of the company, to the extent that there are families where the grandfather, father, and child are all employees. This is why such companies are able to continuously generate innovative technologies and services. In contrast, in Japan, lifetime employment has become the norm as a system, wage levels do not match those of Western companies, and, in a sense, the system produces uniform and largely identical pay

levels. Since its founding, Canon has steadfastly protected people's jobs, promoted the autonomous growth of employees through our so-called San-ji (Three Selfs) Spirit, and was quick to implement a merit-based evaluation system. That is why we are confident in our ability to secure talented human resources. However, it is also true that there remains a significant gap between Western companies. Going forward, we will offer high wages to a small number of highly skilled employees who achieve high efficiency. If we do not, talented personnel will leave Japan and Canon for opportunities abroad. It is an extremely difficult challenge for a Japanese company but having decided to pursue the vision of becoming a truly excellent global corporation, we are fully committed to seeing it through.

TO OUR SHAREHOLDERS

Building new growth engines that follow the four pillars

Within our four business pillars, we have put in place a solid framework to bring products to the market capable of driving further growth, such as photon-counting CT

in the Medical field and nanoimprint lithography in the Industrial field. I am confident that each of these products will contribute to solving social challenges. That said, there is no room for complacency. Looking ahead, we must begin preparing now for the next wave of innovation. To this end, we are working on the space business as a new growth engine-specifically, satellites, and the data businesses that utilize them. The space industry was traditionally led by the government, but it is now shifting to the private sector, with markets growing across a wide range of applications such as

communications, earth observation, and disaster prevention.

Within the Canon Group, Canon Electronics Inc. has worked on the development of ultra-compact satellites and other technologies that are competitive in both perfor-

mance and cost. Going forward, Canon Inc. will take the lead in the development of the space business and further enhance its competitiveness by bringing together the Group's expertise in optics, sensing, equipment control, and image processing. I certainly expect satellite technology to become a driving force that supports Canon's future growth.

In the medical field as well, there are many untapped markets where Canon's fundamental technologies can be utilized. For example, if we can develop testing technology that accurately analyzes the wide variety of information contained in blood, it will become possible to elucidate the mechanisms of diseases for which the cause has been previously unknown. Regenerative medicine is precisely the kind of technology that will become indispensable in the future. We are working in collaboration with Kyoto University's Center for iPS Cell Research and Application (CiRA) to develop production equipment for iPS cells and artificial platelets.

Pushing through reforms to achieve a 15% operating profit ratio

In 2030, the final year of Phase VII, we are targeting 5.6 trillion yen in net sales and an operating profit ratio of 15%.

This is not an easy target, but it is the minimum requirement for what we define as "exceptionally high profitabil-ity." From a global perspective, Canon's ability to generate

profit is still not as strong as it needs to be, and across both our production and sales operations, there are still areas that have not fully adapted to changes in the market environment. We will drastically overhaul our business structure in order to achieve these goals without fail.

Continuing to contribute to society through sustainable management

The greatest role of a company is to create jobs, generate profits, and continually contribute to solving social challenges. Canon expresses this commitment in its corporate philosophy of kyosei, which conveys its dedication to creating a society where all people, regardless of culture, customs, language, or race, can harmoniously live and work together in happiness. In addressing global warming and promoting the recycling of resources, we have implemented initiatives not only at our own sites, but also in collaboration with suppliers, customers, and even competitors, which has ultimately led to cost reductions and the development of new business relationships. We aim to achieve net-zero greenhouse gas (GHG) emissions by 2050 and we are committed to reducing GHG emissions across the entire lifecycle

of our products, including the supply chain.

In sustainability, human resources are also an important theme as it is people that enables these initiatives to grow and endure. Canon has long upheld the principles of respect for humanity, meritocracy, and enterprising spirit, and has developed human resources that can contribute to societies around the world as internationally minded individuals. As technology evolves and society undergoes rapid change, our employees need to learn more than ever

and continue to grow. By further strengthening our personnel evaluation system that ensures fairness and equity, we will promote a sustainability-driven management approach that enables us to keep contributing to society.

