Canon Inc. Second Quarter 2018 Results

Transcription

1 Canon Inc. Second Quarter 2018 Results July 26, 2018 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 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 20-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.

2 Agenda 2018 Results P2 5 FY 2018 P6 11 Details by Business ( 2018 Results & FY 2018 ) P12 18 Financial Situation P19 20 Supplementary Information P

3 Key Message ( 2018 Results) Sales and profit growth, improved profitability Sales and profit growth in 1H as well, driven by new products net sales exceeds one trillion yen for first time in 10 years, since 2008 Existing Businesses Sales of lithography equipment remain strong Sales of office equipment also growing New Businesses Medical returns to net sales growth, all new businesses grew 2

4 FY 2018 Financial Results ( 2018 versus 2017 ) Compared to last year (pre-reclassification basis): Returned to sales and profit growth, achieved an operating profit ratio exceeding 10% Service Cost FY 2018 FY 2017 Pension (Pre-reclassification) Pension (Pre-reclassification) % Change (Pre-reclassification) Net Sales 1, , % Gross Profit % (% of Net Sales) 47.2% 50.0% 49.9% 49.9% Op. Expenses Op. Profit % (% of Net Sales) 9.7% 10.2% 9.5% 9.7% Non-operating Income IBT % Net Income % (% of Net Sales) 7.7% 7.7% 7.0% 7.0% USD EURO Note 1: Note 2: In 2018, a reclassification of service revenue related costs and expenses was conducted. In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 3

5 FY 2018 Financial Results by Business Unit ( 2018 versus 2017 ) Amid a decline in Imaging System, Office and Industry & Others contributed significantly to overall performance in terms of both sales and profit Note: Office % Change Net Sales % Op. Profit % Imaging Net Sales % System Op. Profit % Medical Net Sales % System Op. Profit ,027.3% Industry & Net Sales % Others Op. Profit % Corporate & Net Sales Eliminations Op. Profit Total Net Sales 1, % Op. Profit % In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 4

6 FY 2018 Operating Profit Analysis ( 2018 versus 2017 ) Sales volume: Impact from lower camera volume absorbed by Industry & Others BU Price reduction: Efforts made to keep it at a lower level than last year FX Details Net Sales: Cost of Sales: Op. Expenses: Change in Net Sales, excluding FX impact, for reference Office: +2.3 Imaging System: Medical System: +6.1 Industry & Others: Total: +6.9 Service Reclassification Impact Note: In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 5

7 Key Message (FY 2018 ) FX Assumptions Impact of exchange rate movement (2H impact given a one yen change) 2H 2018 FY 2018 Net Sales Op. Profit USD/Yen yen yen 7.5 billion yen 2.7 billion yen EUR/Yen yen yen 3.4 billion yen 1.6 billion yen External Environment Risk of trade friction, but expect modest global economic expansion to continue FY 2018 Outlook Accelerate sales of new products through various sales initiatives Enhance profitability through cost reduction and expense review Continue to aim for second consecutive year of sales and profit growth 6

8 FY 2018 Financial (FY 2018 Current versus FY 2017 ) Second highest level of net sales since 2007 Project all profit margins to improve compared to last year FY 2018 FY 2017 Current Current Service Full year % Change Pension Pension Cost (Pre-reclassification) (Pre-reclassification) (Pre-reclassification) Net Sales 4, , , , % Gross Profit 1, , , , % (% of Net Sales) 46.3% 49.2% 48.8% 48.8% Op. Expenses 1, , , ,661.2 Op. Profit % (% of Net Sales) 9.2% 9.6% 7.9% 8.1% Non-operating Income IBT % Net Income % (% of Net Sales) 6.8% 6.8% 5.9% 5.9% USD EURO Note 1: Note 2: In 2018, a reclassification of service revenue related costs and expenses was conducted. In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 7

