Canon Marketing Japan Group
Three-Year Management Plan
2015 - 2017

January 28, 2015
Masami Kawasaki
President
1

Contents
 2014 Recap
 The ideal situation in 2017

 Performance Objectives(consolidated/by segments)
 Overall Strategy and Growth Scenario for

Realization of

Ideal Situation
 Growth Strategy of each Segment
 Business Solutions
 IT Solutions
 Imaging Systems
 Industrial/Medical
 Investing for Growth Capital Policy and Policy on Returns to Shareholders
2

2014 Recap(billion)

2013

2014
Ratio

Net sales(YoY)
Op. profit(YoY)
Ord. profit(YoY)
Net profit
(YoY)

657.2
（99.7%）
17.0（101.3%）18.2（100.6%）
10.2（96.1%）Key indicators

Ratio

2.6%
2.8%
1.5%

659.4
（100.3%）25.1（147.5%）26.6（145.8%）16.0（157.7%）

3.8%
4.0%
2.4%

2014 results

Ratio of Beyond CANON sales

33%

Ratio of Beyond JAPAN sales

4%

Ratio of sales from service businesses

40%*Beyond CANON: Sales of products purchased from external sources and our own services, excluding hardware, consumables, andmaintenance services related to Canon products
Beyond JAPAN: Overseas sales and domestic sales of imported products for which we have exclusive distribution rights
Sales from service businesses: Sales of software, maintenance services, system development and operation, userware, and others3

Major achievements in 2014
Canon’s existing domains
 Achieved the largest market share for cameras and printersInterchangeable-lens digital cameras, compact cameras, inkjet printers, and LMP (23rdconsecutive year)Canon’s new domains
 Expansion of the NVS business (Up 62.6％ year on year）
 Growth of the production printing business enabled by the sales expansion of light
production products (Up 2.9% year on year)Canon MJ’s independent domains
 Expansion of businesses in the IT Solutions segment (Up 4.5％ year on year) Growth of IT Solutions businesses in the Business Solutions domain, with thecentral role played by Canon System & Support (Up 6.3％ year on year) Expansion of 3D-related businessesImplementation of M&A (A&A, a 3D CAD company, and AZE, a company
specializing in 3D medical imaging)
Sales expansion of 3D printers and MR systems

 Launch of medical imaging IT solutions services (MedicalImagePlace)4The ideal situation in 2017

Corporate group which continues toprovide original new added value
 We have evolved into a value creation-oriented trading company,
providing solutions based on an understanding of social issues.
Progress has been made with the strengthening and development of
human resources to support growth strategies.
Profitability has been strengthened further through continued
profit structure reform.

5Six general strategies for realizing the ideal situation
Establish Canon as undisputed market leader in Japanin each of its businesses

Enhance productivity and added value inexisting business domains
Maximize group synergies

Strengthen and expand Canon’s new priority
businesses
Concentrate all Group efforts on expanding independent domains
Create businesses and procure new products with a sense of speed

Promote the “Beyond Japan” concept inall business domains

6

Consolidated Performance Objectives(billion)
2014 result

2015
objective

2016
objective

2017
objective

Net sales

659.4

681.0

709.0

741.0

Sales growth rate

+0.3%

+3.3%

+4.1%

+4.5%

Average growth rate between 2014 and 2017: +4.0%
Op. profit

25.1

26.0

33.0

37.0

Op. margin

3.8%

3.8%

4.7%

5.0%

Ord. profit

26.6

27.2

34.2

38.2

Net profit

16.0

16.9

21.6

24.2

ROE

6.1%

6.2%

7.5%

8.0%

Net profit per share

12.4

13.0

16.7

18.6

* Values for net profit per share for 2015 and thereafter were calculated based on
7
the number of shares at the end of 2014.

