FY2017 Results

January 30, 2018
Yoshiyuki Matsusaka
Director, Senior Vice President* The figures are rounded off to the nearest 100 million yen in this material.
* Forward-looking statements and results forecasts presented in this material are based on the management’s assumptions using currently available
information and therefore contain inherent risks and uncertainties.
As a consequence, due to a range of possible factors, actual results may materially differ from the forecasts.

Summary of 2017 4Q Results
Net sales¥175.9 B （Y/Y +0.3B, +0％）

 Net sales increased on continued growth in independent growth areas,including IT solutions and industrial equipment.

Operating Income¥12.0 B （Y/Y +0.2B, +1％）

 Operating income rose due to a Company-wide reduction in expenses.

Profit attributable toowners of parent¥8.2 B （Y/Y -0.0B, -0％）1

4Q 2017 Actual

Summary of Results(from October 1 to December 31)(Billions of yen)

 Summary of Results
4Q 2016

4Q 2017

ChangesAmount%

175.6

175.9

+0.3

(35.5%)(34.8%)(-0.7%)

62.3

61.2

-1.1

(6.7%)(6.8%)(+0.1%)

11.8

12.0+0.2(6.7%)(6.9%)(+0.2%)

Ordinary income

11.8

12.2+0.3

Profit attributable toowners of parent(4.7%)(4.6%)(-0.0%)

8.2

8.2-0.0

Net Sales
Gross Profit
Operating income+0%-2%+1%+3%-0% Op. Income Variance Analysis

11.8

10.9

4Q 2016

Increase in
net sales

Decrease ingross profit

Decrease in
SG&A expenses

4Q 20172

Segment Outline

4Q 2017 Actual(from October 1 to December 31)(Billions of yen)

4Q FY2016
4Q FY2017
Changes
Op.
Op.
Op.
Net Sales
Net Sales
Net Sales
IncomeIncome
IncomeBusiness
BusinessSolutions
Solutions86.93.9

85.9

3.7

-1.0

-0.2

ITITSolutions
Solutions

31.2

1.0

36.5

1.3

+5.3+0.3

Imaging
ImagingSystem
System

56.1

7.4

52.8

6.7

-3.3

-0.7

Industrial
Industrial/ /Medical
Medical

7.6

-0.7

8.2

0.1

+0.6+0.8

Other
Other-6.2

0.1

-7.5

0.1

-1.3

-0.0

Total
Total

175.6

11.8

175.9

12.0

+0.3

+0.2

Notes
1. “Other” includes the intersegment sales, the shared service businesses and the corporate expenses that are
not allocated to each segment.
2. The intersegmental business transfer of Canon Biz Attenda Inc., A&A Co., Ltd. And Canon ITS Medical Inc. isreflected in the figures of FY2016.
3

Summary of Results

FY 2017 Actual(from January 1 to December 31)(Billions of Yen)

 Summary of Results
FY2016FY2017

ChangesAmount%

629.3

632.2

+2.9

(35.9%)(35.4%)(-0.5%)

226.0

223.8

-2.2

(4.4%)(4.8%)(+0.4%)

27.7

30.4

+2.7

(4.6%)(5.0%)(+0.4%)

Ordinary income

28.7

31.5+2.8

Profit attributable toowners of parent(2.9%)(3.3%)(+0.4%)

18.2

20.7+2.5Net Sales
Gross Profit
Operating income+0%-1%+10%+10%+14%

 Op. Income Variance Analysis

FY2016

Increase in
net sales

Decrease ingross profit

Decrease in
SG&A expenses

FY20174FY2017 Actual

Segment Outline(from January 1 to December 31)(Billions of Yen)FY2016Net Sales

FY2017

Changes

Op.
Op.
Op.
Net Sales
Net Sales
IncomeIncomeIncomeBusiness
BusinessSolutions
Solutions

