Translation

Interim Reportfor the 50thBusiness TermJanuary 1, 2017  June 30, 2017

Securities code: 8060

To Our Shareholders

1

Information by Segment

3

Introduction of Our
New Alliance Initiatives

5

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 the50th Business Term.

In the interim period under review, notwithstanding a slightincrease in the second quarter (April to June), net sales ofCanon MJ Group declined, chiefly because the market for
Imaging Systems remained sluggish. However, operating
income increased, reflecting progress in earnings structuralreforms. We plan to pay interim dividends of 25 yen pershare (20 yen in the interim period of the previous fiscalyear) and annual dividends of 50 yen per share (the sameamount as in the previous fiscal year), as announced at thebeginning of the period.
We aim to achieve increases in sales and profits for thefiscal year by continuing to work on “growing sales” andon “improving profits,” the core themes in the Three-YearManagement Plan (2017 to 2019).
To achieve these objectives, we will strive to expand ourproduction printing business, strengthen the network
camera business and develop IT security extensively, actively
focusing on new businesses to drive growing sales; To
improve profits, we will target active sales expansion ofhigh value-added products and an improvement in sales
efficiency using IT.
As we pursue these initiatives, we sincerely ask for yourcontinued support.
August 2017
* In this report, the period from January 1, 2017 to June 30, 2017 is stated as
the “interim period.”

1Canon Marketing Japan Inc.

Haruo Murase

Masahiro Sakata

Chairman & Representative Director

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)

646.0

629.3

(Billions of yen)

645.0

Comparison withprevious period

27.7

26.6

0.8%
314.1

6.3%

303.7

306.2

FY2016FY2017FY2015

Ordinary income

11.0

10.3

8.5

FY2015

28.8
Comparison withprevious period

FY2016FY2017

Profit attributable to owners of parent(Billions of yen)

28.7

28.0

Comparison withprevious period(Billions of yen)

29.6

5.4%

11.8

11.2

9.6

FY2015FY2016

18.2

15.7

5.1

FY2017FY2015

19.8

Comparison withprevious period

26.1%
6.6

FY20168.4

FY2017

Profit attributable to owners of parent per share(yen)12139

FY2015153

14051

FY201665

Please see our website for more detailed businessresults.
http://cweb.canon.jp/eng/ir/library/results.html

FY2017

Canon Marketing Japan Inc.

2

Information by Segment* Description of increases and decreases in the information by segment is based on comparison with the previousinterim period. We have changed the reportable segments of Canon MJ and consolidated subsidiaries (“CanonMJ Group”) in the current interim period under review in association with the organizational restructuring ofCanon MJ Group. Therefore, we retroactively changed segment information in the previous interim period.

Business Solutions
Setting up “Customer Experience Center Tokyo”
In April, Canon set up “Customer Experience Center Tokyo” (“CEC Tokyo”) on the site ofits headquarters (Ota-ku, Tokyo) for the purpose of strengthening the commercial printing
business. Canon Production Printing Systems Inc., a subsidiary of Canon MJ, is in chargeof its operation.
In contrast to normal showrooms, visitors to CEC Tokyo are able to experience suchaspects as output verification, quality confirmation and media verification using their own
printing data.
We will continue to expand our production printing business using this facility.
■ Net sales(Billions of yen)

167.5

170.9

Equipment in CEC Tokyo■ Operating income(Billions of yen)Comparison withprevious period

2.1%

5.4

5.9

Comparison withprevious period

8.6%

2016
2017
Interim period Interim period

2016
2017
Interim period Interim period

Overall ConditionSales of office MFPs, production printing, laser printers, toner cartridges and network
cameras increased. In particular, the performance of network cameras was strong due tothe acquisition of orders in various areas, as well as large orders for commercial facilities.
Maintenance service revenue for office MFPs and other products remained flat. As a result,net sales in this segment increased.

Imaging Systems
Launching the mirrorless camera EOS M6
Canon MJ launched the mirrorless camera EOS M6 in April. The EOS M6 is a mirrorlesscamera that is able to capture quickly moving objects with high accuracy by mounting theDual Pixel CMOS AF, an AF technology unique to Canon, despite its small size. The EOS
M6 responds to extensive needs for full-fledged photo expression from photography
enthusiasts, as well as users wishing to step up from a smartphone and a compact camera.