Performance Objectives by Segments(billion)

2014 result
Sales

Business
Solutions

IT Solutions

Imaging
Systems
Industrial/
MedicalOther/Sales
eliminations

Group
consolidated

Op.
Profit2015 objective

2016 objective

2017 objective

Sales

Sales

Op. Profit

Sales

Op. Profit

Op. Profit

330.2

8.2

340.0

8.7

351.4

12.5

362.0

13.5

+0.9%

2.5%

+3.0%

2.6%

+3.4%

3.6%

+3.0%

3.7%

148.8

3.2

151.7

4.2

159.5

6.4

173.6

8.4

+4.5%

2.1%

+2.0%

2.8%

+5.1%

4.0%

+8.8%

4.8%

185.4

14.3

188.8

13.2

195.0

12.7

200.0

13.0

-3.3%

7.7%

+1.8%

7.0%

+3.3%

6.5%

+2.6%

6.5%

28.0

-1.0

31.5

-0.5

37.8

1.0

42.4

+7.3%

-

+12.4%-+20.1%

2.6%+12.1%

4.0%

-33.0

0.4

-31.0

0.4

-34.7

0.4

-37.0

0.4

659.4

25.1

681.0

26.0

709.0

33.0

741.0

37.0

+0.3%

3.8%

+3.3%

3.8%

+4.1%

4.7%

+4.5%

5.0%

* The percentage in the lower part of each segment shows the YOY
growth rate for sales and the operating margin for operating profit.

Average
growth rate
between2014 and
2017

+3.1%

+5.3%

+2.6%

1.7 +14.8%

+4.0%

8

Growth scenario (changes in net sales)(billion)

800
8,000

Average
growth rate

700
7,000

600
6,000

222.6

239.4

+6.8%

196.7

207.5

42.1

48.9

58.5

66.7

+16.6%

420.6

424.6

427.9

434.9

+1.1%

2014年

2015年

2016年

2017年

500
5,000
4,000
400
3,000
300
2,000
200
1,000
100
00
Canon’s existing

キヤノン既存領域
domains

Canon’s new

キヤノン新規注力領域
priority domains

Independent

独自事業
businesses

9Growth strategies for eachsegment

10

Business Solutions

11

Growth scenario(billion)Target: Total sales ¥362/O.P ¥13.5 (2017)
Category

Annual average
growth rate
(between 2014
and 2017)

Included businesses

IT Solutions
Independent
business+6%

Document Solutions
Support Business

Canon’s newpriority domain
Canon’s existingdomain+15%+0.2%

Production Printing BusinessNetwork Cameras, Projector
MFP(including maintenancebusiness)

LBP(including maintenancebusiness)

12

Growth strategies
1

Increase market share for MFP and improve
profitability of MFP by innovating the business style2

Increase the market shares for LBP and retain the
top position in specific printing

3

Secure a competitive edge in the markets of CRD, data print services
and commercial printing, and expand the MDS business

4

Strengthen and enhance the solutions business5

Expand the network camera business to new
application fields

6

Expand the projector business to new application
fields13

1

Increase the market share for MFP and improve theprofitability of MFP by innovating the business style

Strategies for the MFP business

Sales
reform

1. Strategically target specific sectors with a focus on
major enterprises.
2. Increase sales capabilities aimed at midsize
companies in urban areas nationwide.
3. Establish an efficient sales expansion system for
low-PV machines and kit machines aimed at small
and medium-sized companies.

Servicereform

1. Promote the unification of service departmentgroups
2. Improve service productivity
3. Transfer service personnel to growth fields
4. Increase profits from new services and expand
value-added services

Operational
reform

1. Promote BPR (contract-related operations anddistribution operations)
2. Integrate call center operations
14

2

Increase the market share for LBP and retain the top
position in the market of specific printing

Strategies for LBP business
Establish a system for expanding sales from existing customers bytargeting specific customers
Continuous provision of the function for linking devices to sector-specificapplications
PV
Finance
Policy illustration

Output fromSME backbone systems

Distribution
and retailPOP

Hospitals
and clinics
Government
and public
officesLocal
governments

OA in general

Dispensing
pharmacy
Drug envelopes/
drug information
Color ratio

15

3

Secure a competitive edge in the markets of CRD, data print services
and commercial printing, and expand the MDS business

Strategies for the production printing business
Increase shares in the domains of CRD* and data print
services by expanding the lineup of light production devices
and continuous feed printing systems*CRD : Central Reprographics Department
Full-scale entry into the commercial printing market with inkjet products from OCE
Develop new customers such as newspaper companies in addition to printing firms
ColorStream3700Z

Introduced by a major newspaper
company in 2014

Enter the package market
Target sales of PPS business for 2017: ¥48 billion

164Strengthen and enhance the solutions business

Strategies for the solutions business
Expand the solutions business for major enterprises bystrengthening unique solutions with a focus on documentsExpand common solutions such as input and output and the document management base.
Expand the license/development business by strengthening cooperation with
Salesforce.
Promote data center business with a focus on hosting services.

