Canon Marketing Japan Inc.
Three-Year Management Plan
2020 to 2022

Canon Marketing Japan Inc.
President

Masahiro Sakata
January 29, 2020

© Canon Marketing Japan Inc. 2020

Contents

1 Review of 2019

2 Three-Year Management Plan 2020-2022

3 Strategic Investment© Canon Marketing Japan Inc. 20202

1 Review of 2019

2 Three-Year Management Plan 2020-2022

3 Strategic Investment© Canon Marketing Japan Inc. 20203

2019 General Overview — Trend in Net sales/operating income
Unit: 100 million
700,000

6,812

6,572

6,324

4.7%

6,594

4.4%

6,460

6,322

4.1%

600,000

4.8%

6,293

3.8%

5.2％

5.0%

6,211
6,216
4.0%

500,000

2.6%
400,000

2.5%

266

277

304

289

324

3.0%

251
300,000

2.0%

1.3%

168

170

200,000

100,000

1.0%

8400.0%

2011
2011年

2012
2012年

2013
2013年

2014
2014年

2015
2015年

2016
2016年

2017
2017年

2018
2018年

2019
2019年

Long-Term Management Objectives phase
II 営業利益率 Long-Term Management Objectives phase III
売上Sold mainly high-value added products and evolved into a company with a lean corporate structure
while keeping SG&A expenses in check.
We were able to increase the gross margin and achieved a record-high operating income ratio of 5.2% for 2019.
© Canon Marketing Japan Inc. 2020

4

Group ITS Business: Sales Results and Sales Composition～～～～¥629.3 billion¥632.2 billion¥621.6 billion¥621.1 billion¥221.5 billion(year-on-year +12%)¥197.7 billion(year-on-year +9%)¥183.9 billion

ITSsalescomposition¥177.0 billion(Year-on-year +4％)

28％

29％

32％

36％

2016

2017

2018

2019

Partly due to support from brisk PC-related business, the ITS business exceeded net sales of ¥200 billion and achieved
double-digit growth year on year.
© Canon Marketing Japan Inc. 2020

5ITS Business: Sales Results by Segment
ITS is operated group-wide with Canon IT Solutions/Canon System & Support at its core
・Products for consumers

Other¥22.9 billion

・Medical IT

Canon Marketing Japan

Other・Solutions by industry
for large companies

・Document solutions
for large companies

Canon System & Support
・A range of ITS and total
support for mid-ranking or
small and mid-sized firms
are provided nationwide

Area¥73.6 billionGroup
net sales for ITS
in 2019¥221.5Enterprise¥124.9 billion

billionCanon Marketing Japan・ITS for businesspartners© Canon Marketing Japan Inc. 2020

Canon IT Solutions
・SI services
・IT infrastructure services
・Engineering6

Growth of Core Group Companies

Core group companies grew in ITS and achieved record-high profit.
Canon IT Solutions(Enterprise segment)■ Profitability in SI services improved
thanks to an increase in larger projects
and package-type SI projects.

■ At highly-rated data centers for highquality operations, profitability improved
thanks to the expansion of maintenanceand operation menus in addition tocolocation.

Record-high profit© Canon Marketing Japan Inc. 2020

Canon System & Support(Area segment)■ Solution business expansion bycombining business efficiency softwarewith security cloud and other services.
■ End-to-end business expansion
including from ITS introduction support tooperational support after the construction.
■ Expansion of Windows 10 compatibility
business.

Record sales/profit
7

Situation of Canon Main Products■ Despite holding the largest share for 14 consecutive years, unit sales and sales value substantially
Digitalinterchangeable declined due to market contraction.
lens cameras ■ Increased the lineup of EOS R system and established a base for the expansion of a full-size model.

■ Held the largest share for six consecutive years.

Inkjet printers ■ Composition ratio of high-value added models increased, including the launch of the large-capacity ink model
GIGA TANK.

■ As the market shrinks, maintained profitability by screening out projects with low profitability.

Office MFP■ As for maintenance services, a drop in unit price was kept in check despite a decrease in print volume mainly atlarge companies.
■ Achieved the largest market share for 27 consecutive years. The number of laser printers shipped increased year
on year, mainly reflecting orders received for multiple large-scale projects and the sales expansion for specific

Laser printers

industries.

■ Cartridges declined as momentum gathers for paperless.

