・ Net sales have remained almost the same since 2016.

・ However, operating income has been increasing gradually.

・ Income declined in 2018, but rose in 2019.

・ The main factor in higher income is the shift from a conventional

way of thinking, pursuing the number of units and the market share,

to selling mainly high value-added products.

・ A typical example is inkjet printers.

・ We have changed the selling method to making a profit on products

without depending on consumables.

・ In addition, evolution into a company with a lean corporate structure

is being accomplished by controlling SG&A expenses while working

in highly productive ways.

・ The operating income ratio exceeded 5%, and we will continue to

raise it.

・ The ITS Business, which is a growth area, makes up more than one

third of total net sales.

・ In 2019, the PC-related business grew associated with the

termination of support for Windows 7.

・ Therefore, it is too early to see the figures for 2019 as our raw

strength.

・ However, we did not simply increase the number of PCs sold but

provided customers with various solutions and support, and the ITS

Business has become a business with profits.

・ The ITS Business achieved net sales of 200 billion yen—its

immediate target.

・ It aims to achieve net sales of 300 billion yen in 2025, and is moving

forward little by little toward that target.

・ The core of the ITS Business is Canon IT Solutions (“Canon ITS”)

shown in dark blue in the pie chart.

・ When I became president in 2015, I said that all businesses would

move based on IT.

・ In fact, solutions are provided in all areas of our BtoB business.

・ In addition to the growth of Canon ITS, segments for director sales

to large companies, for partners, Canon System & Support (“Canon

S&S”), and Medical IT, are also performing well even though they

are not large.

・ Overall balance has been improving.

・

・ Customer needs differ between large companies and middle-ranking and small

and mid-sized companies, or vary by company size.

・ In the Enterprise segment centered on Canon ITS, SI services such as system

construction play a central role, and projects have been growing in size.

・ As we have shifted from a conventional style of constructing systems from

scratch to the proposal of solutions to customers by packaging systems as

much as possible, profitability has improved.

・ Nishi-Tokyo Data Center, which began operating in 2012, received high marks

because there has been no major problem since its start of operation.

・ It is becoming a business where we share some customers’ business by

enhancing the menu to include maintenance and operation, in addition to

keeping their data.

・ The core Group company of business for middle-ranking and small and mid-

sized companies is Canon S&S.

・ In 2019, there were many PC replacement projects.

・ Even in the area of small and mid-sized companies, customers have begun to

utilize IT, including the introduction of various packages and the use of cloud

services.

・ In response, Canon S&S can support customers after the introduction, in

addition to making proposals to customers.

・ Significant expansion and higher profitability are expected in this area, as the

use of IT progresses.

・ Although the market for conventional products is shrinking, we must persevere.

・ While we maintain the top share in products other than office MFP, sales and profits will

decline if the current situation continues.

・ We must act purposefully, in addition to following conventional sales methods.

・ In digital interchangeable lens cameras, the shift toward mirrorless cameras is progressing.

・ We have launched EOS R/RP and also plan to launch new products in 2020.

・ We intend to push the mirrorless area forward through the EOS R system, including lenses.

・ Regarding inkjet printers, rather than pursuing the number of units sold, we will make

proposals so that customers will purchase core products that we most want to sell by

solidly appealing to their functions.

・ We also intend to increase the composition ratio of high value-added models by widening

the lineup of large-capacity ink models.

・ As for office MFP, large companies, in particular, are going paperless.

・ While the print volume continues to increase from the previous year, it will decrease at

large companies.

・ Also at middle-ranking and small and mid-sized companies, it will become difficult to

anticipate an increase.

・ We will work to expand sales of MFP by making proposals including solutions.

・ Given that the print volume will decrease, we will maintain tight control on a drop in unit

price.

・ While laser printers will also be strongly affected by the paperless trend, we have been

working to expand sales for specific industries for the past few years because there are

areas where the use can be expected in some industries.

・ As this sales expansion has produced results, we will further step up this effort.

・ We will propose to customers such output that will create business, such as POP printing,

rather than simple output like a conventional one for OA use.

・ On January 1, 2020, Canon Lifecare Solutions was transferred to

Canon Medical Systems.

・ Canon ITS Medical continues to remain in the Group.

・ Last year, the Healthcare Business achieved excellent results in the

construction of hospital information system with a focus on

electronic medical chart, among others.

・ In the medical field, local healthcare is not steadily progressing, and

IT is delayed in some parts of the Japanese medical field.

・ We intend to develop this field by proposing medical IT while taking

advantage of the technical capabilities of Canon ITS.

・ The basic strategy we have set in the Three-Year Management Plan

is to transform into a highly profitable business group.

