Canon 2008 Annual Report Download - page 6

4
O
v
e
rvi
e
w
of
Fi
sca
l 2
008
In the
fi
rst hal
f
o
f
2008, energy and raw material prices
sk
y
rocketed, which had a ma
j
or impact on corporate earn
-
in
g
s. Moreover, durin
g
the severe economic recession that
be
g
an in September, stock prices dropped precipitousl
y
due
to the expandin
g
fi nancial crisis. At the same time, heav
y
y
en
bu
y
in
g
in forei
g
n exchan
g
e markets caused the alread
y
hi
g
h
y
en to s
h
arp
l
y appreciate. During 2008, t
h
e average ex-
change rate o
f
the yen was ¥103.23 against the dollar and
¥151.46 against t
h
e euro, appreciating approximate
l
y 14%
an
d
7% year on year, respective
l
y
.
Turnin
g
to each re
g
ion, in the United States a
g
rave
situation has been created b
y
the recession tri
gg
ered b
y
the
subprime loan problem, with a sharp decline in new housin
g
starts alon
g
with
g
rowin
g
unemplo
y
ment in the auto and
fi nancial industries—all leadin
g
economic indicators.
In Europe, the
fi
nancial crisis has also a
ff
ected the real
economy,
l
ea
d
ing to a
d
ec
l
ine in regiona
l
tra
d
e, w
h
ic
h
h
a
d
been an engine o
f
growth.
In Japan as well, the
fi
nancial crisis sent economic
conditions into a rapid tailspin. Exports, a
g
rowth driver,
plun
g
ed and production dropped substantiall
y
for most
m
a
n
u
f
actu
r
e
r
s
.
In Asia and emer
g
in
g
countries in other areas, economic
g
rowt
h
a
b
rupt
l
y
d
ec
l
ine
d
d
ue to
d
ecrease
d
exports.
F
i
sca
l 2
008
P
e
rf
o
rm
a
n
ce
R
esu
l
ts
As a result o
f
the above-mentioned
f
actors, Canon’s consoli
-
d
ate
d
net sa
l
es
d
ec
l
ine
d
8.6% to ¥4,094.2
b
i
ll
ion an
d
net
income dro
pp
ed 36.7% to ¥309.1 billion com
p
ared with the
previous fi scal
y
ear. B
y
product cate
g
or
y
, sales decreased
9
.4% to ¥2,660.0 billion for business machines (includes
offi ce ima
g
in
g
products and computer peripherals) and
9
.6% to ¥1
,
042.0 billion
f
or cameras. However
,
sales o
f
optical and other products were largely in line with those o
f
the previous
fi
scal year at ¥392.2 billion. By operating region,
in Europe sales
f
ell 10.5% to ¥1,341.4 billion. Sales also
d
ecrease
d
in t
h
e Americas,
d
ec
l
ining 13.6% to ¥1,154.6
billion. In Ja
p
an sales sli
pp
ed 8.4% to ¥868.3 billion, and
elsewhere in Asia and Oceania sales climbed 4.5
%
to
¥729.9
b
illi
o
n.
Turning to operating expenses, Canon’s se
ll
ing, genera
l
an
d
a
d
ministrative expenses
d
ec
l
ine
d
4.8% year on year to
¥1,067.9 billion. The Compan
y
’s R&D expenses increased
1.6% to ¥374.0 billion, or 9.1% of net sales. Even in a ma
j
or
economic downturn, Canon’s a
gg
ressive R&D spendin
g
was
at a hi
g
her rate than in the previous fi scal
y
ear. The
g
ross
p
rofi t ratio declined 2.8 percenta
g
e points to 47.3%. Net
income per s
h
are,
b
asic an
d
d
i
l
ute
d
, came in at ¥246.21 an
d
¥246.20, respective
l
y.
As
f
or returning pro
fi
ts to stockholders, Canon empha-
s
izes the stable return o
f
f
ree cash
fl
ow to stockholders, and
intends to pa
y
a full-
y
ear dividend per share of ¥110, the
s
ame amount as in the previous fi scal
y
ear. Moreover, Canon
p
urchased a total of ¥100 billion in treasur
y
stock durin
g
fi
sca
l 2008.
M
anagement Policies for Fiscal 2009
W
e have de
fi
ned 2009 as the year to prepare
f
or making
our next leap
f
orward. We will
f
ocus on surmounting the
a
d
versity cause
d
b
y t
h
e economic crisis an
d
promote measures
and policies to improve the qualit
y
of mana
g
ement
.
First, Canon will thorou
g
hl
y
stren
g
then its SCM. To
r
emain successful in the midst of ma
j
or market chan
g
es, we
m
ust continue to expeditiousl
y
launch conpetitive new
p
ro
d
ucts. T
h
is cannot
b
e ac
h
ieve
d
wit
h
on
l
y
d
eve
l
opment
an
d
pro
d
uct p
l
anning capa
b
i
l
ities. We wi
ll
b
ui
ld
a
h
ig
h
er
level o
f
SCM through IT innovations that consolidate in
f
or
-
m
ation on everything
f
rom development through sales, as
w
ell as through pull production, or the timely manu
f
acture
of
p
roducts to meet the exact level of demand.
Canon will promote a two-pron
g
ed production strate
gy
of further developin
g
cost-reducin
g
technolo
g
ies and build
-
in
g
a
g
loball
y
optimized production s
y
stem based on local
-
ized production.
With respect to the development o
f
cost-reducing
technologies, the Company will work to expand the scope o
f
automation with the goal o
f
establishing
f
ully automated
p
roduction systems. In addition to the assembly o
f
toner and
ink
j
et cartrid
g
es, We will continue to promote automation,
even in the product bod
y
assembl
y
process. We are develop
-
in
g
intelli
g
ent robots that can carr
y
out hi
g
hl
y
precise and