CANON ANNUAL REPORT 2024
Fiscal Year Ended December 31, 2024
Strategy
1
Financial Highlights
2
To Our Shareholders
Business Strategy
12
At a Glance
14
Business Strategy
22
Research & Development
24
Production & Quality
ESG
28
Environment
32
Social
35
Governance
Financial Overview
40
Financial Overview
58
Ten-Year Financial Summary
Financial Section
62
Consolidated Balance Sheets
63
Consolidated Statements of Income
63
Consolidated Statements of
Comprehensive Income
64
Consolidated Statements of Equity
65
Consolidated Statements of
Cash Flows
66
Notes to Consolidated Financial
Statements
108 Consolidated Supplementary Schedule
109 Management’s Report on Internal
Control Over Financial Reporting
110 Independent Auditor‘s Report
Corporate Data
116 Transfer and Registrar’s Office
116 Shareholder Information
116 Major Consolidated Subsidiaries
Cover Photo:
Products representing Canon’s four new businesses;
Continuous feed presses: Printing
Computed tomography (CT) systems: Medical
Network cameras: Imaging
Nanoimprint semiconductor manufacturing
equipment: Industrial
TABLE OF CONTENTS
Net Income Attributable to Canon Inc. (Billions of yen)
ROE/ROA (%)
2020
2021
2022
2023
Cash Flows (Billions of yen)
Net Sales (Billions of yen)
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow
ROE
ROA
2020
2021
2022
2023
5,000
4,000
3,000
2,000
1,000
2024
0
100
300
200
2024
2020
2021
2022
2023
200
0
600
400
2020
2021
2022
2023
2024
0
2
4
10
6
8
2024
0
Notes:
1. Canon’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.
2. U.S. dollar amounts are translated from yen at the rate of JPY158 = U.S.$1, the approximate exchange rate on the Tokyo Foreign Exchange Market as of
December 30, 2024, solely for the convenience of the reader.
Millions of yen
(except per share amounts)
Thousands of U.S. dollars
(except per share amounts)
2024
2023
Change (%)
2024
Net sales
¥ 4,509,821
¥ 4,180,972
+ 7.9
$ 28,543,171
Operating profit
279,754
375,366
-25.5
1,770,595
Income before income taxes
301,161
390,767
-22.9
1,906,082
Net income attributable to Canon Inc.
160,025
264,513
-39.5
1,012,816
Net income attributable to Canon Inc.
shareholders per share:
—Basic
¥
165.53
¥
264.20
-37.3
$
1.05
—Diluted
165.44
264.08
-37.4
1.05
Total assets
¥ 5,766,246
¥ 5,416,577
+6.5
$ 36,495,228
Canon Inc. shareholders’ equity
¥ 3,380,273
¥ 3,353,022
+0.8
$ 21,394,133
CANON ANNUAL REPORT 2024
1
FINANCIAL HIGHLIGHTS
20
24
15
10
05
00
96
Net sales and net income attributable to Canon Inc.
(Billions of yen)
Canon Inc. dividend per share
(Yen)
5,000
3,000
2,000
1,000
4,000
0
500
300
200
100
400
0
2021
2022
2023
2024
Net income attributable to Canon Inc. (right axis)
Net sales (left axis)
Year-end dividend
Commemorative dividend
Interim dividend
150
90
60
30
120
0
Achieved net sales target of the current five-year plan one year ahead of
schedule
The global economy continued to be besieged by challeng-
ing conditions in 2024, including rising energy costs against
a backdrop of heightened geopolitical risks, an economic
slowdown in Europe owing to high interest rates, and a
deceleration in the Chinese economy stemming from a slug-
gish real estate market. Despite this environment, consolidated
net sales for the fiscal year ended December 31, 2024, rose
approximately 8%, driven by semiconductor lithography
equipment and new businesses such as network cameras. This
means we achieved our net sales target of 4.5 trillion yen that
we set in Phase VI of the Excellent Global Corporation Plan,
the five-year management plan that ends in 2025, one year
ahead of schedule.
FUJIO MITARAI
Chairman & CEO
Canon Inc.
to bring about a prosperous,
safe, and fulfilling society
Canon is
committed to pursuing
innovation
CANON ANNUAL REPORT 2024
2
TO OUR SHAREHOLDERS
With improved profitability and increased operating cash flow, we raised
dividends by 15 yen
In addition to an increase in sales, we made every effort to
rein in distribution costs, manufacturing costs, and selling
expenses. This drove an increase in the range of 20% at all
profit levels, including operating profit, thus improving our
profitability. With regards to the medical business, business
opportunities have shrunk mainly due to the present deterio-
ration in the business operating conditions of medical institu-
tions in Japan and the impact of geopolitical issues and other
factors. Impacted by changes in the external environment, we
recorded an impairment loss of 165.1 billion yen in this busi-
ness, and subsequently, a decrease in profit. The impairment
had no impact on operating cash flow, which increased by
approximately 150 billion yen from the previous year. As for
dividends, to enhance shareholder returns, in 2024, the divi-
dend per share was 155 yen, an increase of 15 yen from the
previous year.
2025, a year in which efficiency will be thoroughly pursued
2025 is the final year of our 6th five-year management plan, in
which we will thoroughly pursue efficiency to further raise the
profitability of our businesses. It is also a year in which we will
make great strides toward achieving greater growth over the
next five years starting from 2026. To further develop global
markets, we need to review our business portfolio which rap-
idly advanced over the past 10 years, identifying areas within
our operations that require improvement due to the impact of
the COVID-19 pandemic, and promote efficiency. Therefore,
to further enhance operational efficiency, we will primarily
focus on reforming our production and sales structures and
furthering innovative development.
Reorganization of production sites for further efficiency
Reforming our production structure is an urgent issue. In re-
sponse to the rapid appreciation of the yen in the 1980s, we
shifted production to the Asian region. However, with the
drastic changes in the global economic situation and the trans-
formation of Canon’s business portfolio itself, it is now time to
reconsider the optimization of our production sites. We need
to consolidate the plants of businesses where demand has
contracted due to changes in the market environment, boost
capacity utilization rates of our production sites, and strengthen
cost competitiveness. We will start consolidating our produc-
tion sites, which currently total about 60 around the world, into
countries and regions with political and social stability.
Transformation into a stronger, and more competitive organization
On the sales front, after reviewing the channels of each sales
company last year, we restructured organizations to better
align with the nature of each business, thus transforming sales
groups into stronger and more competitive organizations.
These reforms are mostly complete, but we will stay ahead
of the curve by implementing further reviews, particularly in
Europe, where a prolonged market downturn is expected.
In terms of product development, we will expand concur-
rent development on a company-wide basis in which prod-
uct development teams, product engineering divisions, and
manufacturing sites collaborate and work as one. In addition,
by utilizing digital transformation (DX) and simulation technol-
ogy, we will aim to reduce the development time and cost of
prototyping and further improve development productivity.
As the times change significantly, we will also focus on
strengthening our headquarter functions. To raise the pro-
ductivity of every individual, we will strengthen the system for
achieving the high efficiency and high wages that we have
been striving for, and will rapidly improve the performance
evaluation system to better reflect the abilities of employees—
in other words, to create a meritocracy.
CANON ANNUAL REPORT 2024
3
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Continuing reforms that prioritize a thorough focus on profitability
I became President in 1995 and, as a manager over the past
30 years, I have been thoroughly committed to profitability
and have continued to reform our business operations. When
I joined the Company, most Japanese companies had a sales-
first approach, and as a sales rep, I was also a part of that.
What completely changed my mindset was a remark from a
tax officer when I was transferred to our U.S. subsidiary. The
officer said that “company profits should actually exceed inter-
est rates on deposits.” Those words were both spot-on and
shocking.
Profit-oriented management was the norm at blue-chip
companies in the U.S., and I was painfully aware of the differ-
ence in thinking compared to Canon at the time. With that
bitter experience in mind, when I became President, I adopted
a “focus on profitability” policy. Since then, as a manager,
I have consistently focused on profit-oriented management
while also being conscious of asset efficiency.
Profits are for all stakeholders
Why do we need profits? The answer is encapsulated in the
word kyosei. On the occasion of Canon’s 51st anniversary
in 1988, we established the corporate philosophy of kyosei.
It conveys our dedication to seeing all people, regardless of
culture, customs, language or race, harmoniously living and
working together in happiness into the future. Through our
corporate activities, we are working to address issues that
hinder this harmony, such as economic, resource-related, and
environmental problems.
A company that cannot generate profits cannot maintain or
improve the lives of its employees and their families, nor can it
adequately return value to its investors, let alone contribute to
society. A company needed by society is one that can continu-
ously solve social issues through its business. And without
stable management, it is impossible to generate the innova-
tion that society demands.
People around the world simply wish to be happy and
prosperous. Canon is aligned with this desire and plays a role
in solving issues by implementing cutting-edge technology in
society. Accordingly, we must become a stronger company.
Around the world, there are many top-tier blue-chip firms that
are miles ahead of Canon. To grow into a truly global corpora-
tion, we will look to further strengthen our earnings structure.
A company needed by
society is one that can
continuously solve issues
through its business
CANON ANNUAL REPORT 2024
4
TO OUR SHAREHOLDERS
Over 30 years of sustainability measures
Nowadays, non-financial information, in addition to financial
information such as sales and profit, has also come to be
valued as part of a company’s worth. Sustainability measures
have certainly become a major challenge for global corpora-
tions. For Canon, sustainability is a concept that overlaps with
our corporate philosophy of kyosei. That is why, for over 30
years, the entire Group has been working towards enabling
affluent lifestyles while protecting the environment.
We became the first in the industry to start collecting used
toner cartridges in 1990 in order to realize resource-efficiency,
and now operate five recycling centers worldwide: Japan, the
U.S., Germany, France, and China. We are also working on
phasing out the use of single-use plastics, a movement that is
gaining traction on a global scale. We are also working to stop
using polystyrene foam and switching to molded pulp instead
for use in product packaging materials, and also working to
reduce, reuse, and recycle plastic waste at our business sites.
Environmental measures are a key part of manufacturing
To prevent global warming as well, we aim to achieve net-zero
CO2 emissions by 2050. We are focusing on reducing CO2
emissions across the entire lifecycle of our products, includ-
ing the supply chain. As a target for 2030, we aim to lower
our own CO2 emissions by 42% and reduce emissions from
purchased goods and services as well as the use of sold prod-
ucts by 25% compared to 2022 levels. This target has been
certified by the Science Based Targets initiative (SBTi), which
promotes setting greenhouse gas emission reduction targets
based on scientific evidence. We also consider environmental
measures to be an integral part of the manufacturing process.
Just as we improve the processes in product development,
manufacturing, and sales to cut costs, recycling water to
reduce environmental impact, for example, also contributes to
cost reduction. While actively utilizing our own technologies in
implementing our environmental measures one by one, at the
same time, we have leveraged such activities to strengthen our
earnings structure.
Nurturing internationally minded individuals who contribute to the global
community
In addition to solving social issues through our business ac-
tivities, Canon is engaged in social contribution activities
worldwide. We provide educational and sociocultural support
programs by leveraging our imaging and printing technologies,
and also contribute to the provision of medical care in develop-
ing countries through the use of our medical technology.
As for human resources, which is crucial for sustainability,
in order to nurture “strong individuals,” Canon has thor-
oughly exercised fair and equitable placement, evaluation, and
treatment based on “meritocracy,” and fostered a corporate
culture that encourages the “enterprising spirit” of employees,
based on a mindset of “respect for humanity” that values a
sense of mission, responsibility, and ambition. We respect
diversity and actively promote the appointment and utilization
of human resources from an impartial point of view. Through
these initiatives, we hope that Canon employees will become
internationally minded individuals that can interact with, and
understand, people from around the world with different
cultures and values.
CANON ANNUAL REPORT 2024
5
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Change is progress, transformation is advancement
Companies are destined to evolve together with society. Just
as lifestyles were transformed by the industrial revolution,
society continues to change through innovation. If we view
society as an ecosystem, a company is merely one living entity
within it. If a company cannot adapt to change, it cannot
survive. For this reason, I have always urged employees to em-
brace change positively with the words “change is progress,
transformation is advancement.”
Canon is a company that has been constantly changing.
Founded as a camera manufacturer in 1937, we saw the
camera market suddenly become saturated during the pe-
riod of rapid economic growth in the 1960s. In response, the
president at the time, Takeshi Mitarai, spearheaded Canon’s
entry into the calculator market in 1964 and further promoted
business diversification with the slogan “Cameras in the Right
Hand, Business Machines in the Left,” which he coined in
1967. Subsequently, Canon introduced Japan’s first domesti-
cally produced plain-paper copier and the world’s first inkjet
printer, both of which helped its steady growth as a company.
Entire company coming together to overcome the biggest crisis since founding
However, the IT revolution of the 2000s was an enormous test
for Canon. The rapid uptake of smartphones and cloud servic-
es led to a significant decline in net sales in our core business-
es, such as cameras and laser printers, and heavily impacted
sales of consumables like paper and toner. Furthermore, the
2008 financial crisis led to a prolonged downturn in the global
economy. The combined shock of rapid technological ad-
vancement and this crisis led to the biggest challenge Canon
had ever faced since its founding.
With a radical shift in our portfolio urgently needed, I once
again returned to the Company’s founding spirit. Canon is
a corporation that has always valued “people” the most. I
believed in the capabilities of our employees and bet on a
strategy to leverage the strengths of our existing businesses by
integrating them with IT. We harnessed our camera technol-
ogy to develop network cameras that serve as the eyes for
safety and security in the community, and utilized our multi-
function device and printer technologies to enter the fields of
commercial and industrial printing, thereby planting seeds in
these growth areas.
As technology was evolving at an accelerated pace, we
determined that there was not enough time to develop new
technologies from scratch and turn them into businesses.
Therefore, we did not hesitate to pursue a strategy of con-
ducting large-scale M&As. In addition to network cameras
and commercial/industrial printing, we acquired Toshiba
Medical Systems (now Canon Medical Systems Corporation) in
order to strengthen our medical business, where technological
innovation is inevitable. We also acquired the U.S. company
Molecular Imprints, Inc. and gained nanoimprint lithography
technology, an alternative to traditional lithography methods
for chip fabrication. By integrating the technologies acquired
through M&As with the technologies Canon has accumulated
over many years, we were able to generate new value and
establish the four pillars of Printing, Medical, Imaging, and
Industrial.
It is my policy to leave the management of acquired com-
panies to their respective management teams. This is because
during the acquisition exploration phase, in addition to con-
ducting thorough due diligence, we also assess whether the
management team consists of individuals capable of continu-
ing to lead the company. This is an important factor for our
decision on the acquisition. Moreover, each company has its
own history, culture, and values, and therefore, I believe that
by respecting one another in this way, we can generate maxi-
mum synergies.
CANON ANNUAL REPORT 2024
6
TO OUR SHAREHOLDERS
Becoming a company that can contribute to the world through AI
Changing something from the status quo is always coupled
with some risk. Since I became President, we have been
formulating five-year management plans with the title of
Excellent Global Corporation Plan to reassess the trends of
the times every five years and to help guide Canon in the right
direction. Considering the advancements in technology and
changes in the business environment, it is difficult to foresee
10 years ahead, but I believe we can anticipate the future over
a five-year span.
The world is in the midst of an AI revolution. Canon’s four
business pillars—Printing, Medical, Imaging, and Industrial—
are all fields that have the potential to grow with the incor-
poration of AI. The medical business in particular has a mis-
sion to meet the well-being needs of extending the healthy
lifespans of people worldwide. In the fields of examinations,
diagnostics, and regenerative medicine, there is still room for
innovation to create new markets. Canon will take the lead in
technological development and contribute to the health and
happiness of people worldwide.
Maintaining profit-oriented management by being deliberate in council and
decisive in action
Reflecting on my 30-year career as a manager, I am reminded
that the pace of change in the times is growing even faster. In
a complex social landscape where various factors intertwine,
we are constantly faced with difficult choices. While we can
never handle everything perfectly, there is no time to look
back either.
I have long relied on the idiomatic phrase “be deliberate
in council, and decisive in action.” It means giving careful
thought before taking action, and then once a decision is
made, moving forward without hesitation. This phrase, which
my father, a physician, conveyed to me when I started work-
ing, reflects the resolve of doctors to face people’s lives in an
era when, unlike today, they were unable to identify lesions in
advance with X-rays and other imaging technology.
The same applies to what can be done as a manager. Gather
as much information as possible, think through it by repeat-
edly using deductive and inductive reasoning, and once a deci-
sion is made, move forward resolutely without looking back.
The environment surrounding business management will
most likely continue to change rapidly. Nevertheless, Canon
will dauntlessly engage with cutting-edge technology, con-
sistently focus on profits, and take on challenges in the busi-
ness lines that can contribute to the international community.
All Canon employees are committed to supporting society.
Together, we will work towards achieving kyosei.
Fujio Mitarai
Chairman & CEO
Canon Inc.
CANON ANNUAL REPORT 2024
7
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Phase I to Phase V (1996–2020)
Canon launched the Excellent Global Corporation Plan in
1996, and has since strengthened its management base
through each of the plan’s five-year stages, from Phase I
through Phase V.
During Phase I, we stressed thorough cash flow manage-
ment and significantly boosted productivity through the
introduction of our cell production system, along with other
measures. In Phase II, we stepped up efforts to digitalize our
office multifunction devices and camera offerings, endeav-
ored to strengthen the competitiveness of our products, and
established a strong earnings structure. In Phase III, we rode
the globalization and digitization wave to drive sales and profit
higher. In 2007, we achieved record-high sales of 4,481.3
billion yen and recorded net profit of 488.3 billion yen. During
that period, we also turned our attention to OLED displays
and welcomed Canon Tokki (formerly Tokki) and Netherlands-
based printer manufacturer Canon Production Printing (for-
merly Océ) into the Canon Group.
During Phase IV, we promoted diversification by way of
expanding our existing businesses into other new businesses,
such as the Cinema EOS System, whilst also accelerating
our M&A strategy in pursuit of new growth. In this man-
ner, we set out a clear direction for shifting our focus for
growth from B2C to B2B. At that time, we turned Milestone
Systems (“Milestone”) and Axis Communications (“Axis”)
into subsidiaries in order to reinforce and expand our rap-
idly growing network camera business. Additionally, Canon
Nanotechnologies (formerly Molecular Imprints) became a
subsidiary, and we furthered the development of next-genera-
tion semiconductor manufacturing equipment that uses nano-
imprint lithography, a technology that enables miniaturization
and cost reductions for semiconductor devices.
In Phase V, under the basic policy of “embracing the chal-
lenge of new growth through a grand strategic transforma-
tion,” we welcomed Canon Medical Systems Corporation
(“Canon Medical”; formerly Toshiba Medical Systems) into the
Canon Group, and completed the assembly of the four new
businesses—commercial printing, network cameras, medi-
cal, and industrial equipment—while carrying out structural
reforms on our existing businesses to re-establish their sustain-
able and highly profitable business structures. Thus we com-
pleted the first stage of our business portfolio transformation.
Excellent Global Corporation Plan
Canon transformed its mindset to focus more
on total (not partial) optimization and profit-
ability (not sales) and also engaged in thorough
cash flow management. We introduced various
business innovations, including the selection
and consolidation of business areas, and reform
activities in such areas as production and
development.
Phase I
1996–2000
Aiming to become No.1 in all major business
areas, Canon focused on strengthening its com-
petitiveness by stepping up efforts to digitalize
its products in line with the changing times.
