Canon 2006 Annual Report Download - page 5

3
Overview of Fiscal 2006
Canon hit the ground running in fiscal 2006, the inaugural year
of Phase III of its Excellent Global Corporation Plan aimed at
attaining sound growth. The Company achieved record earn-
ings and posted its seventh consecutive year of sales and profit
growth, as well as increased sales across all major product
categories and all operating regions.
The global economy continued on a steady course in 2006
in spite of concerns over sharp rises in raw material and fuel
costs, along with tense geopolitical conditions. Personal
consumption and capital investment increased in the United
States while the European economy recovered steadily. The
Asian economy continued to hum along, driven by China and
ASEAN countries, and the economy in Japan saw moderate
but stable growth.
Canon again enjoyed strong results in digital cameras, color
network multifunction devices (MFDs) and laser beam printers
(LBPs). Consolidated net sales in fiscal 2006 grew 10.7% to
¥4,156.8 billion (US$34,931 million), income before income
taxes and minority interests jumped 17.5% to ¥719.1 billion
(US$6,043 million), and net income rose 18.5% to ¥455.3
billion (US$3,826 million). The gross profit ratio improved 1.1
percentage points to 49.6%, owing to major cost reductions.
Return to Stockholders
With the goal of expanding its base of individual investors,
Canon executed a three-for-two stock split in July 2006. The
Company will continue taking an active approach to stockholder
returns in the future, primarily in the form of dividends, after
careful consideration of investment plans and cash flows in the
context of consolidated performance results. Over the mid to
long term, the Company intends to raise its stockholder return
ratio to a level of approximately 30% on a consolidated basis.
For the fiscal year ended December 31, 2006, Canon set its full-
year dividend per share at ¥100, which would equal ¥125 on a
pre-stock-split basis, marking a real increase of ¥25 over the
previous fiscal year.
Toward the Achievement of Phase III Targets
In Phase III of our Excellent Global Corporation Plan, we will
strengthen existing businesses and cultivate new businesses
while maintaining a high profit structure. In addition, we will
work toward further accelerating innovation across all busi-
ness activities.
Through reforms carried out in Phase I and Phase II, Canon
made major improvements in productivity and solidified its
financial foundation to enhance corporate value. Moreover,
aggressive investments in infrastructure over the past 10 years
have led to expanded sales and enabled us to focus on cultivat-
ing new businesses over the mid-term.
We view the five years of Phase III as an expansion period and,
with the aim of joining the ranks of the global top 100 compa-
nies, have set consolidated performance targets of ¥5.5 trillion in
net sales and a return on net sales of 10% or higher in 2010.
A Truly Excellent Global Corporation
In 2007, as we celebrate the 70th anniversary of Canon’s
founding, I envision the Company continuing on a long journey
of 100 or even 200 years of sustained development and
prosperity. As we take up fresh challenges in our drive to
increase the level of admiration and respect the Company earns
worldwide, we will continue to follow our philosophy of kyosei
and act as a responsible corporate citizen to protect the natural
environment and make positive contributions to society.
In May 2006, I was appointed Chairman of Nippon
Keidanren (Japan Business Federation), and will work in this
capacity to contribute to the development of Japanese society,
in addition to my responsibilities at Canon. I have assumed the
post of Chairman and CEO, while Mr. Tsuneji Uchida has been
appointed President and COO. Under this new management
framework, we will press ahead toward our primary goal of
accomplishing our Phase III objectives.
Fujio Mitarai
Chairman and CEO
Canon Inc.