Canon Inc. First Half 2007 Results

Transcription

1 Canon Inc. First Half 27 Results July 26, 27 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.

2 Agenda in Method of Depreciation P3 27 Results & FY 27 Projections P4 5 2Q&1H 27 Results P6 13 2H 27 Projections P14 21 Supplementary Information P

3 in Method of Depreciation Applied new depreciation method that provides a better picture of actual business performance Details Assets Covered: PP&E, including those acquired before 2Q 27 Effective Date: Applicable from 2Q 27 New Method: 25% declining balance method (Straight line method for buildings) (Acquisition cost, depreciated to one yen) Impact on Statement of Income 2Q7 FY7 Current Gross profit Operating profit Net income

4 Summary of Results 2Q 27 Actual & FY 27 Current Projection v. 26 Actual Pct. Predepreciation Postdepreciation Actual Predepreciation Postdepreciation Net sales 1, , , % +9.5% Gross profit % % % +15.% +12.5% 2Q Op. profit Net income % 12.% % 11.% % 1.3% +19.3% +27.6% +7.8% +17.% Yen-1USD Yen-1EURO Net sales 4,58. 4,58. 4, % +1.2% Gross profit 2, % 2,3. 5.2% 2, % +13.9% +11.6% FY Op. profit Net income % 11.8% % 1.9% % 11.% +17.8% +18.6% +8.3% +9.8% Yen-1USD Yen-1EURO

5 Summary of Results 2Q 27 Actual & FY 27 Current Projection v. 27 Previous Projection 27 Pct. Predepreciation Postdepreciation Previous Projection Predepreciation Postdepreciation Net sales 1, , , % +.6% Gross profit % % % +4.1% +1.9% 2Q Op. profit Net income % 12.% % 11.% % 1.6% +8.8% +13.8% -1.7% +4.4% Yen-1USD Yen-1EURO Net sales 4,58. 4,58. 4, % +.9% Gross profit 2, % 2,3. 5.2% 2, % +2.7% +.7% FY Op. profit Net income % 11.8% % 1.9% % 11.1% +5.4% +6.9% -3.% -1.% Yen-1USD Yen-1EURO

6 Transition in and Op. Profit 2Q 27 Actual v. 2Q 27 Previous Projection 2Q 27 Op. Profit Previous Projection (April 24, 27) 1, Foreign exchange impact [net sales, cost of sales, expenses] volume impact USD: 1EURO: in Exchange Rate 117. to yen 155. to yen Office Imaging Products -16. Computer Peripherals Business Information Products -1.5 Cameras +7.6 Optical and Other Products -6. Total Others Total Actual (Pre-depreciation change) 1, Depreciation change impact Actual (Post-depreciation change) 1,

7 Business Machines 2Q&1H 27 Actual 1,5 ( ) Local currency base Operating Profit Op ratio 45 3% 1,2 21.7% 22.4% 22.9% 21.7% 22.9% 23.8% 23.2% %(+4.8%) %(+6.9%) 3 1,447 1, Pre-dep. chg % Post-dep. chg % Pre-dep. chg % Post-dep. chg % % 1% 2Q6 2Q7 2Q7 1H6 1H7 Previous 2Q6 Previous Predep. Chg. 2Q7 Postdep. Chg 1H6 Predep. Chg. 1H7 Postdep. Chg % 7

8 Office Imaging Products 2Q&1H 27 Actual (Unit base) 5 Others ( ) Local currency base 1, Copying machines Color 2Q +24% 1H +19% 4 3 Color Monochrome %(+2.6%) %(+7.2%) %(+2.5%) %(+5.9%) Monochrome (For office use) Total -16% (-2%) -11% -14% (+1%) -1% %(+13.4%) %(+15.8%) Color ratio (Copying machines) 2Q 1H %(-5.%) 2Q6 2Q7 2Q7 25 1H6-1.2%(-6.3%) 1H7 Value base* Unit base 41% 17% *Includes consumables 42% 17% Previous 8