9 FY 2018 Operating Profit Analysis (FY 2018 Current versus FY 2017 ) Sales volume: Absorb the impact of lower volumes on Imaging System through sales expansion of mainly new products in each business Price reduction: Same level as last year and absorbed through cost reduction Change in Net Sales, excluding FX impact, for reference Office: Imaging System: Medical System: Industry & Others: Total: FX Details Net Sales: -4.6 Cost of Sales: Op. Expenses: -3.5 Service Reclassification Impact Note: In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 8

10 FY 2018 Financial (FY 2018 Current versus FY 2018 Previous ) Lowered projection for sales and op. profit by 180 and 25.5 billion yen, respectively Average selling price decline mainly due to growth in sales of affordably priced MFDs and cameras Industry & Others impacted by temporary adjustment of overheated OLED investment Current FY 2018 Previous Amount Change Net Sales 4, , Gross Profit 1, , (% of Net Sales) 46.3% 46.1% Op. Expenses 1, , Op. Profit (% of Net Sales) 9.2% 9.4% Non-operating Income IBT Net Income (% of Net Sales) 6.8% 6.5% USD EURO

11 FY 2018 Operating Profit Analysis (FY 2018 Current versus FY 2018 Previous ) Sales volume: Average selling price decline, impact from lower compact camera volumes, revision of medical treatment fees, postponement of industrial equip. investment Maintaining previous projection for price reduction, and taking into account the impact of sharp rise in raw material prices on cost reduction FX Details Net Sales: Cost of Sales: Op. Expenses: Change in Net Sales, excluding FX impact, for reference Office: Imaging System: Medical System: Industry & Others: Total:

12 FY 2018 Financial by Business Unit () Vs. previous projection: Lowered projection for mainly Imaging System and Industry & Others Vs. last year: Sales and profit growth through expanded sales of new products and progress made in cost reduction Office FY 2018 Current FY 2017 % Change FY 2018 Previous Amount Change Net Sales 1, , % 1, Op. Profit % Imaging Net Sales 1, , % 1, System Op. Profit % Medical Net Sales % System Op. Profit % Industry & Net Sales % Others Op. Profit % Corporate & Net Sales Eliminations Op. Profit Total Net Sales 4, , % 4, Op. Profit % Note 1: Note 2: In 2018, a reclassification of service revenue related costs and expenses was conducted. In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. 11

13 Office MFDs : Next-generation color models continue to be the main driver of sales growth Full year: Aiming for market exceeding growth, enhancing support system for dealers 2018 Unit Growth Rate Y/Y imagerunner ADVANCE Gen3 2nd Edition % 2017 % Amount Current Previous Change Change Change MFDs % % LPs % % Others % % Net Sales % 1, , % 1, Op. Profit % % (% of Net Sales) 13.0% 11.9% 12.3% 9.7% 12.1% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year MFDs +0.2% +2.6% LPs +0.3% +0.6% Others -0.2% +3.4% Total +0.1% +2.0% MFDs Full year B&W -8% -1% Color +11% +8% Total +2% +4% Inherits high reliability of current models User authentication, print management etc. offered as standard features Work with external cloud-services 12

14 Office Laser Printers : Achieved increase in overall revenue as sales of consumables returned to positive growth Full year: Maintaining previous projection due to strong hardware sales in 1H LPs Full year % 2017 % Amount Current Previous Change Change Change MFDs % % LPs % % Others % % Net Sales % 1, , % 1, Op. Profit % % (% of Net Sales) 13.0% 11.9% 12.3% 9.7% 12.1% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year 2018 Unit Growth Rate Y/Y MFDs +0.2% +2.6% LPs +0.3% +0.6% Others -0.2% +3.4% Total +0.1% +2.0% B&W +4% 0% Color +3% +8% Total +4% +1% 13