We embarked on a fundamental reform of
procurement activity under the newly organized
Procurement Headquarters, and we took steps
to reform inhouse systems, such as our person-
nel system, with the aim of balancing lifetime
employment with merit-based principles.
Phase II
2001–2005
Canon moved ahead with new growth strate-
gies, including the enhancement of existing
businesses and expansion of new business
areas, and also implemented reforms for supply
chain management and IT systems in order to
achieve real-time management that can readily
adapt to changes.
Phase III
2006–2010
Canon shifted away from a management policy
targeting expansion of scale and reinforced
its financial structure. While actively pursuing
M&As, we pushed ahead with the rebuilding
of our business foundation for future growth
with a view to entering industries that will
serve as new growth engines in step with the
changing times.
Phase IV
2011–2015
Canon endeavored to reconsolidate its long-
standing core businesses (namely, cameras and
office equipment) and completed the first stage
of the grand strategic transformation of its
business portfolio by working to expand and
strengthen the following four new businesses
that would underpin Canon’s future: commercial
printing, network cameras, medical, and indus-
trial equipment.
Phase V
2016–2020
CANON ANNUAL REPORT 2024
8
TO OUR SHAREHOLDERS
Phase VI Management Objectives and Progress
(Trillion yen)
5
3
2
1
4
0
2021
3.51
4.03
4.18
4.51
4.5 T or more
2022
2023
2024
2025
Operating profit ratio (right axis)
Net sales (left axis)
15
5
10
0
(%)
8.0
8.8
9.0
6.2
12% or higher
2025
Targets
• Net Sales: 4.5 trillion yen or more
• Op. Profit Ratio: 12% or higher
• Net Income Ratio: 8% or higher
• ROE: 10% or higher
Note: Medical figures for 2024 exclude impact of
impairment loss
Circle size: Operating profit
Figures: Operating profit ratio
10%
2023
Net sales
937.4 Billion yen
(Growth rate +8.8%)
2024
Sluggish market conditions
Medical
In position to aim for 1 trillion yen
Imaging
Double-digit growth
Operating profit ratio
Net sales
One
trillion yen
2024
4.3%
5.7%
Industrial
2023
Net sales
356.5 Billon yen
(Growth rate +13.3%)
2024
2023
Return to double-digit profitability
Printing
2023
9.7%
11.5%
2024
Key Challenge 1
Strengthen and expand our industry-oriented business groups
In April 2021, we bundled together the existing and new
businesses that are technologically compatible with each
other and placed them into the following four groups:
Printing, Medical, Imaging, and Industrial. We intend to
further streamline operations by eliminating redundant func-
tions and combine technologies within the Group to trigger
“chemical reactions” as we go about developing new prod-
ucts and solutions.
In Phase VI that commenced in 2021, our basic policy is to
promote our portfolio transformation through improved pro-
ductivity and new business creation. For 2025, the final year of
Phase VI, we are targeting record-high net sales of more than
4,500 billion yen, an operating profit ratio of at least 12%,
a net profit ratio of 8% or higher, and in terms of financial
soundness, a shareholder equity ratio of at least 65%.
In 2025, the final year of Phase VI, we are focusing on the
following four key challenges: (1) strengthening and expand-
ing our industry-oriented business groups; (2) promoting
production structure reform; (3) promoting development
innovations; and (4) addressing cybersecurity risks.
Phase VI Basic Policy and Targets
Phase VI Basic Policy and Key Strategies
CANON ANNUAL REPORT 2024
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STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Key Challenge 2
Promote production structure reform
In an uncertain and unstable global environment, the sup-
ply chain is the lifeline of a manufacturer, and from a stability
and sustainability perspective, we need to review it. We are
seeking to achieve robust production and supply systems by
reorganizing our domestic and overseas production sites and
consolidating them in countries and regions where we see
political and social stability. In addition, we are working to
improve the capacity utilization rates of production sites and
to promote the return of production of high-value-added
products to Japan. We will also concentrate our efforts on
automation and in-house production technologies through
collaboration among design, production technology, and
manufacturing sites, while improving cost competitiveness.
Key Challenge 3
Promote development innovations
Under such circumstances where the world is rapidly chang-
ing and competition is becoming more severe, it is important
to swiftly launch products that are superior in terms of quality
and cost. At the development stage, which is the starting point
of such a plan, we will employ concurrent development, which
requires cooperation with production technology and produc-
tion sites for joint work, at a company-wide level. We will also
utilize digital transformation (DX) and simulation technologies
to reduce development time and costs for prototypes, etc., with
the aim of further increasing development productivity. To cul-
tivate innovation personnel who support development, we will
develop and strengthen a system to certify talented engineers
as “top scientists” and “top engineers,” while supporting skill
improvements through CIST, an in-house institution intended to
develop software engineers.
Key Challenge 4
Address cybersecurity risks
As for information security risks that are an increasing global
threat, while working on countermeasures against information
leakage from within the Group and cyberattacks from outside,
we are also taking other steps such as raising the awareness
of employees at a Group-wide level. In the unlikely event that
an information security incident occurs, we have established a
dedicated team, CSIRT*, to deal with it promptly.
Furthermore, since we are working to boost the convenience
of our products and services by connecting them to the cloud
and smartphones via networks, as a key initiative, we are also
working on countermeasures against cybersecurity risks, such
as the leakage of personal and confidential information, from
the development stage.
*Computer Security Incident Response Team (general term for organizations to deal with
incidents and accidents related to computer security)
CANON ANNUAL REPORT 2024
10
TO OUR SHAREHOLDERS
BUSINESS
STRATEGY
12 AT A GLANCE
14 PRINTING GROUP
16 MEDICAL GROUP
18 IMAGING GROUP
20 INDUSTRIAL GROUP
22 RESEARCH & DEVELOPMENT
24 PRODUCTION & QUALITY
CANON ANNUAL REPORT 2024
11
568.8
MEDICAL
Co-creation with Healthcare Professionals
Diagnostic X-ray systems
Computed tomography (CT) systems
Magnetic resonance imaging (MRI) systems
PRINTING
From Home Printing to Commercial and Industrial Printing
Guided by a core policy of “accelerate our corporate portfolio transformation by improving productivity and creating new business,”
Canon reorganized its business divisions into four industry-oriented business groups to make the best possible use of Canon’s broad
range of businesses and technologies.
We will revisit all of our technological capabilities and business areas from the perspective of each group to build a more robust orga-
nization while actively pursuing M&A and other avenues to bolster Canon’s development and production and create new businesses.
Digital sheet-fed presses
Laser printers
Office multifunction devices
(MFDs)
Net Sales ¥2,522.7 billion / 56% Share of Net Sales
Number of Employees 111,733
Net Sales ¥568.8 billion / 13% Share of Net Sales
Number of Employees 13,289
¥4,50
Total Net Sales
Business
Note: The totals do not amount to 100% because the sales of each business unit include the sales relating to intersegment transactions.
CANON ANNUAL REPORT 2024
12
AT A GLANCE
Total Number
170,
Prosumer
1,026.1
Production
1,055.1
441.5
Office
Semiconductor lithography equipment
OLED Display Manufacturing Equipment
FPD (Flat panel display) lithography equipment
INDUSTRIAL
Contributing to Leading-edge Electronics Industry
Mirrorless cameras
Digital cinema cameras
RF lenses
Network cameras
IMAGING
From People's Daily Lives to Professional Settings
Cameras
579.9
Network
cameras, etc.
357.5
Others & Corporate
Net Sales ¥937.4 billion / 21% Share of Net Sales
Number of Employees 25,612
Net Sales ¥356.5 billion / 8% Share of Net Sales
Number of Employees 7,740
Net Sales ¥233.7 billion / 5% Share of Net Sales
Number of Employees 11,966
for 2024
Segments
Optical
equipment
253.4
Industrial
equipment
103.1
CANON ANNUAL REPORT 2024
13
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
9.8 billion
of Employees
340
Satisfying diverse printing needs with a broad
product lineup, while at the same time expanding
commercial and industrial printing
In commercial and industrial printing fields, as we ride the wave of transition from analog
to digital, we will further expand our business. We will also accelerate full-scale digital
transformation in both office and prosumer fields to increase market share.
The imageRUNNER ADVANCE DX series enhances office productivity with high-speed, yet quiet, printing
CANON ANNUAL REPORT 2024
14
PRINTING GROUP
Orders for commercial and industrial printing equipment expanded, and sales of office MFDs increased
due to steady service revenues
As for commercial and industrial printing, amid a continued
shift to digital, which addresses quick turnaround and wide-va-
riety short-run printing and also offers advantages in terms of
operability, we have made several improvements to our prod-
ucts, based on customer feedback. At a quadrennial interna-
tional printing equipment trade fair held in Germany at the end
of May 2024, our industry-leading product lineup, including
new products, was well received, leading to increased orders.
As for office MFDs, with solid demand for highly productive
core printing equipment, and our products which have been
highly evaluated by customers for their energy saving perfor-
mance and maintainability, our install base of color models at
customer sites has increased, leading to stable service revenue.
Although sales of inkjet printers were affected by weak market
conditions in Europe and China, we recorded double-digit growth
in the unit sales of refillable ink tank models that benefited from
the launch of new products. As for laser printers, after the comple-
tion of shipment adjustments, sales have steadily recovered from
the second quarter, leading to increased sales for the full year.
As a result, on a consolidated basis, sales for this business
unit increased by 7.5% to 2,522.7 billion yen in comparison to
the previous term.
Performance in 2024
Pursuing the value of print in a digital society and expanding business domains
We will meet diversified printing needs by taking advantage of
the strength of offering a wide variety of printing equipment
from printers for home use and for office use to commercial
printers.
As for digital commercial printing, the Company’s sales
are growing. This reflects the enhanced image quality and
productivity that have spread throughout the industry as we
incorporate the feedback of printing company customers.
We will develop sales channels through cooperation with
Heidelberger Druckmaschinen AG, a leading German compa-
ny of offset printing equipment, while expanding our business
domain by making a full-scale entry into the industrial printing
field, specifically targeting labels and packaging, which have
high growth potential, to accelerate growth.
As for office and home printing, since the market has ma-
tured and is not expected to grow substantially, we will work to
increase market share by raising product competitiveness, and
review our structures of development, production, and sales,
to build a more effective organization for higher profitability.
Toward Further Growth
Net Sales
(Billions of yen)
2022
2023
2024
2,522.7
2,272.6
2,346.1
3,000
0
1,500
CANON ANNUAL REPORT 2024
15
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Enhancing our presence through the development
of next-generation products centered on
diagnostic imaging equipment and strengthening
our global sales capabilities
We are bolstering our sales structure, particularly in the United States, which is designated
as a key region, while accelerating development of Photon Counting CT, with the aim of
achieving the No.1 global market share in CT. We are also working to increase our market
share by boosting the product competitiveness of our MRI and diagnostic ultrasound systems.
CT systems that deliver high-resolution images, but also reduce the strain on patients with less radiation exposure
CANON ANNUAL REPORT 2024
16
MEDICAL GROUP
In diagnostic imaging equipment, sales of flagship models increased. Sales increased due to strong results,
mainly in the Unites States, Asia, and the Middle East
As for diagnostic imaging equipment, the market shrank, due
to China’s prolonged anticorruption campaign, economic
slowdown in Europe, and work style reforms at medical
institutions in Japan. However, we increased sales, particularly
in the United States, with our new flagship computed tomog-
raphy (CT) system, the “Aquilion ONE / INSIGHT Edition,”
which we globally released, the “Vantage Galan 3T / Supreme
Edition,” a magnetic resonance imaging (MRI) system in which
key parts were replaced with ones made by Canon, and the
“Alphenix,” an angiography system. In the United States, a key
market for our growth, positive effects are emerging from the
strengthening of our sales structure and the forging of part-
nerships with medical institutions. We also saw sales growth
in emerging countries, including in Asia and the Middle East.
As a result, on a consolidated basis, sales for this business
unit increased by 2.7% to 568.8 billion yen in comparison to
the previous term.
Performance in 2024
Bolstering global sales capabilities and presence by expanding our lineup of mainstay diagnostic
imaging equipment
We aim to establish a solid presence in the field of diagnostic
imaging equipment, which serves as the core of the busi-
ness. In addition to further expanding our product lineup
that is comparable to that of competitors around the world,
strengthening our sales capability and presence overseas is an
urgent issue. In the United States which is a medically ad-
vanced country that has great influence in the global market,
while reinforcing our sales structures by means of increasing
our sales force and other resources, we are collaborating with
advanced medical institutions and strengthening relation-
ships with medical practitioners who serve as key opinion
leaders. In addition, Photon Counting CT, the next generation
CT, is drawing increasing attention as many papers based on
Canon’s equipment have been published. We will work to im-
prove Canon’s presence by realizing the early launch of Photon
Counting CT.
In terms of profitability, we began taking action by estab-
lishing the Medical Business Innovation Committee in February
2024 to identify areas for improvement. We will unify Canon
Inc. and Canon Medical Systems Corporation and improve
efficiency in our development, production, sales, and manage-
ment operations for higher profitability.
Toward Further Growth
Net Sales
(Billions of yen)
2022
2023
2024
568.8
513.3
553.8
600
0
300
CANON ANNUAL REPORT 2024
17
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Sales of cameras increased thanks to sustained
growth of core products, while network cameras
also performed well
By further expanding our product lineup, we aim to secure an overwhelming No.1
position in the global interchangeable-lens camera market. We will also expand our
network camera business by capturing growing demand.
Canon’s mirrorless cameras support photographers with high-precision AF, superior image quality, and high reliability
CANON ANNUAL REPORT 2024
18
IMAGING GROUP
Sustained growth in both interchangeable-lens cameras and network cameras
As for interchangeable-lens cameras, in August and November
of last year, we launched new mirrorless cameras, namely the
“EOS R5 Mark II,” a new mainstream model for professionals
and enthusiasts, and the “EOS R1,” our flagship model, re-
spectively. As a result, we maintained mirrorless camera sales
growth as unit sales exceeded those of the previous term. The
sales of interchangeable lenses also increased due to sales
growth in high-value-added cameras, which led to net sales
growth in the camera category overall.
The network camera market keeps on growing with a
continued focus on the security field. Sales of network cam-
eras were sluggish in the first quarter due to inventory adjust-
ments. However, after inventory adjustments were completed,
we firmly secured growing demand by leveraging our power-
ful sales channels in Europe and the United States. As a result,
we posted growth in both network camera hardware and
software sales, which led to double-digit net sales growth also
in this term.
As a result, on a consolidated basis, sales for this business
unit increased by 8.8% to 937.4 billion yen in comparison to
the previous term.
Performance in 2024
Accelerating growth by creating attractive products and responding to increasingly diverse needs
As for digital cameras, it is important for us, as a leading com-
pany of cameras, to continue to provide attractive products
to users, including younger generations, and to stimulate the
market going forward. Canon will offer a lineup that satisfies
both demand for still image photography from professional
photographers and camera enthusiasts, and for diverse video
recording from social media users.
Demand for network cameras for surveillance applications
continues to increase to ensure safety and security against
disasters and crimes.
At the same time, the need for in-store marketing and for
production control at manufacturing sites are growing. Canon
will accelerate its growth by responding to diversifying demand.
Toward Further Growth
Net Sales
(Billions of yen)
2022
2023
2024
937.4
803.5
861.6
1,000
0
500
CANON ANNUAL REPORT 2024
19
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Strong sales of mainstay, semiconductor
lithography equipment driven by growing
demand for semiconductors,
mainly for generative AI
As we take steps to ramp up production capacity to fully capture the strong demand
for semiconductor lithography equipment, we also aim to expand sales of nanoimprint
semiconductor manufacturing equipment that can reduce production costs and
power consumption.
i-line semiconductor lithography systems for advanced packaging which contribute to high integration of semiconductor devices
CANON ANNUAL REPORT 2024
20
INDUSTRIAL GROUP
Sales of semiconductor lithography equipment increased due to robust demand, while demand for FPD
lithography equipment started to recover in the second half
As for semiconductors, demand for logic and DRAM for gen-
erative AI has grown significantly, and with the trend toward
domestic production from an economic security perspective,
demand for semiconductor lithography equipment has re-
mained strong. We have experienced a significant increase
in the sales of equipment for power semiconductors used in
electric vehicles (EVs), etc. As for our back-end processing
equipment for the advanced packaging of semiconductors
used in generative AI, which is recognized as the industry
standard, our unit sales more than doubled compared to the
previous term.
For FPD (Flat Panel Display) lithography equipment, new
investment for IT panels installed in notebook PCs and tablets
and additional investment for smartphones due to advanced
functions gradually recovered as the earnings of panel manu-
facturers improved. This led to a slight increase in unit sales
compared with the previous term.
As a result, on a consolidated basis, sales for this business
unit increased by 13.3% to 356.5 billion yen in comparison to
the previous term.
Performance in 2024
Augmenting production capacity in preparation for increased demand for semiconductor lithography
equipment in line with medium-to-long-term market growth
We anticipate continuing market growth for semiconductors
driven by essential devices used in AI, IoT, electric vehicles
(EVs), and other technological innovations. And due to this,
demand for semiconductor lithography equipment is antici-
pated to also increase. Recognizing the need to significantly
bolster production capacity to respond to strong demand, we
have started construction of a new plant at our production site
in Utsunomiya that is scheduled to become operational
in 2025.
We are aiming to expand sales of “nanoimprint semicon-
ductor manufacturing equipment” to further enhance sales
growth potential. Unlike conventional methods that use light
to expose circuit patterns, this system forms circuit patterns by
pressing a patterned mold like a stamp. We are working with
semiconductor manufacturers to evaluate and test various
types of patterning for mass production.
In addition, we are also proceeding with the development of
ArF lithography equipment with the aim of launching it in the
second half of 2025. We will expand the coverage of semicon-
ductor production processes by enhancing our lineup.
Toward Further Growth
Net Sales
(Billions of yen)
2022
2023
2024
356.5
329.2
314.7
400
0
200
CANON ANNUAL REPORT 2024
21
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Samsung Electronics
TSMC*1
Qualcomm
Apple
Huawei Technologies
Samsung Display
IBM*2
CANON
Google
LG Electronics
3,082
3,046
2,768
2,596
2,465
2,329
3,989
6,377
3,422
2,054
*1
*2
TSMC is an abbreviation for Taiwan
Semiconductor Manufacturing Co Ltd.
IBM is an abbreviation for International
Business Machines Corporation.
Source:
Numbers of patents based on figures
released by IFI CLAIMS Patent Services
(as of January 15, 2025).
Development of OLED materials
Canon seeks to solve
issues in society through
innovation.
intertwines our technologies in various ways. Namely, the
core competency technologies to create core products, the
fundamental technologies as the basis for technology ac-
cumulation, and value creation technologies that underpin
our product commercialization technologies. In addition,
the most distinctive feature of Canon’s R&D is that a holistic
environment (one where technologies can be joined in com-
plex ways) has been developed where it is possible to use and
deploy together throughout the company the “technologies
that go into products” like core technologies/fundamental
technologies, and the “technologies that support products”
such as value creation technologies. Moreover, in order to
respond quickly to social issues, we have sought out the most
optimal R&D structure best suited to the times. Currently, in-
stead of having a single R&D department take on all research
and development areas, we have multiple R&D departments,
each responsible for specific fields. We have evolved this ag-
gregation of R&D functions in line with our business domains
Canon’s R&D
Canon, founded in 1937 as a camera manufacturer, started to
expand its business domains from the 1960s to office equip-
ment, optical devices, and medical equipment. Today, we
operate in four industry-oriented groups: Printing, Medical,
Imaging, and Industrial.