9 5 4 3 Computer Peripherals 2Q&1H 27 Actual Others IJP LBP 33 ( ) Local currency base +14.5%(+7.5%) %(+8.1%) 1, %(+11.9%) %(+7.4%) LBP Color Total (Unit base) Monochrome 2Q +12% +2% +19% Color ratio (LBP) Value base* Unit base 2Q 37% 14% *Includes consumables 1H +43% +39% +4% 1H 36% 15% %(+7.6%) %(+13.8%) IJP SFP MFP (Unit base) 2Q -1% +28% 1H -15% +27% Total +5% +% 2Q6 2Q7 2Q7 Previous 1H6 1H7 MFP ratio (IJP) Unit base 2Q 48% 1H 47% 9

10 Cameras 2Q&1H 27 Actual 6 ( ) Local currency base Operating Profit OP ratio % 26.4% 3% 24.1% 24.9% 26.4% 25.8% 23.6% %(+6.3%) 1 Pre-dep. chg % Post-dep. chg % 2% %(+3.1%) Pre-dep. chg % Post-dep. chg % 1% 2Q6 2Q7 2Q7 1H6 1H7 Previous 2Q6 Previous Predep. Chg. 2Q7 Postdep. Chg 1H6 Predep. Chg. 1H7 Postdep. Chg % 1

11 Cameras 2Q&1H 27 Actual 5 Video cameras Digital cameras ( ) Local currency base %(+6.3%) 52 (Unit base) Digital cameras 2Q +17% 1H +18% 4 Film cameras/lenses +1.8%(+3.1%) %(-15.6%) D SLR ratio* %(-13.6%) +14.3%(+6.2%) %(+9.3%) Value base Unit base 2Q 38% 13% * Percentage of digital cameras sales attributable to SLRs 1H 37% 13% +5.2%(-.8%) +12.5%(+7.%) 2Q6 2Q7 2Q7 1H6 1H7 Previous 11

12 Optical and Other Products 2Q&1H 27 Actual 3 ( ) Local currency base 45 Operating Profit OP ratio Pre-dep. chg % Post-dep. chg. -7.8% 12% 2 3 Pre-dep. chg. -5.5% Post-dep. chg. -6.9% 7.9% 8.5% 6.9% 8% -2.3%(-4.2%) 5.7% 5.3% 5.3% 1-6.4%(-8.8%) % % 2Q6 2Q7 2Q7 1H6 1H7 Previous *Excluding inter-segment sales *Calculation of operating profit margin includes inter-segment sales 12 2Q6 Previous Predep. Chg. 2Q7 3 Postdep. Chg 1H6 Predep. Chg. 1H7 Postdep. Chg %

13 Optical and Other Products 2Q&1H 27 Actual Others SPE IC LCD TTL IC Stepper Unit Breakdown by Light Source 3-6.4% (-8.8%) 2Q7-2.3%(-4.2%) ArF % KrF 32% 21 2 i-line 68% +.1%(-3.8%) Q7 Previous Projection ( ) Local currency base IC Stepper 3mm Ratio (Units) -12.3%(-13.3%) 2Q7 2Q6 2Q7 2Q7 3mm 81% Previous SPE (Unit sales) 2Q6 2Q H6 SPE (Unit sales) 1H6 IC LCD TTL +2.4%(-.8%) -6.6%(-7.3%) H7 1H IC Stepper Unit Breakdown by Light Source ArF KrF i-line 3mm 1H7 % 36% 64% IC Stepper 3mm Ratio (Units) 1H7 79% 13

14 Assumptions 2H 27 Average Exchange Rate 2H7 FY7 FY6 USD 12. yen 12.3 yen yen EURO 16. yen yen yen Impact of Exchange Rate Movement (2H impact given a one yen change) USD EURO Net sales 8.3 billion yen 4.1 billion yen Operating profit 4.8 billion yen 3.2 billion yen 14

15 Summary of Projected Results 27 Current Projection v. 26 Actual 27 Current Projection 26 Pct. Predepreciation Postdepreciation Actual Predepreciation Postdepreciation Net sales 2, , , % +9.5% Gross profit 1, % 1, % 1, % +13.4% +1.2% 2H Op. profit Net income % 11.3% % 1.1% % 1.9% +15.3% +13.5% +2.3% +1.5% Yen-1USD Yen-1EURO Net sales 4,58. 4,58. 4, % +1.2% Gross profit 2, % 2,3. 5.2% 2, % +13.9% +11.6% FY Op. profit Net income % 11.8% % 1.9% % 11.% +17.8% +18.6% +8.3% +9.8% Yen-1USD Yen-1EURO