15 Office Others : Grew unit sales of new products designed for graphic arts Full year: Further expand sales through the strengthening of sales organization etc. High-speed Cut Sheet Printer VarioPrint i300 High-speed Continuous Feed Printer ProStream % 2017 % Amount Current Previous Change Change Change MFDs % % LPs % % Others % % Net Sales % 1, , % 1, Op. Profit % % (% of Net Sales) 13.0% 11.9% 12.3% 9.7% 12.1% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year MFDs +0.2% +2.6% LPs +0.3% +0.6% Others -0.2% +3.4% Total +0.1% +2.0% Wide-format UV Inkjet Printer Colorado

16 Imaging System Cameras : Increased market share in each region, driven by new camera "EOS M50" Full year: Increase sales, capturing new users and strengthening sales of advanced amatuer models 2018 Units (Millions) & Unit Growth Rate Y/Y % 2017 % Amount Current Previous Change Change Change Cameras % % IJPs % % Others % % Net Sales % 1, , % 1, Op. Profit % % (% of Net Sales) 13.3% 17.2% 14.9% 15.5% 16.7% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year Full year Units % Change Units % Change New Mirrorless Model EOS M50 Cameras -11.1% -4.4% IJPs -7.0% -1.0% Total -9.5% -3.3% DILCs % % DCs % % 15

17 Imaging System Inkjet Printers : Unit sales below last year due to impact from reviewing sales channels Full year: Aiming to post unit sales growth, strengthening sales of models that fit the special needs of each region Refillable Ink Tank Models G Series % 2017 % Amount Current Previous Change Change Change Cameras % % IJPs % % Others % % Net Sales % 1, , % 1, Op. Profit % % (% of Net Sales) 13.3% 17.2% 14.9% 15.5% 16.7% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year 2018 Unit Growth Rate Y/Y Full year Cameras -11.1% -4.4% IJPs -7.0% -1.0% Total -9.5% -3.3% IJPs -3% +3% 16

18 Medical System : Achieved sales and profit growth, driven by overseas sales Full year: Improving profitability through sales expansion of new products and the pushing forward of measures to raise earnings % 2017 % Amount Current Previous Change Change Change Net Sales % % Op. Profit ,027.3% % (% of Net Sales) 2.0% 0.2% 6.0% 5.2% 5.7% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Full year Total +6.9% +3.2% Ultrasound Aplio i-series MRI Vantage Orian 17

19 Industry & Others : Market for semiconductor litho. equip. remains strong, significant growth in unit sales Full year: Lowered projection for FPD litho. Equip. and OLED vacuum deposition equip. due to impact from temporary adjustment to overheated OLED investment % 2017 % Amount Current Previous Change Change Change Litho. Equip % % Others % % Net Sales % % Op. Profit % % (% of Net Sales) 12.1% 7.6% 8.4% 7.8% 8.3% * In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation Net Sales Growth Rate Y/Y (Local Currency) Lithography Equipment (Units) Full year FY 2017 Full year Litho. Equip % +11.3% Others +14.4% +3.3% Total +15.8% +5.4% IC FPD

20 Inventory Continued to maintain appropriate level of inventory in Compared with the end of June 2017, inventory was basically flat not only in monetary terms, but also in days turnover Compared with the end of March 2018, the inventory increase reflects preparation for the selling period in 2H FY 2017 FY Q 3Q 4Q 1Q Office Imaging System Medical System Industry & Others Amt Days Amt Days Amt Days Amt Days Total Amt Days

21 Cash Flow () Comprehensive cash flow management Planning to invest in growth of new businesses Capital investment within range of depreciation FY 2018 Current FY 2018 Previous FY 2017 Net cash provided by operating activities Net cash used in investing activities Free cash flow Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at end of period Cash-on-hand (In months of Net sales) * Capital expenditure Depreciation * FY 2018 and FY 2017 was calculated using second-half net sales. FY 2018 Previous was calculated using annual net sales. 20

