Canon Inc. First Half 2008 Results

Transcription

1 Canon Inc. First Half 28 Results July 24, 28 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 reflect management s views and assumptions formed by available information. All statements other than statements of historical fact are statements that could be considered forward-looking statements. When used in this document, words such as anticipate, believe, estimate, expect, intend, may, plan, project or should and similar expressions, as they relate to Canon, are intended to identify forward-looking statements. Many factors could cause the actual results, performance or achievements of Canon to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptance of new products or services by Canon s targeted customers, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this presentation. A detailed description of these and other risk factors is included in Canon s annual report on Form 2-F, which is on file with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. Canon does not intend or assume any obligation to update these forward-looking statements. July 24, 28 Canon Inc.

2 Agenda 2Q&1H 28 Results P3 12 2H&FY 28 Projections P13 21 Supplementary Information P22 31 July 24, 28 Canon Inc. 2

3 2Q 28 in Summary (External Environment) Weaker-than-expected business confidence, particularly in developed countries Yen appreciation that exceeded that in the 1Q on a year-on-year basis Higher costs due to steep increases in raw material and oil prices (Achievements) Posted lower net sales and profits, due to external environment Accelerated net sales growth on a local currency basis, evidencing underlying business strength Kept high level of profitability, through aggressive measures to control costs July 24, 28 Canon Inc. 3

4 Summary of Results 2Q&1H 28 Actual Pct. Change Current % % Actual % Actual Net sales 1,15.9 1, , % -1.9% Gross profit % % % -1.9% -5.6% 2Q Op. profit Net income % 9.8% % 9.2% % 11.% +4.6% +5.4% -11.7% -13.% Yen-1USD Yen-1EURO Net sales 2, ,12. 2, % -2.5% Gross profit 1, % 1, % 1, % -1.% -6.% 1H Op. profit Net income % 1.1% % 9.9% % 11.8% +2.2% +2.6% -14.9% -15.9% Yen-1USD Yen-1EURO July 24, 28 Canon Inc. 4

5 Transition in and Op. Profit 2Q 28 Actual v. Projection Projection (April 24, 28) Foreign exchange impact [net sales, cost of sales, expenses] volume impact Office Imaging Products Computer Peripherals Business Information Products Cameras Optical and Other Products Total Others Total Change Actual 2Q 28 Op. Profit 1, , USD: 1EURO: Change in Exchange Rate 1. to yen 157. to yen July 24, 28 Canon Inc. 5

6 Business Machines 2Q&1H 28 Actual 1,5 1,2 ( ) Local currency base Operating Profit OP ratio 45 3% 23.2% 21.7% 21.8% 2.1% 9-4.%(+2.6%) 3 2.7% 2% %(+2.2%) ,447 1, % % % 2Q7 2Q8 2Q8 1H7 1H8 2Q7 2Q8 2Q8 1H7 1H8 % July 24, 28 Canon Inc. 6

7 Office Imaging Products 2Q&1H 28 Actual Others Color Monochrome ( ) Local currency base -4.7%(-.3%) +3.9%(+6.9%) +4.3%(+7.8%) -14.7%(-9.2%) 2Q7 2Q8 2Q8 1, H7 *Figures related to analog personal copying machines, which use to be included in Monochrome, are now included in Others. -5.3%(-1.3%) %(+9.4%) +.3%(+3.4%) -14.4%(-9.4%) 1H8 Copying machines Color Total (Unit base) Monochrome 2Q +6% +8% +7% 1H +12% July 24, 28 Canon Inc. +3% +5% Color ratio (Copying machines) Value base* Unit base 2Q 47% 24% 1H 47% 25% Calculated on a post reclassification basis *Includes consumables 7

8 6 4 2 Computer Peripherals 2Q&1H 28 Actual Others IJP LBP 378 ( ) Local currency base -3.7%(+5.7%) %(+4.2%) -4.9%(+6.2%) 1, %(+6.7%) %(+7.%) -3.9%(+6.7%) LBP Color Total (Unit base) Monochrome 2Q +18% +8% +9% Color ratio (LBP) Value base* Unit base IJP 2Q 4% 15% *Includes consumables +11% 1H (Unit base) 2Q +8% % +1% 1H 39% 16% 1H +1% 2Q7 2Q8 2Q8 1H7 1H8 July 24, 28 Canon Inc. 8

