Canon Inc. Results January 30, 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.
Agenda Results P2-7 FY 2018 P8-12 Details by Business ( Results & FY 2018 ) P13-19 Financial Situation P20-21 Supplementary Information ( / 4Q 2017 Results) P22-31 1
Key Message ( Results) Sales and profit growth, first time in 4 years Made further progress in transforming business structures through recovery of existing businesses and expansion of new ones Existing Businesses Achieved sales and profit growth in all businesses, thoroughly strengthened profitability New Businesses Strong expansion via creation of 4 new businesses Doubled sales, includes benefit from newly consolidated medical related subsidiary 2
3 in New Businesses Composition Ratio Increased sales composition through strong sales growth Doubled net sales, more than 20% growth even w/o new consolidation benefit Net Sales Composition Growth Rate +105% w/o new consolidation benefit +23%
Financial Results (Full Year) Against last year: Sales and profit growth, first time in 4 years, rapid recovery in profitability of existing businesses Against projection: Profit lower than projected due to impairment loss on goodwill related to commercial printing business (Billions of yen) FY 2016 % Previous % Net Sales 4,080.0 3,401.5 +19.9% 4,080.0 0.0% Gross Profit 1,992.7 1,673.8 +19.0% 1,984.0 +0.4% (% of Net Sales) 48.8% 49.2% 48.6% Op. Profit 331.5 228.9 +44.8% 350.0-5.3% (% of Net Sales) 8.1% 6.7% 8.6% Net Income 241.9 150.7 +60.6% 245.0-1.3% (% of Net Sales) 5.9% 4.4% 6.0% 1 US$ 112.13 108.58 111.88 1 Euro 126.69 120.25 126.49 4
Regarding Impairment Loss (Commercial Printing Business) in the business environment Increasingly intense competition in technology trend (Toner Ink) Temporary decline in profit due to continued investment into product developed targeting growth Recognized impairment loss on goodwill (33.9 billion yen) Our new products are gradually penetrating the market. We will continue to focus on expanding MIF and service revenue to enhance our commercial printing business, which we believe is a growth area 5
Financial Results by Business Unit (Full Year) Office and Imaging System BU benefit from recovery in laser printers and cameras, which are sources of profit Industry & Others BU driven by lithography and OLED vacuum deposition equip. (Billions of yen) FY 2016 % Previous % Office Net Sales 1,865.9 1,807.8 +3.2% 1,867.1-0.1% Op. Profit 180.6 169.5 +6.6% 210.5-14.2% Imaging Net Sales 1,136.2 1,095.3 +3.7% 1,133.0 +0.3% System Op. Profit 175.9 144.4 +21.8% 172.0 +2.3% Medical Net Sales 436.2 439.0-0.6% System Op. Profit 22.5 21.5 +4.7% Industry & Net Sales 731.7 584.7 +25.2% 730.0 +0.2% Others Op. Profit 56.8 7.4 +662.5% 54.0 +5.2% Corporate & Net Sales -90.0-86.3-89.1 Eliminations Op. Profit -104.3-92.4-108.0 Total Net Sales 4,080.0 3,401.5 +19.9% 4,080.0 0.0% Op. Profit 331.5 228.9 +44.8% 350.0-5.3% 6
Operating Profit Analysis (Full Year comparison against FY 2016) Sales volume: Profit growth driven by sales expansion in all businesses Continued cost savings absorbs impact of price reduction Excluding the impact of new consolidations, operating expenses down mainly thanks to lower R&D expense (Billions of yen) FX Details Net Sales: Cost of Sales: Op. Expenses: +96.2-32.5-31.8 Mainly reflects consolidation of CMSC in Net Sales, excluding FX impact, for reference Office: +24.0 Imaging System: +4.5 Medical System: +435.4 Industry & Others: +135.3 Total: +599.2 7