22 Supplementary Information 21

23 Impact of Change in Pension Accounting Standard 22 Reclassification of CoS, SG&A and Other income (deductions) (Full-year impact 9.9 billion yen) No impact on IBT or net income Pension accounting - Pre-standard change Pension accounting - Post-standard change FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 FY 2017 Full year Full year 1Q 3Q 4Q 1Q 3Q 4Q Net Sales , , , ,080.0 Gross Profit , ,990.6 (% of Net Sales) 48.1% 49.9% 48.5% 48.8% 48.8% 48.1% 49.9% 48.4% 48.7% 48.8% Op. Expenses , ,669.0 Op. Profit (% of Net Sales) 7.8% 9.7% 8.1% 7.1% 8.1% 7.5% 9.5% 7.8% 6.8% 7.9% Non-operating Income IBT Net Income (% of Net Sales) 5.7% 7.0% 6.3% 4.9% 5.9% 5.7% 7.0% 6.3% 4.9% 5.9%

24 Net Sales Growth Rate of Hardware & Non-hardware FY 2018 FY 2017 MFDs JPY LC LPs JPY LC IJPs JPY LC Hardware +4% +5% -2% +2% Non-hardware 0% +1% +1% +3% Hardware +3% +5% -4% -2% Non-hardware -2% +1% +1% +1% Hardware -2% 0% +12% +6% Non-hardware +4% 0% +8% +6% Hardware -3% +1% +10% +3% Non-hardware +2% +1% +6% +3% Hardware -4% +4% +4% +11% Non-hardware -6% -3% -5% -2% Hardware -6% +4% +4% +8% Non-hardware -8% -3% -6% -5% 23

25 24 Color Ratio (MFDs & LPs) MFDs LPs FY 2018 FY 2017 Net Sales 59% 60% 58% 58% QTY 59% 57% 54% 55% Net Sales 51% 52% 52% 52% QTY 16% 19% 17% 18% Sales Growth by Monochrome & Color MFDs JPY LC FY 2018 FY 2017 Monochrome 0% -1% -4% -1% Color +3% +5% +3% +5% Monochrome -2% -1% -5% -3% Color +2% +5% +2% +2%

26 25 Interchangeable-Lens Camera Ratio Value Base Unit Base FY 2018 FY % 87% 86% 85% 62% 65% 57% 58% * Value base includes interchangeable lenses IC Stepper Unit Breakdown by Light Source KrF i-line Total FY 2018 FY

27 Second Quarter 2018 Results Supplementary Data Table of Contents Page 1. Segment Information by Business Unit... P1 2. Other Income... P1 3. Net Sales by Region & Business Unit... P2 4. Statements of Cash Flows... P2 5. Foreign Exchange Rate Impact... P3 6. Sales Growth on a Local Currency Basis (Year over Year)... P3 7. R&D Expenditure / Capex / Depreciation & Amoritization... P4 8. Other Financial Data... P4 This document 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 forwardlooking 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 document. A detailed description of these and other risk factors is included in Canon s annual report on Form 20-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 forwardlooking statements.