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

To our stakeholders

Guided by its corporate philosophy of kyosei, Canon will continue to use technology to fulfill the genuine desire of people around the world to have happier lives. To achieve this, we must engage with society's diverse values and deepen mutual understanding through dialogue. In 2023, we established the Corporate Governance Center to further deepen dialogue with stakeholders, including shareholders and investors, and to support sustainable growth as a company.

Looking back on over my more than thirty years as a business leader, I am reminded that a leader needs two essential qualities. One is imagination. That means, taking a broad view of society and envisioning the future we should strive toward. The other is creativity. This refers to formulating and implementing strategies to turn that envisioned future into reality. My sights are set on turning Canon into a truly excellent global corporation. By staying at the forefront of innovation and continuing to take on challenges, we have finally reached where we are today.

However, we are still far from becoming a truly excellent global corporation. Our ability to generate profit is still not where it needs to be. There are many challenges we must overcome before we can become a company that earns the respect of people around the world and one in which our employees can take genuine pride. With the advent of AI, the speed of technological innovation will accelerate more than ever before. Keeping pace with that speed and adapting to changes in industry and society will be no easy task. As a business leader, I know we are entering a tough and

demanding era - but it is one I must see through to the very end.

Leaders must learn from their failures and continue to challenge themselves. While there are many important qualities for effective management, if I were to highlight one, it would be humility. It is important to humbly acknowledge one's own shortcomings and swiftly pull oneself together after a failure.

My guiding principle is "be deliberate in council, and decisive in action," an idiomatic phrase given to me by my father, who was a doctor. It means before making a decision, gather as much information as possible, think through it repeatedly using deductive and inductive reasoning, and once you have resolved yourself, proceed without hesitation. This saying describes the mindset of surgeons in a time before

X-rays, when it was impossible to confirm the condition of a lesion. This truly applies to corporate management as well.

I have been helped by these words many times. If a mistake is made after careful deliberation, the cause of the error can usually be identified quickly.

I believe that the mindset of being deliberate in council, and decisive in action is something future leaders must uphold. Achieving my vision of becoming a truly excellent global corporation will require time, but we will accomplish it without fail. Life as a business leader is never easy. That is precisely why it is so rewarding. I recognize that my greatest responsibility in Phase VII is to demonstrate my experience and determination to the next generation of leaders.

Fujio Mitarai

Chairman & CEO Canon Inc.

TO OUR SHAREHOLDERS

Medium- to Long-term Management Program

Excellent Global Corporation Plan Phase VII

Guided by the corporate philosophy of "kyosei," Canon launched its five-year management plan, "Excellent Global Corporation Plan," in 1996 with the goal of becoming a truly excellent company that is admired and respected around the world.

In the five-year plan, "Excellent Global Corporation Plan - Phase VI" ("Phase VI"), which ran through 2025, Canon Group set forth the basic policy of "promoting portfolio transformation through improved productivity and new business creation" and carried out initiatives to strengthen Canon's four industry-oriented business groups: Printing,

Medical, Imaging, and Industrial. Supported by steady

gains in market share across these businesses, Canon Group achieved its Phase VI net sales target of ¥4,500 billion one year ahead of schedule. However, Canon Group's earnings structure continues to rely heavily on the Printing business and the Imaging business centered on cameras

- segments that largely operate in mature market environments. Therefore, Canon Group recognizes the need to further accelerate its portfolio transformation. In addition, external factors such as rising labor costs, inflation, and

tariffs adversely impacted profitability, and as a result, the Phase VI operating profit ratio fell short of the 12% target. Therefore, strengthening businesses in growth areas and improving profitability through structural reforms remain key management priorities for the Canon Group.