■ Net sales(Billions of yen)

68.1

64.5

■ Operating income(Billions of yen)Comparison withprevious period

5.3%
2016
2017
Interim period Interim period

3EOS M6Canon Marketing Japan Inc.

1.7

2.1

Comparison withprevious period

20.7%
2016
2017
Interim period Interim period

Overall Condition
Sales of SLR cameras declined, but sales of mirrorless cameras increased significantly due
mainly to the launch of new products. Sales of compact digital cameras were also up.
While sales of inkjet printers increased, sales of inkjet cartridges and commercial imaging
equipment declined. As a result, net sales in this segment decreased.

(Figures are rounded to the nearest unit)

IT Solutions
Strengthening solutions against cyber attacks
With cyber attacks intensifying, Canon IT Solutions Inc., a subsidiary of Canon MJ, proposes appropriate defenses against a broad
range of attack techniques.
The GUARDIANWALL, an email filtering software that has commanded the largest
domestic share for the 15th consecutive year 1, has been refurbished into theGUARDIANWALL Series, an integrated unified brand for measures against information
leaks, and evolved into a lineup that is able to provide more flexible solutions for a changing
environment, such as the increasing use of cloud computing systems and technical cooperation
with other companies. In addition, we are actively working on alliances with other companies, asindicated by our planning of SPAMSNIPER AG, which features an email sanitizing function toprevent information leaks caused by targeted attacks, etc., in cooperation with Jiransoft Japan, Inc.
We will continue to develop security solutions by considering the challenges and needs facing companies in the security area,
based on the knowledge and know-how we have accumulated in the security business.
■ Net sales(Billions of yen)

65.5
Comparison with

66.1

previous period

0.9%■ Operating income(Billions of yen)

2.1

2.1

Comparison withprevious period

1.6%

2016
2017
Interim period Interim periodNote 1. Based on the “Network Security Business 2016 · Comprehensive Research Report” ofFuji Chimera Research Institute, Inc.

20162017
Interim period Interim period* Net sales in the IT Solutions segment include inter-segment sales or transfers of
13.5 billion yen.

Overall Condition
Net sales in the SI services business remained flat, and net sales in the IT infrastructure andservices business declined. While net sales in the embedded systems business were down
due to a fall in orders from major customers in the manufacturing industry, the products
business saw net sales increase, thanks chiefly to the firm performance of security-relatedproducts. As a result, net sales in this segment declined slightly.

Industrial / Medical
Launching two models, including CXDI-710C Wireless
We announced the digital X-ray systems CXDI-710C Wireless and CXDI-810C Wireless in March andlaunched them in July. These products have trimmed weight to meet the needs of the rising number offemale radiology technologists in medical settings, and have improved usability by incorporating afunction to store X-ray images in the built-in memory.
■ Net sales(Billions of yen)

17.6

16.2■ Operating income(Billions of yen)Comparison withprevious period

7.8%
2016
2017
Interim period Interim period

0.7Comparison with

0.7

previous period

5.3%
2016
2017
Interim period Interim period

Overall Condition
Sales of industrial equipment increased due to solid orders for semiconductor
manufacturing equipment and testing and measuring systems, etc. and firm service
revenue, reflecting buoyant markets in the semiconductor sector. Net sales in the medical
business declined due to the backlash from the large orders received in the previous
interim period, despite growth in sales of medical cloud services, etc. As a result, net sales
in this segment decreased.

Canon Marketing Japan Inc.

4

Introduction of Our New Alliance Initiatives
Under our Long-Term Management Objectives and the Three-Year Management Plan, we are actively
working on alliances as a key strategy for growth.

Announcing the official marketing partner agreement with LEGOLAND® Japan
Canon MJ has become an official marketing partner of LEGOLAND® Japan in
its imaging area. The agreement covers Canon’s output and imaging-related
technologies for both individuals and corporations in areas such as cameras,
inkjet printers, network cameras and printing. LEGOLAND® Japan provides itsvisitors with a photography service using an SLR camera, photoprints by aninkjet printer, and a dedicated photo book service of LEGOLAND® Japan, using
the automated layout technology unique to Canon. We also contribute tosecurity and safety at LEGOLAND® Japan by introducing more than 200
network cameras of Canon and Axis Communications and the video
management software of Milestone Systems.

