Canon Marketing Japan Group

Three-Year Management Plan 2014-2016

January 29, 2014
Masami Kawasaki
President1

2013 Recap

2012
Ratio
Net sales(YoY)
Op. profit(YoY)
Ord. profit(YoY)
Net profit
(YoY)

659.2
16.8

2.5%

18.1

2.7%

10.6

1.6%

（billion）
2013
Ratio
△657.2( 0.3%)
17.0
2.6%(+1.3%)
18.2
2.8%(+0.6%)△
10.2
1.5%( 3.8%)
3

The ideal situation in 2016

Corporate group which continues toprovide original new added valueWe have developed into a value creation-oriented trading company, providingexcellent solutions.
Progress has been made with the strengthening and development of
human resources to lead growth strategies and drive businesses.
Profitability has been strengthened further through continued profit
structure reform.
4Five general strategies for realizing the ideal situation
Establish Canon as undisputed market leader in Japanin each of its businesses
Enhance productivity and added value in existing
business domains by maximizing group synergies
Strengthen and expand growth areas
in existing businesses
Concentrate all Group efforts on creating businesses
and procuring new products with a sense of speed
Promote the “Beyond Japan” concept inall business domains
5Consolidated Performance Objectives(billion)
Performanceindicator
Net sales
Sales growth rate

2013 result

2014
objective

2015
objective

2016
objective

657.2

673.2

738.0

800.0

99.7%

102.4%

109.6%

108.4%

Average growth rate between 2013 and 2016: 106.8%

Op. profit

17.0

18.8

25.5

36.0

Op. margin

2.6%

2.8%

3.5%

4.5%

Ord. profit

18.2

19.9

26.5

37.0

Net profit

10.2

12.0

16.2

23.0

74.4 yen

87.9 yen

118.6 yen

168.4 yen

Net profit per share6Performance Objectives by Segments
2013 result
Sales

BusinessSolutions

IT Solutions

Imaging
Systems
Industrial/
MedicalOther/Sales
eliminations
Group
consolidated

Op.
Profit(billion)

2014 objective

2015 objective

2016 objective

Sales

Sales

Sales

Op. Profit

Op. Profit

Op. Profit

Average
growth rate
between2013 and2016

327.3

5.5

332.5

6.4

354.0

7.5

375.0

12.3 104.6%

98.9%

1.7%

101.6%

1.9%

106.5%

2.1%

105.9%

3.3%

142.3

0.4

146.2

1.8

167.5

5.0

185.0

108.6%

0.3%

102.7%

1.2%

114.6%

3.0%

110.4%

4.1%

191.7

12.5192.3

11.1

204.0

11.0

215.0

12.3 103.9%

99.9%

6.5%

100.3%

5.8%

106.1%

5.4%

105.4%

5.7%

26.1

-1.8

30.3

-0.8

44.0

1.4

59.0

85.1%

-116.1%-145.2%

3.2%

134.1%

5.6%

-30.2

0.4

-28.1

0.3

-31.5

0.6

-34.0

0.6

657.2

17.0

673.2

18.8

738.0

25.5

800.0

36.0 106.8%

99.7%

2.6%

102.4%

2.8%

109.6%

3.5%

108.4%

4.5%

7.5 109.1%

3.3 131.2%* The percentage in the lower part of each segment shows the YOY growth rate for sales and theoperating margin for operating profit.

7

Growth scenario (changes in net sales)(billion)
900

Average
growth rate

800

700
600
500

400

190.3

203.6

40.1

43.7

50.9

65.0 118%

426.9

425.9

448.3

460.5 103%2013
result2014
objective

2015
objective

2016
objective

300
200

238.8

274.5 113%

1000

Canon’s existing domains

Canon’s new priority domains

Independent businesses
8Business Solutions

9

Business Solutions

Growth scenario(billion)Target: Total sales ¥375 /O.P¥12.3 (2016)
Category

Independentbusiness

Canon’s newpriority domain
Canon’s existingdomain

Annual average
growth rate(between 2013 and2016)