We have continued to diversify our business operations
by practicing a style of core competency management that
Top Ten companies by number of US patents obtained in 2024
CANON ANNUAL REPORT 2024
22
RESEARCH & DEVELOPMENT
Development of high-performance material for perovskite solar cells
Canon has developed a high-performance material for
perovskite solar cells, which are gaining attention as next-
generation solar cells. Perovskite solar cells are lightweight,
bendable, and can generate electricity even from indoor light-
ing, thereby offering a greater degree of freedom in installa-
tion than silicon solar cells. In addition, they are expected to
reduce capital investment costs because they do not require
large-scale manufacturing equipment. On the other hand, the
crystal structure of the perovskite layer (photoelectric conver-
sion layer) is susceptible to the effects of mainly moisture,
heat, and oxygen in the atmosphere, resulting in low durabil-
ity. Furthermore, stable volume production of perovskite solar
cells with large surface areas has shown to be problematic.
By applying the materials technology cultivated through the
development of photosensitive members, a key component
of multifunction office devices and laser printers, Canon has
developed a high-performance material to protect the photo-
electric conversion layer and improve durability.
Efforts to Develop and Expand Latest Technologies
to engage in new manufacturing processes. Going forward,
we will continue to create new value through technology
and innovation and advance R&D in order to contribute to
solving increasingly complex and diverse social issues.
In 2024, R&D expenses amounted to 337.3 billion yen,
which equates to 7.5% as a percentage of net sales. Our
focus on R&D has also helped us cement our leading position
in the intellectual property field. Canon was granted 2,329
patent applications in the U.S. in 2024, ranking it ninth in the
world. We also maintained our number one ranking among
Japanese companies for the 20th consecutive year.
Research of high-performance material for perovskite solar cells
Development of compact terahertz device with world’s highest output*
Canon has developed a compact, high-performance device
capable of transmitting terahertz waves more strongly and
over longer distances. The device delivers the world’s high-
est output and a high level of directivity (the concentration
of energy in a single direction). Terahertz waves consist of
electromagnetic waves that enable high-speed, high-capacity
communication and are expected to be deployed in such fields
as 6G telecommunications. They also have the potential to
be used in security applications because they can penetrate
certain objects without causing exposure to radiation. Canon
became the first Japanese company to receive the Best Paper
Award from a leading international journal published by IEEE
MTT-S, a world-renowned academic institute in the field of
microwaves.
*Among 450GHz output semiconductor devices. As of December 28, 2022 (based on
Canon research).
Development of the semiconductor terahertz light source
CANON ANNUAL REPORT 2024
23
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Quality testing of a digital commercial printing machine conducted in a radio frequency shielded room that is not affected by radio waves
Canon has established its
own quality management
system to provide high-
quality and excellent
products and services. We
strive to further improve
production-engineering
technology and to develop
human resources with
outstanding technical skills.
Canon’s basic quality concept is “no claims, no trouble.” We
have developed our own quality management system that we
exhaustively follow to deliver products and services that are
guaranteed to be safe, reliable, and satisfactory. The system
has three defining characteristics, shown in the chart below.
With the quality management system as a base, each business
division at Canon Inc. implements rigorous quality control by
building quality assurance systems optimized for the charac-
teristics of each business and in compliance with the laws and
regulations of each country and region.
1. Fulfills all the requirements of ISO 9001, the international
quality management standard.*1
2. Incorporates the concept of substantial safety*2 to place
greater emphasis on safety.
3. Introduces a framework for quality verification in the prod-
uct commercialization process to ensure reliable product
safety standards.*3
In terms of quality governance, the Quality Assurance
Department within each business division checks the qual-
ity of the Development Division independently from the
Quality Control
3
Introduces a framework
for quality verification
in the product
commercialization process
to ensure reliable product
safety standards.*3
2
Incorporates the concept
of substantial safety*2
to place greater
emphasis on safety.
1
Fulfills all the
requirements of ISO
9001, the international
quality management
standard.*1
Three defining characteristics
CANON ANNUAL REPORT 2024
24
PRODUCTION & QUALITY
Manufacturing Division, while the Quality Control Headquarters,
which is under the direct control of the CEO, controls the quality
assurance activities of each business division.
In addition, we believe that employees must always have
opportunities to become more aware of quality control and
acquire knowledge in order to maintain and enhance superior
product quality. To this end, we repeatedly communicate our
basic quality concept, as well as messages about quality con-
trol. And every year we have all Group employees complete a
quality awareness survey so that we can assess their degree of
understanding.
*1 The in-house regulations governing Canon’s quality management system are recognized
by the International Register of Certificated Auditors (IRCA) as an alternative standard
to ISO 9001.
*2 This means safety not only in terms of what is required by laws and statutes, but also
any safety issue that can reasonably be expected to arise during customer use even if
not regulated or mandated by law.
Should a quality issue arise, Canon has systems in place to
promptly and appropriately investigate the cause, conduct free
repairs, and disclose quality information.
In the event of a quality problem, the marketing companies
in each country or region, which serve as the contact point for
customers, file a report with the quality assurance division of
the respective business division. The quality assurance division
then investigates the cause and considers the countermea-
sures. Moreover, in the event of a major issue, related business
divisions, the Global Quality Management office, the Legal
Division, and Public Relations Division are consulted concern-
ing response measures, and after the matter is reported to the
CEO, action is promptly taken.
Systems for Responding to Quality Issues
CEO
Quality information report
Meetings of QA Representatives of Each
Business, Group-wide activities
(1) Communication and enforcement
of Group-wide policies and rules
(2) Sharing and discussions of, and re-
sponses to, Group-wide situations
(3) Sharing of examples of activities
Business divisions
Development
division
manufacturing
division
Quality
assurance
divisions
GM of Global
Quality
Management
office
Customer
Marketing subsidiaries in each
country or region
Canon
Inquiry
Response
Information
disclosure
Information disclosure
When critical
quality issues occur,
hold conference
to determine
countermeasures
• Legal division
• Public relations
division, etc.
Quality assurance divisions of products
operations
Chief executive
Report countermeasures
Approval
CEO
Canon Inc.
Report
Instructions
for response
Global Quality Management office
General manager, Global Quality
Management office
Confirmation of
response measures
Share information,
clarify cause
Critical Quality Issues
*3 This involves setting QA standards that must be satisfied for each of the stages in the de-
velopment of Canon products from development and design to production and shipping.
At each checkpoint along the development process, the QA framework requires a decision
on whether the QA standard is satisfied to ensure rigorous control of product quality.
Chief executive
CANON ANNUAL REPORT 2024
25
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Canon aims to achieve further production efficiency by
leveraging technologies cultivated in different businesses
regardless of divisions and by collaboration among design,
production engineering, and manufacturing sites, to refine its
automation and in-house production technologies. In addition
to key devices and components, we are also actively pursuing
in-house production of production equipment and molding
dies. Following toner cartridges, we have rolled out automat-
ed production lines for cameras and interchangeable lenses to
further enhance productivity.
Productivity Improvements Through Automation and In-House Production
Automated production process for interchangeable lenses
At Canon, we believe that the development of human re-
sources is fundamental to manufacturing, which is why we
have long been committed to training the skilled workers and
engineers. In addition, as part of our efforts to train young
skilled workers, we have participated in the National Skills
Competition, a competition for young skilled workers in Japan
(generally under 23 years of age) since the 43rd competition
in 2005. In 2024, eight participants from the Canon Group
competed in four categories, winning a total of four awards
including one gold medal.
Participation in the National Skills Competition
Canon’s master craftsman with exceptional skills who also nurtures
young talent
To further enhance its manufacturing capabilities, Canon is
actively engaged in the development of technicians to support
production. We are also focused on nurturing our most skilled
technicians in specific fields, known as Master Craftsmen, and
those who contribute to the advancement of manufacturing
with their wide-ranging skills and knowledge of mainly as-
sembly and component processing, known as Meisters.
These technicians contribute to the improvement of Canon’s
production-engineering technology and play an active role at
the front line of production by passing on the skills they have
honed over the years to the next generation.
Development of Human Resources: Master Craftsmen and Meisters
Young engineers entering competitions to further hone their technique
CANON ANNUAL REPORT 2024
26
PRODUCTION & QUALITY
E S G
28 ENVIRONMENT
32 SOCIAL
35 GOVERNANCE
CANON ANNUAL REPORT 2024
27
Basic Approach
In 2008, Canon formulated an environmental vision called
“Action for Green.” In keeping with this vision, we aim to real-
ize a society that achieves a beneficial balance between lifestyle
enrichment and the environment. To that end, we will look to
supply products and services that further enrich people’s lives
while also reducing environmental impact by employing mea-
sures across the entire product lifecycle. Our focus is on four
key areas: (1) climate change; (2) resource efficiency; (3) chemi-
cal substances; and (4) biodiversity. In particular, we endeavor
to take heed of, and reduce, CO2 emissions and other environ-
mental impacts not only in our own business activities such as
development, production, and sales, but also at each stage of a
product's lifecycle, including those of suppliers and customers.
To further accelerate these activities, we are seeking to gener-
ate a heightened level of awareness among all employees by
establishing a slogan for all employees.
Climate Change
By working closely with society and implementing initiatives
across the entire product lifecycle, Canon aims to achieve net-
zero CO2 emissions by 2050. We have set targets to reduce
our Scope 1 and 2 emissions by 42% and Scope 3 emissions
(categories 1 and 11) by 25% compared to 2022 levels by the
year 2030. These targets have been certified by the Science
Based Targets initiative (SBTi).
Also, we have a longstanding goal of achieving an average
annual improvement of 3% in the index of lifecycle CO2 emis-
sions per product unit as a yardstick for reducing our environ-
mental footprint across the entire product lifecycle. As part
of our efforts to achieve this goal, we switched the electricity
used at seven factories across five overseas production sites to
100% renewable energy in 2024. In addition, we are endeav-
oring to reduce energy consumption by exhaustively analyzing
the requirements of production equipment used for produc-
tion processes at each site and optimizing factors such as
equipment running time, compressed air, production cooling
water, and air conditioning.
As a result of these initiatives, in 2024 we reduced our
Scope 1 and 2 emissions by 12.8% and Scope 3 (categories 1
and 11) emissions by 17.7% compared to 2022 levels. We also
achieved a 44.6% improvement (average annual improvement
of 3.76%) in the index of lifecycle CO2 emissions per product
unit compared to 2008. Our CO2 emissions data are disclosed
every year and verified by an independent third party.
Moreover, in line with the framework recommended by the
Providing products and
services that further enrich
people’s lives while also
reducing environmental
impact.
ENVIRONMENT
Remanufacturing of office MFDs
CANON ANNUAL REPORT 2024
28
ESG
Total CO2 Emissions
(1,000t-CO2)
Amount reduced
137
0
200
400
600
800
1,000
1,200
1,068
6,564
5,397
4,923
931
620
2030
2024
2022
(Base year)
Scope 1 & 2
0
1,000
2,000
3,000
4,000
5,000
7,000
6,000
(1,000t-CO2)
2030
2024
2022
(Base year)
Scope 3 (category 1, 11)
Index of Lifecycle CO2 Emissions Per Product Unit
2030
2022
2023 2024
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
0
20
40
60
80
100
•
•
•
•
•
•
•
•
•
•
* Assuming 2008 baseline of 100
(Year)
Target: 42%
reduction
Target: 25%
reduction
Amount reduced
1,167
50%
improvement
Overall target:
Average annual
3%
improvement
44.6%
improvement
Achievement: Average annual
3.76% improvement
Index
Task Force on Climate-related Financial Disclosures (TCFD),
we disclose the risks and opportunities of climate change in
the value chain, scenario analyses and countermeasures, and
short-term and long-term financial impacts in our sustainabil-
ity report, on our website, and via other channels.
Targets and Achievements
2030 Targets
2024 Achievements
Total CO2 emissions
(compared to 2022)
42% reduction for Scope 1 & 2,
25% reduction for Scope 3 (category 1 and 11)
Scope 1 & 2: 12.8% reduction;
Scope 3: 17.7% reduction
Improvement in per-unit
lifecycle CO2 emissions index
(compared to 2008)
50% improvement
44.6% improvement
2024-2026 Targets
2024 Achievements
Overall (Lifecycle)
3%-per-year average improvement in lifecycle CO2 emissions
improvement index per product
Average annual 3.76% improvement
(2008–2024)
Products
3%-per-year average improvement in raw materials and use
CO2 emissions improvement index per product
Average annual 2.22% improvement
(2008–2024)
2024 Targets*1
2024 Achievements*2
Operational Sites
Energy consumption per basic unit : 2.4% improvement
4.6% improvement
Total waste generation per basic unit: 1% improvement
2.2% improvement
Water usage per basic unit: 1% improvement
0.6% improvement
Emissions of controlled chemical substances per basic unit: 1%
improvement
0.9% deterioration
*1 Calculation based on average annual improvement rate of the three most recent years. For energy consumption at Japanese operational sites, however, calculation as stipulated in Act on
Rationalizing Energy Use. The basic unit denominator is decided according to the characteristics of each operational site (production volume, effective floor area, workforce, etc.)
*2 For scope of data collection: https://global.canon/en/sustainability/report/pdf/data-2024-e.pdf
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DATA
0
20,000
40,000
60,000
80,000
100,000
2022
2023 2024
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
(Year)
Product-to-Product Recycling Volume (Cumulative)
(t)
Volume of product-to-product plastic
Volume of reused products and components
86,323
47,510
38,813
Contributing to a Circular Economy
Canon has five sites in Japan, Germany, France, the U.S., and
China to conduct recycling operations. And having established
systems under which we can recycle resources in the regions
where they are consumed, we continue to promote more effi-
cient use of limited resources and reduce waste. In particular, we
are pursuing a form of recycling that reuses resources, includ-
ing the remanufacturing of office MFDs and the closed-loop
recycling of toner cartridges. Also, at the Canon Eco Technology
Park in Japan that opened in 2018, we aim to realize state-of-
the-art resource recycling. In the digital printing business, we are
targeting a resource recycling rate of 20% by 2025 and 50% by
2030. This rate represents the weighting of recycled materials
and products as a percentage of total sales volume.
We are also working to reduce, reuse, and recycle plastic
waste at our business sites worldwide, for instance, by switch-
ing from polystyrene foam to molded pulp for use in product
packaging materials in order to reduce single-use plastics.
The recycling of plastic requires the precise sorting of many
different types of plastic according to color, size, and other
characteristics. Canon has developed a technology for the
simultaneous sorting of plastics, including black-colored plas-
tics, which was previously quite difficult. We have achieved
this by combining our proprietary measurement and control
technologies with a measurement technique called Raman
spectroscopy that uses a laser beam. Furthermore, in June
2024 we started taking orders for the TR Series of plastic
sorting equipment that utilizes this technology. This method is
expected to further accelerate plastic recycling and encourage
the establishment of a circular economy. In 2024, we launched
the "Refreshed" series of environmentally specialized multi-
function devices, which involve the remanufacturing (collec-
tion and refurbishment) of used multifunction devices. The
imageRUNNER ADVANCE C3530F III-RG and the imageRUN-
NER ADVANCE C5550F III-RG models offer high performance
and quality equivalent to any new multifunction device while
also achieving the industry's highest reused parts ratio.
High-precision sorting equipment capable of measuring black plastic
pieces, which are difficult to identify
* Product recycling initiatives have been ongoing since before 2007. Data are based on 2008 as the baseline year.
CANON ANNUAL REPORT 2024
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Eliminating Hazardous Substances and Preventing Pollution
Canon thoroughly manages chemical substances in prod-
ucts and those used in manufacturing processes to prevent
pollution of the global environment and adverse effects on
people’s health. Our basic approach to management involves
prevention measures to ensure that products do not contain
regulated chemical substances that exceed the prescribed
standards and that production sites do not discharge regu-
lated chemical substances that exceed such standards. We also
take steps to confirm that we are in compliance with these
standards. Particularly with regard to chemical substances in
products, we have built a Group-wide environmental assur-
ance system, and we develop products in conformity with the
in-house standards that have been established in line with the
most stringent regulations in the world. We are working to
achieve the improvement target for reduction of the emissions
of controlled chemical substances per basic unit, and in fiscal
2024 we reviewed the conditions for chemical substance use,
among other measures.
Contributing to a Society in Harmony with Nature
Canon is cognizant of the fact that biodiversity is critical to
a sustainable society, which is why Canon is committed to
undertaking various initiatives aimed at protecting biodiversity
in keeping with its Group-wide Biodiversity Policy and “Nature
Positive” slogan. In doing so, we aim to contribute to a society
in harmony with nature.
As part of these activities, we globally run the Canon Bird
Branch Project. The site of Canon’s global headquarters in
Tokyo is home to the thickly wooded Shimomaruko Forest of
approximately 1,000 trees. An environment conducive to wild
bird life is maintained thanks mainly to the installation and
cleaning of nesting boxes for birds. Surveys on the migration
of wild birds to the site are also carried out. In recognition of
this initiative, the Shimomaruko Forest has been certified by
the Ministry of the Environment of Japan as a site of natural
symbiosis. As part of the project to certify such sites, the
Japanese government recognizes areas where biodiversity is
being protected with the aim of achieving the 30by30 target,
a worldwide initiative to effectively conserve at least 30% of
the earth’s land and oceans as healthy ecosystems by 2030.
These certified areas are then registered in a global database.
As Canon relies on water resources in the manufacturing
of its products, we established a policy on water resources in
2024 to promote the efficient use of water and prevent pollu-
tion. Canon collects water data by intake source (public water
supply/industrial water/groundwater) and manages its water
resources carefully so as not to exceed intake limits in each re-
gion. We also set and manage targets for the volume of water
used in production, and constantly endeavor to further reduce
water usage by improving production processes, increasing
efficiency in water use, and raising the quality of our water
management. We are also promoting the recycling of water
resources. The Kitsuki Plant of Oita Canon, which faces out to
Beppu Bay in an area blessed with precious natural resources,
has installed a fully closed wastewater system that discharges
only rainwater in consideration of the impact on the local
ecosystem. At other production sites, we treat wastewater
from infrastructure such as air conditioning and reuse it in the
production process as recycled material for toner and ink car-
tridges. We also collect wastewater from cleaning equipment
and reuse it in the polishing process.
Bird Branch Project activity in the Shimomaruko Forest on the grounds
of Canon’s global headquarters
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Basic Approach
Canon adopted kyosei as its corporate philosophy in 1988
with the aim of achieving a society where all people, regard-
less of culture, customs, language, or race, harmoniously living
and working together in happiness into the future. Under this
corporate philosophy, we are implementing various initiatives
for the benefit of people and society, such as respecting human
rights, promoting diversity, upholding occupational health and
safety standards, developing human resources, and lending our
support to sociocultural activities. Through these efforts, Canon
contributes to the attainment of the SDGs and the achievement
of Canon’s own sustainable growth and development.
Respecting Human Rights
In accordance with the United Nations’ Guiding Principles on
Business and Human Rights, we have formulated the Canon
Group Human Rights Policy. Guided by this policy, we set in mo-
tion a human rights due diligence process to identify significant
human rights risks in the Canon Group. We also put in place a
grievance mechanism, engage in dialogue with stakeholders,
and promote awareness-raising activities for our employees.