Expand solutions to new sectors and businessdomainsExpand to technology areas (drawing management, drawing release) with 3D solutions at the core.
Medical care, nursing care, agriculture, infrastructure, construction, real estate, business related to Social
Security and the Tax Number System (My Number system)

Expand the IT Solutions business for SMEs with thecentral role played by Canon System & Support

Expand sales of HOME to enable security strengthening and communication improvement.
Strengthen solutions that are specific to sectors/operations and expand introduction/
maintenance services.
Take challenges to new stock businesses.

17

5

Expand the network camera business into new
application fields

Strategies for network camera business Expand applications for crime prevention and monitoring to address risks
Expansion of applications for marketing and improvement of operatingprocesses
Fields in which the business is growing and introduction examples
 Food defense (monitoring of food/beverage production and packaging
lines)
 Security monitoring of shop streets and shopping malls On-site store management
 Security and safety management in nursing-care facilities (monitoring toprevent wandering) Improvement of operating processes in hospitals

Strengthen the dedicated sales personnel system
Launch cloud businesses such as multiple device compatibility and image analysis

Strengthen solutions capabilities by promoting alliances
186

Expand the projector business into new application fields

Strategies for projector businessIncrease business opportunities by expanding applications in a variety of
categories, including use in offices, education, and digital signage)
Introduction examples
 Digital signage for video advertisement outside premises by anautomobile retailer operating showrooms all over Japan Illumination/projection mapping show for a Christmas event at acommercial complex

Target total sales of network camera and projector businesses for 2017: ¥10 billion

19

IT Solutions

20

Growth scenario
Target: Total sales ¥173.6 /O.P¥8.4 (2017)
Category

Independent
businessCanon’s new priority
domainAnnual average growthrate (between 2014
and 2017)

Included businesses+6%

System Integration Business+12%

IT Infrastructure & Service
Business

+8%
-0.4%
+45%

Embedded System Business
Products BusinessMR** MR: Mixed Reality
21

IT Solutions: Growth strategies
1

Improve efficiency and shift to service businessthrough structural reform of business2

Expand business in SI services based on strength in particularsectors and solutions in our strong areas

3

Start full-scale operation of Tokyo West Data Center as soon
as possible and expand system operation services

4

Expand product business by strengthening our own package products
and discovering competitive external products for which we haveexclusive distribution rights

5

Expand the embedded system business for the
automotive industry and others

6

Reinforce the business structure in the ASEAN
region, with MAT at the core7

Accelerate the launch of new businesses223Start full-scale operation of Tokyo West Data Center assoon as possible and expand system operation services

Expand stock business by operating the service business with high valueadded data centers at the core
Facility
Co-location

Housing

Operation and monitoring

Services

Monitoring services Operation services

Private cloud
SI services

NW services

Tokyo West Data Center

23

IT Solutions: Growth strategies
1

Improve efficiency and shift to service businessthrough structural reform of business2

Expand business in SI services based on strength in particularsectors and solutions in our strong areas

3

Start full-scale operation of Tokyo West Data Center as soon
as possible and expand system operation services

4

Expand product business by strengthening our own package products
and discovering competitive external products for which we haveexclusive distribution rights

5

Expand the embedded system business for the
automotive industry and others

6

Reinforce the business structure in the ASEAN
region, with MAT at the core7

Accelerate the launch of new businesses
246

Reinforce the business structure in the ASEAN region,
with MAT at the core
Target sales of ITS global business*: ¥26 billion in 2017