Included businesses
IT Solutions

110%

Document Solutions
Support Business

113%

102%

Production Printing BusinessNetwork Cameras
MFP(including maintenancebusiness)
LBP(including cartridges andmaintenance business)
10Growth strategies
1

Improve productivity and profitability of documentbusiness2

Expand specific printing (LBP) and sector-specificsolutions

3

Fully launch solutions for SMEs

4

Establish base for turning production printing
business into growth engine, headed by newcompany

5

Fully launch network camera business11

Business Solutions

Improve productivity and profitability of document business

Expand MIF (machines in field) andDV (document volume)Further strengthen product appeal of iR-ADV
multifunctional office printerVigorously promote development of new customers
Strengthen customer contact through documentsolutions

Improve productivity throughbusiness process reforms

Vigorously expand MDS (managed documentservices)12

Business Solutions

Expand specific printing (LBP) and sector-specific solutions
Priority domain in the future
・・・

Specialized markets(Specializedapplications)
Medical20%
In crease inDistributionMIFand retail・・・

Office market（OA applications）
Slight70%
decrease inMIF

Local government
market10%13

Business Solutions

Expand IT solutions for SMEs

Solutions for SMEs provided by Canon System & Support
Document solutions

Information-sharing solutions

Cloud solutions

Using paper documents andelectronic data through linkage ofmultifunctional products and printers

Sharing information - an important
corporate asset -safely and reliably,inside and outside of the company

Using necessary hardware
and software over the Internet

Mobile solutions

Security solutions

Back-up solutions

Creating an efficient IT
infrastructure using mobile terminals

Implementing reliable security
measures for safe IT use

Preparing for data corruption,
hardware failure and disaster

New: UTM * Independent maintenance service
Backbone solutions

Optimum office solutions

IT consulting

Reviewing backbone system - central
to corporate activity -to improve
productivity

Providing layouts suited tocustomer needs

Analyzing current issues frommultiple perspectives and implementing
effective measures

New:Comfortable space solutions* UTM: Unified Threat Management

14Market targets in production printing
デジタル印刷市場規模 約4,000億円

Business Solutions

Size of digital printing market: Expected to grow from ¥400 billion to ¥1 trillion
Outsourcing

Bulk printing within corporate group

High-speed printing (CRD)
ＣＲＤ/In-plantCommercial printing

Office/High-speed

Reprographicindustry

Printing
industry

From enterprises
基幹ルーム

Data print services（DPS）

Document printing
Privateenterprises

Retail Photo
LaboPrinting industry

Government
and public offices

Creative arts（ＣＡ）
Productioncompanies
Design offices

Large-format printers
Sign & display
industry
Design offices

15

Business Solutions

Strengthen structure by establishing new company,and introduce new products

Productstrength

High-end
Mid-range
Low-endSales
strength

Commercial printing

Supportstrength7 services centers dedicated toproduction printing locatedthroughout Japan

Name of newcompany
Number ofemployees

DPS

Canon Production Printing Systems Inc.
Around 550

Planned date ofincorporation

April 1, 2014

Objective: Consolidated net sales in production
printing business of ¥46 billion in 201616

Fully launch network camera business
デジタル印刷市場規模 約4,000億円

Business Solutions

Expand and improve product line-up

Strengthen solutions business
Tap into high-end market

17

IT Solutions18

IT solutions

Growth scenario(billion)

Target: Total sales ¥185 /O.P¥7.5 (2016)
Category

Independent business

Canon’s new priority
domainAnnual average growth rate(between 2013 and 2016)

Included businesses

112%

System Integration Business113%

IT Infrastructure & ServiceBusiness

116%

Embedded System Business

98%

Products Business

163%

MR※

* MR: Mixed Reality
19Growth strategies

1

Strengthen customer base and improve
development productivity in SI services

2

Expand data center business3

Start up new solutions business and promotecommercialization of technologies held