In 2024, we delivered a presentation about our human rights
initiatives for a webinar hosted by the International Labour
Organization (ILO), the Japan External Trade Organization
(JETRO), and the Global Compact Network Japan (GCNJ).
Promoting Diversity
Canon respects global diversity and actively encourages the
fair hiring and promotion of employees, regardless of gender,
age, or presence of disability. We have established VIVID (Vital
workforce and Value Innovation through Diversity), a company-
wide horizontally integrated organization spearheaded by
an Executive Vice President, so that we can empower female
employees, support the intentions of male employees to partici-
pate in childcare, help employees balance work and nursing care
duties, and encourage the active participation of employees with
disabilities. In particular, to promote the active participation of
women and encourage men to participate in childcare, we have
established the ratio of female managers and the ratio of male
employees taking childcare leave as KPIs, and we implement
various initiatives in these areas. We are working to build an en-
vironment where women can thrive by organizing a leadership
training course for women that aims to nurture female candi-
dates for managerial positions, holding return-to-work seminars
for employees returning to work from childcare leave and their
supervisors, and providing manager-led mentoring. The ratio of
female managers reached 4.2% in 2024 compared to 1.4% in
2011, which includes the appointment of one female director
and two female executive officers. We are also making steady
progress in our efforts to encourage male employees to partici-
pate in childcare, as well as nursing care and other initiatives.
Guided by our corporate
philosophy of kyosei, we aim
to achieve a society where all
people harmoniously living
and working together in
happiness into the future.
SOCIAL
Visitors admiring the works of the Tsuzuri Project, which provides many people the op-
portunity to get to know Japanese cultural assets
CANON ANNUAL REPORT 2024
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2019
2020
2021
2022
2023
2024
5
3
1
2
4
0
Ratio of Female Managers (Canon Inc.)
(%)
4.2
Supplier Evaluation
Before starting business dealings with a new supplier, Canon
conducts an assessment based on the Canon Sustainability
Supplier Guidelines and other reference standards of whether
the company fulfills all requisite standards in terms of corpo-
rate ethics, environmental conservation (chemical substance
management, prevention of air pollution and water pollution,
proper disposal of waste, initiatives aimed at conserving energy
and resources, reduction of GHG, and biodiversity conserva-
tion), finance, and production structure. Only those suppliers
who meet these criteria are accepted as suppliers. We aim to
preferentially deal with suppliers evaluated highly in our com-
prehensive assessment that includes our annual supplier survey,
as well as each supplier’s trade performance. In addition, we
conduct on-site audits of suppliers with low evaluations, pro-
viding guidance and instruction for improvement. In particular,
Canon may choose to terminate business with suppliers if they
are not complying with laws and social norms covering areas
such as human rights, labor, and the environment.
Sociocultural Support Activities
To commemorate Canon’s 70th anniversary, in 2008, we
established the Canon Institute for Global Studies and the
Canon Foundation. The Canon Institute for Global Studies is
a think tank that researches and analyzes issues from a global
perspective and makes policy proposals with an eye on the
future of Japan and the world, mainly in the fields of macro-
economics, energy, environment, foreign policy, and national
security. In addition, the Canon Foundation provides grants
to assist a broad range of science and technological research
Leadership training course for women that aims to nurture female
candidates for managerial positions
with the goal of contributing to the advancement of science
and technology.
Furthermore, since 2007, Canon and Kyoto Culture
Association (NPO) have operated the Tsuzuri Project (of-
ficially named the Cultural Heritage Inheritance Project). By
combining Canon’s advanced imaging technologies—from
input to image processing and output—with traditional Kyoto
* Corporate ethics covers areas including legal compliance, product safety, management of
confidential information, human rights, labor, health and safety, and intellectual property
rights protection.
Supplier Evaluation System
New supplier
(candidate)
New supplier qualification check
• Corporate ethics*
• Environmental conservation
• Responsible minerals sourcing
• Finance
• Production structure
(quality/cost/delivery/manufac-
turing capacity/management)
• Compliance with security trade
controls
• Non-association with anti-
social forces
Annual evaluation
• Corporate ethics
• Environmental conservation
• Responsible minerals sourcing
• Finance
• Production structure
(quality/cost/delivery/manufac-
turing capacity/management)
• Business continuity manage-
ment (BCM) in the event of a
disaster
• Compliance with security trade
controls
• Non-association with anti-
social forces
Pass: start
business
dealings
Feedback
Conclude supply contract
Annual survey
Supplier list
Existing supplier
Improvements
CANON ANNUAL REPORT 2024
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DATA
craftsmanship, we have produced high-resolution facsimiles
of time-honored Japanese cultural assets for which viewing
opportunities are rather limited, such as folding screens and
sliding doors known as fusuma. By widely exhibiting these
high-resolution facsimiles, we can provide opportunities for
people to become more familiar with cultural assets.
Miraisha Programme
Also, Canon Central and North Africa is promoting its Miraisha
Programme with the aim of improving the technical skills of
young people in the region and expanding their opportunities
for employment in the photography, video production, and
printing industries. Miraisha is a portmanteau of the Japanese
word for future, mirai, and the Swahili word for life, maisha.
So far, workshops have been held in Kenya, Ghana, Nigeria,
and other African countries in collaboration with local govern-
ment agencies, professional photographers selected as Canon
ambassadors, and Canon-certified Miraisha trainers.
A participant in the Miraisha Programme in Nigeria
Initiatives Utilizing Elevated Printing Technology
Using its unique elevated printing technology involving the
layering of UV-curable ink, Canon Production Printing is sup-
porting the creation of works that allow people both with and
without visual impairments to appreciate photographs. As
one example, using this technology, we reproduced Vermeer’s
masterpiece Girl with a Pearl Earring, including the uneven
texture and gloss of the oil painting. The reproduction is now
available as a tactile painting at the Mauritshuis museum in the
Netherlands. In addition, in 2024, Canon Europe held a major
photo exhibition titled World Unseen in the Europe, Middle
East, and Africa (EMEA) region, utilizing elevated printing.
Canon Young People Programme
As one measure to help bring about a sustainable society,
Canon Europe is running the Canon Young People Programme
in 32 countries in Europe, the Middle East, and Africa. The
workshops of the program aim to provide young people with
opportunities to express themselves through photographs and
videos with the incorporation of creative visual storytelling
and critical thinking based on the concepts of the SDGs. The
program was attended by 1,725 students in 2024.
Canon Young People Programme in a refugee camp in Jordan
Touching and feeling a photograph using elevated printing technology at
the photo exhibition World Unseen
CANON ANNUAL REPORT 2024
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Fundamental Approach
In order to establish a sound corporate governance structure
and continuously raise corporate value, improving manage-
ment transparency and strengthening management supervis-
ing functions is essential.
Governance Structure
Basic Policy
Canon is globally expanding its business in various business
fields, including printing, medical, imaging, and industrial, and
aims to aggressively expand into new business fields in the fu-
ture. In order to make prompt decisions in each business field,
and make important decisions on matters that straddle the
entire Canon Group or several business fields from a company-
wide perspective and at the same time ensure appropriate de-
cision making and the execution of operations, the corporate
governance structure below is judged to be effective.
Board of Directors
While the focus of the organizational structure of the Board of
Directors is on Representative Directors that oversee company-
wide business strategies or execution such as the CEO, COO,
CFO, CTO, and Representative Directors or Executive Directors
that oversee multiple business fields or headquarters func-
tions, at least two Independent Outside Directors are appoint-
ed while also assuring that they account for one third or more
of the total number of Directors, in order to ensure sound
management. The Board of Directors, in accordance with laws
and regulations, makes important decisions and supervises the
execution of duties.
Other decisions and execution are made by the CEO and
other Representative Directors. And under the direction and
supervision of the Representative Directors, Executive Officers
that are elected through resolution of the Board of Directors,
make decisions, and execute operations of each business field
or function.
The Board of Directors consists of ten members, six Directors
from inside Canon Inc., including three Representative Directors,
and four Outside Directors that qualify as Independent Directors
(including one female), and is chaired by the CEO. Additionally,
there will be 39 Executive Officers, including two females and
one non-Japanese, as of April 1, 2025.
Audit & Supervisory Board
As a body which is in charge of the audit of operations, under
the principles of autonomy, which is independent from the
Board of Directors, Canon has full-time Audit & Supervisory
Board Members that are familiar with Canon’s businesses or
its management structure, and Independent Outside Audit &
Supervisory Board Members that have extensive knowledge
Canon is working to enhance
corporate governance, risk
management, intellectual
property management, and
other governance areas,
with the aim of continuously
raising corporate value.
GOVERNANCE
President & CEO Mitarai making a speech at an executive meeting
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in specialized areas such as law, finance and accounting, and
internal control. The Audit & Supervisory Board, which is
composed of these individuals, cooperates with the Canon
Accounting Auditors and internal audit division, audits the
status of duty execution and the status of corporate assets, etc.
to ensure the soundness of management.
There are five Audit & Supervisory Board Members of
which three are Independent Outside Audit & Supervisory
Board Members.
In accordance with auditing policies and plans decided
at Audit & Supervisory Board meetings, the Audit &
Supervisory Board Members attend Board of Directors’
meetings and other important gatherings such as Corporate
Strategy Committee meetings. They are also able to listen to
reports from Directors and employees, review documents
related to important decisions, and conduct audits by inves-
tigating, etc. the status of operations and assets of Canon
Inc. and its subsidiaries. Additionally, the Office of Audit &
Supervisory Board Members is independent from the con-
trol of the Directors, etc., and it has a dedicated staff. The
Audit & Supervisory Board Members can order headquarter
management and other operations to conduct investigations
in cases of necessity. In this way, the Audit & Supervisory
Board plays a role in monitoring management, conduct-
ing strict audits of Directors’ execution of duty, including
the status of development of the internal control system.
Furthermore, the Audit & Supervisory Board Members
cooperate closely with the accounting auditors and Canon
Inc.’s internal auditing arm, and such cooperation services to
improve each monitoring function.
Procedures in the Nomination of Directors
Canon Inc. established the “Nomination and Remuneration
Advisory Committee,” a non-statutory committee, which
consists of the CFO, four Independent Outside Directors and
one Independent Outside Audit & Supervisory Board Member.
At the time, Director and Audit & Supervisory Board Member
candidates are nominated and Executive Officers are ap-
pointed, including the selection of a successor for the chief
executive officer position, the CEO recommends candidates
thereof from among individuals that have been recognized as
having met the prescribed requirements, and the Committee
checks the fairness and validity of such recommendation prior
to submission to and deliberation by the Board of Directors.
Additionally, as for Audit & Supervisory Board Member candi-
dates, prior to deliberation of the Board of Directors, consent
of the Audit & Supervisory Board shall be acquired.
Requirements of Director and Audit & Supervisory
Board Member Candidates and Executive Officers
Director and Audit & Supervisory Board Member candidates and
Executive Officers are people that have the ability to fairly and
effectively execute duties and, in principle, are selected from
Representative
Directors and
Executive
Directors
Have a true understanding of the corporate phi-
losophy and code of conduct of Canon Inc. At
the same time, have broad familiarity with Canon
Inc.’s businesses and operations, gained through,
for example, Executive Officer experience, and
have the ability to make effective decisions from a
high-level perspective of multiple businesses and
functions. In addition to this, the CEO shall be a
person with the ability to lead the Canon Group,
having, in particular, a wealth of knowledge and
skill related to management and a clear vision and
a strong sense of responsibility.
Independent
Outside
Directors
In addition to meeting the independence
standard that is separately determined by the
Board of Directors, have an abundance of
experience and superior insight in areas that
cannot be adequately covered by internally
promoted directors into fields such as, risk
management, law, and economics.
Audit &
Supervisory
Board Members
Be familiar with Canon Inc.’s businesses or its
management structure, or have an abundance
of experience and superior insight into profes-
sional fields such as law, finance & accounting,
and internal control. Outside Audit & Supervisory
Board Members shall also meet the independence
standards that are separately determined by the
Board of Directors.
Executive
Officers
Have been highly evaluated in terms of character
and ability in managerial assessment and mana-
gerial talent training programs, and also have
sufficient knowledge, experience and judgment
ability, to shoulder the responsibility of execu-
tion in specific fields, and truly understand the
corporate philosophy and code of conduct of
Canon Inc.
CANON ANNUAL REPORT 2024
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ESG
among people that have met the following requirements, re-
gardless of personal attributes such as gender, nationality, age.
Skills of Board of Directors
Canon Inc. operates businesses globally with very different
market environments. As a whole, the Board of Directors,
which oversees important decision-making and execution,
needs to possess skills in the following seven areas.
* The table below indicates up to five areas in which we expect each person to particularly
demonstrate their skills. It does not represent the entirety of each person’s experience,
knowledge, or skills.
Corporate Strategy Committee, Sustainability
Committee, Risk Management Committee, and
Disclosure Committee
Canon Inc. established the Corporate Strategy Committee,
consisting of Directors, including Independent Outside
Directors, Audit & Supervisory Board Members, and some
Executive Officers. Among items to be decided by the CEO,
the Committee undertakes prior deliberations on important
matters pertaining to Canon Group strategies.
On April 1, 2024, Canon established the Sustainability
Committee to share information and conduct preliminary
deliberations with the aim of ensuring appropriate and effec-
tive judgment by the CEO or Board of Directors regarding the
sustainability-related matters that the Canon Group should
respond to or address.
Based on a resolution passed by the Board of Directors,
Canon Inc. set up the Risk Management Committee, which
formulates policy and action proposals regarding improve-
ment of the Canon Group risk management system. The
Risk Management Committee consists of three entities: the
Financial Risk Management Subcommittee, which is tasked
with improving systems to ensure reliability of financial re-
porting; the Compliance Subcommittee, which is tasked with
promoting corporate ethics and improving legal compliance
systems; and the Business Risk Management Subcommittee,
which is charged with improving systems to manage overall
Candidates for Directors
Asterisks indicate
candidates
for Outside Directors
Skills to be Possessed by the Board of Directors Overall
Corporate
Management
Global
Understanding
Business
Experience
Technology and
Development
Finance and
Accounting
Risk
Management
ESG
Skills as a senior
level executive of
a listed company
that does business
globally, and
the like
Global awareness
/experience
obtained
through working
overseas, global
marketing, etc
Business
management
skills
in the Company’s
business domain
Knowledge and
R&D experience
in the Company’s
core competence
technologies
Skills as a financial
accounting expert,
derived from being a
financial accounting
officer of a listed
company, a certified
public accountant, etc.
Skills as an
expert in
risk management,
including
compliance, and
internal control
systems
Knowledge and
experience in ESG
Fujio Mitarai
Toshizo Tanaka
Toshio Homma
Kazuto Ogawa
Hiroaki Takeishi
Minoru Asada
Yusuke Kawamura *
Masayuki Ikegami *
Masaki Suzuki *
Akiko Ito *
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business risks. The Risk Management Committee verifies the
risk management system’s improvement and implementation
and reports the status to the CEO and the Board of Directors.
In addition, the Disclosure Committee was established to
undertake deliberations pertaining to information disclosure,
including content and timing, to ensure important corporate
information will be disclosed in a timely and accurate manner.
Corporate Audit Center
Canon Inc. has established the Corporate Audit Center as its
internal auditing division, which conducts audits on various
topics such as finance, procurement, asset management, con-
tracts, health and safety, quality, etc. for each division and
subsidiary of the Company, in addition to audits on general
operations and management, and makes recommendations
for improvements as necessary. The Corporate Audit Center
also conducts audits on topics such as quality, and health and
safety. Audit results are reported not only to the CEO and CFO,
but also to the Audit & Supervisory Board and its members. In
addition, Canon Inc. has established a system in which reports
are also regularly given to outside directors and those outside
directors can request submission of proposals to the Board of
Directors, as necessary.
General Meeting of Shareholders
Representative Directors
CEO etc.
Accounting Auditors
Audit Firm
Executive Officers and each General Manager
Corporate Audit Center
Disclosure Committee
Subcommittees
Financial Risk
Compliance
Business Risk Management
Risk Management Committee
Elect/Dismiss
Elect/Dismiss/
Approve/
Supervise
Instruct/Order
Approve/
Supervise
Elect/Dismiss
Elect/Dismiss
Audit
Cooperation
Financial
Audit
Cooperation
Cooperation
Report
Audit
Report
Report
Internal Audit
Report
Report
Report
Report
Consult
Report
Consult
Consult
Report
Cooperation
Report
Corporate Strategy Committee
Directors, including Independent Outside Directors
Audit & Supervisory Board Executive Officers with
direct control of an organizational division
Sustainability Committee
Board of Directors
10 Members, including 4 Independent
Outside Directors
Audit & Supervisory Board
5 Members, including 3 Members
Nomination and Remuneration
Advisory Committee
CFO, 4 Independent Outside Directors and
1 Independent Outside Audit &
Supervisory Board Member
Corporate Governance Structure
Details of Canon Inc.’s corporate governance structure are available on Canon Inc.’s website under “an overview of Corporate Governance at Canon Inc.”
https://global.canon/en/ir/strategies/governance.html
CANON ANNUAL REPORT 2024
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FINANCIAL
OVERVIEW
40 Financial Overview
58 Ten-Year Financial Summary
CANON ANNUAL REPORT 2024
39
GENERAL
The following discussion and analysis provides information
that management believes to be relevant to understanding
Canon’s consolidated financial condition and results of opera-
tions. References in this discussion to the “Company” are to
Canon Inc. and, unless otherwise indicated, references to the
financial condition or operating results of “Canon” refer to
Canon Inc. and its consolidated subsidiaries.
OVERVIEW
Canon is one of the world’s leading manufacturers of office
multifunction devices (“MFDs”), laser printers, inkjet print-
ers, medical equipment, cameras and lithography equip-
ment. Canon earns revenues primarily from the manufacture
and sale of these products domestically and internationally.
Canon’s basic management policy is to contribute to the
prosperity and well-being of the world while endeavoring to
become a truly excellent global corporate group targeting
continued growth and development.
Canon divides its businesses into four segments: the Printing
Business Unit, the Medical Business Unit, the Imaging Business
Unit and the Industrial Business Unit.
Economic environment
Looking back at 2024, the global economy continued to
recover moderately, as inflation in various regions began
to settle down and monetary tightening eased. Looking
by region, in the U.S., consumer spending remained solid,
supported by a favorable personal income environment. In
Europe, although the economic situation varied from one
region to another, the economy was supported by consumer
spending as the inflationary pressure eased towards the end
of the year. In China, despite steady exports, the economy
continued to be stagnant as the real estate market remained
sluggish, and the pace of recovery in domestic demand slowed
down. In other emerging countries, consumption remained
firm as inflationary pressure eased. In Japan, although there
were strong signs of stagnation at the beginning of the year,
the economy recovered moderately as consumer spending and
inbound demand picked up.
Market environment
In the markets in which Canon operates, demand remained
firm overall, despite the impact of economic stagnation in
some regions. On a product basis, overall demand for MFDs
and commercial printing remained solid, despite the contin-
ued sluggish market conditions in Europe and China. While
demand for inkjet printers overall decreased, demand for refill-
able ink tank models increased. Despite a decrease in demand
mainly in China for laser printers, sales were solid due in part
to the completion of inventory adjustments at its OEM partner.
For medical equipment, although the U.S. market remained
strong, the Chinese market experienced stagnation, and the
conditions for hospital management became increasingly
challenging in Europe and Japan, resulting in a weak market
overall. For cameras, demand remained solid, mainly for mir-
rorless cameras. As for semiconductor lithography equipment,
demand remained at a record-high level, due in part to contin-
ued strong investment in generative artificial intelligence (AI).