334.6

12.1

338.1

12.2

+3.5+0.2

ITITSolutions
Solutions

128.8

4.0

134.9

4.6

+6.1

+0.6

Imaging
ImagingSystem
System

159.2

10.9

152.3

11.7

-6.9

+0.8

Industrial
Industrial/ /Medical
Medical

32.2

0.234.3

1.5+2.1+1.4

Other
Other-25.5

0.6

-27.5

0.4-2.0-0.2

Total
Total

629.3

27.7

632.2

30.4

+2.9+2.7

Notes
1. “Other” includes the intersegment sales, the shared service businesses and the corporate expenses that are
not allocated to each segment.
2. The intersegmental business transfer of Canon Biz Attenda Inc., A&A Co., Ltd. And Canon ITS Medical Inc. isreflected in the figures of FY2016.
5

Segment Information

Business Solutions

51%

Net sales : ¥85.9 B （ Y/Y -1.0B, -1%）
 While firm performance was seen in areas such as network cameras and IT solutions, a fall in
production printing led to a decline in net sales.

Operating income ¥3.7 B （ Y/Y -0.2B, -6%）
 Operating income declined due to a fall in income from lower sales.
Net sales

2017 Actual v. 2016 ActualFY2016

FY2017

Changes

Net Sales

334.6

338.1

+3.5

Op. income

12.1

12.2+0.2

Net sales - Growth rate

(Billions of Yen)

Op. income

1Q

2Q

3Q

4Q

FY

FY2016+1%-0%-1%+4%+1%FY2017+2%+2%+1%-1%+1%6

Segment Information

21%IT Solutions

Net Sales : ¥36.5 B （Y/Y +5.3 B, +17％）
Net sales in this segment rose, reflecting strong performance in the SI service business,
as well as the IT infrastructure & service business and product business.

Operating income : ¥1.3 B （Y/Y +0.3 B, +28%）
 Operating income rose due to an increase in gross profit resulting from the rise in net
sales and a fall in SG&A expenses.
Net sales

2017 Actual v. 2016 ActualFY2016

FY2017

Changes

Net Sales

128.8

134.9

+6.1

Op. income

4.0

4.6+0.6

Net sales - Growth rate

(Billions of Yen)

Op. income1Q

2Q

3Q

4Q

FY

FY2016+3%+0%-0%-4%-0%

FY2017-2%+0%+4%+17%+5%7[Reference] Overall sales of IT Solutions(Billions of Yen)

4Q 2016

Changes

4Q 2017%

AmountSales of IT Solutions

31.2

36.5+5.3+17%

Sales other than the IT Solutions segment

19.0-7.5+0.1-1.3+0%Intersegment (elimination), etc.

19.0-6.2

Total

43.9

48.1+4.1+9%

FY2016FY2017-%

ChangesAmount%Sales of IT Solutions

128.8

134.9+6.1+5%

Sales other than the IT Solutions segment

76.5-27.5+2.8-2.0+4%

Intersegment (elimination), etc.

73.7
-25.5

Total

177.0

183.9

+6.9

+4%-%

YonY2016 v 2017
【Reference】 Overall IT Security net sales

Overall IT Security

4Q

1Q-4Q-3%+12%8

Segment Information

23%

Imaging SystemNet sales : ¥52.8 B （Y/Y -3.3 B, -6％）
 Net sales in the segment fell, reflecting a decline in ink jet printers and ink cartridges.

Operating income : ¥6.7 B （Y/Y -0.7 B, -9%） Operating income declined due to a fall in income from lower sales.
Net sales

2017 Actual v. 2016 ActualFY2016FY2017

Changes

Net Sales

159.2

152.3

-6.9

Op. income

10.9

11.7+0.8

Net sales - Growth rate
1Q(Billions of Yen)

Op. income

2Q

3Q

4Q

FY

FY2016-8%-18%-15%-4%-11%

FY2017-7%-4%+0%-6%-4%
9Segment Information

5%

Industrial / Medical

Net sales : ¥8.2 B （Y/Y +0.6 B, +8％）
 Net sales in the Industrial segment increased thanks to the strong performance of semiconductor
manufacturing equipment and inspection and measurement equipment. Net sales in the Medical segment
fell due to a slumps in areas such as X-ray film sales and pharmaceutical dispensing-related products.

Operating income : ¥0.1 B （ Y/Y +0.8 B, -％） Operating income in the Industrial segment rose due the increase in net sales. Similarly, the Medicalsegment recorded significant improvement due to factors including structural improvements to thebusiness.