4

Expand global business according to each region

5

Strengthen Group’s IT solutions capabilities in othersegments besides the IT Solutions segment
20Expansion strategy in data center businessIT solutions

Features of Tokyo West DC that were highly
rated by customers
Features
High-level security

Sectors of customers that use data center
Information
PublicFinancial
Services
services
servicesectorsectorsectorcorporations○○○○

Location away from coast○

Sturdy foundations○

Tier4 level facilities
Power facilities that can handle highloads
Maximum load weight of server room
Total support from construction tooperation
Manned 24 hours a day, 365 days ayear
Supports multiple carriers○High scalability

○

○

○

○
○
○

○

○

○

○

○

Initiatives for business expansion in the future

21Expand IT solutions business in Asia

IT solutions

IT solutions business company that newly joined the groupCompany
nameMaterial Automation (Thailand) Co.,Ltd.

Established

January 1992

Location

Bangkok, Kingdom of Thailand

Capital50 million baht (approximately 160
million yen)

Shareholder
composition

Represent
ativesNumber ofemployees

Canon ITsolutions
CanonITS Thailand

President & CEO
Authorized Director

Director

49％
51％
Hidesato Kodama
Takashi Hirakawa
Keizo Go171 (as of December 2013)

BusinessSolution business for Japanesecompanies (the manufacturingindustry in particular) advancing intoThailand(IT infrastructure building,engineering-related software, andproduction management systems)

Branches

3branches in Thailand

Consolidated
Companies

ASAHI-M.A.T.(Thailand)
MAT Vietnam(Vietnam)

Annualsales

Approximately 2.0 billion yen (2013)

Establish business structure through cooperation between Japan and Thailand
Expand business in Southeast Asia, including the Philippines and Vietnam
Expansion of ITS business in Southeast Asia (Beyond JAPAN).

IT solutions

Strengthen the Group’s IT Solutions capabilities(billion)
2013 result

2016 objective

167.8

230.0

ITS sales in segments besides ITS
segment

55.875.0

ITS segment sales

142.3

185.0

Inter-segment sales (eliminations)

-30.3

-30.0

Overall Group ITS sales

Expand and improve cloud platform that can be used by
all segments
Cooperate in the development of sector-specific solutions

23

Imaging Systems

24Imaging Systems

Growth scenario(billion)

Target: Total sales ¥215 /O.P¥12.3 (2016)
Category

Annual average growthrate (between 2013 and2016)

Included businesses
Framed photo rental (Shuttle Photo)

Independent business134%

Photo-related online services(withPhoto)
IT products

Canon’s new priority
domainCommercial imaging equipment
129%

Commercial photo printers(DreamLabo)
Interchangeable lens digital cameras

Canon’s existing domain

103%Compact digital cameras

Digital video cameras
Inkjet printers

Other consumer equipment25

Growth strategies
1

Strengthen inkjet products and services for home, professionaland business markets

2

Become No. 1 in all classes of interchangeable lens/mirrorless
digital cameras through continued step-up strategy

3

Improve profitability of compact digital camera business bystrengthening premium models

4

Expand and improve line-up of commercial imaging equipment
and strengthen solutions

5

Expand and improve CRM* and promote digital marketing.

6

Expand new businesses for photo-related contents* CRM: Customer Relationship Management

26

Interchangeable lens digital cameras:Continue to pursue step-up strategy

Imaging Systems

Professionalclass

Broad range ofinterchangeable lenses

MiddleclassCore product for
middle-class
Entry-class(Beginners)

Entry-level cameras
for people taking up
photography more
seriously

Mirrorless
digital cameras

Compact digital camera users
and smart phone users
27

Imaging Systems

Expand solution capabilities in commercial imaging equipment

Develop a broad line-upof products integrating optical,
sensor and image processing
technologies

30-inch 4K display DP-V3010
Scheduled for launch January 2014

Standard
Zoom Lens

PortableZoom Lens
Top endZoom Lens

Compact Zoom Lens

Prime Lens

Information
camera systems

Broadcasting and video production

Industrial/Medical

29

Industrial/Medical

Growth scenario

Category

Annual average
growth rate(between 2013and 2016)

Included businesses
Testing and measurement

Independentbusiness

Process equipment

164%

Field engineers
ecoFab

New products

Canon’s newpriority domain-Canon’s existingdomain103%

New products

Component business30Growth strategies -Industrial Equipment

Industrial/Medical

1

Expand and improve line-up of new products
handled and build into pillar of growth2

Strengthen technology trading company function

3

Develop Taiwan market through Canon AdvancedTechnologies Taiwan Inc.