Key Message (FY 2018 ) FX Assumptions 1 US$ = 110 yen, 1 Euro = 130 yen External Environment Global economy - Remains on path of modest recovery FY 2018 Outlook Existing businesses: Increase market share and thoroughly strengthen profitability via successive launch of strategic products. New businesses: Top priority is sales expansion. Will also focus on improving profitability Aiming for sales and profit growth for 2nd consecutive year 8
FY 2018 Financial (Full Year) Aiming for second consecutive year of sales and profit growth Projecting 2nd highest level of sales (Highest set in 2007) Expect operating profit to reach 400 billion yen level, first time since 2008 (Billions of yen) FY 2018 % Net Sales 4,300.0 4,080.0 +5.4% Gross Profit 2,095.0 1,992.7 +5.1% (% of Net Sales) 48.7% 48.8% Op. Profit 420.0 331.5 +26.7% (% of Net Sales) 9.8% 8.1% Net Income 280.0 241.9 +15.7% (% of Net Sales) 6.5% 5.9% 1 US$ 110.00 112.13 1 Euro 130.00 126.69 9
FY 2018 Financial (Full Year) Service revenue related reclassification: Op. expenses to COS (110.0 billion yen) Pension accounting reclassification: COS & Op. expenses to Non-operating income (16.0 billion yen) Reclassification has no impact on Income before taxes & Net income (Billions of yen) FY 2018 FY 2018 (after new Standards applied) Impact of Standard Service Cost Pension Net Sales 4,300.0 4,300.0 0.0 - - Gross Profit (% of Net Sales) 2,095.0 48.7% 1,983.0 46.1% -112.0-110.0-2.0 Op. Expenses 1,675.0 1,579.0 +96.0 +110.0-14.0 Op. Profit (% of Net Sales) 420.0 9.8% 404.0 9.4% -16.0 0.0-16.0 Non-operating Income 0.0 16.0 +16.0 - +16.0 IBT 420.0 420.0 0.0-0.0 Net Income (% of Net Sales) 280.0 6.5% 280.0 6.5% 0.0 - - 10
FY 2018 Financial by Business Unit (Full Year) Office: Expand MIF via strategic models, enhance profitability Imaging System: Improve product mix, promote in-house production and automation Industry & Others: Sales of lithography equipment and OLED vacuum deposition equipment to remain strong Billions of yen FY 2018 % Office Net Sales 1,939.0 1,865.9 +3.9% Op. Profit 235.5 180.6 +30.4% Imaging Net Sales 1,153.0 1,136.2 +1.5% System Op. Profit 193.0 175.9 +9.7% Medical Net Sales 470.0 436.2 +7.8% System Op. Profit 27.0 22.5 +20.0% Industry & Net Sales 839.0 731.7 +14.7% Others Op. Profit 69.4 56.8 +22.2% Corporate & Net Sales -101.0-90.0 Eliminations Op. Profit -104.9-104.3 Total Net Sales 4,300.0 4,080.0 +5.4% Op. Profit 420.0 331.5 +26.7% 11
FY 2018 Operating Profit Analysis (Full Year comparison against ) Sales volume: Improvement in all businesses via increased volume and improved product mix Impact of price reduction offset with cost savings (Billions of yen) FX Details Net Sales: Cost of Sales: Op. Expenses: -2.9 +8.9-5.3 in Net Sales, excluding FX impact, for reference Office: +85.4 Imaging System: +23.8 Medical System: +37.2 Industry & Others: +96.5 Total: +242.9 12