For FPD (Flat Panel Display) lithography equipment, investment
by panel manufacturers improved.
The average value of the yen for the year was ¥151.63
against the U.S. dollar, a year-on-year depreciation of approxi-
mately ¥11, and ¥163.99 against the euro, a year-on-year
depreciation of approximately ¥12.
Summary of operations
In 2024, net sales for the year reached ¥4,509,821 million,
exceeding the historical sales record set in 2007, and adjusted
income before income taxes excluding the Medical business
unit’s impairment losses on goodwill increased by 19.3%
year-on-year to ¥466,261 million. Looking by region although
sales were affected by market deterioration in Europe and
China, sales in other countries were solid overall. On a product
basis, sales were favorable for products such as semiconduc-
tor lithography equipment, network cameras, and mirrorless
cameras. Gross profit as a percentage of net sales increased
by 0.4 points to 47.5% due to cost reductions including
improvements in logistics costs and positive effects from the
depreciation of the yen. As a result, gross profit increased by
8.8% year-on-year to ¥2,143,095 million. Operating expenses
increased by 16.9% year-on-year to ¥1,863,341 million mainly
due to impairment loss booked on goodwill in the Medical
business unit, and an increase in operating expenses of for-
eign currencies due to the depreciation of the yen. As a result,
operating profit decreased by 25.5% to ¥279,754 million.
Other income (deductions) increased by ¥6,006 million from
the previous fiscal year to ¥21,407 million due to the favor-
able impact in currency exchange from receivables of foreign
currencies. As a result, income before income taxes decreased
by 22.9% to ¥301,161 million, and net income attributable to
Canon Inc. decreased by 39.5% to ¥160,025 million.
Total assets increased by ¥349,669 million to ¥5,766,246
million as of December 31, 2024 compared to the end of the
previous year, mainly from an increase in assets of foreign
currencies due to the depreciation of the yen, and an increase
in accounts receivable accompanied by an increase in sales.
Total liabilities increased by ¥310,325 million to ¥2,121,195
million due to the execution of long-term debt and an increase
in accrued expenses. The balance of total equity increased by
¥39,344 million to ¥3,645,051 million, due to an increase in
net income attributable to Canon Inc. shareholders, and an
increase in foreign currency translation adjustments caused
by the depreciation of the yen, partially offset by dividends
to Canon Inc. shareholders and repurchases of treasury stock
which were carried out two times.
As a result, Canon Inc.’s shareholders’ equity as a percent-
age of total assets declined by 3.3 points to 58.6% compared
to the end of the previous year.
CANON ANNUAL REPORT 2024
40
FINANCIAL OVERVIEW
Key performance indicators
The following are the key performance indicators (“KPIs”) that
Canon uses in managing its business. The changes from year
to year in these KPIs are set forth in the table shown below.
Net sales and profit ratio
As Canon pursues the goal to become a truly excellent global
corporation, one indicator upon which Canon’s management
places strong emphasis is revenue. The following are some of
the KPIs related to revenue that management considers to be
important.
Net sales is one such KPI. Canon derives net sales primar-
ily from the sale of products and, to a lesser extent, provision
of services associated with its products. Sales vary depending
on such factors as product demand, the number and size of
transactions within the reporting period, market acceptance
for new products, and changes in sales prices. Other factors
involved are market share and market environment. In addi-
tion, management considers the evaluation of net sales by
product to be important for the purpose of assessing Canon’s
sales performance in various products, taking into account
recent market trends.
Gross profit to net sales ratio is another KPI for Canon.
Under the basic policy of Phase VI of the Excellent Global
Corporation Plan, Canon has been consistently strengthening
business competitiveness and striving to provide highly profit-
able products with price competitiveness. Furthermore, Canon
promotes cost reduction initiatives across the Canon Group
through in-house production and automation of assembly pro-
cesses which integrate the three functions of design, produc-
tion technology and manufacturing. Canon will continue to
actively take these measures to improve Canon’s gross profit
to net sales ratio.
Operating profit to net sales ratio, income before income
taxes to net sales ratio, and R&D expense to net sales ratio are
also considered to be KPIs by Canon. From this aspect, Canon
is focusing on two areas for improvement. Canon is striving
to control and reduce its selling, general and administrative
expenses as its first key point. Secondly, Canon’s R&D policy is
designed to maintain adequate spending in core technology
to sustain Canon’s leading position in its current business areas
and to exploit opportunities in other markets. Canon believes
such investments will create the basis for future success in its
business and operations.
Cash flow management
Canon also places significant emphasis on cash flow manage-
ment. The following are the KPIs relating to cash flow man-
agement that Canon’s management believes to be important.
Inventory turnover measured in days is a KPI as it measures
the efficiency of supply chain management. Inventories have
inherent risks of becoming obsolete, physically damaged
or otherwise decreasing significantly in value, which may
adversely affect Canon’s operating results. To mitigate these
risks, management believes that it is crucial to continue reduc-
ing inventories by shortening production lead times in order to
promptly collect product related expenses, while maintaining
finished goods at appropriate level in order to avoid losing
potential sales opportunities.
The debt to total assets ratio is also one of the KPIs. For a
manufacturing company like Canon, it generally takes con-
siderable amount of time to bear fruit from the business due
to lead times required for R&D, manufacturing and sales.
Therefore, management believes that it is important to bulid
sufficient financial strength. Canon will continue to maintain
liquidity and manage capital investments within the cash flow
generated from operation, however it is possible that Canon
utilizes debt following a decision to invest on a large scale for
future growth.
The equity ratio, which indicates the proportion of share-
holders’ equity to total assets, is another KPIs. Having ample
shareholders’ equity allows to continue making high-level
investments from a long-term perspective, and enables stable
business operations that are not shaken by short-term per-
formance declines. Ensuring financial stability is particularly
important for Canon which places a strong emphasis on R&D
activities. On the other hand, we will also pay attention to
optimizing our capital structure, such as effectively utilizing
debt for growth investments.
Return on equity
Return on Canon Inc. shareholders’ equity, calculated as the
ratio of net income divided by shareholders’ equity, is one of
the KPIs for Canon. Canon seeks to increase profitability by
reviewing its business structure and optimization of expenses,
as well as pursuing asset efficiency as a result of appropriate
control over inventory levels and consolidation of production
sites. In addition, Canon will improve return on Canon Inc.
shareholders’ equity in order to realize investment for growth
while maintaining the financial soundness with an appropriate
capital structure by effectively utilizing debt.
CANON ANNUAL REPORT 2024
41
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
KEY PERFORMANCE INDICATORS
2024
2023
2022
2021
2020
Net sales (Millions of yen)
4,509,821
4,180,972
4,031,414
3,513,357
3,160,243
Gross profit to net sales ratio
47.5%
47.1%
45.3%
46.3%
43.5%
R&D expense to net sales ratio
7.5%
7.9%
7.6%
8.2%
8.6%
Operating profit to net sales ratio
6.2%
9.0%
8.8%
8.0%
3.5%
Income before income taxes to net sales ratio
6.7%
9.3%
8.7%
8.6%
4.1%
Inventory turnover measured in days
65 days
66 days
69 days
66 days
60 days
Debt to total assets ratio
11.5%
9.6%
8.2%
6.8%
10.9%
Canon Inc. shareholders’ equity to total assets ratio
58.6%
61.9%
61.1%
60.5%
55.7%
Return on Canon Inc. shareholders’ equity
4.8%
8.2%
8.1%
7.9%
3.2%
Note: Inventory turnover measured in days is determined by: Inventory divided by net sales for the previous six months, multiplied by 182.5.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The consolidated financial statements are prepared in accor-
dance with U.S. generally accepted accounting principles
(“U.S. GAAP”) and based on the selection and application of
significant accounting policies which require management to
make significant estimates and assumptions. These estimates
and assumptions include future market conditions, net sales
growth rate, gross margin and discount rate. Though Canon
believes that the estimates and assumptions are reasonable,
actual future results may differ from these estimates and
assumptions. In addition, actual results and outcomes may
differ from management’s estimates and assumptions due
to pandemic, geopolitical risk and economic slowdown risk
in response to inflation. Canon believes that the following
are the more critical judgment areas in the application of its
accounting policies that currently affect its financial condition
and results of operations.
Revenue recognition
Canon generates revenue mainly through the sale of products
of the Printing Business Unit, the Medical Business Unit, the
Imaging Business Unit and the Industrial Business Unit, sup-
plies and related services under separate contractual arrange-
ments. Revenue is recognized when, or as, control of prom-
ised goods or services transfers to customers in an amount
that reflects the consideration to which Canon expects to be
entitled in exchange for transferring these goods or services.
Revenue from sales of products of the Printing Business
Unit, such as office MFDs, laser printers and inkjet printers,
and the Imaging Business Unit, such as digital cameras, is pri-
marily recognized at a point in time upon shipment or delivery,
depending upon when the customer obtains control of these
products.
Revenue from sales of equipment of the Medical Business
Unit and the Industrial Business Unit that are sold with cus-
tomer acceptance provisions related to their functionality,
including certain medical equipment such as Computed
tomography (CT) systems and Magnetic resonance imaging
(MRI) systems, and lithography equipment such as semicon-
ductor and FPD lithography equipment, is recognized at a
point in time when the equipment is installed at the customer
site and the agreed-upon specifications are objectively satisfied
and confirmed.
Most of Canon’s service revenue is generated from main-
tenance service in the products of the Printing Business Unit
and the Medical Business Unit which is recognized over time.
For the service contracts of the Printing Business Unit, the
customer typically pays a variable amount based on usage, a
stated fixed fee or a stated base fee plus a variable amount
which frequently includes the provision of consumables as well
as break fix activities. The majority portion of service revenue
from the products of the Printing Business Unit is recognized
as billed since the invoiced amount directly correlates with
the value to the customer of the underlying performance
obligation delivered to date. For the service contracts of the
Medical Business Unit, the customer typically pays a stated
fixed fee for the stand ready maintenance service and revenue
CANON ANNUAL REPORT 2024
42
FINANCIAL OVERVIEW
is recognized ratably over the contract period.
The majority of service arrangements for the products are
executed in combination with related products. Transaction
prices for products and services need to be allocated to each
performance obligation on a relative standalone selling price
basis where judgements are required. Canon estimates the
standalone selling price using a range of prices that would
meet the allocation objective based on all the information
that is reasonably available including market conditions and
other observable inputs. If transaction prices of the product or
service contracts are not within the acceptable range then the
revenue is subject to allocation based on the estimated stand-
alone selling prices. Canon recognizes the incremental costs of
obtaining a contract as an expense when related products of
the Printing Business Unit are sold.
Revenue from sales of certain industrial equipment which
do not have alternative use and for which Canon has enforce-
able right to payment to the customers for the performance
completed to date is recognized over time with progress
towards completion measured using the cost based input
method as the basis to recognize revenue and an estimated
margin. Provisions for estimated losses on uncompleted con-
tracts are made in the period in which such losses become evi-
dent. Changes in job performance, job conditions, estimated
margin and final contract settlements may result in revisions to
projected costs and revenue and are recognized in the period
in which the revisions to estimates are identified and the
amounts can be reasonably estimated. Factors that may affect
future project costs and margins include, production efficien-
cies, availability and costs of labor and materials. These factors
can impact the accuracy of Canon’s estimates and materially
impact future reported revenue and cost of sales.
The transaction prices that Canon is entitled to receive in
exchange for transferring goods or services to the customer
include certain forms of variable consideration, including prod-
uct discounts, customer promotions and volume-based rebates
mainly for the products of the Imaging Business Unit, which
are sold predominantly through distributors and retailers.
Canon includes estimated amounts in the transaction price
only to the extent it is probable that a significant reversal of
cumulative revenue recognized will not occur when the uncer-
tainty associated with the variable consideration is resolved.
Variable consideration is estimated based upon historical
trends and other known factors at the time of sale, and is
subsequently adjusted in each period based on current infor-
mation. In addition, Canon may provide a right of return on its
products for a short time period after a sale. These rights are
accounted for as variable consideration when determining the
transaction price, and accordingly Canon recognizes revenue
based on the estimated amount to which Canon expects to be
entitled after considering expected returns.
Taxes collected from customers and remitted to governmen-
tal authorities are excluded from revenues in the consolidated
statements of income.
Allowance for credit losses
Allowance for credit losses for trade and lease receivables is
maintained for all customers based on ASC 326 “Financial
Instruments – Credit Losses,” based on historical experiences
of credit losses and reasonable and supportable forecasts. An
additional reserve for individual accounts is recorded when
Canon becomes aware of a customer’s inability to meet its
financial obligations, such as in the case of bankruptcy filings.
If circumstances related to customers change, estimates of the
recoverability of receivables would be further adjusted. When
all collection options are exhausted including legal recourse,
the accounts or portions thereof are deemed to be uncollect-
able and charged against the allowance.
Valuation of inventories
Inventories are stated at the lower of cost or net realizable
value. Cost is determined by the average method for domes-
tic inventories and principally the first-in, first-out method
for overseas inventories. Net realizable value is the estimated
selling price in the ordinary course of business less the esti-
mated costs of completion and the estimated costs necessary
to make a sale. Canon routinely reviews its inventories for
their salability and for indications of obsolescence to deter-
mine if inventories should be written down to market value.
Judgments and estimates must be made and used in con-
nection with establishing such allowances in any accounting
period. In estimating the net realizable value of its inventories,
Canon considers the age of the inventories and the likelihood
of spoilage or changes in market demand for its inventories.
Impairment of long-lived assets
Based on ASC 360 “Property, Plant, and Equipment,” long-
lived assets, such as property, plant and equipment, and
acquired intangibles subject to amortization, are reviewed
for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. If the carrying amount of the asset exceeds its
estimated sum of undiscounted future cash flows, an impair-
ment loss is recognized in the amount by which the carry-
ing amount of the asset exceeds the fair value of the asset.
Determining the fair value of the asset involves the use of
estimates and assumptions.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumu-
lated depreciation. Depreciation is calculated principally by the
declining-balance method, except for certain assets which are
depreciated by the straight-line method over the estimated
useful lives of the assets.
CANON ANNUAL REPORT 2024
43
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BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
Lease
As for lessor accounting, Canon provides leasing arrange-
ment to its customers primarily for the sale of office products.
Revenue from the sale of these products under sales-type
leases is recognized at the inception of the lease. Interest
income on sales-type leases and direct-financing leases is
recognized over the life of each respective lease using the
interest method. Leases not qualifying as sales-type leases or
direct-financing leases are accounted for as operating leases
and related revenue is recognized ratably over the lease term.
When product leases are bundled with maintenance contracts,
revenue is allocated based upon the estimated standalone
selling prices of the lease and non-lease components. Lease
components generally include product and financing while
non-lease components generally consist of maintenance
contracts and supplies. Some of the contracts include options
to extend or to terminate the lease. Canon takes such options
into account to determine the lease term when it is reason-
ably certain that the customers will exercise these options. The
majority of Canon’s lease contracts do not contain bargain
purchase options for their customers.
As for lessee accounting, Canon has operating and finance
leases for various assets including office buildings, ware-
houses, employees’ accommodations, and vehicles. Canon
determines if an arrangement is a lease at the inception
of each contract. Some of the contracts include options to
extend or to terminate the lease. Canon takes such options
into accounts to determine the lease term when it is reason-
ably certain that it will exercise these options. Canon’s lease
arrangements do not contain material residual value guar-
antees or material restrictive covenants. As a rate implicit in
most of Canon’s leases cannot be determined, Canon uses
incremental borrowing rate based on the information available
at commencement to determine the present values of lease
payments. Canon has lease contracts with lease and non-lease
components, which are accounted for separately. Canon allo-
cates the consideration in the lease contract to the lease and
non-lease components based upon the estimated standalone
prices. Costs associated with operating lease assets are recog-
nized on a straight-line basis over the term of the lease.
Business combinations
Acquisitions are accounted for using the acquisition method of
accounting. The acquisition method of accounting requires the
identification and measurement of all acquired tangible and
intangible assets and assumed liabilities, excluding acquired
contract assets and contract liabilities, at their respective fair
values, as of the acquisition date. The determination of the fair
value of net assets acquired involves significant judgment and
estimates, such as future cash flow projections, appropriate
discount and capitalization rates and other estimates based
on available market information. Estimates of future cash
flows are based on a number of factors including operating
results, known and anticipated trends, as well as market and
economic conditions. Acquired contract assets and contract
liabilities are recognized and measured in accordance with
ASC 606 “Revenue from Contracts with Customers.”
Goodwill and other intangible assets
Goodwill and other intangible assets with indefinite useful
lives are not amortized, but are instead tested for impairment
annually in the fourth quarter of each year, or more frequently
if indicators of potential impairment exist. All goodwill is
assigned to the reporting unit or units that benefit from the
synergies arising from each business combination. If the
carrying amount assigned to the reporting unit exceeds the
fair value of the reporting unit, Canon recognizes an impair-
ment loss in an amount equal to that excess, limited to the
total amount of goodwill allocated to that reporting unit. Fair
value of a reporting unit is determined primarily based on
the discounted cash flow analysis which involves estimates of
projected future cash flows and discount rates. Estimates of
projected future cash flows are primarily based on Canon’s
forecast of future growth rates. Estimates of discount rates are
determined based on the weighted average cost of capital,
which considers primarily market and industry data as well as
specific risk factors. Canon has completed its impairment test
in the fourth quarter of 2024 and recognized an impairment
loss for the Medical Reporting Unit for the amount by which
the carrying amount exceeded the reporting unit’s fair value.
For further information, please refer to Note 8 and 22 of the
Notes to Consolidated Financial Statements. The fair values
of remaining reporting units exceeded its respective carrying
amount, and thus no other impairment loss was recognized
as a result of 2024 impairment test. A significant amount of
goodwill was allocated to the Medical Reporting Unit, which
was ¥403,131 million in the consolidated balance sheet for
the current fiscal year. Future cash flows for the Medical
Reporting Unit were based on a mid-term management plan
that considered the future market growth of medical equip-
ment and growth in geographies where Canon operates its
medical business. Intangible assets with finite useful lives con-
sist primarily of software, trademarks, patents and developed
technology, license fees and customer relationships, which
are amortized using the straight-line method. The estimated
useful lives of software are primarily from 3 years to 9 years,
CANON ANNUAL REPORT 2024
44
FINANCIAL OVERVIEW
trademarks are 15 years, patents and developed technology
are from 5 years to 21 years, license fees are 7 years, and cus-
tomer relationships are from 11 years to 19 years, respectively.
Income tax uncertainties
Canon considers many factors when evaluating and estimat-
ing income tax uncertainties. These factors include an evalu-
ation of the technical merits of the tax positions as well as
the amounts and probabilities of the outcomes that could
be realized upon settlement. The actual resolutions of those
uncertainties will inevitably differ from those estimates, and
such differences may be material to the financial statements.
Valuation of deferred tax assets
Canon currently has significant deferred tax assets, which
are subject to periodic recoverability assessments. Realization
of Canon’s deferred tax assets is principally dependent upon
its achievement of projected future taxable income. Canon’s
judgments regarding future profitability may change due to
future market conditions, its ability to continue to successfully
execute its operating activities and other factors. Any changes
in these factors may require possible recognition of significant
valuation allowances to reduce the net carrying value of these
deferred tax asset balances. When Canon determines that cer-
tain deferred tax assets may not be recoverable, the amounts,
which may not be realized, are charged to income tax expense
and will adversely affect net income.