Shift from businesses focusing on IT andinfrastructure services to solutions businesses
including applications
Operate businesses and plan M&A based on thecharacteristics of each trade area
Expand solutions provided in Japan (including
solutions related to security, MR, and network) tooverseas markets*Sales of IT global business include domestic sales of overseas products for which we haveexclusive distribution rights25

7

Accelerate launch of new businesses

Target sales of 3D-related business: ¥15 billion in 2017
Category

Average growth rate between
2014 and 2017

MR

+45%

3D CAD+14%

3D printers+52%

3D medical solutions+93%

Total of 3D-related
business+31%

 Strengthen cooperation on 3D products within the Group Expand to the areas of manufacturing and medical care on a full
scale
26

Strengthen the Group’s IT Solutions capabilities(billion yen)2014 result2017 target

174.9

206.5

ITS sales in segments besides ITS
segment

58.4

69.1

ITS segment sales

148.8

173.6

Inter-segment sales (eliminations)

-32.3

-36.2

Overall Group ITS sales

27

Imaging Systems

28

Growth scenario
Target: Total sales ¥200 /O.P¥13 (2017)
Category

Annual average growthrate (between 2014 and2017)

Included businesses
Framed photo rental (Shuttle Photo)

Independent business+21%

Photo-related online services(withPhoto)
IT products

Canon’s new priority
domain+19%

Commercial imaging equipment

Commercial photo printers(DreamLabo)
Interchangeable lens digital cameras

Canon’s existing domain+2%Compact digital cameras

Digital video cameras
Inkjet printers

Other consumer equipment
29

Imaging Systems: Growth strategies
1

Achieve the largest market shares for all thecategories of interchangeable-lens digital cameras

2

Achieve the overwhelmingly largest market share for compact
digital cameras through a full-lineup strategy centering on
premium models

3

Expand PV of inkjet printers

4

Expand commercial imaging equipment by strengthening 4K
and over-4K products and SI capabilities

5

Expand and improve CRM* systems and promote digitalmarketing.
* CRM: Customer Relationship Management30

1Achieve the largest market shares for all the categories ofinterchangeable-lens digital cameras
EOS-1D X

Pro.

Broad range ofinterchangeable lenses

EOS 7DMark IIEOS 5DMark III

MiddleEOS 6DEOS 70D

Entry

EOS
Kiss X7i

EOS
Kiss X7

EOS
Kiss X70

EOS M2

Promote the step-up strategy powerfully by strengthening the productlineup from the user point of view

ML

31

3

Expand PV of inkjet printers Create new demand for printing with smartphone printing
Strengthen the appeal of products for professional use
 Increase market shares for printers for SOHO with a full lineup
combined with laser printers
Corporate
OfficeSmall
OfficeHome
OfficeConsumer
Personal

32

4Expand commercial imaging equipment by strengthening
4K and over-4K products and SI capabilities
Current products

8K

2015

2016

Olympic and Paralympic GamesIn Tokyo

2014

Rugby World Cup Japan

2013

FIFA World Cup Russia

2012

Olympic and Paralympic GamesIn Rio de Janeiro

2011

Start of test
broadcast

Shift toterrestrial
digitalbroadcastingFIFA World Cup Brazil

4K display forcommercial use

Start of regular broadcast

4K lenses

4K

Start of test broadcast

4K cameras

4K

8K

Start ofregular broadcast

8K lens

8K
Start of regularbroadcastStrengthen SI capabilities
Strengthen product lineup

HD (2K)
2017

2018

2019

2020

Business opportunities will increase with accelerated spread of next-generation (4K/ 8K) broadcast

33

Industrial/Medical

34

Growth scenario
Move into the black definitively while trying to expand new businesses

Category

Annual average
growth rate
(between 2014
and 2017)

Included businesses
Testing and measurement

Independent
business+22%

Process equipment
Field engineers
New products

Canon’s newpriority domain+148%

Industrial cameras, machine
vision, AGV

Canon’s existingdomain+7%

Component business35

Industrial Equipment: Growth strategies

1

Expand and improve the line-up of new products handled andbuild into a pillar of growth
Strengthen the technology trading company function

2

Launch Canon’s priority businesses early, including
those for machine vision and industrial cameras

3

Develop Taiwan market through Canon Advanced
Technologies Taiwan Inc.