In light of these challenges, Canon's new five-year plan beginning in 2026, the "Excellent Global Corporation Plan - Phase VII" ("Phase VII"), adopts the basic policy of "Achieve new growth through innovations in productiv-

ity," and under this policy, Canon will steadily progress the three structural reforms launched in 2024 - sales reform, production reform, and medical business innovation. At the same time, Canon will enhance its focus on strengthening the Medical and Industrial businesses, which offer high market growth potential, while further shifting the emphasis of each industry-based business group toward growth domains. Furthermore, it will advance initiatives for full-scale entry into the space-related business as well as create new business solutions leveraging AI platforms. Through these efforts, Canon aims to realize a new stage of growth and further enhance corporate value.

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Phase VII Basic Policy and Targets

In Phase VII that commenced in 2026, our basic policy is "Achieve new growth through innovations in productivity." For 2030, the final year of Phase VII, we are targeting 5.6 trillion yen or more in net sales, an operating profit ratio

of 15% or higher, and a return on equity (ROE) of 15% or higher. And we will accelerate our transformation through seven key strategies.

Phase VII Management Objectives

(Trillion Yen)

5

4.6

9.8

4

3 2

1

5.0

5.6T or more

12

15%

or higher

(%)

15

10

5

0

2025

Net Sales (left axis)

0

2028 2030

Operating profit ratio (right axis)

BUSINESS STRATEGY

12 AT A GLANCE

14 PRINTING GROUP

16 MEDICAL GROUP

18 IMAGING GROUP

20 INDUSTRIAL GROUP

22 RESEARCH & DEVELOPMENT

24 PRODUCTION & QUALITY

CANON ANNUAL REPORT 2025 11

AT A GLANCE

Guided by a core policy of "accelerate our corporate portfolio transformation by improving productivity and creating new business," Canon reorganized its business divisions into four industry-oriented business groups to make the best possible use of Canon's broad range of businesses and technologies.

We will revisit all of our technological capabilities and business areas from the perspective of each group to build a more robust organization while actively pursuing M&A and other avenues to bolster Canon's development and production and create new businesses.

PRINTING

Net Sales ¥2,494.4 billion / 54% Share of Net Sales

From Home Printing to Commercial and Industrial Printing

Number of Employees 105,938

Prosumer

993.4

Office

1,063.7

Inkjet printers

Digital sheet-fed presses

Production

437.3

Office multifunction devices (MFDs)

Business

Total Net Sales

¥4,62

Total Number

165,

Magnetic resonance imaging (MRI) systems

580.6

Computed tomography (CT) systems

MEDICAL

Co-creation with Healthcare Professionals

Diagnostic X-ray systems

Net Sales ¥580.6 billion / 13% Share of Net Sales

Number of Employees 13,347

Note: The totals do not amount to 100% because the net sales of each business unit include the net sales relating to intersegment transactions.

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Others & Corporate

Net Sales ¥237.1 billion / 5% Share of Net Sales

Number of Employees 12,138

IMAGING

Net Sales ¥1,054.9 billion / 23% Share of Net Sales

From People's Daily Lives to Professional Settings

Number of Employees 26,367

Network cameras

Network cameras, etc.

429.4

Cameras

625.5

Digital compact cameras

Segments

for 2025

4.7billion

of Employees

547

Digital cinema cameras

RF lenses

Mirrorless cameras

Industrial equipment

104.7

Optical equipment

256.4

Semiconductor lithography equipment

Sputtering equipment

INDUSTRIAL

Contributing to Leading-edge Electronics Industry

FPD (Flat Panel Display) lithography equipment

Net Sales ¥361.1 billion / 8% Share of Net Sales

Number of Employees 7,757

CANON ANNUAL REPORT 2025 13

PRINTING GROUP

imageFORCE series delivers high productivity and strong expressive capability to meet the needs of today's workforce

Gaining market share with new series of office MFDs, while expanding product lineup for commercial and industrial printing

Expanded product lineup for commercial printing to meet diverse needs and achieved sales growth even in challenging market conditions

14 CANON ANNUAL REPORT 2025

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Performance in 2025

Expanded sales channels for commercial and industrial printing and introduced new series of office MFDs to drive sales growth

As for commercial and industrial printers, we started to supply digital printing equipment to Heidelberger

Druckmaschinen AG, a leading company of offset printing equipment, as well as expanded our sales channels, which led to increased sales of cut sheet equipment. We expect sales to increase further in 2026 by expanding our product lineup.