(Billions of Yen)

Net sales

2017 Actual v. 2016 ActualFY2016

FY2017

Changes

Net Sales

32.2

34.3

+2.1

Op. income

0.2

1.5+1.4

Op. income

Net sales - Growth rate
1Q2Q

3Q

4Q

FYFY2016

+11%

-14%

-16%-7%-6%FY2017-16%+3%+41%+8%+7%10Summary of Projections(Billions of Yen)FY2018
ProjectionNet Sales

FY2017
ActualChanges
Amount645.0

632.2+12.8(5.0%)(4.8%)(+0.2%)

32.0

30.4+1.6(5.1%)(5.0%)(+0.1%)

Ordinary Income

33.0

31.5+1.5

Profit attributable toowners of parent(3.4%)(3.3%)(+0.1%)

21.7

20.7+1.0

Operating Income%+2%+5%+5%+5%11Overview of New Segments
Consumer

Professional

Selling Canon products such as digital camera and ink
jet printers and products from external suppliers togeneral individual customers.

Running solution businesses targeting customers inspecialized fields of each area

Enterprise
Providing IT solutions and services catering to the needsof each business category in addition to sales of I/O
devices to large enterprises<Major Group Companies>
Canon IT Solutions Inc.
Canon BizAttenda Inc.

Production Printing
Sale of continuous feed printings and high-speed cut
sheet printings (mid-range and higher) primarily to theprinting industry<Major Group Company>
Canon Production Printing Systems Inc.

Industrial Equipment
Sale of semiconductor manufacturing equipment andinspection and measurement equipment primarily to
manufacturers of semiconductors and other electronic devices

Healthcare

Area
Providing one-stop IT solutions including security
solutions in addition to sales of I/O devices to small andmid-sized firms as the main customers<Major Group Company>
Canon System & Support Inc.

Provision of digital radiography, medical and healthcheckup-related IT and infection control solutions tohealthcare and health checkup providers<Major Group Companies>
Canon Lifecare Solutions Inc.
Canon ITS Medical Inc.

Imaging Solutions
Sale of network camera solutions for surveillance andbusiness applications and sale of commercial video
equipment to broadcasters
12Summary of Projections(Billions of Yen)FY2017FY2018ActualProjection

Net Sales

Net Sales

Consumer

166.3

163.4-2.9-2%

Enterprise

176.9

182.7+5.9+3%

Area

260.6

263.3

+2.6+1%

Professional

54.5

61.5

+7.1

+13%

Other-26.1-25.9+0.1-%

Total

632.2

645.0

+12.8+2%

Changes
Net Sales

1. “Other” includes the intersegment sales and the corporate expenses that are not allocated tothe shared service businesses or to each segment.
13Y/Y Projections : Professional Segment
FY2018
Projection

Production Printing+18%

Industrial Equipment+3%

Healthcare Business+8%

Imaging Solutions+43%

Production Printing
An increase of 18% over the previous year is expected thanks to factors including the release of a
black-and-white continuous feed printer that was subject to delayed shipping.

Industrial Equipment
A slight decrease in sales is projected due to the conclusion of sales distributor agreements with someoverseas partners, but sales are expected to rise thanks to an increase in new products.

Healthcare Business
Sales are expected to rise due to expanded sales in digital radiography and medical IT.

Imaging Solutions
Sales are expected to rise by 43% over the previous year due to continued significant growth in networkcameras.

14

Y/Y Projections B2C
FY2018
Projection

DILC (units)-2%Compact Digital Camera（Unit）-10%

Inkjet Printer（Unit）-5%

Inkjet Printer Cartridge（Amount）-1%

DILC(Digital Interchangeable Lens Camera）
Although we project significant growth in mirrorless cameras due to aggressive sales promotions and other measures,
we forecast a decline in entry-level digital SLR cameras due to the migration to mirrorless and expect a decrease overall.

Compact Digital Camera
Although we expect a decline in units sold due to the shrinking market, we will make efforts to secure profits by increasing thepercentage of high unit price products.

