Canon Marketing Japan Group
Long-Term Management Objectives Phase II 2011–2015
Three-Year Management Plan
2011–2013

January 27, 2011
Masami Kawasaki
President

Look back at Long-Term Management Objectives
Phase I (2006-2010)
1-1. Road to 2005
1968 to 1980s

Created and enhanced system to sell
Canon products ourselves
1990s

Grew through sales of non-Canon
products, with focus on foreign
manufacturers’ PCs, etc.
2000 to 2005

Laid foundation of creative solution
company focused on solving customer
issues: To form a group through M&A ofIT service companies

Look back at Long-Term Management Objectives
Phase I (2006-2010)
1-2. Long-Term Management Objectives Phase I

Became overwhelming No.1 in Japan in Canon
product segment
 Maintained high market share amid severe climate for consumer products
 Centralized service functions & introduced system. Improved productivity.
→Bolster the foundation to achieve number-one in customer satisfaction

Established next-generation segment
 Structured organization and sped up decision making by incorporating
Canon MJ IT Group Holdings Inc.
 Prepared to pursue new cloud-based segment with datacenters asfoundation

Look back at Long-Term Management Objectives
Phase I (2006-2010)
1-3. Performance trends¥billion

1,000

5.0%
Sales

900
798.3

800
700

820.5

Operating profit margin

684.2

905.1
827.5

815.5 821.9

794.9 786.8

730.8 720.3

867.2

757.0
695.6

3.9%

3.6%

4.0%

4.1%

686.6 674.2

3.6% 3.6%

600
500
400

3.0%
3.0%

3.1%

3.0%
2.6%
2.5%
2.4% 2.5%

2.0%

2.2%

300
1.6%
200

1.1%

1.0%

0.9%

100
0

0.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Management reform measures

Long-Term Management
Objectives ~Phase Ⅰ ~Left unprofitable segments, reorganized group, M&A
Change company name
Introduced consolidated group IT system at Shinagawa headquarters
Transfer semiconductor segment
Reorganize ITS group

Canon Group’s Excellent Corporation Plan Phase IV
Excellent Global Corporation Plan
Continue to contribute through technology based on its philosophy of kyosei(coexistence), and be liked and respected around the world

Phase IV (2011-2015)
2015 management objective:
Be in world’s top 100 in all
major management indices

Net sales: ¥5 trillion or more
Operating ratio: 20% or more
Profit margin: 10% or more
Equity ratio: 75% or more(Assumes: USD = ¥85, EUR = ¥110）

Slogan“Aiming for the Summit”～ Speed & Sound Growth ～Long-Term Management
Objectives Phase II 2011–2015
Forward～charting a new course for growth through business creation～

1. Mission & Vision

MissionTo provide optimal value through marketing
innovation that enhances security andcomfortable and supports creativity in allareas of life, work and society
VisionTo be a group of service creation companies
that practices the principle of customer focus
with a global perspective

2. Priority Strategies

1. Strengthen market shares ofCanon products
2. Diversify business3. Evolve into a service company
4. Further group management
innovation- Beyond CANON, Beyond JAPAN -2. Priority Strategies
2-1. Strengthen market shares of Canon products
Marketing & service
capabilities
leveraging IT

Customer satisfaction
in all segments

Development capabilities& cost competitivenessthroughout groupService & support
capabilities

Strengthen share
Help make Global Canon No.1
in world

2. Priority Strategies
2-2. Diversify business
Expand business domain in step with changes tomarket environment
Establish new businesses in fields offocus by Global Canon Group
CommercialPrinting
Retail PhotoMR

Actively market world’s
top products

Industrialequipment

Medicalequipment

Target: Increase sales by ¥100b through diversification (2015)

2. Priority Strategies
2-3. Evolve into a service company
As extension of ITS3000:

Evolve group as a whole into a service company
Expand service businesses
Maintenance services for
document solutions

Outsourcing of
document &IT solutions

Cloud-based
ITS segment
Canon Inc.
creative solutions

Consumer services

Global growth withfocus on IT businesses
Offer IT solutions toglobal Canon Group
Offer IT solutions tocompanies expandingin AsiaTarget: At least 45% of sales from service segments (2015)

2. Priority Strategies
2-4. Further group management innovation
Maintain and strengthen a solid management foundationin order to implement priority strategies

Strengthen links between
management & IT strategies

Develop workforce suited
to a global service company

Reform grouppersonnel structure

Pursue CSR activities2015 Performance Objectives：¥850b or more

Net sales

Operating profit (margin) ：¥42.5b (5%)： ¥185 or more

Profit per share
Reference indices

Beyond CANON
ratio
Beyond JAPANratio

30%Ratio of sales from externally procured
products and independent services

10%

Proportion of sales from internationalsales and sales of imported products

Three-Year Management Plan
2011–2013

1. Basic Strategies
１We will strengthen our collaboration with Global Canon Group and further
enhance the solutions capabilities of the Canon MJ Group so as toachieve overwhelming leadership for Canon products and establish themas No. 1 in terms of world market shares.

２

We will use the core competencies and know-how of the Canon Groupand the Canon MJ Group to create original solutions with high addedvalue.

３

We will realize the “Beyond Canon, Beyond Japan” concept through theevolution of the Canon MJ Group toward new business domains andbusiness models.

The strength of Canon products and the capacity of the Canon MJ Group tooffer solutions will be the core drivers for our evolution into a service creation groupcapable of continually providing original added value in the global business arena.