Office MFDs 2017 - Positive growth via expanded sales of next-generation color devices 2018 - Further expansion of sales via versions upgraded with enhanced software Improve profitability of the entire business through a higher mix of color FY 2016 % % FY 2018 % Previous (Billions of yen) MFDs 694 676 +2.6% 706-1.7% 728 694 +4.8% LPs 707 668 +5.8% 691 +2.3% 705 707-0.2% Others 465 464 +0.4% 470-1.0% 506 465 +8.8% Net Sales 1,866 1,808 +3.2% 1,867-0.1% 1,939 1,866 +3.9% Op. Profit 181 169 +6.6% 211-14.2% 236 181 +30.4% (% of Net Sales) 9.7% 9.4% 11.3% 12.1% 9.7% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 MFDs -0.4% +4.7% LPs +3.2% +0.5% Others -2.6% +8.5% Total +0.4% +4.1% Unit Growth Rate Y/Y MFDs FY 2018 B&W -5% -1% Color +10% +8% Total +3% +4% Image RUNNER ADVANCE Gen3 2nd Edition Inherits high reliability of current models User authentication, print management etc. offered as standard features Works with external cloud-services 13
Office Laser Printers 2017 - Completion of new product lineup, strong recovery 2018 - Raise new product ratio, expand consumable sales FY 2016 % % FY 2018 % Previous (Billions of yen) MFDs 694 676 +2.6% 706-1.7% 728 694 +4.8% LPs 707 668 +5.8% 691 +2.3% 705 707-0.2% Others 465 464 +0.4% 470-1.0% 506 465 +8.8% Net Sales 1,866 1,808 +3.2% 1,867-0.1% 1,939 1,866 +3.9% Op. Profit 181 169 +6.6% 211-14.2% 236 181 +30.4% (% of Net Sales) 9.7% 9.4% 11.3% 12.1% 9.7% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 MFDs -0.4% +4.7% LPs +3.2% +0.5% Others -2.6% +8.5% Total +0.4% +4.1% Unit Growth Rate Y/Y LPs FY 2018 B&W 0% 0% Color +4% +8% Total +1% +1% 14
Office Others Market - Expansion trend, particular in graphic art areas 2018 - Expand sales through already launched strategic products FY 2016 % % FY 2018 % Previous (Billions of yen) MFDs 694 676 +2.6% 706-1.7% 728 694 +4.8% LPs 707 668 +5.8% 691 +2.3% 705 707-0.2% Others 465 464 +0.4% 470-1.0% 506 465 +8.8% Net Sales 1,866 1,808 +3.2% 1,867-0.1% 1,939 1,866 +3.9% Op. Profit 181 169 +6.6% 211-14.2% 236 181 +30.4% (% of Net Sales) 9.7% 9.4% 11.3% 12.1% 9.7% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 MFDs -0.4% +4.7% LPs +3.2% +0.5% High-speed Cut Sheet Printer VarioPrint i300 High-speed Continuous Feed Printer ProStream 1000 Others -2.6% +8.5% Total +0.4% +4.1% Wide-format UV Inkjet Printer Colorado 1640 15
Imaging System Cameras 2017 - Achieved sales growth via launch of 6 models, most in industry 2018 - Maintain sales growth, driven by mirrorless cameras where double-digit growth continues FY 2016 % % FY 2018 % Previous (Billions of yen) Cameras 703 667 +5.3% 699 +0.5% 711 703 +1.2% IJPs 336 331 +1.4% 336-0.1% 340 336 +1.2% Others 97 97 +0.8% 98 0.0% 102 97 +4.2% Net Sales 1,136 1,095 +3.7% 1,133 +0.3% 1,153 1,136 +1.5% Op. Profit 176 144 +21.8% 172 +2.3% 193 176 +9.7% (% of Net Sales) 15.5% 13.2% 15.2% 16.7% 15.5% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 Cameras +1.8% +1.1% IJPs -1.5% +1.2% Total +0.4% +1.4% Units (Millions) & Unit Growth Rate Y/Y FY 2018 Units % Units % DILCs 5.51-3% 5.50 0% DCs 4.04 0% 3.40-16% New Model Equipped w/ Full Size Sensor EOS 6D Mark II 16
Imaging System Inkjet Printers Market - Slightly up due to recovery in Asia Sales expansion of compact models and large ink tank models in both 2017 and 2018 FY 2016 % % FY 2018 % Previous (Billions of yen) Cameras 703 667 +5.3% 699 +0.5% 711 703 +1.2% IJPs 336 331 +1.4% 336-0.1% 340 336 +1.2% Others 97 97 +0.8% 98 0.0% 102 97 +4.2% Net Sales 1,136 1,095 +3.7% 1,133 +0.3% 1,153 1,136 +1.5% Op. Profit 176 144 +21.8% 172 +2.3% 193 176 +9.7% (% of Net Sales) 15.5% 13.2% 15.2% 16.7% 15.5% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 Cameras +1.8% +1.1% IJPs -1.5% +1.2% Total +0.4% +1.4% Unit Growth Rate Y/Y FY 2018 IJPs +1% +3% Compact Business Model TR Series Compact design Fax feature Enhanced operability through use of touchscreen 17