28 1. Segment Information by Business Unit (Millions of yen) FY 2017 FY 2018 % Change Y/Y 1st Half 1st Half 1st Half Office External customers 470, ,315 1,863, , ,164 1,897, % +0.7% +1.8% Intersegment 479 1,087 2, ,256 2, % +15.5% -10.7% Total sales 470, ,402 1,865, , ,420 1,899, % +0.8% +1.8% Operating profit 55, , ,648 61, , , % +3.2% +29.0% Operating profit ratio 11.9% 12.0% 9.7% 13.0% 12.3% 12.3% Imaging System External customers 282, ,468 1,135, , ,004 1,100, % -8.1% -3.1% Intersegment % +6.1% -0.7% Total sales 282, ,747 1,136, , ,300 1,101, % -8.1% -3.1% Operating profit 48,490 77, ,913 34,766 59, , % -23.5% -6.5% Operating profit ratio 17.2% 14.8% 15.5% 13.3% 12.3% 14.9% Medical System External customers 88, , ,985 94, , , % -3.9% +3.2% Intersegment , , % -55.9% -16.8% Total sales 88, , ,187 94, , , % -3.9% +3.2% Operating profit ,068 22,505 1,939 12,446 27,000 +1,027.3% +23.6% +20.0% Operating profit ratio 0.2% 4.6% 5.2% 2.0% 5.9% 6.0% Industry & Others External customers 151, , , , , , % +15.7% +4.3% Intersegment 21,282 41,642 85,946 25,847 49,490 96, % +18.8% +12.2% Total sales 172, , , , , , % +16.1% +5.2% Operating profit 13,151 21,858 56,788 24,320 42,918 65, % +96.3% +14.5% Operating profit ratio 7.6% 6.5% 7.8% 12.1% 11.0% 8.4% Corporate & Eliminations External customers Intersegment -21,972-43,230-89,992-26,718-51, , Total sales -21,972-43,230-89,992-26,718-51, , Operating profit -23,854-53, ,249-24,925-54, , Operating profit ratio Consolidated External customers 992,473 1,965,234 4,080,015 1,006,387 1,967,099 4,120, % +0.1% +1.0% Intersegment Total sales 992,473 1,965,234 4,080,015 1,006,387 1,967,099 4,120, % +0.1% +1.0% Operating profit 93, , ,605 97, , , % +4.8% +17.7% Operating profit ratio 9.5% 8.5% 7.9% 9.7% 8.9% 9.2% 2. Other Income (Millions of yen) FY 2017 FY 2018 Amount Change Y/Y 1st Half 1st Half 1st Half Interest and dividend, net 1,581 2,612 5,194 1,386 3,081 3, ,894 FX gain (loss) -2,254-3,465-9, ,900 +2,138 +3,762 +6,875 Equity earnings of affiliated cos , , Other, net 6,200 10,688 35,664 10,261 16,532 30,000 +4,061 +5,844-5,664 Total 5,724 10,544 32,279 12,158 20,834 31,500 +6, , Note : In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. - P1 -

29 3. Net Sales by Region & Business Unit (Millions of yen) 1st Half 1st Half 1st Half Japan Office 95, , ,475 94, , % +2.2% - Imaging System 41,287 73, ,944 34,892 63, % -14.4% - Medical System 40, , ,276 38,387 94, % -14.5% - Industry & Others 33,999 67, ,133 35,362 77, % +14.0% - Total 210, , , , , , % -2.9% +2.0% Overseas Office 374, ,899 1,482, , , % +0.4% - Imaging System 241, , , , , % -7.1% - Medical System 48, , ,709 56, , % +6.8% - Industry & Others 117, , , , , % +16.2% - Total 781,576 1,523,770 3,195, ,873 1,538,645 3,217, % +1.0% +0.7% Americas Office 151, , , , , % -2.6% - Imaging System 81, , ,756 71, , % -13.0% - Medical System 20,342 44, ,131 22,619 44, % +1.1% - Industry & Others 21,390 40,669 86,252 27,491 48, % +19.4% - Total 274, ,146 1,107, , ,561 1,116, % -3.5% +0.8% Europe Office 149, , , , , % +2.1% - Imaging System 74, , ,906 71, , % -4.8% - Medical System 15,830 34,119 80,035 15,810 38, % +13.8% - Industry & Others 14,258 29,981 65,649 19,957 37, % +23.9% - Total 253, ,555 1,028, , ,607 1,053, % +2.2% +2.4% Asia & Oceania Office 74, , ,012 79, , % +3.0% - Imaging System 85, , ,978 83, , % -3.6% - Medical System 12,105 31,155 62,543 17,814 33, % +7.4% - Industry & Others 81, , ,724 91, , % +13.8% - Total 253, ,069 1,059, , ,477 1,047, % +4.5% -1.1% Intersegment Office 479 1,087 2, , % +15.5% - Imaging System % +6.1% - Medical System , % -55.9% - Industry & Others 21,282 41,642 85,946 25,847 49, % +18.8% - Eliminations -21,972-43,230-89,992-26,718-51, Total Total Office 470, ,402 1,865, , , % +0.8% - Imaging System 282, ,747 1,136, , , % -8.1% - Medical System 88, , ,187 94, , % -3.9% - Industry & Others 172, , , , , % +16.1% - Eliminations -21,972-43,230-89,992-26,718-51, Total 992,473 1,965,234 4,080,015 1,006,387 1,967,099 4,120, % +0.1% +1.0% 4. Statements of Cash Flows FY 2017 FY 2018 FY 2017 FY 2018 % Change Y/Y (Millions of yen) Amount Change Y/Y 1st Half 1st Half 1st Half Net cash provided by operating activities 141, , , , , ,000-18, ,253-50,557 Net cash used in investing activities -57, , ,010-39,824-89, , , , ,990 Free cash flow 83, , ,547 82,886 75, ,000-1, , ,547 Net cash provided by (used in) financing activities -51, , ,464-48, , ,800 +2,914-9,361 +6,664 Effect of exchange rate changes on cash and cash equivalents 6,898-2,520 6,538 2,656-14,948-18,000-4,242-12,428-24,538 Net change in cash and cash equivalents 39,172 63,633 91,621 36,787-84, ,800-2, , ,421 Cash and cash equivalents at end of period 693, , , , , ,000-56,328-56, ,814 - P2 -