9 Cameras 2Q&1H 28 Actual ( ) Local currency base +4.5%(+12.2% +1.9%(+9.%) Operating Profit 25.8% % 21.5% Op ratio -12.9% 26.4% % -18.% 113 3% 2% 1% 2Q7 2Q8 2Q8 1H7 1H8 2Q7 2Q8 2Q8 1H7 1H8 % July 24, 28 Canon Inc. 9

10 Cameras 2Q&1H 28 Actual 5 Video cameras Digital cameras ( ) Local currency base 9 (Unit base) Digital cameras 2Q +14% 1H +16% 4 3 Film cameras/lenses +4.5%(+12.2%) %(+22.3%) +1.9%(+9.%) %(+8.4%) D SLR ratio* Value base 2Q 45% 1H 42% %(+9.%) 3 +.2%(+7.%) Unit base 15% * Percentage of digital cameras sales attributable to SLRs 14% 2Q7 2Q8 2Q %(+22.9%) +1.3%(+18.9%) 1H7 1H8 July 24, 28 Canon Inc. 1

11 Optical and Other Products 2Q&1H 28 Actual 3 ( ) Local currency base Operating Profit OP ratio 4 6.9% 8% 2 3 6% 4.1% -2.8%(+.3%) 2 4% 1 -.3%(+2.6%) Q7 2Q8 2Q8 1H7 1H % %.1% 2Q7 2Q8 2Q % 2% -74.2% 6 1H7 1H8 % *Excluding inter-segment sales *Calculation of operating profit margin includes inter-segment sales July 24, 28 Canon Inc. 11

12 Optical and Other Products 2Q&1H 28 Actual Others SPE %(+2.6%) %(+6.4%) -3.5%(-1.3%) 2Q7 2Q8 2Q8 SPE (Unit sales) 2Q7 IC LCD TTL ( ) Local currency base IC Stepper Unit Breakdown by Light Source 2Q8 Projection ArF Dry KrF i-line 2Q Q H7-2.8%(+.3%) SPE (Unit sales) 1H7 IC LCD TTL +3.5%(+6.9%) -9.%(-6.4%) H8 1H IC Stepper Unit Breakdown by Light Source ArF Dry KrF i-line July 24, 28 Canon Inc. 1H

13 Assumptions 2H 28 Average Exchange Rate 2H8 FY8 FY7 USD 15. yen yen yen EURO 165. yen yen yen Impact of Exchange Rate Movement (2H impact given a one yen change) USD EURO Net sales 9.4 billion yen 4. billion yen Operating profit 5.5 billion yen 3.1 billion yen July 24, 28 Canon Inc. 13

14 Key Points 2H&FY 28 Assumptions Longer than expected economic slump, mainly in developed countries. Continued strong yen and high price for raw materials and oil Projections Accelerate contribution of new products Drive additional thorough cost reduction and expense savings Overcome challenging environment and achieve ninth consecutive year of sales and profit growth July 24, 28 Canon Inc. 14

15 Summary of Projected Results 2H&FY 28 Current Projection Pct. Change Current % % Actual % Actual Net sales 2, ,45. 2, % +7.% Gross profit 1, % 1, % 1, % -.2% +7.% 2H Op. profit Net income % 11.5% % 11.9% % 1.1% -1.6% -1.9% +19.4% +22.5% Yen-1USD Yen-1EURO Net sales 4,59. 4,57. 4, % +2.4% Gross profit 2, % 2, % 2, % -.6% +.6% FY Op. profit Net income % 1.9% % 1.9% % 1.9%.%.% +1.8% +2.4% Yen-1USD Yen-1EURO July 24, 28 Canon Inc. 15