18 Medical System 2017 - Strong sales of new CT and Ultrasound diagnostic systems 2018 - Expand both sales and profit, promoting the strength of our products as well as expanding sales overseas Accelerate measures to reduce costs through enhanced group cooperation (Billions of yen) FY 2016 % Previous % FY 2018 % Net Sales 436 - - 439-0.6% 470 436 +7.8% Op. Profit 23 - - 22 +4.7% 27 23 +20.0% (% of Net Sales) 5.2% - 4.9% 5.7% 5.2% Net Sales Growth Rate Y/Y (Local Currency) FY 2018 Total - +8.0% CT Aquilion ONE / GENESIS EDITION Ultrasound Aplio i-series
Industry & Others 2017 - Unit sales of FPD lithography equip. grew thanks to OLED panel demand 2018 - Unit sales of IC lithography equip. doubled thanks to expanding demand for memory Maintain double-digit growth in both OLED vacuum deposition equipment and network cameras FY 2016 % % FY 2018 % (Billions of yen) Previous Litho. Equip. 193 121 +59.5% 198-2.3% 227 193 +17.4% Others 539 464 +16.2% 532 +1.2% 612 539 +13.7% Net Sales 732 585 +25.2% 730 +0.2% 839 732 +14.7% Op. Profit 57 7 +662.5% 54 +5.2% 69 57 +22.2% (% of Net Sales) 7.8% 1.3% 7.4% 8.3% 7.8% Net Sales Growth Rate Y/Y (Local Currency) Lithography Equipment (Units) FY 2018 FY 2016 FY 2018 Litho. Equip. +58.3% +17.4% Others +14.8% +13.7% Total +23.8% +14.7% IC 64 70 126 FPD 37 84 75 FPD Lithography Equipment MPAsp-E813 19
Inventory Inventory turnover in days significantly shorter Improving performance of Office and Industry & Others BU FY 2016 (Bilions of yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Office Yen 227 211 211 206 207 211 223 205 Days 42 42 44 42 40 42 44 40 Imaging System Yen 168 138 144 127 143 149 164 130 Days 51 48 49 41 46 52 54 39 Medical System Yen - - - - - 80 77 84 Days - - - - - 67 70 71 Industry & Others Yen 126 130 139 228 219 157 157 151 Days 92 106 108 152 94 98 90 79 Total Yen 521 479 494 561 569 597 621 570 Days 52 53 55 59 54 55 57 49 20
Cash Flow (Full Year) 2017 - Generated 400.0 billion yen in FCF, worked to pay down debt 2018 - Plan to invest in the growth of new businesses, and strive for comprehensive cashflow management (Billions of yen) FY 2018 FY 2016 Net cash provided by operating activities 550 591 500 Net cash used in investing activities -330-165 -837 Free cash flow 220 426-337 Net cash provided by (used in) financing activities -322-341 356 Effect of exchange rate changes on cash and cash equivalents -10 7-22 Net change in cash and cash equivalents -112 92-3 Cash and cash equivalents at end of period 610 722 630 Cash-on-hand (In months of Net sales) 1.7 2.0 2.2 Capital expenditure 200 148 172 Depreciation 245 262 250 21
Supplementary Information 22
23
Operating Profit Analysis (Full Year Comparison against Previous ) (Billions of yen) FX Details Net Sales: Cost of Sales: Op. Expenses: +5.9-1.2-1.3 in Net Sales, excluding FX impact, for reference Office: Imaging System: Medical System: Industry & Others: Total: -7.6-1.0-3.2 +0.8-11.0 24
Dividend 25
4Q 2017 26
Financial Results (4Q 2017) 27 Billions of yen 4Q 2017 4Q 2016 % 4Q 2017 Previous % Net Sales 1,120.3 965.2 +16.1% 1,120.3 0.0% Gross Profit 546.6 460.1 +18.8% 537.9 +1.6% (% of Net Sales) 48.8% 47.7% 48.0% Op. Profit 79.0 80.2-1.4% 97.6-19.0% (% of Net Sales) 7.1% 8.3% 8.7% Net Income 54.6 44.8 +21.8% 57.7-5.3% (% of Net Sales) 4.9% 4.6% 5.1% 1 US$ 112.96 109.48 112.00 1 Euro 132.98 118.10 132.00