© Canon Marketing Japan Inc. 2020

8Restructuring of the Healthcare Business

Healthcare Business of the Company(From December 2019)

Canon Lifecare Solutions Inc.
Medical system businessand healthcare-related
business centering on
medical image diagnostic
equipment

Consolidated into
Canon Medical Systems Corporationin January 2020

Collaboration
Canon ITS Medical Inc.
Construct hospital
information system with afocus on electronic
medical chart/SI Business© Canon Marketing Japan Inc. 2020

Utilizing the Company group companies’
technical/development capabilities, supportbusiness efficiency improvement in themedical industry with IT

91 Review of 2019

2 Three-Year Management Plan 2020-2022

3 Strategic Investment© Canon Marketing Japan Inc. 202010

Basic Strategy under the Three-Year Management Plan for 2020-2022

Transform into a highly profitable business group
Aim to maximize profitability by providing solutions ahead of changes in society and customers

Reinforcementof profitability

Growth strategy■ Focus on the ITS Business・Resolve social issues

・ Maintain profitability of Canon’s・Resolve management issues
・Provide high-value addedbusinessIT technical strength© Canon Marketing Japan Inc. 2020

main businesses

・ Enhance internal productivity
using IT

Canon brand

Customer base11

Declining Personnel and Enhancement of Productivity

Declining Japanese working population
The Company’s personnel are also expected to decline in the medium to long term.

Transform into a highly profitable company by enhancing productivity

Operational
process review

Thorough use ofIT

Use of in-house
expertiseWorkstylereforms

Improvement ofcustomer contact

Toward a highly profitable Group that combines growth strategy
with reinforcement of profitability© Canon Marketing Japan Inc. 202012

Objectives under the Three-Year Management Plan for 2020-2022

Results
2019

Sales

¥621.1 billion

Three-Year Management Plan
2020 (Forecast)

2022 (Planned)¥600.0 billion

At least¥640.0 billion

Operatingincome¥32.4 billion¥34.0 billion

At least¥38.0 billion

Operatingincome ratio

5.2％

5.7％

At least 5.9％

Profit attributableto owners of parent¥22.3 billion¥22.8 billion

At least¥25.5 billion© Canon Marketing Japan Inc. 202013

Sales/Operating Income Objectives by Segment

Results

Three-Year Management Plan

2019

Consumers
Enterprise
Area
Professional
Consolidated
total

2020 (forecast)

Net sales(Growth rate)

Operating income

2022 (planned)(Profit margin)

Net sales(Growth rate)

Operating income(Profit margin)

Net sales¥132.8 billion¥6.9 billion¥125.3 billion¥6.2 billion-(5.2％)(-5.6％)(4.9％)At least¥115.0 billion

At least¥5.5 billion¥195.8 billion¥10.1 billion¥196.5 billion¥11.4 billion-(5.1％)(+0.4％)(5.8％)At least¥220.0 billion

At least¥14.0 billion¥268.3 billion¥14.4 billion¥263.0 billion¥15.5 billion-(5.4％)(-2.0％)(5.9％)At least¥270.0 billion

At least¥17.0 billion¥43.7 billion¥1.6 billion¥34.6 billion¥2.3 billion-(3.7％)(-20.8％)(6.6％)At least¥45.0 billion

At least¥3.5 billion¥621.1 billion¥32.4 billion¥600.0 billion¥34.0 billion-(5.2％)(-3.4％)(5.7％)At least¥640.0 billion

At least¥38.0 billion(At least 5.9％)

Operating income(Profit margin)* “Corporate/Eliminations” are contained between figures by segment and Consolidated total.
© Canon Marketing Japan Inc. 202014

Growth Strategy
Focus on the ITS Business© Canon Marketing Japan Inc. 202015

Situation of Domestic Companies

Declining working population・ Labor shortage is an urgent business for small, medium and large-sized companies.
・ There is an urgent need to enhance productivity through workstyle reforms.

Middle-Ranking

Large Companies
・Would like to use IT for enhanced businessefficiency and focus resources on mainbusinesses
・Would like to proceed with workstyle reforms
through IT and enhance employees’ sense ofreward/Small and Mid-Sized Firms••

Would like to improve businessefficiency by using IT due to labor
shortage
Would like to leave in-house IT toprofessionals

Cannot be solved unless IT is used.

Robust demand for IT© Canon Marketing Japan Inc. 202016

Outlook for Domestic IT Market

Outlook for Domestic IT Market(Trend in case year 2019 is deemed to be 100)

Data Center

IT Security

2022
2022

2019
2019

IT for Small and Mid-Sized Firms＊IaaS Outlook

CAGR＋25.4%

CAGR
＋3.8%

CAGR
＋6.7%

2019
2019

Cloud Service

2022
2022

2019
2019

CAGR
＋1.1%

2022
2022

2019
2019

2022
2022

As the domestic IT market is expected to expand at approx. 2% CAGR (2019 → 2022), we willdevelop business by focusing on high growth/large customer base areas.
* Market outlook is prepared by the Company based on forecasts published by external forecasting agencies (IDC/Fuji Chimera Research Institute).
© Canon Marketing Japan Inc. 202017

Focus Area and Medium-Term Targets in the ITS Business

Aim for expansion of the Maintenance and Operation Service/Outsourcing
with the SI service area at its core.
¥300.0 billion ＋α

CAGR＋4％¥250.0 billion

Main products/services■ SI development■ Embedded development■ Engineering■ Data Center/Cloud Service■ Operation/Support■ Infrastructure construction system■ Product system security■ IT products including PCs¥220.8 billion*SI service¥95.0 billion¥83.0 billion
Maintenance andoperation service/outsourcing¥55.0 billion¥33.6 billion

