Canon 2003 Annual Report Download - page 5

advanced 79.7% to ¥126.3 billion (U.S.$1,181 million).
Sales of optical products totaled ¥270.6 billion
(U.S.$2,529 million), a year-on-year increase of 18.6%.
Despite the increased sales, the gross profit ratio decreased
in 2003 due to severe competition and a one-time expense
for the disposal of inventories, resulting in an operating
loss of ¥11.4 billion (U.S.$107 million) for the term.
Progress toward Meeting Management Objectives
In 2001, Canon launched Phase II of the Excellent Global
Corporation Plan, a five-year management initiative whose
aims include securing the No. 1 position worldwide in all of
our core business areas, strengthening R&D and further
enhancing the Canon Group’s financial position. In 2003,
we reached several milestones indicating our progress
toward achieving these aims. These include a move to
increase R&D spending to 10% of net sales and the
reduction in our long-term interest-bearing debt to below
100 billion yen.
Among our core businesses, we are aiming to build on
our No. 1 position worldwide in the areas of copying
machines and laser beam printers by, among other methods,
actively launching new models that will help to expand the
color market and “print-on-demand” market.
Canon is one of the few companies that possess world-
class technologies for both cameras and photo-quality
printers. We intend to continue leveraging this advantage
to increase market share and expand new markets, such
as home photo printing.
In 2003, Canon introduced new semiconductor
production equipment based on a new platform. With the
aim of capturing the No. 1 position in this industry, we will
continue to launch new leading-edge products.
Our expanded commitment to R&D is focused on
enhancing core technologies as well as bolstering product
“engine” and platform technologies. We are also continuing
to pursue “prototype-less design” through the effective
utilization of 3D-CAD systems, eliminating, to the extent
possible, physical prototypes from the design process.
We are keeping a close eye on the expanding Chinese
market and plan to strengthen our sales structure there as
well. And we will continue to promote cash-flow manage-
ment to achieve financial strength befitting a truly excellent
global company.
Dealing with the Challenges Ahead
Exchange rate fluctuation is a persistent challenge for a
global company. To mitigate its impact, we are working to
increase product development speed, which will enable
us to introduce products priced to reflect the latest foreign
exchange levels. For the long term, we will establish product
development operations in the United States and Europe,
enabling each region—Japan, the Americas and Europe—to
develop, produce and export its own products all over
the world.
We also view environmental concerns as a management
issue of extreme importance. From the product development
stage through to production, sales, use, recovery and
recycling, we focus our efforts on creating environmentally
conscious products designed with energy savings, resource
conservation, and the elimination of harmful substances
in mind.
While the global economy appears to be headed for
recovery in 2004, uncertainties are likely to continue.
Strongly positioned in a range of expanding markets, Canon
will remain on course toward our goal of becoming an
excellent global company, and in so doing, I believe, will
continue adding value to the Canon Group for all
stakeholders around the world.
Fujio Mitarai
President and CEO
Canon Inc.
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