Financial Results by Business Unit (4Q 2017) 28 (Billions of yen) 4Q 2017 4Q 2016 % 4Q 2017 Previous % Office Net Sales 493.2 485.9 +1.5% 494.4-0.2% Op. Profit 27.3 48.6-43.9% 57.1-52.2% Imaging Net Sales 340.9 324.7 +5.0% 337.8 +0.9% System Op. Profit 59.0 51.7 +14.2% 55.1 +7.1% Medical Net Sales 103.7 106.5-2.6% System Op. Profit 4.9 3.9 +25.5% Industry & Net Sales 205.3 175.6 +16.9% 203.6 +0.8% Others Op. Profit 16.1 3.2 +409.2% 13.3 +20.9% Corporate & Net Sales -22.8-21.0-22.0 Eliminations Op. Profit -28.3-23.3-31.8 Total Net Sales 1,120.3 965.2 +16.1% 1,120.3 0.0% Op. Profit 79.0 80.2-1.4% 97.6-19.0%
4Q 2017 Operating Profit Analysis (Quarterly comparison against 4Q 2016) (Billions of yen) FX Details Net Sales: Cost of Sales: Op. Expenses: +41.1-12.4-14.9 Mainly reflects consolidation of CMSC in Net Sales, excluding FX impact, for reference Office: -8.3 Imaging System: -2.2 Medical System: +103.2 Industry & Others: +24.8 Total: +117.5 29
Office / Imaging System (4Q 2017) 30 Office 4Q 2017 4Q 2017 4Q 2016 % % Previous (Billions of yen) MFDs 188 179 +5.4% 200-6.0% LPs 178 184-3.0% 162 +9.7% Others 127 123 +2.6% 132-3.7% Net Sales 493 486 +1.5% 494-0.2% Op. Profit 27 49-43.9% 57-52.2% (%of Net Sales) 5.5% 10.0% 11.6% Net Sales Growth Rate Y/Y (Local Currency) 4Q 2017 MFDs +0.1% LPs -4.2% Others -2.8% Total -2.3% Unit Growth Rate Y/Y MFDs 4Q 2017 4Q 2017 LPs B&W -10% B&W -11% Color +10% Color +13% Total +1% Total -7% Imaging System Net Sales Growth Rate Y/Y (Local Currency) Units (Millions) & Unit Growth Rate Y/Y 4Q 2017 4Q 2017 4Q 2016 % % Previous (Billions of yen) Cameras 208 198 +4.8% 204 +1.7% IJPs 104 101 +3.1% 104-0.2% Others 29 26 +14.0% 30-0.1% Net Sales 341 325 +5.0% 338 +0.9% Op.Profit 59 52 +14.2% 55 +7.1% (% of Net Sales) 17.3% 15.9% 16.3% 4Q 2017 Cameras -1.4% IJPs -2.0% Total -0.9% 4Q 2017 Units % DILCs 1.70-5% DCs 1.13 +5% 4Q 2017 IJPs +2%
Medical System / Industry & Others (4Q 2017) 31 Medical System (Billions of yen) 4Q 2017 4Q 2016 % 4Q 2017 Previous % Net Sales 104 - - 106-2.6% Op. Profit 5 - - 4 +25.5% (% of Net Sales) 4.8% - 3.7% Industry & Others (Billions of yen) 4Q 2017 4Q 2016 % 4Q 2017 Previous % Litho. Equip. 55 35 +55.8% 59-7.7% Others 150 141 +7.2% 145 +4.3% Net Sales 205 176 +16.9% 204 +0.8% Op. Profit 16 3 +409.2% 13 +20.9% (% of Net Sales) 7.8% 1.8% 6.5% Net Sales Growth Rate Y/Y (Local Currency) 4Q 2017 Litho. Equip. +54.6% Others +5.1% Total +15.0% Lithography Equipment (Units) 4Q 2016 4Q 2017 IC 19 25 FPD 12 21
RESULTS Supplementary Data Table of Contents Page 1. Segment Information by Business Unit ( & FY 2018)... P1 2. Other Income ( & FY 2018)... P1 3. Net Sales by Region & Business Unit ( & FY 2018)... P2 4. Statements of Cash Flows ( & FY 2018)... P2 5. Foreign Exchange Rate Impact... P3 6. Sales Growth on a Local Currency Basis (Year over Year)... P3 7. Net Sales Growth Rate of Hardware & Non-hardware... P4 8. Color Ratio (MFDs & LPs)... P4 9. Sales Growth by Monochrome & Color MFDs... P4 10. IC Stepper Unit Breakdown by Light Source... P4 11. R&D Expenditure / Capex / Depreciation & Amoritization... P5 12. Other Financial Data... P5 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.
