Canon 2002 Annual Report Download - page 6

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Strong Financial Foundations Sustain Growth
The origins of Canon´s robust performance during the past three years can be found in a wide range
of programs and activities combining our traditional strengths with the commitment to maintaining
profitable operations throughout the Canon Group. For example, production reformation has allowed
us to significantly reduce costs, which is why we will continue these activities into the future.
In addition, the Canon Group is developing new products more efficiently and
rapidly than ever before. Nearly 60% of the Canon brand products now on the
market were launched within the past two years, which means that we are selling
a large number of products with high profitability. While shortening product
development lead times, we have also dramatically reduced production defects.
These efforts made possible the excellent performance of the Canon Group
in 2002 and sustained an increase in consolidated net income well in advance of
our rise in net sales. Comprehensive cash flow management also made it possible
to bring our ratio of cost of sales to net sales down more than three percentage
points from the 2001 result, raise our stockholders´ equity ratio to 54.1%, from
the previous year´s 51.3%, and improve our debt ratio from 10.4% to 5.0%.
Management Reformation Continues to Deliver Results
The management reformation strategies we introduced in 1996 under Phase I
of the Excellent Global Corporation Plan placed Canon firmly on the path to
profitability. Our Groupwide shift to cell production, which was completed in
2002, eliminated more than 20 kilometers of conveyor belt and dozens of automated storage systems,
freeing large volumes of internal and external floor space. Now that we are well into Phase II of the
Excellent Global Corporation Plan, the spirit of reform is becoming firmly established in the corporate
character of the Canon Group. This is why I am confident that our people will continue to seek
innovative ways to improve our operations and performance to ensure even more favorable results
in 2003 and beyond.
4
How was the Canon Group able to complete its third consecutive year of record-breaking
results for consolidated net income? And what does the future hold? In this interview,
Fujio Mitarai, president and CEO of Canon Inc., discusses the momentum of management
reformation and the Group´s prospects for future growth.
50
40
30
20
10
(%)
0
Stockholders´ Equity Ratio
96 97 98 99 00 01 02
54.1
38.1 38.6 42.4 46.5 45.9
51. 3 50
40
30
20
10
(%)
0
Debt Ratio
96 97 98 99 00 01 02
5.0
28.8 26.5
21.4 17.9 13.8 10.4
Interview with the President
Nurturing the Seeds of Success to
Maintain Momentum