CAJ Canon Inc

 August

Date….

We are pleased to provide this overview of the first half (from January 1, 2023 to June 30, 2023) of our 123rd Business Term.

In the first half of this term, the global economy started with downside risks, including escalating geopolitical risks and rapid interest rate hikes in many countries and regions. However, inflation, which was a concern, continued to decline steadily, and consumer spending and employment remained firm.

In this environment, the markets for our products are returning to normal conditions in terms of both demand and supply, and in the new post-pandemic society, we increased sales by demonstrating our strong product competitiveness. Amid the diversification of working styles and distributed offices, sales of printing equipment exceeded those of the previous year as we leveraged the strength of our broad product lineup, which spans from office multifunction devices (MFDs) to printers for home use. We posted significant growth in the sales of cameras, network cameras, and medical equipment. As for cameras, new mirrorless models stimulated demand. For network cameras and medical equipment, we captured the need for safety and security. For industrial equipment supporting social infrastructure as well, we continued to see strong investment in semiconductor lithography equipment.

Consolidated net sales for the first half of this term increased by 6.1% year on year, and consolidated net income attributable to Canon Inc. increased by 16.0%, reflecting not only solid sales of each product, but also the foreign exchange effect of yen depreciation.

Based on our first-half results, we decided to pay 70.00 yen per share for the interim dividend for this term, which is 10 yen higher than the interim dividend for the previous term.

We have reached the midway point, two and a half years since embarking on our five-year management plan, Phase VI of the “Excellent Global Corporation Plan.” During the period, unexpected developments have occurred, including the spread of COVID-19, insufficient product supply due to shortages of semiconductors and other components and pressures on distribution, and the rapid rise in inflation. Although we faced unexpected developments, we responded promptly to the changes in the environment and achieved favorable performance to date. In the second half of the five-year plan, we will continue striving to further improve our performance and increase our corporate value under our basic policy of “accelerating our productivity improvement and corporate portfolio transformation through new business creation.”

We look forward to our shareholders’ continued support and encouragement.

August, 2023

Chairman & CEO    FUJIO MITARAI

Highlights of Consolidated Results

·

In the first half of this term, even amid persisting future global economic uncertainty, demand for our products was firm and we expanded sales of highly competitive products. As a result, consolidated net sales for the first half of this term increased by 6.1% year on year.

·

Consolidated net income attributable to Canon Inc. for the first half of this term increased by 16.0% year on year due to firm sales and also as a result of efforts to control costs, primarily logistics cost, and expenses.

Office MFDs experienced a significant increase in sales as steady demand for machines continued and a recovery in the number of prints drove an increase in service revenue. As for laser printers and inkjet printers, although sales declined due to the impact of business conditions, digital commercial printing, an area in which market growth is expected, has continued to grow steadily with increased unit sales especially of products for graphic arts.

As a result, sales for this business unit for the first half of this term increased by 5.1% on a consolidated basis, in comparison to the first half of the previous term.

Sales of interchangeable-lens digital cameras increased significantly amid a recovery in travel and leisure demand. In particular, our new mirrorless cameras, launched from the second half of last year through this year, have been favorably received and in some cases, demand for our products is outpacing production. Sales of network cameras, for which needs are increasing mainly in the security field, also increased significantly as we continue to strengthen our product lineup and sales structure.

As a result, sales for this business unit for the first half of this term increased by 15.0% on a consolidated basis, in comparison to the first half of the previous term.

As for medical equipment, installations of large diagnostic imaging systems, such as CT and MRI, which had been postponed due to the impact of the pandemic, progressed and sales of diagnostic ultrasound systems also increased, mainly in Europe. In the United States, a key market for growth, we established a new company in the suburbs of Cleveland to strengthen sales and increased our sales force. This has driven an increase in the number of business negotiations with medical institutions and an increase in orders.

As a result, sales for this business unit for the first half of this term increased by 8.8% on a consolidated basis, in comparison to the first half of the previous term.

As for semiconductor lithography equipment, with the development of electric vehicles (EVs) and IoT, semiconductor manufacturers have a strong appetite for investment mainly for power devices and sensors, and we are increasing our unit sales by boosting our production capacity. Although unit sales of FPD lithography equipment have been declining, given customers’ adjustments in capital investment, we are proceeding to strengthen our product competitiveness in preparation for increased demand for IT panels for notebook PCs and tablets from next year onward.

As a result, sales for this business unit for the first half of this term decreased by 6.7% on a consolidated basis, in comparison to the first half of the previous term.

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