Translation

Interim Report for the 51th Business Term
January 1, 2018  June 30, 2018
Securities code: 8060

To Our Shareholders

1Business Conditions by Segment

3Topics5

To Our Shareholders
We take this opportunity to convey our sincerest appreciation to all of our shareholders fortheir continued support.
Canon Marketing Japan Inc. (“Canon MJ”) is pleased to deliver the interim report for the51th Business Term.

During the interim period under review, net sales of theCanon MJ Group tumbled on sluggish sales of digital SLR
cameras, inkjet printers and other products, outweighing
the briskness of IT solutions for businesses. Operating
income also declined, mainly due to a decline in sales ofhighly profitable products. We plan to pay interim dividendsof 25 yen per share, and annual dividends of 60 yen per
share as announced at the beginning of the period. Bothdividends are unchanged from the previous fiscal year.
To preview the second half of this period, we forecast aslump in both net sales and operating income, given thatthe market is weaker than expected in the Consumers
segment and that our performance is falling somewhat
short of plan in the Professional segment. However, we will
have our new market- and customer-based organizational
structure, introduced on January 1, 2018, more deeply
entrenched across the company and we will build closer
ties with customers in separate markets to offer high value
in a constant effort to shift to growth and to enhance
profitability.
As we pursue these initiatives, we sincerely ask for yourcontinued support.

Masahiro Sakata
August 2018
* In this report, the period from January 1, 2018 to June 30, 2018 is stated asthe “interim period.”

1Canon Marketing Japan Inc.

President & Representative Director

Results Highlights(Figures are rounded to the nearest unit)■■ Interim period ■ Fiscal year

Net sales

Fiscal year forecast

Operating income(Billions of yen)

632.2

629.3

(Billions of yen)

27.7

625.0

Comparison withprevious period

30.4

1.0%
306.2

FY2016

11.8%

300.5

303.7

FY2017

28.5
Comparison withprevious period

11.0

10.3

FY2018FY2016

Ordinary income

9.7

FY2017FY2018

Profit attributable to owners of parent(Billions of yen)

31.5

28.7

(Billions of yen)

30.0

20.7

18.2

Comparison withprevious period

7.0%11.2

FY2016

11.2%

11.0

11.8

FY2017

20.2
Comparison withprevious period

6.6

FY2018FY20168.4

FY20177.4

FY2018

Profit attributable to owners of parent per share(yen)51

FY201615615914065

FY2017

57

Please see our IR Site for more detailed businessresults.
canon.jp/8060e-ir

FY2018Canon Marketing Japan Inc.

2

Business Conditions by Segment
The Canon MJ Group shifted from its conventional product-based organizational structure to a new market- and customer-based structure on January 1,
2018, with a view to implementing the basic policy in our Long-Term Management Objectives Phase III.
Accordingly, new reporting segments of Consumers, Enterprise, Area and Professional apply starting this interim report to replace the conventional segmentsof Business Solutions, IT Solutions, Imaging Systems, and Industrial / Medical.
* The segment figures for the interim period in the preceding fiscal year represent the results of recalculation in accordance with the definition of new segments that applies to the interim
period under review. The changes mentioned in the Overall Condition are based on the comparison with net sales for the interim period in the preceding fiscal year. Net sales in eachsegment include internal sales and transfers between segments.

Consumers

Providing digital cameras, inkjet printers and other products for individual customers■ Net sales(Billions of yen)

70.6

61.0

■ Operating income(Billions of yen)

2.6

Comparison withprevious period

-1.1

13.6%
2017
Interim period

2018
Interim period

2017
Interim period

2018
Interim period

Interchangeable Lens Digital Cameras
Released in March, the EOS Kiss M attained strong sales to hold the largest market
share in its domain. Mirrorless models thus achieved sales growth. However, sales ofdigital SLR cameras were sluggish, a reflecting of the market contraction. Sales in thecategory of interchangeable lens digital cameras as a whole declined.
Compact Digital Cameras
Sales were down, following the slumping market.
Inkjet Printers
Sales of inkjet printers fell given a weak market for home-use models, despite brisk
sales of business inkjet printers. Sales of ink cartridges were also down after a decline
in the printing volume.
IT Products
Brisk sales of gaming computers and peripherals led to massive sales growth in thiscategory.