For office MFDs, we will work to expand our market share through the progressive introduction of core products of

the imageFORCE series, our first new series in 15 years, which incorporates new technologies that significantly enhance product functionality. While unit sales grew for inkjet printers, mainly refillable ink tank models, sales of laser printers declined substantially due to shipment adjustments resulting from a deterioration in market conditions. As a result, on a consolidated basis, sales for this Business Unit decreased by 1.1% to 2,494.4 billion yen in comparison to the previous term.

Net Sales

(Billions of yen)

3,000

2,346.1 2,522.7

2,494.4

1,500

0

2023 2024 2025

Toward Further Growth

Drive sales growth by introducing new products for commercial printing that meet rising demand for high-mix, small-lot printing and by making effective promotional investments

Starting with commercial printing, we plan to steadily introduce new products that expand our business area, including the varioPRINT iX1700 for small- and medium-size printing companies, the varioPRESS iV7, which enables printing on B2-size substrates, and the Colorado XL, a large format printer that can handle a wide variety of media.

In Office MFDs, expanding sales of our new imageFORCE series will be a major driver of growth. As for laser printers,

we will work to make effective marketing investments to regain market share. As for inkjet printers, we will continue to expand sales of refillable ink tank models and expand sales through the new cartridge-based models that were launched in 2025. As a result, even under challenging market conditions, we expect to increase Business Unit net sales by 1.5%.

CANON ANNUAL REPORT 2025 15

MEDICAL GROUP

CT systems that deliver high-resolution images, but also reduces the strain on patients with less radiation exposure

Expanding sales in the U.S. and emerging markets and accelerating growth through launch of next-generation CT system and business reforms

Enhanced global presence, introducing next-generation CT system, expanding sales channels in emerging markets, and enhancing recognition in the U.S.

16 CANON ANNUAL REPORT 2025

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Performance in 2025

Secured orders for diagnostic imaging systems in the U.S. and achieved steady sales growth by also expanding sales in emerging markets

As for diagnostic imaging equipment, including CT, MRI, and diagnostic X-ray systems, we increased sales in the United States, a key market for our growth, by gaining orders from major hospitals, ranked among the top ten in the world. Sales also grew steadily in emerging markets, particularly in Latin America and Asia. In April, we launched the Aquilion Rise, a multi-position CT system that enables patient imaging not only in the conventional couch (supine) position, but also in standing and sitting positions. We are also preparing for the introduction of Photon Counting CT, our next-generation CT system.

Going forward, we aim to achieve further sales growth through groundbreaking new products. The Medical Business Innovation Committee, which was launched

in 2024, is making steady progress in its efforts to improve profitability. In April 2026, Canon Medical Systems Corporation will be integrated into Canon Inc., and under this new structure, we plan to advance to the next stage and accelerate our efforts to innovate this business.

As a result, on a consolidated basis, sales for this Business Unit increased by 2.1% to 580.6 billion yen in comparison to the previous term.

Net Sales

(Billions of yen)

600

553.8 568.8

580.6

300

0

2023 2024 2025

Toward Further Growth

Preparing groundbreaking new products and expanding sales of CT and other large-size systems to drive sales growth

Through innovative new products, such as the Aquilion Rise, a multiple position CT system launched in April that can image a patient in a standing or sitting position, and Photon Counting CT, our next-generation CT technology, which

we are preparing to launch, we aim to achieve further sales growth. In emerging markets, we will continue to grow, mainly through sales channel expansion. In the United

States, which is a key region, recognition of our products in the medical industry has been increasing through papers and presentations at academic conferences by influential and prominent physicians. As a result, we expect to achieve double digit growth, particularly in large systems such

as CTs, and aim for a full-year sales increase of 6.1% on a global basis.