31

Industrial/Medical

Targets in expansion of handled products
MarketDomainApplication/product

Manufacturers currently
handling
application/productSemiconductors

Lamp annealing, Defect measurement

Mattson, Raytex

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

Lamp annealing, Ashing, Etching,
Defect measurement, Quality measurement, Filmpressure measurement , etc.

Mattson、Raytex、Metryx、Camtek、RAVE、JVS、
EUV tech.

Consumables (filters)

Chemical filter

KAEL

Ashing, Etching, Defect measurement,
Shape measurement, etc.

MAS、Camtek、Zygo、
memsstar

Precision machining

Precision sensors, precision measurement, etc.

Canon

Precision measurement

Surface shape, Surface roughness, etc.

Zygo

Memory, logic, etc.

Probe cards*

Semicond
NonNon-semiconductors
uctorssemiconductors
Domains being newly
enteredExisting business domains

WafersMEMS
LED, etc.

Production innovation

Preclinical (Pharmacy )Manufacturers
planning to handle
application/productPlasma Therm

ProbeAce

Multi-wire saws

3D Systems
CMJ
independently

Small animal PET/SPECT/CT

Tri Foil Imaging

3D printers, Robot-related,, Image input-* Plan to launch in Taiwan market.
32

Industrial/Medical

Medical: Growth scenario

Category

Annual average
growth rate between
2013-2016

Included businesses

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

114%

Ophthalmic equipment

Infection management
Pharmaceutical dispensing
Healthcare products

Canon’s existingdomains

CXDI
125%

Digital non-mydriatic retinal
cameras/OCT33Growth strategies –Medical

Industrial/Medical

1

Expand sales of modalities by strengthening sales
force

2

Strengthen and expand medical imaging ITsolutions

3

Bolster product line-up by developing new products

4

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

5

Establish total Group presence in the medicalmarket

34

Industrial/Medical

Expand infection management and pharmaceutical dispensing businesses
overseas

Acquire overseas distributors throughcooperation with the Canon Group
Develop products for overseas (Asia)
Hydrogen peroxide gas
sterilizer

Tablet packing machine35Industrial/Medical

Strengthen and expand medical solutions
Healthcare solutions

Office device solutions
Projectors, scanners,
TV conferencing, Web conferencing

Hospitals

Document solutions
In-hospital printing(MFP, LBP)

Administrativesystem solutions
Electronic medicalrecords
Ordering systems
Receipt computers

Fully automatic blood pressure monitors
Bone density measurement

Infection management
solutions
Sterilizers
Washers

Medical imaging solutions
CXDI
3D
PRIMITUS（PACS）

Image interpretation
service providers

Digital camera-linkedNewsolutions

Diagnostic
reading centers

Image storage systems
Remoteimage interpretation

NewRadiologists

Data center business
Data centers

Target: Total sales of medical solutions ¥37 (2016)（billion)36

Investing for Growth

Breakdown of investment

Generalinvestment

Main
investment
items

MFP rental assets

Around ¥20
billion

Additional investment in Tokyo West
Data CenterAround ¥5billionInternal IT system development

Around ¥7billion

Total

Strategic investment

3-yearcumulative
investment
amountM&A-related funds

Around ¥50
billionAround ¥40
billion(Preparatoryfunds)
37

Returning profits to shareholders

Dividends are main way toreturn profits to shareholders＊Stable dividends＊Rough guide is consolidated
payout ratio of 30%
38

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.