2017

Jan.

1Feb.

2Mar.

3

Announcing an investment in OurPhoto, a matching site for on-site photo-taking service
Canon MJ has invested in Our Photo Inc., which has developed and now
operates the OurPhoto site. OurPhoto is a matching site for an on-site phototaking service where Our Photo Inc. introduces photographers to customers
seeking to have candid photos taken of themselves during their everyday life.
It provides applicants with an opportunity to have their photo taken by aprofessional or a semiprofessional photographer, and photographers with anopportunity to play an active role as a photographer.
We will develop high value-added businesses by combining the resources ofthe both companies; that is, the advanced services of Our Photo Inc. and theproducts and services of the Canon MJ Group.

5Canon Marketing Japan Inc.

Establishment of Commercial Printing Lab Inc.
Canon Production Printing Systems Inc. (“Canon PPS”), a subsidiary ofCanon MJ, and Ishida Taiseisha Inc. (“Ishida Taiseisha”) have established ajoint venture named Commercial Printing Lab Inc. The new company seeks
to create a new market in the printing industry with its printing andcontent production businesses using high-speed continuous feed inkjet
printers for commercial use. Integrating the know-how of Canon PPS indigital printing with Ishida Taiseisha’s expertise in offset printing andcontent production, we have become able to make comprehensive
proposals covering the area from offset printing to digital printing. We willcontinue to expand our production printing business, taking advantage ofstrengths of Canon PPS and Commercial Printing Lab Inc.

Apr.

4May

5

Developing the nursing care support
business using IoTCanon MJ will develop the nursing care support businessusing IoT, by entering into a capital and business alliancewith Z-Works Inc. (“Z-Works”). Together with Z-Works, wewill actively develop nursing care support solutions that will
improve the operating efficiency and services of nursingcare facilities, where labor shortages are expected tobecome an increasingly serious problem.

Overview
Location

13-29, Konan 2-chome, Minato-ku, Tokyo

Representative

Hiroshi Yaginuma
President & Representative Director

Established day April 3, 2017
CapitalJun.

6100 million yenJul.

7Strengthening the OS development
business for automotive control systems
To expand the automotive software business, Canon ITSolutions Inc. (“Canon ITS”), a subsidiary of Canon MJ,
invested in APTJ Co., Ltd., a venture company originatingfrom Nagoya University, and supports productdevelopment by participating in the development ofautomotive operating systems (OS) based on AUTOSAR*specifications, which APTJ Co., Ltd. is promoting. In July,
Canon ITS increased its stake in APTJ Co., Ltd. to expand
its business based on synergies between the developmentof existing automotive software and the OS business, in anenvironment where emphasis is increasingly being placedon a standard OS for automobiles for autonomous driving.
* AUTOSAR (Automotive Open System Architecture)This is a Group that prepares the global industry standards for thesoftware foundations for automotive control systems. AUTOSAR wasestablished in 2003 and is active mainly in Europe. OS based on AUTOSAR
specifications have already been widely adopted by European automakers,and adoption is expected to spread among Japanese automakers as well in
the future.

Image of nursing care support solutions

Canon Marketing Japan Inc.

6

Details of Our Communication Activities

Introduction of IR Site

Presentations and IR eventsIn April, Masahiro Sakata, the President took
the rostrum at a meeting for individualinvestors sponsored by Daiwa Investor
Relations Co., Ltd. He explained the history,
business, performance trends, medium- andlong-term management plans, and otheraspects of the Canon MJ Group to about Meeting for individual investors sponsored
430 participants. We also organized a by Daiwa Investor Relations Co., Ltd.
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

 StockInformation FinancialInformation
Please see our website for IR
information including the above.
http://cweb.canon.jp/eng/ir/index.html

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 80 shares at the moment, that shareholder is able to increase the number to 100 shares (the share unitnumber) 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: ‌Mikio Hasui
From the Canon Calendar 2017
“Mt. Fuji, an oasis of life: Toki no Katachi”