CANON ANNUAL REPORT 2025 17

IMAGING GROUP

Canon's mirrorless cameras support photographers with high-precision AF, high image quality, and high reliability

Achieved sales growth in interchangeable-lens digital cameras and digital compact cameras driven by new products, and maintained strong sales of network cameras

Interchangeable-lens digital camera sales continued to grow, driven by strong demand for popular entry-level models. Network camera sales also grew in response to rising demand

18 CANON ANNUAL REPORT 2025

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Performance in 2025

Interchangeable-lens digital camera sales grew, driven by strong demand for entry-level models and launch of two new products

As for interchangeable-lens digital cameras, we expanded sales, particularly of entry-level models, amid an increase in camera users, especially young people. We boosted sales through the launch of new mirrorless cameras, namely the EOS R50 V, in April, and the EOS R6 Mark III, a core model for advanced amateurs, in November, and also through

an increase in production of compact digital cameras, for which demand is growing, particularly among young people. As for network cameras, the market continues to grow,

driven mainly by the security sector. Leveraging our strong sales channels in Europe and the United States, we firmly captured expanding demand. Through this, we significantly increased sales of both network camera hardware and software to achieve double-digit full-year sales growth again this year.

As a result, on a consolidated basis, sales for this Business Unit increased by 12.5% to 1,054.9 billion yen in comparison to the previous term, exceeding the 1 trillion-yen mark.

Net Sales

(Billions of yen)

1,000

861.6

937.4

1,054.9

500

0

2023 2024 2025

Toward Further Growth

Continued growth in camera sales driven by popularity of entry-level interchangeable-lens digital cameras among young people and new full-frame models

Starting with cameras, we will continue to increase sales of entry-level interchangeable-lens digital cameras like the

EOS R50 V, the EOS R50 and the EOS R100, which are popular among new camera users, particularly young people. We also plan to increase sales of full-frame models, with focus on the new EOS R6 Mark III, which was launched in the second half of last year. As for digital compact cameras, sup-

ported by strong demand, we will expand sales by further increasing production and plan to increase camera business net sales overall by 8%. As for network cameras, supported by market growth, driven by expanding demand for security, and other applications, we expect to grow our full-year sales by 7.6% and aim to increase Business Unit net sales by 7.8%.

CANON ANNUAL REPORT 2025 19

INDUSTRIAL GROUP

Lithography equipment for advanced back-end process applications that contribute to high integration of semiconductor devices

Achieved strong sales growth of lithography equipment for advanced back-end process applications and making steady progress in evaluation of next-generation systems for mass production

Strong demand from AI data centers driving equipment growth for memory devices. Aim for sales growth through KrF equipment, while accelerating the evaluation and verification of nanoimprint for mass-production

20 CANON ANNUAL REPORT 2025

STRATEGY

BUSINESS STRATEGY

ESG

FINANCIAL OVERVIEW

FINANCIAL SECTION

CORPORATE DATA

Performance in 2025

AI demand drives sales expansion of semiconductor lithography and sputtering equipment for advanced back-end process applications

As for semiconductor lithography equipment, supported by strong AI-related demand, we posted a large increase in the sales of our equipment used in back-end process applications, which set the industry standard for leading-edge semiconductor packaging. We also increased sales of sputtering and other equipment for use in the production of HBM (High Bandwidth Memory) and other advanced semi-

conductor devices. As for Nanoimprint, our next-generation semiconductor manufacturing equipment, we are already shipping systems to customers, and the on-site evaluation

of this equipment for use in mass production is progressing smoothly.

