SEC Form 6-K filed by Canon Inc.

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-....................

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

*Print the name and title of the signing officer under his signature.

The following materials are included.

CONSOLIDATED RESULTS FOR THE FOURTH QUARTER AND

THE FISCAL YEAR ENDED DECEMBER 31, 2023

January 30, 2024

CONSOLIDATED RESULTS

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I. Operating Results and Financial Conditions

2023 in Review

Looking back at 2023, despite the unstable situations such as the Ukraine crisis and armed conflicts in the Middle East, the global economy recovered modestly thanks to the termination of the COVID-19 pandemic which had restricted economic activity for a prolonged period. In the United States, consumer spending remained solid thanks to the strong employment situation and increases in real income. In Europe, however, the economy was lagging with strong uninterrupted downward pressure on the economy due to the inflation and the continuation of tight monetary policies. In China, the economy continued its deceleration trend due to a sluggish real estate market and the lack of recovery in the personal consumption. In other emerging countries, the economy remained solid, mostly centering around consumer spending and the service industry. In Japan, the economy recovered moderately, with consumer spending showing signs of picking up on the back of improvement in the employment and personal income environment.

In the markets in which Canon operates, despite the recovery of product supplies following the resolution of component shortages and logistical disruptions, demand was lagging due to tight monetary policies associated with inflation, the sluggish Chinese and European economy, and increasing uncertainty surrounding geopolitical risks. On a product basis, despite stagnant market conditions in China, demand for office multifunction devices (MFDs) remained firm thanks to solid demand for printing equipment offering high productivity in other countries. For inkjet printers, the demand from customers working from home slowed. For laser printers, demand slowed due to the curbing of corporate investments. For medical equipment, demand remained firm, particularly in Japan and Europe. For cameras, demand remained solid thanks to the need for high-quality visual expression from professionals and enthusiasts. The market of network cameras continued to grow. For semiconductor lithography equipment, although demand for memory devices remained weak, the market has grown, particularly for power devices, analog devices and sensors. For FPD (Flat Panel Display) lithography equipment, the market continued to shrink due to restrained investments by panel manufacturers.

The average value of the yen for the year was ¥140.85 against the U.S. dollar, a year-on-year depreciation of approximately ¥9, and ¥152.20 against the euro, a year-on-year depreciation of approximately ¥14.

In 2023, net sales for the year increased by 3.7% year-on-year to ¥4,181.0 billion thanks to the recovery of product supplies and solid demand for network cameras and other new businesses, as well as the favorable effects of the depreciation of the yen. The sales were the second highest since 2007. Gross profit as a percentage of net sales increased by 1.8 points year-on-year to 47.1% due to a reduction in costs of components and logistics, and the favorable effects of the depreciation of the yen. Gross profit increased by 7.7% year-on-year to ¥1,968.9 billion. Operating expenses increased by 8.1% year-on-year to ¥1,593.5 billion due to an increase in sales-related expenses with the normalization of sales activity. In addition, operating expenses denominated in foreign currencies increased thanks to the depreciation of the yen. As a result, operating profit increased by 6.2% year-on-year to ¥375.4 billion. Other income (deductions) increased by ¥16.4 billion year-on-year to ¥15.4 billion due to a decrease of currency exchange losses, which were substantially incurred last year. As a result, income before income taxes increased by 10.9% year-on-year to ¥390.8 billion and net income attributable to Canon Inc. increased by 8.4% year-on-year to ¥264.5 billion. Consequently, sales and income increased for the third consecutive year.

Basic net income attributable to Canon Inc. shareholders per share was ¥264.20 for the year, a year-on-year increase of ¥27.49.

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Results by Segment

Looking at Canon’s full year performance by business unit, in the Printing Business Unit, unit sales of equipment for the production printing market increased compared with the previous year, thanks to enhancing its product lineup by adding the imagePRESS V1350 and new Colorado series products that were well-received in the market. MFDs for offices continued to sell well, exceeding unit sales from the previous year, as the product supply shortage was abated, while demand for products including the imageRUNNER ADVANCE DX C3900, which is low and mid-speed color MFD series, was solid. As for inkjet printers, the number of unit sales decreased compared with the previous year as the surge in demand from users working from home subsided. As for laser printers, despite middle and high-speed color MFD products that were well-received, unit sales decreased compared with the previous year due to the curbing of corporate investments. These factors resulted in total sales for the business unit of ¥2,346.1 billion, a year-on-year increase of 3.2%, while income before income taxes increased by 3.9% year-on-year to ¥235.1 billion, mainly due to cost-cutting activities and the decrease in logistics costs.

In the Medical Business Unit, sales remained firm thanks to a recovery of investments in large-size equipment previously held back due to the COVID-19 pandemic and firm sales of magnetic resonance imaging (MRI) systems, diagnostic X-ray systems and diagnostic ultrasound systems mainly in Japan and Europe. These factors resulted in total sales for the business unit of ¥553.8 billion, a year-on-year increase of 7.9%, the highest recorded sales in the history of the business unit. Income before income taxes increased by 0.8% year-on-year to ¥32.1 billion due to active investments to augment its workforce in order to enhance its sales capacity.

In the Imaging Business Unit, sales of interchangeable-lens digital cameras, in particular mirrorless cameras like the EOS R6 Mark II, a full-frame mirrorless camera released the year before last, and the new entry-level EOS R50 and EOS R100 mirrorless cameras launched last year, remained solid. Sales of RF-series interchangeable-lenses remained solid as well. Sales of network cameras increased thanks to solid demand and enhanced sales activity against the background of diversifying applications. These factors resulted in total sales for the business unit of ¥861.6 billion, a year-on-year increase of 7.2%, while income before income taxes increased by 14.4% year-on-year to ¥146.4 billion due to an increase in the sales ratio of high-value-added mirrorless camera and solid profit of network cameras.