16 Transition in and Op. Profit 2H&FY 28 Current Projection v. Projection 2H FY Op. Profit Op. Profit 28 Projection (April 24, 28) 2, , Foreign exchange impact [net sales, cost of sales, expenses] volume impact Office Imaging Products Change in Exchange Rate (2H) 1USD: 1EURO: 1. to 15. Yen 157. to 165. Yen Computer Peripherals Business Information Products Cameras Optical and Other Products Change in Exchange Rate (FY) 1USD: 1EURO: 11.5 to Yen to Yen Total Others Total Change Current Projection (July 24, 28) 2, , July 24, 28 Canon Inc. 16

17 Office Imaging Products 2H&FY 28 Current Projection 1,25 1, Others Color Monochrome ( ) Local currency base +.7%(+3.3%) XXX 2H7 2H8 2H %(+6.9%) +7.4%(+9.4%) -7.%(-3.5%) Current 1,5 1,25 1, ,291 1,29 FY7 FY8 FY8 *Figures related to analog personal copying machines, which use to be included in Monochrome, are now included in Others. -2.2%(+1.%) 1, %(+8.1%) +4.%(+6.5%) -1.7%(-6.5%) Current Copying machines Color Monochrome Total Value base* Unit base (Unit base) 2H 49% 25% 2H +12% -4% -1% Color ratio (Copying machines) FY July 24, 28 Canon Inc. FY +12% 48% 25% -1% +2% Calculated on a post reclassification basis *Includes consumables 17

18 1,25 1, Computer Peripherals 2H&FY 28 Current Projection Others IJP LBP ( ) Local currency base +6.6%(+13.3%) %(+9.7%) +6.4%(+14.8%) 2, 1,5 1, 5 1, %(+1.%) 1,544 1, %(+8.5%) +1.2%(+1.7%) LBP Color Total IJP (Unit base) Monochrome 2H +33% +1% +5% Color ratio (LBP) Value base* Unit base 2H 42% 16% *Includes consumables (Unit base) 2H +7% FY +19% +3% FY FY % 4% 16% +8% 2H7 2H8 2H8 Current FY7 FY8 FY8 Current July 24, 28 Canon Inc. 18

19 Cameras 2H&FY 28 Current Projection 1,25 1, Video cameras Digital cameras Film cameras/lenses ( ) Local currency base +9.2%(+13.7%) +9.2%(+13.7%) 2H7 2H8 2H %(+22.1%) +5.1%(+9.4%) Current 1,5 1,25 1, ,153 1, %(+11.5%) FY7 FY8 FY8 (Unit base) 2H Digital +23% cameras 1, %(+15.7%) D SLR ratio* +5.1%(+1.7%) +7.4%(+13.7%) Current Value base Unit base 2H 49% 16% * Percentage of digital cameras sales attributable to SLRs FY +2% FY 46% 15% July 24, 28 Canon Inc. 19

20 Optical and Other Products 2H&FY 28 Current Projection IC LCD TTL Others SPE H7 2H8 2H8 SPE (Unit sales) 2H7 IC Stepper Unit Breakdown by Light Source ( ) Local currency base +26.7%(+28.8%) %(+18.4%) +4.9%(+42.7%) Current 2H ArF Immersion ArF Dry KrF i-line 2H8 Current H IC LCD TTL FY7 FY8 FY8 SPE (Unit sales) +11.7%(+14.2%) FY %(+12.9%) +13.5%(+15.8%) Current FY IC Stepper Unit Breakdown by Light Source ArF Immersion ArF Dry KrF i-line FY8 Current July 24, 28 Canon Inc. FY

21 Operating Profit by Product 2H&FY 28 Current Projection 28 Current Projection 27 Pct. Change Current % % Actual % Actual Bus. Machines % % % -1.1% +9.9% Cameras % % % -5.3% +8.5% 2H Optical & Other Products % % % -23.6% Corp. & Eliminations Total % % % -1.6% +19.4% Bus. Machines % % % -1.6% -.2% Cameras % % % -3.6% -3.4% FY Optical & Other Products % % % -31.4% +49.% Corp. & Eliminations Total % % %.% +1.8% July 24, 28 Canon Inc. 21