Enterprise

Providing Canon’s I/O devices and solutions that help resolve business problems in separate industries for large enterprises■ Net sales(Billions of yen)

89.2

94.7

Comparison withprevious period■ Operating income(Billions of yen)

3.6

Comparison withprevious period

6.2%
2017
Interim period

4.8

35.4%
2018
Interim period

2017
Interim period

2018
Interim period

For the Financial Sector
Strong sales of large system integration projects, steady sales of form design solutions
for life insurance companies and cloud systems for non-life insurance companies andthe expansion of development projects for securities firms resulted in a sales hike.
For the Manufacturing Sector
Sales expanded after strong sales of sales assistance systems for automakers andsystem transition services for building materials manufacturers.
For the Distribution Sector
Sales rose sharply, driven by operation support systems for railway operators and by
solutions for specified trade-related operations for general trading firms, and supported
by a large order won for office multifunctional products (MFPs).
For the Education Sector
Sales were up, due chiefly to the receipt of multiple orders in the in Campus platform,
which provides IT infrastructure systems for information distribution in school and forlearning management.

Data Center Services and Automotive Embedded Software
Sales were steady.
MFPs
Sales were up with steady shipments to financial, manufacturing, public, distribution
and many other business sectors.
Laser Printers
Sales declined on the continued convergence to MFPs and sluggish orders.

3Canon Marketing Japan Inc.

(Figures are rounded to the nearest unit)

Area

Providing IT solutions, including management solutions in addition to sales of I/O devices, primarily to small and medium enterprises nationwide■ Net sales(Billions of yen)

131.1

129.4

Comparison withprevious period

1.3%

2017
Interim period■ Operating income(Billions of yen)

5.5

6.0

Comparison withprevious period

10.2%
2018
Interim period

2017
Interim period

2018
Interim period

The HOME IT support cloud service for small and medium enterprises
Sales were steady.
The ESET anti-virus software
Sales were steady.
Laser Printer Cartridges
Steady sales were attained by cultivating customers in specific business sectors.
Maintenance Services
Sales fell on sluggish sales of MFPs and other mainstay hardware and a decline in unit
prices of maintenance services.

Professional

Providing solutions targeting customers in the specialized fields of Production Printing, Industrial Equipment, Healthcare and Visual Solutions■ Net sales(Billions of yen)

25.7

29.0

Comparison withprevious period■ Operating income(Billions of yen)

-1.0

-0.2

2017
Interim period

2018
Interim period

12.6%
2017
Interim period

2018
Interim period

Production Printing
Sales of high-speed cut sheet printers were nearly flat but sluggish sales of high-speed
continuous feed printers resulted in a sales slide.
Industrial EquipmentT he semiconductor-related market continued to be strong. With an increase in
semiconductor manufacturing equipment handled and inspection and measurement
equipment, the semiconductor business saw robust sales growth. The nonsemiconductor business also enjoyed rising sales, following the expansion ofmeasurement devices and industrial components.
Healthcare
Sales fell sharply on the sluggish modality projects for hospitals, despite growth in salesof medical information systems and ophthalmologic equipment, among others.
Visual Solutions
Sales were almost unchanged. Sales of solutions for broadcasters remained strong, butthere was a reaction to the large lot deal on network cameras made in the previousyear.

Overall IT Solutions■ Overall Sales of IT Solutions(Billions of yen)

IT solutions are an essential element not only to IT-based businesses such as systemdevelopment and data centers. They are also becoming indispensable to other businesses inthe Group. The Canon MJ Group defined them as a driving force for growth and has taken
steps to expand them. As a result, overall sales of IT solutions, included in segment sales forthe interim period under review, totaled 98 billion yen, up 9% year on year.

90.2

98.0

Comparison withprevious period

9%2017
2018
Interim period Interim period

Canon Marketing Japan Inc.

4

Topics (from January 1, 2018 to June 30, 2018)
Launching 30 models in 7 series
imageRUNNER ADVANCE Gen3 2nd Edition
On January 22, Canon MJ launched 30 models in the 7 series imageRUNNERADVANCE Gen3 2nd Edition as new office-use multifunctional products.
The new products have improved functions, reflecting the opinions of users who
have already used imageRUNNER ADVANCE products, while inheriting the highquality basic performance of the third-generation products of imageRUNNERADVANCE, which were launched starting February 2016, and contributing toimproved productivity and reduced management burdens in the office by enhancing
collaboration with cloud services.

Launching a mirrorless cameras for entry users, EOS Kiss M
On March 23, Canon MJ launched the newest mirrorless camera EOS Kiss M, which
has crowned the product name with EOS Kiss, the leading brand in the entry class
SLR cameras, for the first time.
The EOS Kiss brand was created in 1993 and is the representative SLR camera forentry-level users of Canon MJ. EOS Kiss M has achieved a small, lightweight size withhigh image quality by expanding the domain of EOS Kiss to mirrorless cameras. It willmeet a broad range of user needs.

Beginning providing in Campus Scan,a lesson support cloud system using AI
On June 1, Canon MJ and Canon IT Solutions Inc. (“Canon ITS”),
a subsidiary of Canon MJ, began providing “in Campus Scan,” alesson support cloud system using AI.
in Campus Series is an education support information platform
developed by Canon ITS independently. in Campus Scan will
support the work-style reforms of teachers by automating theaggregation of scores of tests and reports, etc. and improving theefficiency of handling learning outcomes and academic results atschools.