Employee retirement and severance benefit plans
Canon has significant employee retirement and severance
benefit obligations that are recognized based on actuarial
valuations. Inherent in these valuations are key assumptions,
including discount rates and expected return on plan assets.
Management must consider current market conditions, includ-
ing changes in interest rates, in selecting these assumptions.
Other assumptions include assumed rate of increase in com-
pensation levels, mortality rate. Changes in assumptions inher-
ent in the valuation are reasonably likely to occur from period
to period. Actual results that differ from the assumptions are
accumulated and amortized over future periods and, there-
fore, generally affect future pension expenses. While manage-
ment believes that the assumptions used are appropriate, the
differences may affect employee retirement and severance
benefit costs in the future.
In preparing its financial statements for 2024, Canon esti-
mated a weighted-average discount rate used to determine
benefit obligations of 1.9% for Japanese plans and 3.9% for
foreign plans and a weighted-average expected long-term rate
of return on plan assets of 3.1% for Japanese plans and 6.0%
for foreign plans. In estimating the discount rate, Canon uses
available information about rates of return on high-quality
fixed-income government and corporate bonds currently
available and expected to be available during the period to
the maturity of the pension benefits. Canon establishes the
expected long-term rate of return on plan assets based on
management’s expectations of the long-term return of the
various plan asset categories in which it invests. Management
develops expectations with respect to each plan asset category
based on actual historical returns and its current expectations
for future returns.
Decreases in discount rates lead to increases in actuarial
pension benefit obligations which, in turn, could lead to an
increase in service cost and amortization cost through amor-
tization of actuarial gain or loss, a decrease in interest cost,
and vice versa. For 2024, a decrease of 50 basis points in the
discount rate increases the projected benefit obligation by
approximately ¥70,757 million. The net effect of changes in
the discount rate, as well as the net effect of other changes in
actuarial assumptions and experience, is deferred until subse-
quent periods.
Decreases in expected returns on plan assets may increase
net periodic benefit cost by decreasing the expected return
amounts, while differences between expected value and actual
fair value of those assets could affect pension expense in the
following years, and vice versa. For 2024, a decrease of 50
basis points in the expected long-term rate of return on plan
assets would increase approximately ¥5,900 million in net peri-
odic benefit cost. Canon multiplies management’s expected
long-term rate of return on plan assets by the value of its plan
assets to arrive at the expected return on plan assets that is
included in pension expense. Canon defers recognition of the
difference between this expected return on plan assets and
the actual return on plan assets. The net deferred amount
affects future pension expense.
Canon recognizes the funded status (i.e., the difference
between the fair value of plan assets and the projected benefit
obligations) of its pension plans in its consolidated balance
sheets, with a corresponding adjustment to an accumulated
other comprehensive income (loss), net of tax.
Environmental Liabilities
Liabilities for environmental remediation and other environ-
mental costs are accrued when environmental assessments or
remedial efforts are probable and the costs can be reasonably
estimated, and are included in other noncurrent liabilities in
the consolidated balance sheets. Such liabilities are adjusted
as further information develops or circumstances change.
Costs of future obligations are not discounted to their pres-
ent values.
Recently Issued Accounting Guidance
Please refer to Note 1 of the Notes to Consolidated Financial
Statements.
CANON ANNUAL REPORT 2024
45
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
CONSOLIDATED RESULTS OF OPERATIONS
SUMMARY OF OPERATIONS
Millions of yen
2024
change
2023
Net sales
4,509,821
+7.9%
4,180,972
Products and Equipment
3,593,598
+8.4%
3,314,627
Services
916,223
+5.8%
866,345
Operating profit
279,754
-25.5%
375,366
Income before income taxes
301,161
-22.9%
390,767
Net income attributable to Canon Inc.
160,025
-39.5%
264,513
Note: See note to KEY PERFORMANCE INDICATORS
Sales
In the current business term, the global economy continued
to recover moderately, as inflation in various regions began
to settle down and monetary tightening eased. Under these
circumstances, mainly due to an increase of sales in growth
businesses such as semiconductor lithography equipment,
digital commercial printing presses, and network cameras,
Canon’s consolidated net sales in 2024 totaled ¥4,509,821
million, an increase of 7.9% from the previous year, exceed-
ing the historical sales record set in 2007. Net sales of prod-
ucts and equipment totaled ¥3,593,598 million, a year-on-
year increase of 8.4%, while net sales of services totaled
¥916,223 million, a year-on-year increase of 5.8%.
Overseas operations are significant to Canon’s operating
results and generated 78.8% of total net sales in 2024. Such
sales are denominated in the applicable local currencies and
are subject to fluctuations in the value of the yen relative to
those currencies. Despite efforts to reduce the impact of cur-
rency fluctuations on operating results, including localization
of manufacturing in some regions along with procuring parts
and materials from overseas suppliers, Canon believes such
fluctuations have had and will continue to have a significant
effect on its results of operations.
The average value of the yen during the year was ¥151.63
against the U.S. dollar, a year-on-year depreciation of approx-
imately ¥11, and ¥163.99 against the euro, a year-on-year
depreciation of approximately ¥12. The effects of foreign
exchange rate fluctuations positively affected net sales by
¥201,712 million in 2024. This favorable impact consisted
of approximately ¥111,973 million of favorable impact for
the U.S. dollar denominated sales and favorable impact of
¥70,753 million for the euro denominated sales, and favor-
able impact of ¥18,986 million for other foreign currency
denominated sales.
Cost of sales
Cost of sales principally reflects the cost of raw materials, parts
and labor used by Canon in the manufacture of its products.
A portion of the raw materials used by Canon is imported or
includes imported materials. Many of these raw materials are
subject to fluctuations in world market prices accompanied by
fluctuations in foreign exchange rates that may affect Canon’s
cost of sales. Other components of cost of sales include
depreciation expenses, maintenance expenses, light and fuel
expenses, and rent expenses. In 2024, cost of sales increased
due to the depreciation of the yen, despite the progress made
in the improvement of costs centering on distribution costs
during the consolidated fiscal year. On the other hand, the
ratio of cost of sales to net sales for 2024 and 2023 were
52.5% and 52.9%, respectively. Cost of sales as a percentage
of net sales decreased by 0.4 points.
Gross profit
Canon’s gross profit in 2024 increased by 8.8% to ¥2,143,095
million from 2023. The gross profit to net sales ratio increased
by 0.4 points to 47.5%. The increase in the gross profit was
mainly due to cost reductions including improvements in logis-
tics costs and positive effects from the depreciation of the yen.
Return on Sales (%)
9
6
3
0
2021
2022
2020
2023
2024
CANON ANNUAL REPORT 2024
46
FINANCIAL OVERVIEW
Operating expenses
The major components of operating expenses are payroll,
R&D, advertising expenses and other marketing expenses.
Operating expenses in 2024 increased by 16.9% year on year
to ¥1,863,341 million mainly due to an impairment loss of
¥165,100 million booked on goodwill in the Medical business
unit, and an increase in operating expenses of foreign curren-
cies due to the depreciation of the yen and structural reforms
of overseas sales subsidiaries. Operating expenses as a percent-
age of net sales increased by 3.2 points to 41.3%.
Operating profit
Operating profit in 2024 decreased by 25.5% to ¥279,754
million from 2023. The operating profit to net sales ratio
decreased by 2.8 points to 6.2% from 2023.
Other income (deductions)
Other income (deductions) for 2024 was a gain of ¥21,407
million, an increase of ¥6,006 million from 2023 mainly due to
the favorable impact in currency exchange from receivables of
foreign currencies.
Income before income taxes
Income before income taxes in 2024 was ¥301,161 million, a
decrease of 22.9% from 2023, and constituted 6.7% of net
sales.
Income taxes
Income taxes in 2024 increased by ¥11,941 million from
2023. The effective tax rate for 2024 was 39.3%, which was
higher than the statutory tax rate in Japan. This resulted from
that goodwill impairment losses are not deductible expenses
for tax purposes.
Net income attributable to Canon Inc.
As a result, net income attributable to Canon Inc. in 2024
decreased by 39.5% to ¥160,025 million, which represents
3.5% of net sales.
Segment information
Canon operates four segments: the Printing Business Unit,
the Medical Business Unit, the Imaging Business Unit and the
Industrial Business Unit.
• The Printing Business Unit mainly includes Digital
continuous feed presses / Digital sheet-fed presses /
Large format printers / Office MFDs / Document solutions /
Laser MFPs / Laser printers / Inkjet printers / Image scanners /
Calculators
• The Medical Business Unit mainly includes CT systems /
Diagnostic ultrasound systems / Diagnostic X-ray systems /
MRI systems / Digital radiography systems / Ophthalmic
equipment / In vitro diagnostic systems and reagents /
Healthcare IT Solutions
• The Imaging Business Unit mainly includes
Interchangeable-lens digital cameras / Interchangeable
lenses / Digital compact cameras / Compact photo printers /
MR Systems / Network cameras / Video management
software / Video content analytics software / Digital
camcorders / Digital cinema cameras / Broadcast equipment
• The Industrial Business Unit mainly includes
Semiconductor lithography equipment /
FPD lithography equipment /
OLED display manufacturing equipment /
Vacuum thin-film deposition equipment / Die bonders
• Others mainly includes Handy terminals / Document scanners
Operating results by segment
Please refer to the table of sales by segment in Note 23 of the
Notes to Consolidated Financial Statements.
Within the Printing Business Unit, sales of production print-
ing devices increased compared with the previous year thanks
to strong sales of the imagePRESS V series and other products
mainly in the U.S. in addition to orders received at drupa,
the world’s largest printing equipment exhibition. As a result,
sales of production printing equipment increased year-on-year.
Although sales of office MFDs were affected by the sluggish
market conditions in China and Europe, sales increased from
the previous year, mainly for low and mid-speed color MFD
series such as the imageRUNNER ADVANCE DX C3900 series.
Sales of inkjet printers were affected by the sluggish market
conditions in China and intensified price competition, particu-
larly for low-end models. Under such situation, however, sales
of refillable ink tank products, for which demand was firm,
continued to grow. Sales of laser printers increased substan-
tially after inventory adjustments by its OEM partner were
settled. These factors resulted in total sales for the business
unit of ¥2,522,725 million, a year-on-year increase of 7.5%,
while income before income taxes increased by 29.4% year-
on-year to ¥304,146 million.
As for the Medical Business Unit, sales of CT systems and
MRI systems increased in the U.S. On the other hand, sales in
China were affected by the market downturn, and the finan-
cial conditions of hospital management became increasingly
challenging in Japan and Europe. As a result of these factors,
total sales increased by 2.7% year-on-year to ¥568,808 mil-
lion. In 2024, adjusted income before income taxes, decreased
by 20.4% year on year to ¥25,592 million due to up-front
investment costs, including development of next-generation
equipment and business structure reform. In addition to the
above, income before income taxes was a loss of ¥139,508
million due to the recognition of impairment loss on goodwill.
As for the Imaging Business Unit, although there was a
period of adjustment in the inventory of interchangeable-lens
digital cameras at the beginning of the year, the new EOS R1
and EOS R5 Mark II introduced in the second half of the year
sold well, as did the entry models EOS R50 and EOS R100.
CANON ANNUAL REPORT 2024
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Sales of network cameras also increased for the year as sales
recovered from the second quarter when inventory adjust-
ments were carried out. As a result of these factors, total sales
increased by 8.8% year-on-year to ¥937,391 million, and
income before income taxes increased by 5.4% year-on-year
to ¥154,308 million.
As for the Industrial Business Unit, unit sales of semicon-
ductor lithography equipment increased substantially year-
on-year as Canon steadily captured the high demand for
its lithography equipment for back-end process which was
accepted as the industry standard in advanced semiconductor
packaging, amid the strong demand for semiconductors used
for generative AI. Unit sales of FPD lithography equipment
increased from the previous fiscal year thanks to the recovery
of the market conditions. As a result of these factors, total
sales increased by 13.3% year-on-year to ¥356,462 million
and income before income taxes increased by 19.0% year-on-
year to ¥70,403 million.
SALES BY SEGMENT
Millions of yen
2024
change
2023
Printing
2,522,725
+7.5%
2,346,076
Medical
568,808
+2.7%
553,780
Imaging
937,391
+8.8%
861,625
Industrial
356,462
+13.3%
314,719
Others and Corporate
233,746
+11.9%
208,844
Eliminations
(109,311)
—
(104,072)
Total
4,509,821
+7.9%
4,180,972
Note: In order to manage the performance of each reportable segment more appropriately, Canon has changed its performance management method regarding
intercompany transactions for Others and Corporate from the beginning of the first quarter of 2024. Operating results for the year ended December 31,
2023 have also been reclassified.
SALES BY GEOGRAPHIC AREA
Millions of yen
2024
change
2023
Japan
955,456
+6.0%
901,589
Americas
1,429,201
+8.9%
1,312,438
Europe
1,184,389
+6.6%
1,111,211
Asia and Oceania
940,775
+9.9%
855,734
Total
4,509,821
+7.9%
4,180,972
Note: This summary of net sales by geographic area is determined by the location where the product is shipped to the customers.
Sales by Segment (Billions of yen)
5,000
3,000
2,000
1,000
0
4,000
Printing
Medical
Imaging
Industrial
Others and Corporate
Eliminations
2022
2023
2024
5,000
3,000
2,000
1,000
0
4,000
Japan
Americas
Europe
Asia and Oceania
2021
2022
2020
2023
2024
Sales by Geographic Area (Billions of yen)
CANON ANNUAL REPORT 2024
48
FINANCIAL OVERVIEW
Sales by geographic area
Please refer to the table of sales by geographic area in Note 23
of the Notes to Consolidated Financial Statements.
In Japan, net sales increased by 6.0% from the previous year
mainly owing to an increase in sales of IT solutions for offices.
In the Americas, net sales increased by 8.9% from the
previous year mainly owing to an increase in unit sales of laser
printers and network cameras, and depreciation of the yen.
In Europe, net sales increased by 6.6% from the previous
year mainly owing to an increase in sales of laser printers and
depreciation of the yen.
In Asia and Oceania, net sales increased by 9.9% from the
previous year mainly owing to increase in sales of semiconduc-
tor lithography equipment.
FOREIGN OPERATIONS AND FOREIGN CURRENCY
TRANSACTIONS
Canon’s marketing activities are performed by subsidiaries in
various regions in local currencies, while the cost of sales is
generally in yen. Given Canon’s current operating structure,
appreciation of the yen has a negative impact on net sales and
the gross profit to net sales ratio. To reduce the financial risks
from changes in foreign exchange rates, Canon utilizes deriva-
tive financial instruments, which consist principally of foreign
currency exchange contracts.
The operating profit on foreign operation sales is usually
lower than that from domestic operations because foreign
operations consist mainly of marketing activities. Marketing
activities are generally less profitable than production activi-
ties, which are mainly conducted by the Company and its
domestic subsidiaries.
Please refer to the table of segment information in Note 23
of the Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Canon’s basic policy for financial strategies is to maintain a
sound financial position through consistent cash flow manage-
ment, and the two basic principles of cash flow management
are as follows:
• Canon strives to improve a highly profitable structure by
further improving the profitability of existing businesses and
accelerating the growth of new businesses.
• Canon strives to maintain financial soundness by keeping
total capital investments for medium-term business expan-
sion and growth within the range of depreciation and
amortization expenses in principle. However, Canon plans to
raise external funds as needed depending on the situation of
capital investments and M&A for growth strategies.
Raising Funds (Cash-In)
Canon is basically funded by net cash provided by operating
activities. In procuring funds, Canon considers terms, currencies
and methods in light of financial market conditions, and selects
the most appropriate instrument from a variety of options.
Use of Funds (Cash-Out)
The principal use of cash is determined in accordance with the
following priorities.
• Investment for growth such as capital investment, R&D,
M&A, etc.:
Canon values M&A as a complementary option for develop-
ment of new businesses. The selection of investment targets
is based on the growth potential and size of the market, and
on the market being highly compatible with the Canon’s
business domains and technologies.
• Return to shareholders:
Canon takes into consideration medium-to long-term busi-
ness prospects, planned future investments, cash flow and
other factors. Canon returns profits to shareholders stably
and aggressively in the form of a dividend with around 50%
of its target payout ratio and share buybacks.
• Repayment of borrowings:
Canon has been repaying borrowings steadily to have suf-
ficient financial strength and secures available capacity to
fund the investments for business expansion and growth.
Cash and cash equivalents increased by ¥100,242 million
to ¥501,565 million in fiscal 2024 compared to the previous
year. Canon’s cash and cash equivalents are primarily denomi-
nated in Japanese yen and in U.S. dollars, with the remainder
denominated in other currencies.
Net cash provided by operating activities increased by
¥155,641 million to ¥606,831 million in fiscal 2024 compared
to the previous year as a result of mainly due to increase in
profit after accounting for impairment losses on non-cash
goodwill and an improvement in working capital caused by an
increase in accounts payable – trade. The major component
Cash flows (Billions of yen)
800
600
400
200
0
-200
-400
-600
2021
2022
2020
2023
2024
Cash flows from
operating activities
Cash flows from
investing activities
Cash flows from
financing activities
Free cash flow
CANON ANNUAL REPORT 2024
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of Canon’s cash inflow is cash received from customers, and
the major components of Canon’s cash outflow are payments
for parts and materials, selling, general and administrative
expenses, and income taxes.
For fiscal 2024, cash inflow from cash received from cus-
tomers increased due to sales improvement. There were no
significant changes in Canon’s collection rates. Cash outflow
increased due to an increase in the payment for parts and
materials owing to increase of sales, and an increase in sales
related expenses with the normalization of sales activity. Cash
outflow for payments for income taxes increased due to an
increase in taxable income.
Net cash used in investing activities expended ¥297,322
million in fiscal 2024 mainly due to an acquisition of
Primagest,Inc, what focused on BPO service, as well as contin-
ued capital investments to improve efficiency and productivity
from the previous year. Purchases of fixed assets increased by
¥6,693 million to ¥237,001 million in fiscal 2024.
Canon defines “free cash flow” as cash flows from oper-
ating activities less cash flows from investing activities. For
fiscal 2024, free cash flow increased by ¥133,691 million
to ¥309,509 million as compared with ¥175,818 million for
fiscal 2023.
Note: “Free cash flow” is a non-GAAP measure. Refer to the “Non-GAAP
Financial Measures” section for the explanation and the reconciliation to
the reported GAAP measure.
Canon’s management places importance on cash flow man-
agement and frequently monitors this indicator. Furthermore,
Canon’s management believes that this indicator is significant
in understanding Canon’s current liquidity and the alternatives
of use in financing activities because it takes into consider-
ation its operating and investing activities and believes that
such indicator is beneficial to investors. Canon refers to this
indicator together with relevant U.S. GAAP financial measures
shown in its consolidated statements of cash flows and con-
solidated balance sheets for cash availability analysis.
Cash flow from financing activities recorded a cash out-
flow of ¥225,996 million due to a ¥69,267 million increase
in expenditures as a result of active returns to shareholders,
including increased dividends in continuation of the previous
year and repurchases of treasury stock which were carried
out two times. The Company paid dividends in fiscal 2024 of
¥145.00 per share.
To the extent Canon relies on external funding for its liquid-
ity and capital requirements, it generally has access to various
funding sources, including the issuance of additional share
capital, issuance of corporate bond or loans. While Canon
has been able to obtain funding from its traditional financing
sources and from the capital markets, and believes it will con-
tinue to be able to do so in the future, there can be no assur-
ance that adverse economic or other conditions will not affect
Canon’s liquidity or long-term funding in the future.