In the Industrial Business Unit, sales of semiconductor lithography equipment remained strong, particularly for those used in the production of power devices. As a result, unit sales exceeded the previous year. For FPD lithography equipment, however, unit sales decreased compared with the previous year due to reduced investments by panel manufacturers as the panel market worsened. These factors resulted in total sales for the business unit of ¥314.7 billion, a year-on-year decrease of 4.4%, while income before income taxes totaled ¥59.2 billion, a year-on-year decrease of 0.1%.

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Cash Flow

During 2023, cash flow from operating activities increased by ¥188.6 billion year-on-year to ¥451.2 billion, mainly due to an improvement in working capital caused by an increase in profit and a reduction in inventory. Cash flow used in investing activities increased by ¥94.6 billion to ¥275.4 billion from the previous year due to an acquisition of Minaris Medical Co., Ltd., which has in vitro diagnostics and automated analyzer businesses, as well as continued capital investments to improve efficiency and productivity. Accordingly, free cash flow increased by ¥94.0 billion compared with the previous year to ¥175.8 billion.

Cash flow from financing activities decreased by ¥9.9 billion year-on-year to ¥156.7 billion due to dividends paid increased by ¥11.5 billion from the previous year resulted by an increase in the previous year’s year-end dividend and this term’s interim dividend, as well as repurchases of ¥100.0 billion of treasury stock.

Owing to these factors, as well as the impact from foreign currency exchange adjustments, cash and cash equivalents increased by ¥39.2 billion to ¥401.3 billion from the end of the previous year.

Outlook

As for the outlook for 2024, there are still some global economic uncertainties due to various geopolitical risks, tightening monetary policies across the world in response to inflation, and the risk of an economic slowdown caused by China’s market stagnation and other factors. However, Canon expects the global economy to continue its recovery trend thanks to the strong employment situation and improved personal income environment, particularly in Japan and the United States.

In the market in which Canon operates, demand for office MFDs is expected to remain firm, thanks to strong demand for high-productivity printing. However, demand for laser printers is expected to be affected by the curbing of corporate investments. For inkjet printers, although there are concerns about the decrease in demand from customers working from home and fierce competition from competitors, Canon will focus on expanding sales by strengthening its refillable ink tank product lineup. As for the medical equipment market, demand is expected to remain solid thanks to the market growth of diagnostic imaging equipment despite such concerns as the curbing of medical institution investments due to uncertainty of the economic outlook. As for interchangeable-lens digital cameras, demand is expected to remain solid due to the shifting of demand to mirrorless cameras. For network cameras, the market is expected to maintain stable growth thanks to the growing demand for video analysis systems and high-value-added products. For semiconductor lithography equipment, robust market conditions are expected to continue thanks to the construction of new semiconductor factories in various countries and regions, and solid demand for equipment mainly for advanced semiconductor devices and power devices. For FPD lithography equipment, market conditions are expected to improve from the second half of the year, mainly due to demand for equipment for computer-related display panels such as tablet devices.

With regard to the currency exchange rates on which Canon bases its performance outlook, Canon anticipates exchange rates of ¥140 to the U.S. dollar and ¥155 to the euro, representing appreciation of approximately ¥1 against the U.S. dollar and depreciation of approximately ¥3 against the euro as the annual average rates of the previous year.

Having taken the aforementioned currency exchange rates into consideration, Canon projects full-year consolidated net sales of ¥4,350.0 billion, a year-on-year increase of 4.0%; operating profit of ¥435.0 billion, a year-on-year increase of 15.9%; income before income taxes of ¥450.0 billion, a year-on-year increase of 15.2%; and net income attributable to Canon Inc. of ¥305.0 billion, a year-on-year increase of 15.3%, due to the market growth of new business such as network cameras, the introduction of new products of office MFDs and interchangeable-lens digital cameras, both of which are Canon’s main businesses, and improvements in profitability expected from ongoing cost-cutting activities.

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II. Basic Concept Regarding the Selection of Accounting Standards

Canon has prepared its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) over the long term since registering its American Depositary Receipts on the OTC (over-the-counter) market in 1969.

Canon has continued to adopt U.S. GAAP in order to maintain the continuity of financial statements from the past and to maintain international comparability.

Also, Canon is gathering information on trends in Japan and Overseas in relation to the International Financial Reporting Standards (IFRS).

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

III. Financial Statements

1. CONSOLIDATED BALANCE SHEETS

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

2. CONSOLIDATED STATEMENTS OF INCOME AND

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Consolidated statements of income

Results for the fourth quarter

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

  Consolidated statements of comprehensive income

  Results for the fourth quarter

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

3. DETAILS OF SALES

Results for the fourth quarter

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CANON INC. AND SUBSIDIARIES

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4. CONSOLIDATED STATEMENTS OF EQUITY

Millions of yen 

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CANON INC. AND SUBSIDIARIES

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5. CONSOLIDATED STATEMENTS OF CASH FLOWS

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CANON INC. AND SUBSIDIARIES

CONSOLIDATED

6. NOTE FOR GOING CONCERN ASSUMPTION

   Not applicable.

7. SEGMENT INFORMATION

 SEGMENT INFORMATION BY BUSINESS UNIT