Inkjet Printer, Inkjet Printer Cartridge
Although we expect a decline in printers in terms of units sold due to the declining market, we will seek toexpand business-oriented offerings and make efforts to secure profits by raising sales unit prices. Sales ofcartridges are expected to decline due to factors such as lower print volume.
15

Y/Y Projections B2B
FY2018ProjectionMFP（Unit）+2%

Service & Support（Amount）-1%

LBP（Unit）＋0%

LBP Cartridge（Amount）＋0%

MFP (Multi-Functional Printer)
The number of shipped units is expected to increase compared with the previous year due to factors including the release of
new imageRUNNER ADVANCE third-generation devices and the acquisition of new customers among medium-sizedcompanies.

Service & Support
Although print volume will increase due to the higher number of units operating in the market, due to the continued fall ofmaintenance unit prices, sales are expected to decline compared with the previous year.

LBP (Laser Beam Printer), LBP Cartridge
Although a decline in sales to regular offices is expected due to the continued consolidation under MFPs, a slight increase in
the number of units sold is projected due to the winning of major projects and higher sales to specific industries. Cartridge
sales are expected to increase slightly due to growth in specific industries.

16Y/Y Projections IT Solutions
FY2018
Projection

System Integration+4%

IT Infrastructure & Service+6%

Engineering+5%※The above projections are based on the figures of Canon IT Solutions Inc.（Non-consolidated）

System Integration
Sales to the financial industry are expected to continue at the same level as last year, while sales to themanufacturing industry are projected to increase. Proposal activities incorporating new technologies
including demand forecast solutions as well as AI and cloud computing will be actively promoted.

IT Infrastructure & Service
Security businesses including the Nishi-Tokyo Data Center and ESET are expected to perform strongly.

Engineering
Embedded business sales are expected to increase through increased external business primarily forautomotive applications. The CAD-focused solutions business is also expected to achieve increasedsales.
17SupplementaryInformation

918

Capital Relationship Diagram

19

Results of main consolidated companies(Billions of Yen)

4Q 2016

4Q 2017

ChangesAmount%-0.1-0%Business Solutions
Canon System & Support Inc.
Canon Production Printing Systems Inc.

Net Sales

29.5

Op. Income

1.0

Net Sales

5.6

Op. Income

0.4

Net Sales

20.9

Op. Income

1.2

Net Sales

3.4

Op. Income

-0.0

29.4
(3.5%)

1.1(3.9%)

4.1(6.5%)-0.1+0.1(+0.3%)-1.6(-)-0.4-28%(-)IT Solutions
Canon IT Solutions Inc.

22.7
(5.6%)

1.5+1.7(6.5%)+0.3+8%(+0.8%)

Industrial / Medical
Canon Lifecare Solutions Inc.

2.8(-)

0.1-0.6(2.5%)+0.1-18%(-)*The impact of merging Canon Software Inc. is reflected in the FY2016 figures of Canon IT Solutions Inc.

20

Results of main consolidated companies(Billions of Yen)FY2016

ChangesAmount

FY2017%

Business Solutions
Canon System & Support Inc.
Canon Production Printing Systems Inc.

Net Sales

120.8

Op. Income

3.9

Net Sales

14.7

Op. Income

0.1

Net Sales

84.5

Op. Income

4.6

Net Sales

13.8

Op. Income

0.3

+0.6

121.4(3.3%)

3.6(3.0%)-0.4(-0.3%)-1.0

13.7(0.7%)-0.3+0%(-)-0.5-7%(-)

IT Solutions
Canon IT Solutions Inc.

+0.2

84.7(5.4%)

5.4(6.4%)+0.8+0%(+1.0%)

Industrial / Medical
Canon Lifecare Solutions Inc.

-0.2

13.7(2.0%)

0.3(2.1%)+0.0-1%(+0.1%)*The impact of merging Canon Software Inc. is reflected in the FY2016 figures of Canon IT Solutions Inc.