Canon’s long-term debt mainly consists of bank borrowings
and finance lease obligations.
In order to facilitate access to global capital markets, Canon
obtains a credit rating from S&P Global Ratings (“S&P”).
In addition, Canon maintains a rating from Rating and
Investment Information, Inc. (“R&I”), a rating agency in Japan,
for access to the Japanese capital market.
As of February 28, 2025, Canon’s debt ratings are: S&P: A
(long-term), A-1 (short-term); and R&I: AA (long-term). Canon
does not have any rating downgrade triggers that would
accelerate the maturity of a material amount of its debt. A
downgrade in Canon’s credit ratings or outlook could, how-
ever, increase the cost of its borrowings.
As part of its ongoing business, Canon does not participate
in transactions that create relationships with unconsolidated
entities or financial partnerships, such as entities often referred
to as structured finance or special purpose entities established
for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes.
Canon provides guarantees for its employees, affiliates
and other companies. The guarantees for the employees are
principally made for their housing loans. The guarantees for
affiliates and other companies are made for their lease obliga-
tions and bank loans to ensure that those companies operate
with less financial risk.
Canon would have to perform under a guarantee if the
borrower defaults on a payment within the contract terms.
The contract terms are 1 year to 10 years in case of employ-
ees with housing loans, and 1 year to 5 years in case of affili-
ates and other companies with lease obligations and bank
loans. The maximum amount of undiscounted payments
Canon would have had to make in the event of default is
¥2,014 million at December 31, 2024. The carrying amounts
of the liabilities recognized for Canon’s obligations as a guar-
antor under those guarantees at December 31, 2024 were
not significant.
CANON ANNUAL REPORT 2024
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FINANCIAL OVERVIEW
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
The following table summarizes Canon’s contractual obligations at December 31, 2024.
Payments due by period
Millions of yen
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
Contractual obiligations:
Long-term debt:
Loan from the banks
201,909
210
201,063
636
—
Other debt
4,990
1,614
2,408
865
103
Operating lease obligations
150,707
44,701
56,933
26,366
22,707
Purchase commitments for:
Property, plant and equipment
112,760
112,760
—
—
—
Parts and raw materials
227,455
227,455
—
—
—
Other long-term liabilities:
Contribution to defined benefit pension plans
18,681
18,681
—
—
—
Total
716,502
405,421
260,404
27,867
22,810
Note: See Notes 9, 11, 19 and 20 in the Notes to Consolidated Financial Statements for further details. The table does not include provisions for uncertain tax
positions and related accrued interest and penalties, as the specific timing of future payments related to these obligations cannot be projected with reason-
able certainty. See Note 12, Income Taxes in the Notes to Consolidated Financial Statements for further details.
Canon provides warranties of generally less than one year
against defects in materials and workmanship on most of
its consumer products. Estimated product warranty related
costs are recorded at the time revenue is recognized and
are included in selling, general and administrative expenses.
Estimates for accrued product warranty costs are primarily
based on historical experience, and are affected by ongoing
product failure rates, specific product class failures outside of
the baseline experience, material usage and service delivery
costs incurred in correcting a product failure. As of December
31, 2024 accrued product warranty costs are included in
accrued expenses and amounted to ¥23,685 million.
Canon’s management believes that current financial
resources, cash generated from operations and Canon’s poten-
tial capacity for additional debt and/or equity financing will be
sufficient to fund current and future capital requirements.
Canon’s management policy in recent periods to optimize
inventory levels is intended to maintain an appropriate balance
among relevant imperatives, including minimizing working
capital requirement, avoiding undue exposure to the risk of
inventory obsolescence, and maintaining the ability to sustain
sales despite the occurrence of unexpected disasters.
Canon’ s current strategy for optimizing inventory levels is
to minimize working capital and avoid the risk of inventory
obsolescence while maintaining an appropriate balance to
ensure continued sales activity in the event of an unexpected
natural disaster. Canon’s total inventory turnover measured in
days were 65, 66 days at the end of the fiscal years 2024 and
2023 respectively. Although the value of inventories increased
mainly due to an increase in shipments due to the avoidance
of operation of the Suez Canal, the number of inventories
turned over decreased due to an increase in sales from the
previous year.
Increase in property, plant and equipment on an accrual
basis in 2024 amounted to ¥219,202 million compared
with ¥201,140 million in 2023. For 2025, Canon projects its
increase in property, plant and equipment will be approxi-
mately ¥210,000 million.
Employer contributions to Canon’s worldwide defined ben-
efit pension plans were ¥28,850 million in 2024 and ¥51,647
million in 2023. Employer contributions to Canon’s worldwide
defined contribution pension plans were ¥29,302 million in
2024 and ¥27,667 million in 2023. In addition, employer con-
tributions to the multiemployer pension plan of certain subsid-
iaries were ¥6,353 million in 2024 and ¥5,447 million in 2023.
Working capital in 2024 increased by ¥118,867 million to
¥903,777 million, compared with ¥ 784,910 million in 2023.
The increase was primarily due to a decrease in short-term
loans (including the current portion of long-term debt). Canon
believes its working capital will be sufficient for its require-
ments for the foreseeable future. Canon’s capital requirements
are primarily dependent on management’s business plans
regarding the levels and timing of purchases of fixed assets
and investments. The working capital ratio (ratio of current
assets to current liabilities) for 2024 was 1.58 compared to
1.55 for 2023.
Return on assets (net income attributable to Canon Inc.
divided by the average of total assets) was 2.9% in 2024,
compared to 5.0% in 2023.
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Return on Canon Inc. shareholders’ equity (net income
attributable to Canon Inc. divided by the average of total
Canon Inc. shareholders’ equity) was 4.8% in 2024 com-
pared with 8.2% in 2023. It improved from the previous fiscal
year due to an increase in net income, although sharehold-
ers’ equity increased due to an increase in retained earnings
resulting from an increase in profit and an increase in foreign
currency translation adjustments resulting from the deprecia-
tion of the yen.
In Phase VI, one of Canon’s management policies is to
thoroughly implement cash flow management, and Canon is
restrengthening its financial base.
In 2024, Long-term loans payable increased due to an
increase in working capital. As a result, the debt to total assets
ratios were 11.5% and 9.6% as of December 31, 2024 and
2023. Canon had short-term loans, current operating lease
liabilities, long-term debt, and noncurrent operating lease
liabilities of ¥663,500 million and ¥517,317 million, as of
December 31, 2024 and 2023.
Canon Inc. shareholders’ equity to total assets ratios
were 58.6% and 61.9% as of December 31, 2024 and 2023.
The ratio as of December 31, 2024 decreased from the previ-
ous fiscal year as a result of an increase in expenditures as a
result of active returns to shareholders, including increased
dividends in continuation of the previous year and repurchases
of treasury stock which were carried out two times to Canon,
and an increase in accumulated other comprehensive income
due to the depreciation of the yen.
Non-GAAP Financial Measures
Canon has reported its financial results in accordance with
U.S. GAAP. In addition, Canon has discussed its results using
the combination of two GAAP cash flow measures, Net cash
provided by operating activities and Net cash used for invest-
ing activities, which Canon refers to as “Free Cash Flow”
which is a non-GAAP measure Canon believes this measure is
beneficial to an investor’s understanding of its current liquidity
and the alternatives of uses of financing activities because it
takes into consideration its operating and investing activities.
A reconciliation of this non-GAAP financial measure and the
most directly comparable measure calculated and presented in
accordance with GAAP is set forth on the following table.
FREE CASH FLOW
Millions of yen
2024
2023
Net cash provided by operating activities
606,831
451,190
Net cash used in investing activities
(297,322)
(275,372)
Free cash flow
309,509
175,818
Working Capital Ratio (%)
2.5
2.0
1.5
1.0
2021
2022
2020
2023
2024
Return on Canon Inc.
Shareholders’ Equity (%)
12
9
6
3
0
2021
2022
2020
2023
2024
Increase in Property,
Plant and Equipment (Billions of yen)
250
100
150
200
0
50
2021
2022
2020
2023
2024
CANON ANNUAL REPORT 2024
52
FINANCIAL OVERVIEW
RESEARCH AND DEVELOPMENT,
PATENTS AND LICENSES
Since its founding, Canon has been promoting diversification
of our business through development of core competency
management, which combines core competency technolo-
gies (“core technologies”), which create industry-leading
core products, with fundamental technologies that form the
basis of our technology accumulation, and value creation
technologies that form the basis of our product commercial-
ization technologies.
Canon has transformed several of these core technologies
into fundamental technologies through repeated R&D efforts.
For example, the core technology behind camera people
detection has been further developed as a fundamental
technology for detection AI/statistics analysis and is now being
incorporated into healthcare IT systems helping to enhance
our business unit
Core competency management is put into practice in the
research and development process through the “matrix R&D
structure.” The head office’s research departments and the
product development divisions of the business units of various
products have established a matrix-style system and created a
structure that will make it possible to use company-wide tech-
nologies. The development divisions of our business units are
the main players when it comes to the core technologies that
make our products competitive. Meanwhile, the head office’s
research departments handle research into forthcoming trends
and the development of fundamental technologies. This can
lead to the advance development of core technologies at the
business departments.
Furthermore, the most distinctive feature of Canon’s R&D
is that a holistic environment (one where technologies can be
joined in complex ways) has been developed where it is pos-
sible to use and deploy together throughout the Company the
“technologies that go into products” like core technologies/
fundamental technologies and the “technologies that sup-
port products” such as value creation technologies. With this,
by simultaneously leveraging the technologies included in
products and those that support products in product develop-
ment, Canon will create competitive products.
R&D expenses were ¥337,348 million in 2024 and
¥331,914 million in 2023. The R&D expenses to net sales
ratios were 7.5% in 2024 and 7.9% in 2023.
Canon believes that new products protected by a robust
patent portfolio will not easily allow competitors to surpass
them, and will give the Company an advantage in establishing
standards in the market and industry.
Canon obtained the ninth greatest number of patents in the
United States in 2024, according to the annual ranking list,
released by IFI CLAIMS® Patent Services.
MARKET RISK EXPOSURES
Canon is exposed to market risks, including changes in foreign
currency exchange rates, interest rates and prices of market-
able securities and investments. In order to hedge the risk
of changes in foreign currency exchange rates, Canon uses
derivative financial instruments.
Equity price risk
Canon holds marketable securities included in current assets,
which consist generally of highly-liquid and low-risk instru-
ments. Investments included in noncurrent assets are held
as long-term investments. Canon does not hold marketable
securities and investments for trading purposes.
Maturities and fair values of such marketable securities
and investments with original maturities of more than three
months were as follows at December 31, 2024.
Millions of yen
Fair value
Fund trusts and others
4,394
Equity securities
25,455
29,849
R&D Expenses (Billions of yen)
400
300
200
100
0
2021
2022
2020
2023
2024
CANON ANNUAL REPORT 2024
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Foreign currency exchange rate and
interest rate risk
Canon operates internationally, exposing it to the risk of
changes in foreign currency exchange rates. Derivative finan-
cial instruments are comprised principally of foreign currency
exchange contracts utilized by the Company and certain of its
subsidiaries to reduce the risk. Canon assesses foreign cur-
rency exchange rate risk by continually monitoring changes
in the exposures and by evaluating hedging opportunities.
Canon does not hold or issue derivative financial instruments
for trading purposes. Canon is also exposed to credit-related
losses in the event of non-performance by counterparties to
derivative financial instruments, but it is not expected that any
counterparties will fail to meet their obligations. Most of the
counterparties are internationally recognized financial institu-
tions and selected by Canon taking into account their financial
condition, and contracts are diversified across a number of
major financial institutions.
Canon’s international operations expose Canon to the risk
of changes in foreign currency exchange rates. Canon uses
foreign exchange contracts to manage certain foreign currency
exchange exposures principally from the exchange of U.S. dol-
lars and euros into Japanese yen. These contracts are primarily
used to hedge the foreign currency exposure of forecasted
intercompany sales and intercompany trade receivables which
are denominated in foreign currencies. In accordance with
Canon’s policy, a specific portion of foreign currency exposure
resulting from forecasted intercompany sales are hedged using
foreign exchange contracts which principally mature within
three months.
The following table provides information about Canon’s
major derivative financial instruments related to foreign cur-
rency exchange transactions existing as of December 31,
2024. All of the foreign exchange contracts described in the
following table have a contractual maturity date in 2025.
Millions of yen
U.S.$
Euro
Others
Total
Forwards to sell foreign currencies:
Contract amounts
67,380
99,991
12,995
180,366
Estimated fair value
(1,764)
(1,610)
(86)
(3,460)
Forwards to buy foreign currencies:
Contract amounts
8,363
1,456
9,017
18,836
Estimated fair value
291
66
(51)
306
CANON ANNUAL REPORT 2024
54
FINANCIAL OVERVIEW
Canon expects that fair value changes and cash flows result-
ing from reasonable near-term changes in interest rates will
be immaterial. Accordingly, Canon believes interest rate risk
is insignificant. See also Note 9 of the Notes to Consolidated
Financial Statements.
Changes in the fair value of derivative financial instruments
designated as cash flow hedges, including foreign exchange
contracts associated with forecasted intercompany sales,
are reported in accumulated other comprehensive income
(loss). These amounts are subsequently reclassified into earn-
ings in the same period as the hedged items affect earnings.
All amounts recorded in accumulated other comprehensive
income (loss) as of December 31, 2024 are expected to be
recognized in net sales over the next twelve months. Changes
in the fair value of a foreign exchange contract for the period
between the date that the forecasted intercompany sales
occur and its maturity date are recognized in earnings.
Canon has entered into certain foreign currency exchange
contracts to manage its foreign currency exposures. These
foreign currency exchange contracts have not been designated
as hedges. Accordingly, the changes in fair values of these
contracts are recorded in earnings immediately.
LOOKING FORWARD
Under the corporate philosophy of kyosei—living and working
together for the common good—Canon’s basic management
policy is to contribute to the prosperity and well-being of the
world while endeavoring to become a truly excellent global
corporation targeting continued growth and development.
Based on this basic management policy, Canon launched
the Excellent Global Corporation Plan in 1996 and, from
Phase I to Phase V, has worked to strengthen its management
base and improve corporate value. To achieve new growth,
Canon made “accelerating corporate portfolio transformation
through our productivity improvement and new businesses
creation” its basic policy under “Phase VI of the Excellent
Global Corporation Plan,” its five-year management plan
from 2021 to 2025. In 2021, Canon reorganized its product-
oriented business divisions into four industry-oriented business
groups that included commercial printing, medical, network
cameras and industrial equipment as new businesses, thereby
establishing a structure for enhancing business competitive-
ness and creating new drivers of growth.
In 2021, Canon reorganized its product-oriented business
divisions into four industry-oriented business groups that
included new businesses of commercial printing, medical,
network cameras, and industrial equipment, thereby establish-
ing a structure for enhancing business competitiveness and
creating new drivers of growth. Each industry-oriented busi-
ness group will concentrate investments in high-growth areas
and by strengthening and expanding these areas, Canon will
realize overall growth. In the first half of the five-year manage-
ment plan, impact of the COVID-19 pandemic remained, and
Canon was preoccupied with responding to shortages of semi-
conductors and other components, and logistical disruptions.
After entering 2023, however, as the situation settled down,
Canon resumed and accelerated its measures for growth, with
office MFDs, cameras and other existing businesses generating
profit, and sales growth coming from new businesses such as
semiconductor lithography equipment, medical equipment,
network cameras, and commercial printing.
Although Canon expects to continue operating its busi-
ness in a climate of political and economic uncertainty going
forward, Canon will maintain growth momentum and lay the
foundations to achieve even greater growth over the next five
years beginning in 2026 by ensuring all divisions, including
development, procurement, production and sales, work in a
concerted effort to implement the following priority measures.
1. Strengthen and expand industry-oriented
business groups
To promote business portfolio transformation, Canon will
thoroughly strengthen competitiveness and expand indus-
try-oriented business groups.
(1) Printing Group
Canon will meet diversified printing needs by taking advan-
tage of the strength of offering a wide variety of printing
equipment from printers for home use and for office use to
commercial printers.
As for digital commercial printing, our sales are growing.
This reflects the enhanced image quality and productivity
that have spread throughout the industry as Canon incor-
porates the feedback of customers who are printing com-
panies. Canon will develop sales channels through coop-
eration with Heidelberger Druckmaschinen AG, a leading
German company of offset printing equipment, while
expanding our business domain by making a full-scale
entry into the industrial printing field, specifically targeting
labels and packaging, which have high growth potential,
to accelerate growth.
As for office and home printing, since the market has
matured and is not expected to grow substantially, Canon
will work to increase market share by raising product com-
petitiveness, and review our structures of development,
production, and sales, to build a more effective organiza-
tion for higher profitability.
(2) Medical Group
Canon aims to establish a solid presence in the field of
diagnostic imaging equipment, which serves as the core
of the business. In addition to further expanding our
product lineup that is comparable to that of competitors
around the world, strengthening our sales capability and
presence overseas is an urgent issue. In the United States
which is a medically advanced country that has great
influence in the global market, while reinforcing our sales
structures by means of increasing our sales force and
other resources, Canon is collaborating with advanced
medical institutions and strengthening relationships with
CANON ANNUAL REPORT 2024
55
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FINANCIAL
SECTION
CORPORATE
DATA
medical practitioners who serve as key opinion leaders.
In addition, Photon Counting CT, the next generation CT,
is drawing increasing attention as many papers based
on Canon’s equipment have been published. Canon will
work to improve Canon’s presence by realizing the early
launch of Photon Counting CT.
In terms of profitability, Canon began taking action by
establishing the Medical Business Innovation Committee in
February 2024 to identify areas for improvement. Canon will
unify Canon Inc. and Canon Medical Systems Corporation
and improve efficiency in our development, production,
sales, and management operations for higher profitability.
(3) Imaging Group
As for digital cameras, it is important for us, as a leading
company of cameras, to continue to provide attractive
products to users, including younger generations, and
to stimulate the market going forward. Canon will offer
a lineup that satisfies both demand for still image pho-
tography from professional photographers and camera
enthusiasts, and for diverse video recording from social
media users. Demand for network cameras for surveillance
applications continues to increase to ensure safety and
security against disasters and crimes. At the same time, the
need for in-store marketing and for production control at
manufacturing sites are growing. Canon will accelerate its
growth by responding to diversifying demand.
(4) Industrial Group
Canon anticipates continuing market growth for semicon-
ductors driven by essential devices used in AI, IoT, electric
vehicles (EVs), and other technological innovations. And
due to this, demand for semiconductor lithography equip-
ment is anticipated to also increase. Recognizing the need
to significantly bolster production capacity to respond to
strong demand, Canon has started construction of a new
plant at our production site in Utsunomiya that is sched-
uled to become operational in 2025.
Canon is aiming to expand sale of “nanoimprint semi-
conductor manufacturing equipment” to further enhance
sales growth potential. Unlike conventional methods that
use light to expose circuit patterns, this system forms circuit
patterns by pressing a patterned mold like a stamp. Canon
is working with semiconductor manufacturers to evaluate
and test various types of patterning for mass production.
In addition, Canon is also proceeding with the devel-
opment of ArF lithography equipment with the aim of
launching it in the second half of 2025. Canon will expand
the coverage of semiconductor production process by
enhancing our lineup.