System sales/IT product¥100.0 billion¥104.2 billion

201920222025(Results)* In disclosing actual results for 2019 under new classifications, net sales included in IT Solutions mainly regarding Canon product related services are excluded.
© Canon Marketing Japan Inc. 202018

Logistics-based, plan-driven SCM solution

FOREMAST and other plan-driven SCM solutions
Establishing a shared system for the Sapporo Group
Customers’ issues

Solutions provided

Values delivered・Shortage of truck drivers

・ Construct a plan-driven system

・Optimize inventory levels

・Rising logistics cost・Complicated supply-demand adjustment

Logistics crisis issue

・Demand forecast and supply chain
planning utilizing AI technology
・Logistics leveling-out simulation

Track record in the manufacturingindustry
Consulting support capabilities

・Level out transport
・Sophisticate supply-demand
operations

Achieving workstyle
Improving profitability and productivity＊ “Dynamic determining technology for demand forecast model (Patent No. 4339769)” received the “Invention Encouragement
Award” in the 2019 Kinki Region Invention AwardsResolve corporate management/social issues with our know-how and technology that have been cultivated for many years.
© Canon Marketing Japan Inc. 2020

19

IT Solutions for Small and Medium-Sized Companies: IT Concierge Service Using Our Strengths

Solve small and medium-sized companies’ management issues through best-of-breed type IT.
Labor shortage

Reinforcement of sales
capabilities

Workstyle reforms

Security

IT Training foremployees

Cloud

Document
management

ERP

BCP support

RemotemaintenanceOn-sitemaintenanceContact centerExpand IT Concierge Services using the introduction support, other support and the operation structure,
which are expanding nationwide.
© Canon Marketing Japan Inc. 202020

Improvement of Profitability© Canon Marketing Japan Inc. 202021

Market Outlook
Market outlook of major products(Number of shipped units in Japan: Changes where numbers in 2018 are taken as 100)

Digital interchangeable lens cameras

Office MFP

SLR camera

Mirrorlesscamera

2018

■

■

■

2019

2022

2018

■

2019

2022

Laser printers

Inkjet printers
Business■

Home

2018

2019

■

■

2022

2018

2019

■

2022

*Changes shown above are solely based on the Company’s survey.
© Canon Marketing Japan Inc. 2020

22

Maintaining the Profitability of Canon’s Major Products
Digital interchangeable lens cameras○ Top ranking in the mirrorless camera market
share→ Aim for the top ranking in the market shareof full-frame models by increasing the selection ofthe EOS R system○ Construction of efficient sales and support
systems

Inkjet printers○ Improvement of profitability through the sales
expansion of home-use printers whose unit priceis high and whose printing volume is large○ Sales expansion of the business field byincreasing the selection of business-use printers
and those with large-capacity ink tanks
Optimization of business operation processes

Office MFP○ Improvement of profitability by increasing
sales to priority customers○ Strengthening of the capability of proposalmaking on the use of MFP in the business
operation process○ Improvement of efficiency in maintenanceservices through the use of IoT

Laser printers○ Increase the number of printers operating in
the market by continuing expansion of sales tospecific industries○ Promotion of the NETEYE service*○ Improvement of profitability by raising theratio of genuine products of cartridges andexpanding automatic deliveries*Online support service thatprovides a comfortable use
environment. By using theInternet, the support continues
monitoring the state ofmultifunctional products.

Highly efficientorganizational management

We will take steps thoroughly with a view toward maintaining profitability.
© Canon Marketing Japan Inc. 202023

Improvement of Internal Productivity through the Use of IT

Renewal of coresystems

Further efforts to use
IoT such as NETEYE

Improvement ofoperational efficiency
throughthe introduction of RPA

Improvement of sales
efficiency by raising thecomposition ratio of EC

Innovate business processes by internally accelerating the adoption of IT

Focus efforts on activities thatfacilitate customer contact© Canon Marketing Japan Inc. 2020

Consider the possibility of sellinginternal use cases to outside customers
24

1 Review of 2019

2 Three-Year Management Plan 2020-2022

3 Strategic Investment© Canon Marketing Japan Inc. 202025

Implementation of Active Investments in Growth Areas

Implementation of Active Investments in Growth Areas■M&A/Investments
・Enhancement of the type of business and area ofbusiness operation solutions
・Enhancement of best-of-breed type solution menus■Organizational restructuring/Recruitment of professional individuals
・ Optimal placement of organizations andhuman resources
・ Securing individuals with advanced expertise

Growthbusinesses■Capital expenditure
・Construction of the new Nishi-Tokyo Data Center
Phase II Building in 2020
・Renewal of internal core systems© Canon Marketing Japan Inc. 2020

26

The performance and future projections made in this document are based on information available
at the present time, and include potential risks and inaccuracies. Owing to various factors, actual
results may differ substantially from these projections.

© Canon Marketing Japan Inc. 2020