1. Segment Information by Business Unit ( & FY 2018) (Millions of yen) Office FY 2016 FY 2018 % Y/Y FY 2018 4Q Full Year 4Q Full Year Full Year 4Q Full Year Full Year External customers 484,656 1,804,862 492,594 1,863,688 1,937,700 +1.6% +3.3% +4.0% Intersegment 1,194 2,957 605 2,240 1,300-49.3% -24.2% -42.0% Total sales 485,850 1,807,819 493,199 1,865,928 1,939,000 +1.5% +3.2% +3.9% Operating profit 48,625 169,486 27,290 180,648 235,500-43.9% +6.6% +30.4% Operating profit ratio 10.0% 9.4% 5.5% 9.7% 12.1% Imaging System External customers 324,455 1,094,291 340,738 1,135,584 1,152,000 +5.0% +3.8% +1.4% Intersegment 287 998 182 604 1,000-36.6% -39.5% +65.6% Total sales 324,742 1,095,289 340,920 1,136,188 1,153,000 +5.0% +3.7% +1.5% Operating profit 51,702 144,413 59,021 175,913 193,000 +14.2% +21.8% +9.7% Operating profit ratio 15.9% 13.2% 17.3% 15.5% 16.7% Medical System External customers - - 103,508 434,985 469,600 - - +8.0% Intersegment - - 174 1,202 400 - - -66.7% Total sales - - 103,682 436,187 470,000 - - +7.8% Operating profit - - 4,940 22,505 27,000 - - +20.0% Operating profit ratio 4.8% 5.2% 5.7% Industry & Others External customers 156,062 502,334 183,451 645,758 740,700 +17.6% +28.6% +14.7% Intersegment 19,572 82,326 21,833 85,946 98,300 +11.6% +4.4% +14.4% Total sales 175,634 584,660 205,284 731,704 839,000 +16.9% +25.2% +14.7% Operating profit 3,162 7,448 16,101 56,788 69,400 +409.2% +662.5% +22.2% Operating profit ratio 1.8% 1.3% 7.8% 7.8% 8.3% Corporate & Eliminations External customers - - - - - - - - Intersegment -21,053-86,281-22,794-89,992-101,000 - - - Total sales -21,053-86,281-22,794-89,992-101,000 - - - Operating profit -23,321-92,481-28,316-104,375-104,900 - - - Operating profit ratio Consolidated External customers 965,173 3,401,487 1,120,291 4,080,015 4,300,000 +16.1% +19.9% +5.4% Intersegment - - - - - - - - Total sales 965,173 3,401,487 1,120,291 4,080,015 4,300,000 +16.1% +19.9% +5.4% Operating profit 80,168 228,866 79,036 331,479 420,000-1.4% +44.8% +26.7% Operating profit ratio 8.3% 6.7% 7.1% 8.1% 9.8% 2. Other Income ( & FY 2018) (Millions of yen) FY 2016 FY 2018 Amount Y/Y FY 2018 4Q Full Year 4Q Full Year Full Year 4Q Full Year Full Year Interest and dividend, net 959 3,701 1,242 5,194 1,000 +283 +1,493-4,194 FX gain (loss) -12,620-2 -3,416-9,775-2,000 +9,204-9,773 +7,775 Equity earnings of affiliated cos. 217 890 281 1,196 1,000 +64 +306-196 Other, net 3,911 11,196 11,374 25,790 0 +7,463 +14,594-25,790 合計 -7,533 15,785 9,481 22,405 0 +17,014 +6,620-22,405 *Canon newly established "Medical System" Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for 2016 were not restated since they were not material. *The actual and projected operating results pertaining to TMSC, a company acquired in December 2016, are included in "Medical System" for 2017 and 2018. Amortization costs of identified intangible assets resulting from the purchase price allocation of TMSC are included in "Corporate and Eliminations." - P1 -