2. Performance Targets
2-1. Group-wide(¥billion)

2010

2011
Ratio

2012
Ratio

2013
Ratio

Ratio

Net Sales

674.2

685

740

785

(YoY)

(10%)

(102%)(108%)(106%)

Op. profit(YoY)
Ord. profit(YoY)
Net profit(YoY)
Net profit/share

7.7 1.1%(123%)

9 1.3%(116%)

9.5 1.4%(115%)(228%)

10 1.5%(105%)

3.7 0.6%-4 0.6%

22 3.0%30 3.8%(136%)

13 1.8%(325%)¥29

28.5 3.6%(139%)(220%)(107%)¥27

20.5 2.8%

17.5 2.2%(135%)¥95* Net profit per share in 2011 and later: calculated by number of shares as of end-2010¥128

2. Performance Targets
2-2. By segment(¥billion)
2010

2011
Ratio

Business solutions

Sales
Op. profit

IT solutions

Consumer imaging

133.3

Op. profit

-3.7

Sales

213.8

Corporate or
eliminations

Total

Ratio
347.5

2.3 0.7%

Sales

2.4 0.7%

-1.9

Ratio
359.5

132.1-

2013

378.5

5 1.4%
145.5

-

214.1

Ratio

7.5 2.0%153

3.5 2.4%

6.5 4.2%

225

231.5
11.5 5.0%

9.8 4.6%

8.4 3.9%

10.5 4.7%

Sales

13.4

17.8

35.5

50

Op. profit-0.2

0.1 0.6%

1.5 4.2%

3 6.0%

Sales

-28.7

Op. profit

-0.4

Sales

674.2

Op. profit
Industrial equipment

342.5

2012

Op. profit--26.5-

7.7 1.1%

0-25.5-685
9 1.3%

0-28-0-740785

20.5 2.8%

28.5 3.6%

3. Priority Strategies by Segment
3-1. Business solutions(1) Restructure the document segment to create a newincome structureIncrease the number of office MFPs in use in the field andimprove market shares Target share: 17% (2010) to 22% (2013)
 Improve support of large/medium corp. market by creating BC Sales Div.
 Improve support of small/medium bus. market through stronger partner
channelsImprove profitability of maintenance services
 Gain new document volume in commercial printing, etc.
 Reduce costs by using IT infrastructure & NetEye remote-monitoring system Increase subscription rate to CSP (Canon Service Pack) Transfer 15% of office MFP CEs (customer engineers) to system maintenance, etc.
(by 2013)

Create new stock-type businesses Expand Home (IT services for small/medium offices) and MDS (managed document services)3. Priority Strategies by Segment
3-1. Business solutions(2) Expand the production printing business, including Océ products

High-resolution, largeformat graphics

High-resolution, color inhouse printing andcommercial printing

High-resolution, large-format,
color CAD for construction
and civil engineering

High-speed, largeformat, B&W CAD fordesign andmanufacturing

Powerful
complementarybusinessalliancesHigh-speed
commercial printing
and form printing

High-durability, largeformat graphics

Target sales for production segment: ¥50b (2013)

3. Priority Strategies by Segment
3-2. IT solutions(1) Improve earning performance in existing segments
More prime contracts
Thorough revenue management

SI Service:Embedded
software: For Canon products
For automobiles
Increase sales in areas of strength: Security, CAD, ERP (Enterprise Resource PlanningSolutionssystem), workflow(2) Create new businesses
Start Mixed Reality (MR) segment
 Develop businesses linked to sales of CAD software targeting
design and development divisions

3. Priority Strategies by Segment
3-2. IT solutions(3) Expand stock-type service businesses
 Develop new outsourcing businesses
・ Data center service： Housing, etc.

・ System-operationservices

Maintenance, admin, operations, IT infrastructure： operations, facility management & admin, etc.

・ Cloud services：Solution-based SaaS services, document services
SaaS/ASP infrastructure services, etc.

・ BPO services (business process outsourcing services) Launch specialized cloud computing organization with about
100 staff (January 2011)
 Establish our own data center (to be completed in the fall of 2012)
Target sales for cloud-related segments: ¥45b (2013)

3. Priority Strategies by Segment
3-2. IT solutions(4) Pursue global expansion
 Provide IT services to production and sales sites of Canon
Group outside Japan Develop solution business in collaboration with CanonGroup Offer IT services as Japanese corporations expand in Asia

3. Priority Strategies by Segment
3-3. Consumer imaging(1) Pursue total No.1 strategy
 Become No.1 in terms of market shares, customer satisfaction, and brand status
Target Market Shares
Product2010

2013

Digital SLR cameras

1st

1st

Digital compact cameras

1st

1st

Digital video cameras

3rd

3rd

Ink-jet printers

1st

1st

2010 market shares: According to Canon MJ survey(2) Launch new products and businesses
 Quickly launch new businesses, such as imaging portal sitebusiness3. Priority Strategies by Segment
3-4. Industrial equipment(1) Expand industrial equipment businessPrioritize reinforcement of inspection and measurement business for thesemiconductor and non-semiconductor fields* MEMS (micro machines), PV (photovoltaics), LED devices, organic EL displays(2) Aggressively expand medical equipment business Strengthen marketing of Canon products and imported products Launch medical information solutions business(3) Launch broadcasting and imaging solutions business Maintain No.1 market share for broadcast TV lenses
 Provide imaging solutions for disaster prevention and security markets

4. Investing for Growth
Aggressive investment to achieve Long-Term Management
Objectives Phase II¥billion
2008-2010 cumulative(Actual)

2011-2013 cumulative(Plan)

Sales cash flow

94.482

Investment cashflow

67.8

100

Free cash flow

26.6-18

Strategic Investments
Data centers

Newbusinesses

M&A

Cloud computing
IT infrastructure

Returning profits to shareholders

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

Canon Marketing Japan Group
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.