Canon Marketing Japan Group
Three-Year Management Plan 2013-2015

January 29, 2013
Masami Kawasaki
President

2012 Recap

2011
Ratio
Net sales((YoY))
Op. profit(YoY)
Ord. profit(YoY)
Net profit
(YoY)

632.4
( %)
(-6%)
8.4
(+9%)
10.7
(+13%)
6.8(+82%)

1.3%（billion）
2012
Ratio
681.2
( %)
(+8%)
16.8
2.5%
(+99%)

1.7%
1.1%

18.1
(+69%)
10.6(+56%)

2.7%
1.6%
2

Long-term Management Objectives Phase II 2011-2015

Evolution into a service creation group through“growth and transition”～Beyond CANON, Beyond JAPAN～
Priority Strategies(1) Strengthen market shares of Canonproducts(2) Diversify business(3) Evolve into a service company(4) Further group management innovation
3

Long-term Management Objectives Phase II Progress (2012)(1) Strengthen market shares of Canon products
Launched a number of products that are positioned as the “secondgeneration” models of the MFP “imageRUNNER ADVANCE” series.
Their market share is steadily increasing.
A hi
Achieved
d theth No.1
N 1 sharehiin ththe llaser printeri t marketk t forf 21
consecutive years.
Continued to secure the No. 1 share in the large format ink-jet printermarket
Continued to secure the No. 1 share in the interchangeable-lensdigital camera market as we introduced a middle entry model “EOS-M,”
which is a mirrorless single-lens reflex camera
Regained share in the ink-jet printer market
4Long-term Management Objectives Phase II Progress (2012)(2) Diversify businessStrengthened medical equipment businessChanged the company name of ELK CORPORATION to Canon Lifecare Solutions Inc. and integrated
it in the sales/maintenance service department of the Group’s medical equipment business (November).
Announced the development and the launch in the market of a PACS (Picture Archiving andCommunication System) (November).

StStrengthened
thd commercial
i l printing
i ti bbusinessi
Made Showa Information Systems into a wholly owned subsidiary and improved the commercial
printing business platform (May).
Océ products started to contribute substantially to sales (large format, high-speed cut sheet model,etc.)

Expanded the “CINEMA EOS SYSTEM” line-upStarted selling EOS C500, which is capable of 4K video shooting, and other productsStarted to selling the MR (mixed reality) system (July).
Strengthened the industrial equipment businessEstablished Canon Advanced Technologies Taiwan, Inc., which is a sales
and service company for equipment related to semiconductor manufacturing,in Taiwan (March).

5

Long-term Management Objectives Phase II Progress (2012)(3) Evolve into a service company
Strengthened the outsourcing service businessStarted the commercial operation of the Nishi-Tokyo Data Center (October).

Evolved the medical solutions businessCanon ITS Medical Inc. delivered a sold performance.

Promoted further expansion of IT solutions into overseas markets
Established Canon IT Solutions(Thailand)Company Limited (August)Canon IT Solutions (Philippines), Inc. (November)

IT solutions targeted at small and medium-sized offices recorded briskbusiness.
The number of “HOME” contracts increased and the security product “UTM”
also delivered a favorable result.

Improved the maintenance service platform for MFPIncreasing popularity of “NetEye” (remote monitoring system) and “CDS”(firmware download service)6

Long-term Management Objectives Phase II Progress (2012)(4) Further group management innovation
Strengthened the ability to respond to customer needs
through work-style reform
Introduced 12,000
12 000 thin and lightweight Ultrabooks for employees
and 5,000 smartphones for sales staff to strengthen the ability torespond to customer needs and promote business efficiency (sinceOctober).

7

Three-year Management Plan

2013-2015

Long-term Management Objectives Phase II 2011-2015
2015 Performance Objectives
Net sales：¥850 b or more

Operating profit (margin)：¥42.5 b (5%)

Profit per share：¥185 or more

IndicatorsArea

2012 Actual

2015 Target

Net Sales increase fromdiversification¥43 billion¥100 billion plus

Service Business Ratio

39％

45％

Non-hardware (excluding consumables) netsales percentage

Beyond CANON Ratio

29％

30％

Percent of net sales contributed by products
procured from outside and Canon services

Beyond JAPAN Ratio

2.2％

10％

Percent of net sales contributed by overseas
activities and imported products

Remarks
Net sales increase versus 2010, fromdiversification

9

Understanding toward the achievement of Long-Term
Management Objectives Phase II2015 targets in the Long-Term Management
Objectives Phase II remain unchanged.
On the other hand, the Three-year Management
Plan was developed
p as an implementation
pplan
pthrough 2015 based on the current businessenvironment, not including uncertain elements
such as the success of M&A projects and new
business start-ups.
We expect that changes in accounting standards
will have certain impact on the presentation ofrevenue.
10