3. Net Sales by Region & Business Unit ( & FY 2018) (Millions of yen) FY 2016 FY 2018 % Y/Y 4Q Full Year 4Q Full Year Full Year 4Q Full Year Full Year Japan Office 99,303 378,834 103,599 381,475 - +4.3% +0.7% - Imaging System 63,174 179,304 60,338 174,944 - -4.5% -2.4% - Medical System - - 39,664 190,276 - - - - Industry & Others 42,619 148,841 39,091 138,133 - -8.3% -7.2% - Total 205,096 706,979 242,692 884,828 947,200 +18.3% +25.2% +7.0% Overseas Office 385,353 1,426,028 388,995 1,482,213 - +0.9% +3.9% - Imaging System 261,281 914,987 280,400 960,640 - +7.3% +5.0% - Medical System - - 63,844 244,709 - - - - Industry & Others 113,443 353,493 144,360 507,625 - +27.3% +43.6% - Total 760,077 2,694,508 877,599 3,195,187 3,352,800 +15.5% +18.6% +4.9% Americas Office 153,027 582,297 156,649 602,376 - +2.4% +3.4% - Imaging System 91,064 297,403 97,310 316,756 - +6.9% +6.5% - Medical System - - 26,226 102,131 - - - - Industry & Others 23,376 83,844 23,092 86,252 - -1.2% +2.9% - Total 267,467 963,544 303,277 1,107,515 1,147,300 +13.4% +14.9% +3.6% Europe Office 158,562 556,353 154,877 580,825 - -2.3% +4.4% - Imaging System 83,926 293,894 91,598 301,906 - +9.1% +2.7% - Medical System - - 22,623 80,035 - - - - Industry & Others 19,836 63,276 20,006 65,649 - +0.9% +3.8% - Total 262,324 913,523 289,104 1,028,415 1,101,700 +10.2% +12.6% +7.1% Asia & Oceania Office 73,764 287,378 77,469 299,012 - +5.0% +4.0% - Imaging System 86,291 323,690 91,492 341,978 - +6.0% +5.6% - Medical System - - 14,995 62,543 - - - - Industry & Others 70,231 206,373 101,262 355,724 - +44.2% +72.4% - Total 230,286 817,441 285,218 1,059,257 1,103,800 +23.9% +29.6% +4.2% Intersegment Office 1,194 2,957 605 2,240 - -49.3% -24.2% - Imaging System 287 998 182 604 - -36.6% -39.5% - Medical System - - 174 1,202 - - - - Industry & Others 19,572 82,326 21,833 85,946 - +11.6% +4.4% - Eliminations -21,053-86,281-22,794-89,992 - - - - Total 0 0 0 0 0 - - - Total Office 485,850 1,807,819 493,199 1,865,928 - +1.5% +3.2% - Imaging System 324,742 1,095,289 340,920 1,136,188 - +5.0% +3.7% - Medical System - - 103,682 436,187 - - - - Industry & Others 175,634 584,660 205,284 731,704 - +16.9% +25.2% - Eliminations -21,053-86,281-22,794-89,992 - - - - Total 965,173 3,401,487 1,120,291 4,080,015 4,300,000 +16.1% +19.9% +5.4% FY 2018 4. Statements of Cash Flows ( & FY 2018) (Millions of yen) FY 2016 FY 2018 Amount Y/Y FY 2018 4Q Full Year 4Q Full Year Full Year 4Q Full Year Full Year Net cash provided by operating activities 156,920 500,283 176,051 590,557 550,000 +19,131 +90,274-40,557 Net cash used in investing activities -12,216-837,125-32,858-165,010-330,000-20,642 +672,115-164,990 Free cash flow 144,704-336,842 143,193 425,547 220,000-1,511 +762,389-205,547 Net cash provided by (used in) financing activities -80,647 355,692-70,621-340,464-321,800 +10,026-696,156 +18,664 Effect of exchange rate changes on cash and cash equivalents 31,656-22,270 2,401 6,538-10,000-29,255 +28,808-16,538 Net change in cash and cash equivalents 95,713-3,420 74,973 91,621-111,800-20,740 +95,041-203,421 Cash and cash equivalents at end of period 630,193 630,193 721,814 721,814 610,000 +91,621 +91,621-111,814 *Canon newly established "Medical System" Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for 2016 were not restated since they were not material. - P2 -