16 Transition in and Op. Profit 2H 27 Current Projection v. 2H 27 Previous Projection Previous Projection (April 24, 27) 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 Current Projection (Pre-depreciation change) (July 26, 27) Depreciation change impact Current Projection (Post-depreciation change) (July 26, 27) 2, , , H Op. Profit USD: 1EURO: in Exchange Rate 117. to 12. yen 155. to 16. yen 16

17 Office Imaging Products 2H 27 Current Projection 1,25 1, Others Color ( ) Local currency base Monochrome 6 2H6 2H7 2H7 Previous +14.5%(+1.9%) %(+24.3%) +26.8%(+22.6%) +2.1%(-1.3%) Current Copying machines Color Monochrome (For office use) Total (Unit base) Value base* Unit base 2H +2% -8% (+2%) Color ratio (Copying machines) *Includes consumables -4% 2H 45% 19% 17

18 Computer Peripherals 2H 27 Current Projection 1,25 1, ( ) Local currency base Others IJP LBP 752 2H6 2H7 2H7 Previous +7.6%(+4.2%) %(+11.9%) +4.9%(+1.7%) Current LBP Color Monochrome Total (Unit base) Color ratio (LBP) Value base* Unit base *Includes consumables IJP SFP MFP Total 2H (Unit base) MFP ratio (IJP) Unit base +4% +4% +4% 2H 2H 38% 14% -3% +4% +16% 2H 52% 18

19 Cameras 2H 27 Current Projection 1, 75 5 ( ) Local currency base Video cameras Digital cameras Film cameras/lenses %(+6.4%) %(-9.9%) (Unit base) Digital cameras D SLR ratio* Value base 2H +11% 2H 35% +13.5%(+9.5%) Unit base 12% 25 * Percentage of digital cameras sales attributable to SLRs +4.2%(+1.5%) 2H6 2H7 2H7 Previous Current 19

20 Optical and Other Products 2H 27 Current Projection 2H IC Stepper Unit Breakdown by Light Source IC Stepper 3mm Ratio (Units) ArF 2H7 Current 2% 3mm 2H7 Current 87% ( ) Local currency base KrF i-line 28% 7% 4 Others SPE SPE (Unit sales) 2H6 2H7 Previous 2H7 Current IC %(-1.%) %(+12.7%) FY LCD TTL IC Stepper Unit Breakdown by Light Source ArF FY7 Current 1% IC Stepper 3mm Ratio (Units) 3mm FY7 Current 83% 1 KrF i-line 32% 67% 2H6 2H7 2H7 Previous -12.9%(-13.3%) Current SPE (Unit sales) FY6 IC LCD TTL FY7 Previous FY7 Current

21 Operating Profit by Product FY 27 Current Projection v. FY 26 Actual Predepreciation 27 Current Projection Postdepreciation Actual 26 Predepreciation Pct. Postdepreciation Bus. Machines % % % +2.4% +13.2% Cameras % % % +13.4% +11.% Optical & Other 2H Products Corp. & Eliminations Total % 17.6% % 15.6% % 16.7% -15.1% +15.3% -93.4% +2.3% Bus. Machines % % % +18.6% +13.6% Cameras % % % +19.3% +17.2% Optical & Other FY Products Corp. & Eliminations Total % 18.2% % 16.7% % 17.% +.5% +17.8% -45.5% +8.3% 21

22 Supplementary Information 22

23 Summary of Results 1H 27 Actual 1H 27 Actual 1H 26 Pct. Predepreciation Postdepreciation Actual Predepreciation Postdepreciation Net sales 2, , , % +11.% Gross profit 1, % 1, % % +14.5% +13.2% Op. profit % % % +2.6% +14.9% Net income % % % +24.4% +19.1% Yen-1USD Yen-1EURO Supplementary Information 23