22 Supplementary Information July 24, 28 Canon Inc. 22

23 2Q 28 and profit (excluding foreign exchange impact) 2Q 28 Actual Foreign exchange impact Actual (excluding forex Impact) 2Q 27 Actual Net sales 1, , ,126.9 Gross profit [% sales] 49.% 5.3% 5.9% Op. profit [% sales] 14.5% 16.6% 16.1% Foreign exchange rate Yen 1USD Yen 1EURO Supplementary Information July 24, 28 Canon Inc. 23

24 Transition in and Operating Profit 2Q&1H 28 Actual v. 2Q&1H 27 Actual 2Q 1H Op. Profit Op. Profit 27 Actual 1, , Foreign exchange impact [net sales, cost of sales, expenses] volume impact Change in Exchange Rate (2Q) Office Imaging Products Computer Peripherals USD: 1EURO: to Yen to Yen Business Information Products Change in Exchange Rate (1H) Cameras Optical and Other Products USD: 1EURO: 12.7 to Yen to Yen Total Others Total Change Actual 1, , Supplementary Information July 24, 28 Canon Inc. 24

25 Gross Profit Variance Analysis 2Q 28 Actual v. 2Q 27 Actual 9 Gross Profit % sales 2Q % 2Q % Change pt Forex impact on sales volume impact Price change Forex impact on costs Supplementary Information Cost reduction Others Total change in gross profit July 24, 28 Canon Inc. 25

26 Operating Profit Variance Analysis 2Q 28 Actual v. 2Q 27 Actual 6 Op. Profit % sales 2Q % 2Q % Change pt Total change in gross profit Change in SG&A (excluding forex impact) Change in SG&A forex impact Total change in operating profit Supplementary Information July 24, 28 Canon Inc. 26

27 Transition in and Operating Profit 2H&FY 28 Current Projection v. 2H&FY 27 Actual 2H FY Op. Profit Op. Profit 27 Actual 2, , Foreign exchange impact [net sales, cost of sales, expenses] volume impact Office Imaging Products Change in Exchange Rate (2H) 1USD: 1EURO: to 15. Yen to 165. Yen Computer Peripherals Business Information Products Cameras Optical and Other Products Change in Exchange Rate (FY) 1USD: 1EURO: to Yen to Yen Total Others Total Change Current Projection (July 24, 28) 2, , Supplementary Information July 24, 28 Canon Inc. 27

28 Inventories (Days) Interest Bearing Debt 8 Inventories Turnover (Days) 8 15 Debt Debt/Total Assets 6% % FYE4 FYE5 FYE6 FYE7 2QE % 39.8%.7% %.6% FYE4 FYE5 FYE6 FYE7 2QE8 2% % Supplementary Information July 24, 28 Canon Inc. 28

29 Capital Expenditure 1, Capex 75 Net income Depreciation Free Cash Flow 1, Operating C/F Free C/F 75 Investing C/F FY5 FY6 FY7 FY8 Projection FY5 FY6 FY7 FY8 Projection [Major Expenditures in 28] New factory (Oita Canon Materials) Production engineering base (Yanagicho, Kawasaki City) Automated machinery for cartridge production Production equipment for toner New factory building (Canon Precision) Supplementary Information July 24, 28 Canon Inc. 29

30 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, 26) 1,156 1, % 43 (65) Dividends per share (Yen) Payout ratio (Consolidated basis) 23.1% 67 (1) 24.4% 83 (125) 28.8% 27.7% (165) (165) FYE4 FYE5 FYE6 FYE7 FYE8 Projection *Approx. 45 billion yen used to purchase own shares in FY27 FY4 FY5 FY6 FY7 FY8 Projection Supplementary Information July 24, 28 Canon Inc. 3

31 Financial Ratios * Common stock held by stockholders as of June 3, 26, were split on a 3-for-2 basis. EPS (Basic) has been adjusted to retroactively reflect the forward stock split. (Yen) 1, % 16.8% 16.% 16.3% 16.5% 16.4% 9.% 1.1% 1.1% 1.6% 1.8% 1.8% FY3 FY4 FY5 FY6 FY7 FY8 EPS (Basic) ROE ROA Projection 2% 15% 1% 5% % -5% Supplementary Information July 24, 28 Canon Inc. 31