・ The growth strategy is to further grow the ITS Business.

・ As measures to reinforce profitability, we will solidly hold on in

Canon’s main businesses and enhance internal productivity.

・ We plan to spend a decent amount of money in renovating internal

business systems.

・ We have decided that this is what we should do now to enhance

productivity.

・ The Group’s personnel are expected to decline in the medium to

long term, and the working population in Japan will also decline in

the future.

・ Enhancing productivity in this environment is a challenge.

・ To address this challenge, we will take measures such as

operational process review, use of IT and workstyle reform.

・ We intend to overcome challenges by implementing these

measures ourselves and proposing them to customers.

・ We forecast that sales will decline in 2020, because a reactionary

fall in the PC-related business is expected, in addition to the transfer

of Canon Lifecare Solutions.

・ In 2022, we will not only increase sales but also grow accompanied

by higher operating income.

・ In addition, we will raise the operating income ratio.

・ Unfortunately, we expect that both net sales and operating income

will decline in the Consumers segment in 2022.

・ Therefore, we must expand the Enterprise segment.

・ We also intend to make the Professional into a profitable segment,

although it is small.

・ While circumstances differ between large companies and small and

mid-sized companies, we often hear customers discuss the labor

shortage.

・ From large companies, we receive requests for the enhancement of

business efficiency, a focus on main and core businesses and the

promotion of workstyle reform through the use of IT.

・ From middle-ranking and small and mid-sized companies, we often

receive requests for proposals to solve issues such as labor

shortages and aging.

・ We also receive requests for support because they are unable to

maintain and manage systems in-house after their introduction.

・ IT is important to advance operations without using manpower.

・ We expect that strong demand for IT will continue for the next few

years and we will lead it toward our business.

・ This is the outlook for the domestic IT market.

・ Because the data volume is increasing significantly, demand for

data centers is also rising.

・ We will make security proposals.

・ Cloud services are useful for customers who do not want to have

their own IT.

・ These services are expected to grow tremendously and we will

solidly respond to this area.

・ The IT market for small and mid-sized companies is not expected to

grow as much, but this is an area that we will expand significantly in

light of the background such as the aging population and the labor

shortage.

・ We aim to grow net sales in the ITS Business to 300 billion yen or

more in 2025.

・ In 2022, the halfway year, we intend to increase net sales to 250

billion yen.

・ The breakdown is as stated on the slide.

・ We intend to largely grow the areas of system construction and

support, rather than products.

・ In 2025, we will grow the two areas in the upper section of the chart,

rather than products, although figures have been omitted due to

unforeseeable factors.

・ We will introduce two cases.

・ One is providing solutions to the Sapporo Group.

・ This is an example of understanding the issues of a large company

customer and using our technologies to solve them.

・ In this example, we succeeded in optimizing inventory levels and

leveling out fluctuations in transport.

・ We proposed maintaining good control of supply and demand, and

this solution is actually operating.

・ We will continue to do a lot of similar business.

・ Small and mid-sized company customers have a variety of issues

other than the labor shortage and the aging population.

・ One is security measures.

・ We will aid small and mid-sized company customers in solving their

issues by providing them with all of our resources.

・ With respect to digital interchangeable lens cameras, we will

conduct activities appropriate for a manufacturer with the largest

market share by increasing the selection of mirrorless cameras and

lenses this year.

・ As for office MFP, we are the third largest company in the industry,

but we will venture into the market more aggressively and make

proposals solidly including solutions to customers.

・ We will also continue to improve the efficiency of maintenance

services by using IoT.

・ In laser printers, we will grasp the usage status of customers by

equipping them with a remote monitoring function and lead to better

proposals.

・ We will also increase the ratio of genuine products for cartridges.

・ As an effort from last year to this year, we will take measures such

as the renewal of core systems, the introduction of RPA, the further

use of IoT to improve the service nature and sales efficiency through

the use of EC by not jostling with EC of volume retailers.

・ We will innovate our business processes by internally accelerating

the adoption of IT.

・ Construction of the Phase II Building of Nishi-Tokyo Data Center will

be completed this summer.

・ Demand is strong and a considerable number of reservations have

already arrived.

・ We also plan to renew internal core systems and make a decent

capital expenditure accordingly.

・ This year or thereafter, we are very interested in enhancing the area

and the size of business operation solutions through an alliance and

M&A with various companies.

・ The area of our business has also been changing to a considerable

degree.

・ Because the lack of professional individuals in new areas inhibit our

growth in some cases, we will actively recruit and secure excellent

human resources from outside.

・ We will be able to grow if all of these measures are put in place.