24 Summary of Projected Results 3Q 27 Current Projection 3Q 27 Current Projection 3Q 26 Pct. Predepreciation Postdepreciation Actual Predepreciation Postdepreciation Net sales 1,75. 1, % +8.8% Gross profit % % % +14.7% +11.5% Op. profit % % % +17.% +3.7% Net income % % % +12.5% +.4% Yen-1USD Yen-1EURO Supplementary Information 24

25 Transition in and Operating Profit 2Q&1H 27 Actual v. 2Q&1H 26 Actual 2Q 1H Op. Profit Op. Profit 26 Actual 1, , Foreign exchange impact [net sales, cost of sales, expenses] volume impact Office Imaging Products in Exchange Rate (2Q) Computer Peripherals Business Information Products USD: 1EURO: to Yen to Yen Cameras Optical and Other Products Total Others in Exchange Rate (1H) 1USD: 1EURO: to 12.7 Yen to Yen Total Actual (Pre-depreciation change) 1, , Depreciation change impact Actual (Post-depreciation change) 1, , Supplementary Information 25

26 Gross Profit Variance Analysis 2Q 27 Actual v. 2Q 26 Actual 9 Pre-depreciation change Post-depreciation change Gross Profit % sales Gross Profit % sales Q7 2Q % 49.6% +2.5 pt % 49.6% +1.3 pt Forex impact on sales volume impact -38 Price change Forex impact on costs Cost reduction Others Total change in gross profit Dep. change impact Total change in gross profit (Pre-depreciation change) (Post-depreciation change) Supplementary Information 26

27 Operating Profit Variance Analysis 2Q 27 Actual v. 2Q 26 Actual Pre-depreciation change Post-depreciation change Operating Profit % sales Operating Profit % sales 2Q7 2Q % 16.4% +1.4 pt % 16.4% -.3 pt Total change in gross profit in SG&A (excluding forex impact) in SG&A forex impact Total change in operating profit Dep. change impact Total change in operating profit (Pre-depreciation change) (Pre-depreciation change) (Post-depreciation change) Supplementary Information 27

28 Transition in and Operating Profit 2H&FY 27 Current Projection v. 2H&FY 26 Actual 26 Actual 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 27 Current Projection (Pre-depreciation change) (July 26, 27) Depreciation change impact 27 Current Projection (Post-depreciation change) (July 26, 27) 2, , , H Op. Profit FY 4, ,58.. 4,58. Op. Profit in Exchange Rate (2H) 1USD: 1EURO: to 12. Yen 15.3 to 16. Yen in Exchange Rate (FY) 1USD: 1EURO: to 12.3 Yen to Yen Supplementary Information 28

29 Inventories (Days) Interest Bearing Debt 8 Inventories 8 2 Debt 8% Turnover (Days) Debt/Total Assets % % 4% FYE3 FYE4 FYE5 FYE6 2QE %.8%.7%.5% FYE3 FYE4 FYE5 FYE6 2QE7 2% % Supplementary Information 29

30 Capital Expenditure 1, Capex 8 Net income Depreciation Free Cash Flow 1, Operating C/F Free C/F 8 Investing C/F FY4 FY5 FY6 FY7 Projection FY4 FY5 FY6 FY7 Projection [Major Expenditures in 27] New factory (Oita Canon Materials) Production engineering base (Yanagicho, Kawasaki City) Production equipment for inkjet key parts Automated machinery for cartridge production Production equipment for toner Supplementary Information 3

31 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) ,5 1,156 1,181 (Yen) 13.8% (3) 2 Dividends per share Payout ratio (Consolidated basis) 16.8% 15.9% (5) 33 (65) 43 (1) % 24.4% 23.1% (15)* (125) 1 FYE2 FYE3 FYE4 FYE5 FYE6 FYE7 Projection FY2 FY3 FY4 FY5 FY6 FY7 Projection Supplementary Information 31

32 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, 15.9% 16.8% (Pre-dep. chg.: 17.2%) 16.% 16.3% 16.% 2% % 1.1% 1.1% 1.6% (Pre-dep. chg.: 11.5%) 1.7% 15% 1% (Pre-dep. chg.: ) % % FY3 FY4 FY5 FY6 FY7 Projection EPS (Basic) ROE ROA -5% Supplementary Information 32