5. Foreign Exchange Rate Impact (1) Exchange rates (Yen) 4Q Full Year 4Q Full Year Full Year Yen/US$ 109.48 108.58 112.96 112.13 110.00 Yen/Euro 118.10 120.25 132.98 126.69 130.00 (2) Amount of impact on net sales (Year over Year) FY 2016 FY 2018 (Billions of yen) 4Q Full Year Full Year US$ +8.6 +42.5-21.9 Euro +27.1 +43.0 +19.8 Other currencies +5.4 +10.7-0.8 合計 +41.1 +96.2-2.9 (3) Impact of foreign exchange rate per yen (Billions of yen) FY 2018 FY 2018 Full Year On sales US$ 14.5 Euro 6.7 On operating Profit US$ 5.3 Euro 3.3 6. Sales Growth on a Local Currency Basis (Year over Year) FY 2018 4Q Full Year Full Year Office Japan +4.3% +0.7% - Overseas -3.8% +0.4% - Total -2.3% +0.4% +4.1% Imaging System Japan -4.5% -2.4% - Overseas 0.0% +1.0% - Total -0.9% +0.4% +1.4% Medical System Japan - - - Overseas - - - Total - - +8.0% Industry & Others Japan -8.3% -7.2% - Overseas +24.4% +41.3% - Total +15.0% +23.8% +14.7% Total Japan +18.3% +25.2% - Overseas +10.1% +15.0% - Americas +10.8% +11.8% - Europe +0.4% +7.8% - Asia and Oceania +20.3% +26.9% - Total +11.8% +17.1% +5.5% - P3 -
7. Net Sales Growth Rate of Hardware & Non-hardware 4Q Full Year 4Q Full Year Full Year MFDs Hardware -10% -11% +3% +2% +9% JPY Non-hardware -8% -9% +8% +3% +1% Hardware -1% -3% -3% -2% +9% LC Non-hardware -1% -2% +2% +1% +1% LPs IJPs JPY LC JPY LC Hardware +7% -14% -2% +6% 0% Non-hardware -18% -27% -3% +6% 0% Hardware +13% -6% -5% +3% +1% Non-hardware -17% -22% -4% +3% +1% Hardware -14% -9% +13% +11% +4% Non-hardware -10% -9% -1% -2% 0% Hardware -7% 0% +7% +8% +5% Non-hardware -3% -1% -6% -5% 0% 8. Color Ratio (MFDs & LPs) FY 2016 FY 2018 FY 2016 FY 2018 4Q Full Year 4Q Full Year Full Year MFDs Net Sales 59% 57% 59% 58% 60% QTY 52% 49% 58% 55% 57% LPs Net Sales 50% 51% 52% 52% 53% QTY 17% 17% 20% 18% 19% 9. Sales Growth by Monochrome & Color MFDs FY 2016 FY 2018 4Q Full Year 4Q Full Year Full Year Monochrome -12% -12% +4% -1% 0% JPY Color -6% -8% +7% +5% +8% Monochrome -5% -4% -1% -3% 0% LC Color +2% -1% +1% +2% +8% 10. IC Stepper Unit Breakdown by Light Source (unit) KrF i-line Total FY 2016 FY 2018 4Q Full Year 4Q Full Year Full Year 6 19 10 24 37 13 45 15 46 89 19 64 25 70 126 - P4 -
11. R&D Expenditure / Capex / Depreciation & Amoritization (Millions of yen) FY 2016 FY 2018 Full Year Full Year Full Year R&D Expenditure Office 94,440 91,763 - Imaging System 91,752 91,784 - Medical System - 36,210 - Industry and Others 67,887 68,131 - Corporate & Eliminations 48,297 42,165 - Total 302,376 330,053 335,000 % of Net Sales 8.9% 8.1% 7.8% Capex Office 67,675 44,172 - Imaging System 23,482 26,876 - Medical System - 7,599 - Industry and Others 26,788 13,620 - Corporate & Eliminations 53,652 55,275 - Total 171,597 147,542 200,000 Depreciation & Amoritization Office 78,319 74,377 - Imaging System 47,386 41,695 - Medical System - 5,212 - Industry and Others 41,053 37,705 - Corporate & Eliminations 83,338 102,892 - Total 250,096 261,881 245,000 12.Other Financial Data FY 2016 FY 2018 ROE *1 5.2% 8.6% 9.6% ROA *2 3.1% 4.7% 5.4% EPS (Yen) 137.95 222.88 259.32 Debt Ratio *3 11.9% 10.2% - Number of Employees *3 Japan 72,913 73,665 - Overseas 124,760 124,111 - Total 197,673 197,776 - Domestic Production Ratio 56% 62% - *1 ; Based on Net Income attributable to Canon Inc. and Total Canon Inc. Shareholders' Equity *2 ; Based on Net Income attributable to Canon Inc. *3 ; as of year end *Canon newly established "Medical System" Business Unit effective at the beginning of the second quarter of 2017, and certain businesses included in Industry and Others Business Unit have been reclassified. Operating results for 2016 were not restated since they were not material. - P5 -