2. Three-year Management Plan (2013-2015) Basic Strategies

１Help Canon products to achieve overwhelming
No.1 share in the global market

２Create original solutions with high added value

３

Strengthen the trading company function and promotecomplete revamping of the business model based on
the “Beyond CANON, Beyond JAPAN ”concepts

Evolution into a service creation group11

1. Performance Targets
1-1. Group-wide(billion)
2012

2013
Ratio

Net sales(YoY)
O profit
Op.
f(YoY)
Ord. profit(YoY)
Net profit(YoY)
Net profit/share

2014
Ratio

2015
Ratio

Ratio

659.2

684.8

729.0

780.0

(-)

(+4%)

(+6%)

(+7%)

16.8 2.5%%(+99%)

18.0 2.6%%(+7%)

18.1 2.7%(+70%)(+33%)

19.0 2.8%(+5%)

10.6 1.6%(+56%)

10.6 1.5%

25.5 3.5%

31.5 4.0%(+24%)

15.0 2.1%(+42%)¥80

30.0 3.8%%(+25%)(+34%)(+0%)¥77

24.0 3.3%%

18.5 2.4%(+23%)¥113¥139* Due to the change in accounting policy since 2013, the 2012 actual net sales was reclassified by deducting certain deductible items.
* Net profit per share in 2013 and later is calculated based on the number of shares as of the end of FY2012.

12

1. Performance Targets
1-2. By segment(billion)
2012

2013
Ratio

Business solutions

Sales
Op. profit

IT solutions

Sales
Op. profit

Consumer imaging

Sales

Other336.7

6.3 1.9%
131.0
192.0

7.0 2.1%

9.0

0.7 0.5%

2.5Sales

30.7

35.6

48.5

Op. profit- 1.2

0.1 0.3%

1.5

Sales

- 25.4Sales
Op. profit- 26.1
-0.5

2.6%

1.6%

0.5

659.2

684.8

729.0

16.8 2.5%

18.0 2.6%

24.0

5.0 3.0%
210.5

5.1%

11.0 5.2%
62.0

3.1%

- 28.0-11.0 3.0%
168.0

204.0
10.5

0.6

370.0

152.0

199.2

-Ratio

352.5

139.4

0.2 0.1%

2015
Ratio

9.7 4.9%

Op. profit
TotalRatio

10.9 5.7%

Op. profit
Industrial equipment

330.9

2014

2.5 4.0%- 30.5-0.5-780.03.3%

30.0 3.8%* Due to the change in accounting policy since 2013, the 2012 actual net sales was reclassified by deducting certain deductible items.
* Other” includes, among others, inter-segment sales, the shared service business, and corporate expenses that are not allocated toeach segment.

13

3. Priority Strategies by Segment
3-1. Business solutions(1) Increase earning performance in the document segment
Expand MIF (Machine in Field) and DV (Document Volume) for MFPs and LBPs
Promote area marketing in corporation with Canon System & Support Inc. andexternal partnersStrengthen the direct selling force (MA Sales Department, BC/GB Sales Headquarters)
St
Strengthenth theth ability
bilit tot offer
ff proposals
l andd solutions
l tiIncrease productivity of sales and service activities
Reduce costs by using IT infrastructure and NetEye remote-monitoring system,
such as an increasing number of machines per CE (customer engineer)Introduce a new “KG (kit guarantee)” method for maintenance contracts
Trim overall staffing through greater efficiency and staffing structure reforms(Reduce 2010 staffing level effectively by 10% by 2015.)Create new stock-type businesses
Increase the number of subscribers of the “HOME” IT support service
targeted at small and medium-sized offices.
Expand the cloud business (My-Promotion-Web, PDF Policy Service, etc.)
Expand MDS (Managed Document Service)14

3. Priority Strategies by Segment
3-1. Business solutions(2) Expand the production printing businessFully leverage synergies with Group companies
Business development carried out by the Company, Showa Information Systems,
Océ-Japan and Canon Print Square working as one teamPriority strategies by productPromote sales of high-speed continuous form models (“ColorStream” series) and
high-speed cut sheet models (“VarioPrint” series) among Océ products
「Develop both commercial printing (printing business) and in-house high-speed
printing markets using Canon’s “imagePRESS” series
Promote sales of large form ink-jet printers (“imagePROGRAF” series)
Develop the retail photo market by installing “DreamLabo” commercial photoprinters

Develop and launch products that are more suited to the needs of theJapanese market through technological fusion between Canon and OcéTarget: Commercial printing sales ¥50.0 bil. (2015)15

3. Priority Strategies by Segment
3-2. IT solutions(1) Maintain growth in existing business areas and implementbusiness structure reform
Maintain growth in existing business areas
Improve sales productivity and the ability to offer broad
services from system development to operation
Reform the revenue structure by revamping the development
functionsExpand business with external parties in the embedded
business

Promote business structure reform
Consolidate and streamline overlapping functions within theGroupShift staff to growth areas (such as outsourcing service business)
Increase development productivity and heighten profitability
through structural reform(2012 sales per SE to increase by 40% by 2015)16

3. Priority Strategies by Segment
3-2. IT solutions(2) Strengthen and expand strategic business areas and startup new businesses
Strengthening and expansion of outsourcing
businesses Expand the data center business and system operation
services leveraging the Nishi-Tokyo Data Center
Strengthen and expand the cloud service business by
expanding the service line-up leveraging “SOLTAGE”* SOLTAGE is the Group’s common IT platform for cloud services.