For FPD (Flat Panel Display) lithography equipment, as the earnings of panel manufacturers improved, there was an increase in new investment for IT panels installed in notebook PCs and tablets, as well as additional investment for smartphones with increasingly high functional capabilities. This led to an increase in unit sales. As a result, on a consolidated basis, sales for this Business Unit increased by 2.7% to 361.1 billion yen in comparison to the previous term.

Net Sales

(Billions of yen)

400

0

200

314.7

351.7

361.1

2023 2024 2025

* In order to manage the performance of each reportable segment more appropriately, Canon has changed its performance management method regarding intercompany transactions for Industrial Business Unit from the beginning of the first quarter of 2025. Operating results for the year ended December 31, 2024 have also been reclassified.

Toward Further Growth

Expand sales of KrF equipment while commercializing nanoimprint-based wafer planarization technology to broaden its application

As for the semiconductor lithography equipment market, in 2025, demand for power semiconductor devices decreased due to a slowdown in EV demand. However, as demand

for AI data centers continues to grow, we expect growth in 2026, particularly for equipment used in the manufacturing of memory devices.

In 2026, we expect the sales of i-line equipment for power semiconductor devices for automotive applications to decline, largely due to the slowdown in EV demand.

However, supported by strong AI demand, there has been a significant increase in business negotiations for equipment used in the manufacturing of memory devices. Accordingly,

we aim to achieve sales growth by selling 71 KrF units, which is 25 units more than last year.

As for Nanoimprint, our next-generation semiconductor manufacturing equipment, the specifications of equipment that was shipped to major semiconductor manufacturers were confirmed. We are now working to further accelerate the evaluation and verification of this equipment for use in mass production. In addition, we announced a technology that leverages our expertise in nanoimprint lithography to flatten wafer surface topography with high precision and are working to expand its application.

CANON ANNUAL REPORT 2025 21

RESEARCH & DEVELOPMENT

Thermal airflow simulation of CT systems

Canon seeks to solve issues in society through innovation. In addition, the company actively promotes research and development through its distinctive development framework and continues to diversify its business portfolio

Canon's R&D

Canon, founded in 1937 as a camera manufacturer, started to expand its business domains from the 1960s to office equipment, optical devices, and medical equipment. Today, we operate in four industry-oriented groups: Printing,

Top 10 companies by number of US patents obtained in 2025

Medical, Imaging, and Industrial.

Canon, which started out as a camera manufacturer, has promoted the diversification of its business in line with the needs of the times, centered on optical technology, and has expanded its business fields to include office equipment and optical products. Today, Canon operates in four industry-oriented groups: Printing, Medical, Imaging, and

Samsung Electronics

TSMC*

Qualcomm Huawei Technologies Samsung Display

Dell Products LG Electronics

2,301

2,284

3,052

2,859

4,194

3,749

7,054

Industrial. During this period, management and R&D have been working together to develop technology management and build an optimal R&D system.

Although Canon is composed of various businesses, we continue to grow as one unified company thanks to a system that enables us to make use of our accumulated technologies across the entire Group. The Canon

Group's technologies are classified into Technologies that

* TSMC is an abbreviation for Taiwan Semiconductor Manufacturing Company Limited Source: Numbers of patents based on figures released by IFI CLAIMS Patent Services (as of January 16, 2026).

go into products (Core Competency Technologies and

Fundamental Technologies), Technologies that support

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products (Value Creation Technologies), and Technologies that commercialize products.

This development environment, in which we are able to combine technologies to create synergies, is also effective in integrating newly acquired technologies and those of companies acquired through M&A, serving as a driving force for Canon's continuing evolution and creation of new value.

In 2025, R&D expenses amounted to 339.3 billion yen,

which equals 7.3% of net sales. Our focus on R&D has also helped us cement our leading position in the intellectual property field. Canon was granted 2,623 patents in the U.S. in 2025, ranking it seventh in the world.

Among the companies that have continually maintained a position within the global top 10, Canon currently holds the record for the longest duration-42 consecutive years.