5Canon Marketing Japan Inc.

Selected for the 2018 Health and Productivity
Stock Selection
Canon MJ has been selected forthe first time for the Health andProductivity Stock Selection, madejointly by the Ministry of Economy,
Trade and Industry and Tokyo
Stock Exchange, Inc. (“TSE”).
The Health and Productivity Stock
Selection evaluates companies
that strategically work on thehealth management of employees
from a management perspectiveand selects one company in each industry from among thelisted companies on TSE. Canon MJ gained high marks in all
items of “management philosophy and policies,” “organizedframeworks,” “specific systems established and measures
introduced for ensuring and implementing health-conscious
management” and “measures established for assessing andimproving health and productivity management.”
Canon MJ will strive even harder to fully enforce safety
consideration, increase self-health management capabilities
and foster a health culture to achieve health and productivity
management for lively and healthy employees and a vigorouscompany.

Special sponsor of the Vienna Boys Choir performancein Japan commemorating the 50th anniversary of theCanon Marketing Japan Group’s founding©www.lukasbeck.com

Canon MJ also became a special sponsor of the performancesof the Vienna Boys Choir in Japan, which were given
throughout the country from the end of April to mid-June,in 2018. In 2018, when Canon MJ became the sponsor forthe 13th time since 2005, a performance of the Vienna Boys
Choir was given in the name of “commemorating the 50thanniversary of the Canon Marketing Japan Group’s founding.”
Canon MJ contributes to the fostering of culture andinternational cultural exchange through its efforts to convey
the attractions of art.

Supporting Rugby World Cup 2019TM, Japan
Canon is sponsoring Rugby World Cup 2019TM, Japan as an Official Sponsor. We
are providing stimulus to the sporting event by posting powerful rugby pictures
printed by “imagePROGRAF” series large-size inkjet printer on newly developed
waterproof poster paper at Canon Rugby Wall Gallery held at the host cities,
among other places.
In May, 500 days before the opening match of Rugby World Cup 2019, wealso began posting the pictures on the wall of the general reception space on
the first floor of CANON S TOWER, the head office building of Canon MJ. We
will continue to support the sporting event with all our strength as an OfficialSponsor.

TM© Rugby World Cup Limited 2015

Canon Marketing Japan Inc.

6

Details of Our Communication Activities

Introduction of IR Site

Presentations and IR events
In May, President Masahiro Sakata took
the rostrum at a meeting for individual
investors sponsored by Daiwa Investor
Relations Co., Ltd. He explained thehistory, business, performance trends,
medium-term management plan, andother aspects of the Canon MJ Group to
Meeting for individual investors sponsoredabout 410 participants. We also organized by Daiwa Investor Relations Co., Ltd.
a company presentation at SMBC Nikko
Securities Inc.
We hope to create more opportunities like these in the future, and will post
details of scheduled events on our website as soon as they are available.

 IR News IR Library ManagementPolicy

 Stock
Information

 Financial
Information

Please see our website for IR
information including the above.
canon.jp/8060e-ir

System for additional purchase and sales of shares of less than one unit (1 to 99 shares)
The trading unit (share unit number) of Canon MJ’s shares is 100, and shares of less than one share unit (1 to 99 shares)
are unable to be traded on the stock market. However, the following procedures are available.
 Additional purchase system
In this system, shareholders are able to purchase the number of Canon MJ’s shares necessary to increase their holding
to a share unit number (100 shares) from Canon MJ at the prevailing market price. For example, if a shareholder
currently holds 180 shares at the moment, that shareholder is able to increase the number to 200 shares by purchasing
an additional 20 shares.
 Sales system
Under this system, shareholders are able to sell to Canon MJ holdings of less than one share unit (1 to 99 shares) ofshares of Canon MJ at the prevailing market price.
· If you are a shareholder who owns less than one share unit of Canon MJ’s shares in an account at a securities company,
please follow the procedures of that securities company.
· If you are a shareholder who owns less than one share unit of Canon MJ’s shares in a special account (a shareholder
who does not have an account at a securities company, etc.), please contact Mizuho Trust & Banking Co., Ltd., which is
the institution responsible for managing special accounts (0120-288-324 (toll-free)).

Headquarters: 16-6, Konan 2-chome, Minato-ku, Tokyo 108-8011, Japan Tel: 03-6719-9111

Cover photo: The Great Barrier Reef, Australia - From the Canon
Calendar 2018 “World Heritage Journey Sekaiisan
wo Tazunete” by Kazuyoshi Nomachi