21

SG&A expenses(Billions of Yen)

FY 2016
4Q

FY 2017

1Q-4Q

4Q

Changes

1Q-4Q

4Q

1Q-4Q

Advertising expenses

2.59.1

2.4

8.5

-0.1

-0.6

Promotion expenses

1.9

5.5

1.8

5.2

-0.2

-0.3

Warranty expenses

1.6

5.9

1.3

5.2

-0.3

-0.6

Other direct selling expenses

5.5

21.3

5.2

20.4

-0.3

-0.9

30.5

124.1

30.6 123.1

+0.1

-1.0

Depreciation and amortization

0.5

2.2

0.4

1.9

-0.2

-0.3

Other selling expenses

7.9

30.4

7.5

29.2

-0.4

-1.2

50.5

198.3

49.2 193.4

-1.3

-5.0

Personnel expenses

Total

22

Non-operating income and expenses(Billions of Yen)

 Non-operating income
FY20164Q
1Q-4Q
Interest income
Dividend income
Insurance income
OtherTotal

0.0
0.0
0.00.1
0.1

0.2
0.1
0.6
0.4
1.4

FY20174Q
1Q-4Q

0.00.0
0.0
0.1
0.2

0.2
0.1
0.5
0.5
1.3

Changes4Q
1Q-4Q+0.0+0.0-0.0+0.1+0.0-0.1-0.0-0.1+0.0-0.1

 Non-operating expenses
FY20164Q
1Q-4Q
Interest expenses
Foreign exchange losses
OtherTotal

0.00.1
0.1
0.1

0.0
0.1
0.3
0.4

FY20174Q
1Q-4Q

0.0-0.0
0.0
0.0

0.0
0.0
0.2
0.2

Changes
4Q
1Q-4Q

-0.0
-0.1
-0.0
-0.1

-0.0
-0.1
-0.1
-0.1

23

Extraordinary income and expenses(Billions of Yen) Extraordinary income
FY20164Q
1Q-4Q
Gain on sales of non-current assets
Gain on sales of investment securities
OtherTotal

 Extraordinary expenses
Loss on sales and retirement ofnon-current assets
Impairment loss
Loss on disaster
Special extra retirement payments
OtherTotal

0.0
0.7
0.0
0.7

0.8
0.7
0.0
1.5

FY20164Q
1Q-4Q

FY20174Q
1Q-4Q

0.0
0.0

0.9
0.5
0.1
1.5

FY20174Q
1Q-4Q

Changes
4Q
1Q-4Q

+0.0
-0.7
-0.0
-0.7

+0.1
-0.1
+0.0+0.0

Changes
4Q
1Q-4Q

0.3

1.0

0.1

0.9

-0.2

-0.1

0.0
0.0
0.0
0.3

0.1
0.0
0.0
0.1
1.3

0.2
0.0
0.3

1.0
0.1
0.0
2.1

+0.2
-0.0
-0.0
-0.0
-0.0

+0.9
-0.0
+0.1
-0.1
+0.8
24

Balance Sheets
Dec. 31 Dec. 31
Changes
2016
2017

497.7

510.8

+13.1

362.1

397.5

+35.4

Cash and deposits107.3

137.0

+29.7

Notes and accounts
receivable trade

124.5

125.6

+1.2

Inventories

30.0

33.9

+3.9

Other

100.4

101.0

+0.6

135.6

113.3

-22.3

Property, plant andequipment

96.7

75.1

-21.6

Intangible assets

6.8

5.5

-1.3

32.1

32.8

+0.7

216.8
157.0

213.3
157.4

-3.5
+0.4

102.7

100.9

-1.7

54.3
59.8
280.9
287.6
-31.9

56.5
55.9
297.5
301.1
-31.9

+2.2
-3.9
+16.6
+13.5
-0.0

-7.1

-4.1

+3.0

0.4

0.5

+0.0

56%

58%

+2%

AssetsCurrent assets

Non-current assets

Investment andother assets
Liabilities
Current liabilities
Notes and accounts
receivable trade
Other
Non-current liabilities
Net assets
Shareholders' equity（Treasury stock）
Accumulated othercomprehensive income
Non-controlling interests
Equity ratio(Billions of Yen)

Notes and accounts receivable trade

Inventories

25

Financial Indicator(Billions of Yen)Operating income ratio / ROA / ROE

Profit attributableto owners ofparent

26

Financial IndicatorPayout Ratio / EPS / Dividend per share
Payout Ratio

Dividend per share：
Yen
EPS：Yen27

Financial Indicator(Billions of Yen)

Depreciation and amortization

Investment

Full Year

Full Year

FY2016FY201713.2
13.7

FY201714.9
14.3

FY201822.5

FY201813.7

FY2016Cash Flow28

929