Efforts to Develop and Expand Latest Technologies

Developed new material to solve perovskite solar cell issues

Canon has developed new material that addresses the challenges of perovskite solar cells, which are gaining attention as next-generation solar cells. Perovskite solar cells are lightweight, bendable, and can generate electricity even from indoor lighting, thereby offering a greater degree

of freedom in installation than silicon solar cells. In addition, they are expected to reduce capital investment costs because they do not require large-scale manufacturing equipment. On the other hand, the crystal structure of the perovskite layer (photoelectric conversion layer) is susceptible to the effects of mainly moisture, heat, and oxygen in the atmosphere, resulting in low durability. Furthermore, stable volume production of perovskite solar cells with large surface areas has shown to be problematic. By applying the

materials technology it cultivated through the development of photosensitive members, a key component of multifunction office devices and laser printers, Canon has developed a high-performance material to protect the photoelectric conversion layer and improve durability.

R&D of new material to solve perovskite solar cell issues

Developing fundamental technologies for iPS cell production

Canon is developing fundamental technologies to automate the iPS cell production process. Leveraging its expertise in manufacturing process technologies and quality control, Canon is working jointly with the CiRA Foundation to develop automated production processes. Based on its proprietary optical technologies and image processing and analysis technologies, it is also working to develop

technologies that enable the continuous monitoring of the condition of iPS cells during the cultivation process and ensure the stable production of high-quality iPS cells. Through these initiatives, it will help bring about a society where high-quality iPS cells and the regenerative medicine prod-

ucts derived from them can be produced at a lower cost and made available to more patients.

R&D of iPS cells in regenerative medicine field

PRODUCTION & QUALITY

Product evaluation testing of the EOS R1

Canon is building a quality management system to provide customers with products and services of surpassing quality.

While striving to further enhance our production-engineering technology, we are developing human resources with outstanding technical skills

Quality Control

In 1964, Canon determined that its basic quality concept is to ensure that customers have "no claims, no trouble," and has since striven to earn the trust and heartfelt satisfaction of customers around the world by providing products and services of surpassing quality.

Based on this mindset, the Canon Group's firm commitment is to adhere to the Canon Quality motto that incorporates the three keywords "Safety + Smartness + Satisfaction"

-the elements we view as essential to product and service quality.

At Canon, we have developed an in-house quality management system that we follow assiduously. The system has three defining characteristics, as outlined below.

1. Fulfills all the requirements of the international quality assurance standard ISO 9001*1

2. Incorporates the concept of "substantial safety*2" as stan-

   dard for quality management

3. Introduces a framework for checking quality in product commercialization processes to ensure reliable product safety standards*3

Using our in-house quality management system as a base, the various Headquarters divisions at Canon implement rigorous quality control by building quality assurance (QA) systems that are optimized for the characteristics of each business, as well as in compliance with the legal and regulatory standards of each country and region.

Under Canon's quality governance set-up, the quality assurance division within each business

division works independently of the development and manufacturing divisions. The Global Quality Management Office, a separate entity reporting

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directly to the CEO, also oversees quality assurance activities by each business division.

In addition, Canon employs a range of measures to instill high employee awareness of the need to maintain outstanding quality and attain further quality improvements, and to help employees gain related knowledge.

We continually communicate our basic concept and motto on quality, while also conducting annual Group-wide surveys of employees to ascertain the degree of quality awareness.

*1 The in-house regulations governing Canon's quality management system have been recognized by the International Register of Certificated Auditors (IRCA) as an alternative standard to ISO 9001 since 2017.

*2 This means safety not only in terms of what is required by laws and statutes, but also any safety issue that can reasonably be expected to arise during customer use even if not regulated or mandated by law.

*3 This involves setting QA standards that must be satisfied for each of the stages in the development of Canon products from development and design to production and shipping. At each checkpoint along the development path, the QA framework

requires a decision on whether the QA standard is satisfied to ensure rigorous control of product quality.