30 5. Foreign Exchange Rate Impact (1) Exchange rates FY 2017 FY st Half 1st Half 2nd Half USD/Yen EUR/Yen (2) Amount of impact on net sales (Year over Year) FY st Half USD EUR Other currencies Total (3) Impact of foreign exchange rate per yen FY nd Half On sales USD 7.5 EUR 3.4 On operating Profit USD 2.7 EUR Sales Growth on a Local Currency Basis (Year over Year) FY st Half Office Japan -0.5% +2.2% - Overseas +0.2% -0.6% - Total +0.1% 0.0% +2.0% Imaging System Japan -15.5% -14.4% - Overseas -8.5% -8.7% - Total -9.5% -9.4% -3.3% Medical System Japan -4.6% -14.5% - Overseas +16.5% +6.1% - Total +6.9% -4.3% +3.2% Industry & Others Japan +4.0% +14.0% - Overseas +18.2% +15.9% - Total +15.8% +15.9% +5.4% Total Japan -3.5% -2.9% - Overseas +1.2% -0.1% - Americas -0.3% -1.1% - Europe -2.9% -3.7% - Asia and Oceania +7.1% +4.8% - Total +0.2% -0.7% +1.1% (Yen) - P3 -

31 7. R&D Expenditure / Capex / Depreciation & Amoritization 1st Half 1st Half (Millions of yen) R&D Expenditure Office 22,808 45,056 91,763 23,079 47,846 - Imaging System 23,054 44,892 91,784 21,008 41,041 - Medical System 7,436 18,612 36,210 9,391 19,301 - Industry and Others 15,835 32,012 68,131 17,517 33,311 - Corporate & Eliminations 12,194 22,849 45,483 5,239 13,655 - Total 81, , ,371 76, , ,000 % of Net Sales 8.2% 8.3% 8.2% 7.6% 7.9% 8.0% Capex 37,191 68, ,542 42,073 75, ,000 Depreciation & Amoritization 64, , ,881 61, , ,000 8.Other Financial Data FY 2017 FY st Half 1st Half ROE * 8.9% 8.6% 9.5% 9.6% ROA * 4.8% 4.7% 5.3% 5.4% EPS - Basic (Yen) EPS - Diluted (Yen) FY 2017 FY 2018 Dec. 31 Jun. 30 Debt Ratio 10.2% 9.6% Number of Employees Japan 73,665 74,450 Overseas 124, ,742 Total 197, ,192 Domestic Production Ratio 62% 62% * Based on Net Income attributable to Canon Inc. FY 2017 FY 2018 Note : In 2018, a reclassification of operating profit and other income (deductions) was conducted due to change in pension accounting standard figures were restated to conform with the current year s presentation. - P4 -