Acquire outsourcing businesses by strengthening the prime
capability of sales and development organizations

Starting up new businessesMR （Mixed Reality）, engineering areas, etc.
Target: At least 29% of total sales from service businesses (2015)* More specifically, the percentage of total sales contributed by stock-type IT
services (cloud, system operation, data center, BPO, and maintenance services).

17

3. Priority Strategies by Segment
3-2. IT solutions(3) Active global business development
Expand IT solutions business in China and other Asian countries
 Take advantage of new locations in Thailand and the Philippines in addition to theexisting location in ShanghaiStrengthen cooperation with overseas Canon group companiesGroup-wide internal IT system supportGlobal solution business development in cooperation with Canon Group

Procurement of advanced overseas software/hardware products andbusiness expansion

Target: Beyond JAPAN ratio (IT solutions) of 10%+ (2015)18

3. Priority Strategies by Segment
3-3. Imaging System(1) Establish No. 1 share of main products withprofitability<Interchangeable-lens digital camera>
Carry out optimal marketing in accordance with the professional,middle, and entry levels for single-lens reflex and mirrorlesscameras.
cae as In add
addition,to ,eexpandpa d sousoundd busbusinesses
esses aandd maintaina ta tthe
eNo.1 share through differentiation leveraging the broad line-up ofinterchangeable lenses<Compact digital cameras>
Strive for higher profitability and the establishment of No. 1 shareby focusing on premium models<Ink-jet printers>Establish No.1 share in the home market and strengthen themarketing of models targeted at professional and business users
19

3. Priority Strategies by Segment
3-3. Imaging System(2) Sales expansion of commercial imaging equipment
GrowthImage
monitoring
Security and othertypes of monitoring
cameras■ Accumulate image monitoringknow-how■ Acquire business with the publicsector■ Create high-sensitivity camera
business■ Develop solutions

Imageproduction
CINEMA EOS SYSTEMEOS MOVIE
Commercial digital
video camera■ Strengthen
gthe pproduct development
pcapabilitypy■ Improve efficiency and productivity■ Proactive expansion into the non-broadcast market■ Gain a substantial share in the
4K/8K market■ Expand the channels■ Improve the ability to sellsolutions directly

Broadcastsystems

Share

Broadcast TV lensesPan heads

Target: Commercial imaging equipment sales ¥10.0 bil. (2015)20

3. Priority Strategies by Segment
3-3. Imaging System(3) Improve customer satisfaction
Expand Canon fan base through the photo culture businessIncrease the number of students of “EOS School” and subscribers of “Canon
Photo Circle”

Strengthen
the service and support
platformgpp p
Improve the quality of repair and other customer services at service centersand call centers

Reinforce CRM (customer relationship management)
Further buildup the customer database and improve CS through its effective
use in all points of contact with customers(4) Grow new businesses
Expand the content businessIncrease the number of subscribers of the web service “withPhoto” and turn it
into a profitable business21

3. Priority Strategies by Segment
3-4. Industrial equipment(1) Expand industrial equipment businessExpand the product line-up targeted at the semiconductor and non-semiconductor
markets (MEMS, LED, etc.)
Develop the Asian market through a Taiwanese subsidiary （Canon Advanced Technologies
Taiwan Inc.）(2) Restore the profitability of and expand medical equipmentbusinessEstablish the business synergy of Canon Lifecare Solutions Inc.
Expand the sales of Canon brand and ELK brand products (low-temperature Sterilizationequipment, automatic powder packaging machine, etc.)

Promote new products (OCT, ultrasound diagnostic equipment, mammography equipment,
portable fundus cameras)Launch of medical imaging solutions businessExpand PACS sales

Target: Medical sales of ¥40.0 billion (2015)22

4. Investing for Growth

Investment to achieve Long-Term Management Objectives Phase II

Plan to make investments totaling 40 billion yen over thenext three years in conventional areas (e.g.,(e g rental assetsand software).
The amount of strategic investments has not been yet
determined, but investment about 45 billion yen is preparedwithin the scope of our free cash flow, for merger andacquisition (M&A) and other steps for agile action to attainthe goals of Long-Term Management Objectives Phase II.
23

Returning profits to shareholders

Dividends are main way toreturn profits to shareholders＊Stable dividends＊Rough guide is consolidated
payout ratio of 30%
24

GrowthTransition

Evolution into a service creation group25

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.