36

Targets in expansion of handled products
MarketDomainApplication/product

Manufacturers currently
handling
application/product

Manufacturers
planning to handle
application/product

Main semiconductors
Peripheral
semiconductors

Nonsemiconductors

Existing business domains

Peripheral
semiconduct
ors

Nonsemiconductors

Domains being newly
enteredWafersLamp annealing, defect measurement

Mattson, Raytex

DRAM, NAND, Flash memory
Logic IC, CMOS image sensors

Lamp annealing, ashing, etching,defect measurement, massmeasurement, film thickness
measurement, dicing, surface shape,
etc.

Mattson, Raytex,
Metryx, Camtek,
RAVE, JVS, EUV
tech., ZYGO

Consumables (filters)

Chemical filter

KAEL

MEMS, LED, power supply IC, etc.

Ashing, etching, defect measurement,
shape measurement, sputtering,cleaning, etc.

MAS, Camtek, Zygo,
memsstar

Precision machining

Precision sensors, galvanometerscanners, etc.

Canon

Precision measurement

Surface shape, surface roughness, etc. Zygo

Schmidt*

LCD drivers

Probe cards*

ProbeAce

Production innovation

3D printers, machine vision, industrial
camerasPreclinical (Pharmacy)

PlasmaTherm

Plasma Therm,
Oerlikon,
EcoSnow

Multi-wire saws

3D Systems,
Canon,
CMJ independently

Small animal PET/SPECT/CT/MRI

TriFoil Imaging-*Marketed in Taiwan
37Medical: Growth scenario
Move into the black definitively while trying to expand new businesses

Category

Included businesses
average growth rate
between 2014-2017

Included businesses
Procurement modality/Ophthalmic
products
PACS/Medical imaging solutions

Independent
business+11%

Ophthalmic equipment
Infection management
Pharmaceutical dispensing

Healthcare products
Canon’s newpriority domain
Canon’s
existing domain-

Medical IT business
CXDI

+11%

Digital non-mydriatic retinal
cameras/OCT
38

Medical: Growth strategies

1

Expand sales of modalities by strengthening sales force

2

Strengthen consulting and one-stop trading
company functions for hospitals

3

Strengthen and expand medical imaging IT solutions

4

Rigorously expand independent business areas of infection
management and pharmaceutical dispensing in Japan

5

Expand overseas businesses
393Strengthen and expand medical imaging IT solutions

Medical Image Place
Medical image external storage
service (planned to be launched in
the future)

Medical image system service(planned to be launched in the
future)Provide infrastructure linking
Provide archive for image
image interpretation service
data generated in the facility
providers to facilities requesting
interpretation
Request for image interpretation

Storage of images generated
in the facility and provision of
application for displaying them(Cloud PACS)

Infrastructure services forremote image interpretation(Launched in 2014)

Clients
Hospitals

Clinics

Medicalexamination
centers

Image interpretation
service providers

Result of theinterpretation

Medical Image Place

Image storage
Provision of applications fordisplaying the images

Management
and operations

Interpretation
Description offindings
Radiologists

AZE: Sales of viewer

40

Investing for Growth
Breakdown of investment

Generalinvestment

Main
investment
items

MFP rental assets

Around ¥21
billion

Additional investment in Tokyo West
Data CenterAround ¥5billionDevelopment of internal IT
equipment/ systems

Around ¥9billionTotal
M&A-related funds

Strategic investment

3-year cumulative
investment
amount<Target areas>
IT solutions, medical care,documents

Around ¥50
billionAround ¥40
billion(Preparatory
funds)
41

Shareholder dividend policy

 Pay dividends with comprehensive considerationof the medium-term profit forecast, investment
plans, and cash flows, with a consolidated payout
ratio of at least 30%

42

Performance and future projections made in this document are based on information
available at present time, and include potential risks and inaccuracies.
Owing to various factors, actual results may differ substantially from these projections.
All estimated/actual performance figures are for consolidated performance.
* The figures are rounded off to the nearest 100 million yen in this material.