Quality Governance Framework

CEO

Business divisions

GM of Global Quality Management Office

Quality information report Meetings of QA Representatives of Each Business, Group-wide activities

1. Communication and enforcement of Group-wide policies and rules

2. Sharing and discussions of, and responses to, Group-wide situations

3. Sharing of examples of activities

Systems for Responding to Quality Issues

Should a quality issue arise, Canon has systems in place to promptly and appropriately investigate the cause, repair products free of charge, and disclose quality information.

In the event of a quality problem, our marketing companies in each country or region, which serve as the contact point for customers, file a report with the quality assurance division of the respective Canon Inc. Headquarters division (products operations). The quality assurance division then in-

vestigates the cause of the issue as well as countermeasures. Moreover, in the event of a major issue, related

Headquarters divisions (products operations), the Global Quality Management Office, the Legal Division, and Public Relations Division are consulted concerning response measures, and after the matter is reported to the CEO, action is promptly taken.

Process for Response to Quality Issues

Canon

Canon Inc.

Inquiry

Report countermeasures

Approval

Response

When Critical

Quality Issues occur, hold conference

to determine countermeasures

Information

disclosure Report

• Legal division

• Public relations division, etc.

Instructions

for response

Information disclosure

Customer

Marketing subsidiaries in each country or region

Critical Quality Issues

PRODUCTION & QUALITY

Productivity Improvements Through Automation and In-House Production

Canon aims to achieve further production efficiency by leveraging technologies cultivated in different businesses regardless of divisions and by collaboration among design, production engineering, and manufacturing sites, to refine its automation and in-house production technologies. In addition to key devices and components, we are also actively pursuing in-house production of production equipment and molding dies. Following toner cartridges, we have rolled out automated production lines for cameras and interchangeable lenses to further enhance productivity.

Automated production process for interchangeable lenses

Development of Human Resources: Master Craftsmen and Meisters

To further enhance its manufacturing capabilities, Canon is actively engaged in the development of technicians to support production. We are also focused on nurturing our most skilled technicians in specific fields, known as Master Craftsmen, and those who contribute to the advancement of manufacturing with their wide-ranging skills and knowledge of mainly assembly and component processing, known as Meisters. These technicians contribute to the improvement of Canon's

production-engineering technology and play an active role at the front line of production by passing on the skills they have honed over the years to the next generation.

Canon's Master Craftsmen with exceptional skills also nurture young talent

Participation in the National Skills Competition

At Canon, we believe that the development of human resources is fundamental to manufacturing, which is why we have long been committed to training skilled workers and engineers. In addition, as part of our efforts to train young skilled workers, we have participated in the National Skills Competition, a competition for young skilled workers in Japan (generally under 23 years of age) since the 43rd competition in 2005. In 2025, eight participants from the Canon Group competed in four categories, winning a total of three awards: one bronze medal and two Fighting Spirit awards.

Young engineers entering competitions to further hone their technique

E S G

28 ENVIRONMENT

32 SOCIAL

35 GOVERNANCE

CANON ANNUAL REPORT 2025 27

ENVIRONMENT

Remanufacturing of office MFDs

Providing products and services that further enrich people's lives while also reducing environmental impact

Basic Approach

In 2008, Canon formulated an environmental vision called "Action for Green." In keeping with this vision, we aim to realize a society in which affluent lifestyles and the global environment coexist. With this goal in mind, we are providing products and services that further enrich people's lives and are working to reduce environmental impact by employing measures across the entire product lifecycle. Our focus is on four key areas: (1) climate change; (2) resource efficiency;

(3) chemical substances; and (4) biodiversity. In particular, we endeavor to take heed of, and reduce, CO2 emissions

and other environmental impacts not only in our own business activities such as development, production, and sales, but also at each stage of a product's lifecycle, including those of suppliers and customers. To further accelerate these activities, we have established the Group-wide slogan "Minimum Energy 360," which reflects our commitment to minimize energy use in every direction (360˚). Through this initiative, we aim to foster a heightened level of environmental awareness among all employees.