2. Promote production structure reform
In an uncertain and unstable global environment, the sup-
ply chain is the lifeline of a manufacturer, and from a stabil-
ity and sustainability perspective, Canon needs to review it.
Canon is seeking to achieve robust production and supply
systems by reorganizing our domestic and overseas produc-
tion sites and consolidating them in countries and regions
where Canon sees political and social stability. In addition,
Canon is working to improve the capacity utilization rates
of production sites and to promote the return of produc-
tion of high-value-added products to Japan. Canon will
also concentrate our efforts on automation and in-house
production technologies through collaboration among
design, production technology, and manufacturing sites,
while improving cost competitiveness.
3. Promote development innovations
Under such circumstances where the world is rapidly
changing and competition is becoming more severe, it is
important to swiftly launch products that are superior in
terms of quality and cost. At the development stage, which
is the starting point of such a plan, Canon will employ
concurrent development, which requires cooperation with
production technology and production sites for joint work,
at a company-wide level. Canon will also utilize digital
transformation (DX) and simulation technologies to reduce
development time and costs for prototypes, etc., with the
aim of further increasing development productivity. To
cultivate innovation personnel who support development,
Canon will develop and strengthen a system to certify
talented engineers as “top scientists” and “top engineers,”
while supporting skill improvements through CIST, an in-
house institution intended to develop software engineers.
4. Address cybersecurity risks
As for information security risks that are an increasing
global threat, while working on countermeasures against
information leakage from within the Group and cyberat-
tacks from outside, Canon is also taking other steps such
as raising the awareness of employees at a group wide
level. In the unlikely event that an information security
incident occurs, Canon has established a dedicated team,
CSIRT*, to deal with it promptly.
Furthermore, since Canon is working to boost the conve-
nience of our products and services by connecting them to
the cloud and smartphones via networks, as a key initia-
tive, Canon is also working on countermeasures against
cybersecurity risks, such as the leakage of personal and
confidential information, from the development stage.
* Computer Security Incident Response Team (general term for organiza-
tions to deal with incidents and accidents related to computer security)
CANON ANNUAL REPORT 2024
56
FINANCIAL OVERVIEW
Forward looking statements
The foregoing discussion and other disclosure in this report
contains forward-looking statements that reflect manage-
ment’s current views with respect to certain future events and
financial performance. Actual results may differ materially
from those projected or implied in the forward-looking state-
ments. Further, certain forward-looking statements are based
upon assumptions of future events that may not prove to be
accurate. The following important factors could cause actual
results to differ materially from those projected or implied in
any forward-looking statements: foreign currency exchange
rate fluctuations; the uncertainty of Canon’s ability to imple-
ment its plans to localize production and other measures to
reduce the impact of foreign currency exchange rate fluctua-
tions; uncertainty as to economic conditions in Canon’s major
markets; uncertainty of continued demand for Canon’s high-
value-added products; Canon’s ability to continue to develop
products and to market products that incorporate new tech-
nology on a timely basis, are competitively priced, and achieve
market acceptance; the possibility of losses resulting from
foreign currency transactions designed to reduce financial
risks from changes in foreign currency exchange rates; inven-
tory risk due to shifts in market demand; spread of infectious
diseases; uncertainty in the global economic environment,
including supply chain disruptions and rising inflation; and
geopolitical events such as the unfolding situation in Ukraine
and the Middle East, changes in the U.S. trade policy which
could affect businesses in the U.S. market.
CANON ANNUAL REPORT 2024
57
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SECTION
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DATA
Common Stock Price Range (Tokyo Stock Exchange) (Yen)
8,000
6,000
4,000
2,000
0
7,000
5,000
3,000
1,000
2017
2016
2015
2022
2021
2020
2019
2018
2023
2024
Millions of yen (except per share amounts)
2024
2023
2022
2021
Net sales:
Domestic
955,456
901,589
864,808
830,378
Overseas
3,554,365
3,279,383
3,166,606
2,682,979
Total
4,509,821
4,180,972
4,031,414
3,513,357
Percentage of previous year
107.9%
103.7%
114.7%
111.2%
Net income attributable to Canon Inc.
160,025
264,513
243,961
214,718
Percentage of sales
3.5%
6.3%
6.1%
6.1%
Advertising
44,384
52,570
45,986
36,812
Research and development expenses
337,348
331,914
306,730
287,338
Depreciation and amortization
235,465
238,676
226,492
221,246
Capital expenditure
256,267
231,725
183,291
179,000
Long-term debt, excluding current installments
205,075
2,954
2,417
179,750
Canon Inc. shareholders’ equity
3,380,273
3,353,022
3,113,105
2,873,773
Total assets
5,766,246
5,416,577
5,095,530
4,750,888
Per share data:
Net income attributable to Canon Inc.
shareholders per share:
Basic
165.53
264.20
236.71
205.35
Diluted
165.44
264.08
236.63
205.29
Dividend per share
155.00
140.00
120.00
100.00
Stock price:
High
5,274
3,912
3,516
2,938
Low
3,594
2,754
2,538
1,876
Average number of common shares in thousands
966,763
1,001,200
1,030,644
1,045,633
Number of employees
170,340
169,151
180,775
184,034
CANON ANNUAL REPORT 2024
58
TEN-YEAR FINANCIAL SUMMARY
Notes: 1. U.S. dollar amounts are translated from yen at the rate of U.S.$1 = JPY158, the approximate exchange rate on the Tokyo Foreign Exchange Market as
of December 30, 2024.
2. Canon adopted Accounting Standards Update (“ASU”) No. 2017-07 from the quarter beginning January 1, 2018. The adoption of the new presenta-
tion requirement of the service cost component and the other components of net benefit cost resulted in reclassification from cost of sales, and selling,
general and administrative expenses, and research and development expenses into other income (deductions) for the years ended December 31 from
2017 to 2015 respectively.
3. Depreciation and amortization and Capital expenditure are the total of tangible and intangible assets.
Thousands of U.S. dollars
(except per share amounts)
2020
2019
2018
2017
2016
2015
2024
806,305
872,534
869,577
884,828
706,979
714,280
$ 6,047,190
2,353,938
2,720,765
3,082,360
3,195,187
2,694,508
3,085,991
22,495,981
3,160,243
3,593,299
3,951,937
4,080,015
3,401,487
3,800,271
28,543,171
87.9%
90.9%
96.9%
119.9%
89.5%
102.0%
107.9%
83,318
124,964
252,441
242,081
150,334
219,943
1,012,816
2.6%
3.5%
6.4%
5.9%
4.4%
5.8%
3.5%
31,273
46,665
58,729
61,207
58,707
80,907
280,911
272,312
298,503
315,842
333,371
306,537
332,678
2,135,114
227,825
237,327
251,554
261,881
250,096
273,327
1,490,285
161,727
211,228
200,504
181,389
208,379
243,130
1,621,943
4,834
357,340
361,962
493,238
611,289
881
$ 1,297,943
2,575,031
2,685,496
2,820,644
2,863,986
2,776,327
2,959,929
21,394,133
4,625,614
4,771,918
4,902,955
5,201,626
5,142,279
4,431,720
36,495,228
79.37
116.79
233.80
223.03
137.66
201.41
$
1.05
79.35
116.77
233.78
223.03
137.66
201.40
1.05
80.00
160.00
160.00
160.00
150.00
150.00
0.98
3,099
3,338
4,395
4,472
3,656
4,539
33.38
1,627
2,687
2,876
3,218
2,780
3,402
22.75
1,049,802
1,069,957
1,079,753
1,085,439
1,092,071
1,092,018
181,897
187,041
195,056
197,776
197,673
189,571
CANON ANNUAL REPORT 2024
59
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
CANON ANNUAL REPORT 2024
60
FINANCIAL
S E C T I O N
Financial Section, consisting of consolidated financial
statements, management’s report on internal control over
financial reporting, and independent auditor’s report, is
the English translation of the annual securities report filed
under the Financial Instruments and Exchange Act of Japan.
62 Consolidated Balance Sheets
63 Consolidated Statements of Income
63 Consolidated Statements of Comprehensive Income
64 Consolidated Statements of Equity
65 Consolidated Statements of Cash Flows
66 Notes to Consolidated Financial Statements
108 Consolidated Supplementary Schedule
109 Management’s Report on Internal Control Over
Financial Reporting
110 Independent Auditor’s Report
CANON ANNUAL REPORT 2024
61
Millions of yen
ASSETS
2024
2023
Current assets:
Cash and cash equivalents (Notes 1 and 22)
501,565
401,323
Short-term investments (Notes 2 and 22)
4,775
3,822
Trade receivables (Note 3)
705,591
655,460
Inventories (Note 4)
841,836
796,881
Current lease receivables (Note 6)
167,612
150,324
Prepaid expenses and other current assets (Notes 15, 18 and 22)
245,665
231,605
Allowance for credit losses (Notes 3 and 6)
(16,961)
(15,329)
Total current assets
2,450,083
2,224,086
Noncurrent receivables (Note 20)
29,614
11,734
Investments (Notes 2 and 22)
113,241
78,505
Property, plant and equipment, net (Note 5)
1,147,380
1,095,879
Operating lease right-of-use assets (Note 19)
136,717
126,125
Intangible assets, net (Notes 7 and 8)
275,391
274,942
Goodwill (Notes 7 and 8)
915,258
1,045,400
Noncurrent lease receivables (Note 6)
363,749
321,065
Other assets (Notes 11 and 12)
339,569
242,659
Allowance for credit losses (Note 6)
(4,756)
(3,818)
Total assets
5,766,246
5,416,577
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans and current portion of long-term debt (Notes 9 and 21)
318,330
386,200
Short-term loans related to financial services
40,400
38,900
Other short-term loans and current portion of long-term debt
277,930
347,300
Trade payables (Note 10)
350,128
309,930
Accrued income taxes (Note 12)
78,438
56,983
Accrued expenses (Notes 11 and 20)
433,329
373,544
Current operating lease liabilities (Note 19)
41,876
35,559
Other current liabilities (Notes 5, 15, 18 and 22)
324,205
276,960
Total current liabilities
1,546,306
1,439,176
Long-term debt, excluding current portion of long-term debt (Notes 9 and 21)
205,075
2,954
Accrued pension and severance cost (Note 11)
166,153
171,779
Noncurrent operating lease liabilities (Note 19)
98,219
92,604
Other noncurrent liabilities (Notes 12 and 15)
105,442
104,357
Total liabilities
2,121,195
1,810,870
Equity:
Canon Inc. shareholders’ equity:
Common stock
174,762
174,762
(Number of authorized shares)
(3,000,000,000)
(3,000,000,000)
(Number of issued shares)
(1,333,763,464)
(1,333,763,464)
Additional paid-in capital (Note 13)
412,287
404,935
Legal reserve
61,893
61,634
Other retained earnings
3,818,668
3,801,212
Total retained earnings (Note 13)
3,880,561
3,862,846
Accumulated other comprehensive income (loss) (Note 14)
470,897
268,758
Treasury stock, at cost
(1,558,234)
(1,358,279)
(Number of shares)
(389,771,598)
(345,964,752)
Total Canon Inc. shareholders’ equity
3,380,273
3,353,022
Noncontrolling interests
264,778
252,685
Total equity
3,645,051
3,605,707
Total liabilities and equity
5,766,246
5,416,577
CANON ANNUAL REPORT 2024
62
CONSOLIDATED BALANCE SHEETS
Canon Inc. and Subsidiaries
December 31, 2024 and 2023
Millions of yen
2024
2023
Consolidated net income
182,874
284,421
Other comprehensive income (loss), net of tax (Note 14):
Foreign currency translation adjustments
145,724
184,836
Net unrealized gains and losses on securities
5
60
Net gains and losses on derivative instruments
(2,433)
1,394
Pension liability adjustments
66,990
24,289
210,286
210,579
Comprehensive income (loss)
393,160
495,000
Less: Comprehensive income attributable to noncontrolling interests
30,996
24,352
Comprehensive income (loss) attributable to Canon Inc.
362,164
470,648
Millions of yen
2024
2023
Net sales (Notes 6, 14, 15 and 18):
Products and Equipment
3,593,598
3,314,627
Services
916,223
866,345
4,509,821
4,180,972
Cost of sales (Notes 5, 8, 11 and 19):
Products and Equipment
1,933,783
1,799,211
Services
432,943
412,851
2,366,726
2,212,062
Gross profit
2,143,095
1,968,910
Operating expenses (Notes 1, 5, 8, 11, 14, 16, 19 and 20):
Selling, general and administrative expenses
1,360,893
1,261,630
Research and development expenses
337,348
331,914
Impairment losses on goodwill
165,100
—
1,863,341
1,593,544
Operating profit
279,754
375,366
Other income (deductions):
Interest and dividend income
15,602
13,425
Interest expense
(3,745)
(2,267)
Other, net (Notes 1, 2, 11, 14 and 18)
9,550
4,243
21,407
15,401
Income before income taxes
301,161
390,767
Income taxes (Notes 12 and 14)
118,287
106,346
Consolidated net income
182,874
284,421
Less: Net income attributable to noncontrolling interests
22,849
19,908
Net income attributable to Canon Inc.
160,025
264,513
Yen
Net income attributable to Canon Inc. shareholders per share (Note 17):
Basic
165.53
264.20
Diluted
165.44
264.08
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Canon Inc. and Subsidiaries
Years ended December 31, 2024 and 2023
CANON ANNUAL REPORT 2024
63
CONSOLIDATED STATEMENTS OF INCOME
Canon Inc. and Subsidiaries
Years ended December 31, 2024 and 2023
Millions of yen
Common
stock
Additional
paid-in
capital
Legal
reserve
Other
retained
earnings
Total
retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total
Canon Inc.
shareholders’
equity
Non-
controlling
interests
Total
equity
Balance at December 31, 2022
174,762
404,838
64,509
3,664,735
3,729,244
62,623
(1,258,362)
3,113,105
235,925
3,349,030
Equity transactions with noncontrolling
interests and other
158
(3,534)
3,534
—
158
(97)
61
Dividends to Canon Inc. shareholders
(130.00 yen per share)
(130,870)
(130,870)
(130,870)
(130,870)
Dividends to noncontrolling interests
(7,495)
(7,495)
Transfers to legal reserve
659
(659)
—
—
—
Comprehensive income:
Net income
264,513
264,513
264,513
19,908
284,421
Other comprehensive income (loss),
net of tax (Note 14):
Foreign currency translation adjustments
183,650
183,650
1,186
184,836
Net unrealized gains and losses on
securities
60
60
60
Net gains and losses on derivative
instruments
1,352
1,352
42
1,394
Pension liability adjustments
21,073
21,073
3,216
24,289
Total comprehensive income (loss)
470,648
24,352
495,000
Repurchases and reissuance of treasury stock
(61)
(41)
(41)
(99,917)
(100,019)
(100,019)
Balance at December 31, 2023
174,762
404,935
61,634
3,801,212
3,862,846
268,758
(1,358,279)
3,353,022
252,685
3,605,707
Equity transactions with noncontrolling
interests and other
7,410
(762)
(762)
6,648
(10,839)
(4,191)
Dividends to Canon Inc. shareholders
(145.00 yen per share)
(141,530)
(141,530)
(141,530)
(141,530)
Dividends to noncontrolling interests
(8,854)
(8,854)
Acquisition of subsidiaries
790
790
Transfers to legal reserve
259
(259)
—
—
—
Comprehensive income:
Net income
160,025
160,025
160,025
22,849
182,874
Other comprehensive income (loss),
net of tax (Note 14):
Foreign currency translation adjustments
144,424
144,424
1,300
145,724
Net unrealized gains and losses on
securities
5
5
5
Net gains and losses on derivative
instruments
(2,443)
(2,443)
10
(2,433)
Pension liability adjustments
60,153
60,153
6,837
66,990
Total comprehensive income (loss)
362,164
30,996
393,160
Repurchases and reissuance of treasury stock
(58)
(18)
(18)
(199,955)
(200,031)
(200,031)
Balance at December 31, 2024
174,762
412,287
61,893
3,818,668
3,880,561
470,897 (1,558,234) 3,380,273
264,778
3,645,051
CANON ANNUAL REPORT 2024
64
CONSOLIDATED STATEMENTS OF EQUITY
Canon Inc. and Subsidiaries
Years ended December 31, 2024 and 2023
Millions of yen
2024
2023
Cash flows from operating activities:
Consolidated net income
182,874
284,421
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Depreciation and amortization
235,465
238,676
Impairment losses on goodwill
165,100
—
Loss on disposal of fixed assets
1,271
4,025
Deferred income taxes
(14,571)
(10,353)
(Increase) decrease in trade receivables
(29,437)
16,625
(Increase) decrease in inventories
(6,865)
65,595
Increase in lease receivables (Note 6)
(18,216)
(24,838)
Increase (decrease) in trade payables
29,348
(57,631)
Increase in accrued income taxes
20,464
6,880
Increase (decrease) in accrued expenses
27,284
(16,083)
Decrease in accrued pension and severance cost
(32,639)
(32,208)
Contribution of cash to retirement benefit trust
—
(18,000)
Other, net
46,753
(5,919)
Net cash provided by operating activities
606,831
451,190
Cash flows from investing activities:
Purchases of fixed assets (Note 5)
(237,001)
(230,308)
Proceeds from sale of fixed assets (Note 5)
7,279
3,670
Purchases of securities
(13,812)
(11,755)
Proceeds from sale and maturity of securities
4,840
16,582
Acquisitions of businesses, net of cash acquired (Note 7)
(32,672)
(54,570)
Other, net
(25,956)
1,009
Net cash used in investing activities
(297,322)
(275,372)
Cash flows from financing activities:
Proceeds from issuance of long-term debt (Note 9)
200,000
—
Repayments of long-term debt (Note 9)
(2,297)
(55,893)
Increase (decrease) in short-term loans related to financial services, net (Note 9)
1,500
(2,300)
(Decrease) increase in other short-term loans, net (Note 9)
(70,960)
140,213
Dividends paid
(141,530)
(130,870)
Repurchases and reissuance of treasury stock, net
(200,031)
(100,019)
Other, net (Note 1)
(12,678)
(7,860)
Net cash used in financing activities
(225,996)
(156,729)
Effect of exchange rate changes on cash and cash equivalents
16,729
20,133
Net change in cash and cash equivalents
100,242
39,222
Cash and cash equivalents at beginning of period
401,323
362,101
Cash and cash equivalents at end of period
501,565
401,323
Supplemental disclosure for cash flow information:
Cash paid during the period for:
Interest
3,766
2,191
Income taxes
124,197
107,036
CANON ANNUAL REPORT 2024
65
CONSOLIDATED STATEMENTS OF CASH FLOWS
Canon Inc. and Subsidiaries
Years ended December 31, 2024 and 2023
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The Company issued convertible debentures in the United
States in May 1969 and established a program in which its
American Depositary Receipts (ADRs) are traded in the U.S.
over-the-counter market. Since then, under the U.S. Securities
Act of 1933 and the U.S. Securities Exchange Act of 1934, as
amended, the Company has prepared its annual consolidated
financial statements in accordance with U.S. GAAP and filed
them with the U.S. Securities and Exchange Commission on
Form 20-F. The Company’s ADRs were listed on the NYSE
in September 2000 after being quoted on NASDAQ from
February 1972 to September 2000. In March 2023, the
Company was delisted from the NYSE. The Company filed a
Form 15F for the termination of registration of its ADRs and
underlying common shares with the SEC and termination
of ongoing reporting obligations under the U.S. Securities
Exchange Act (the “Exchange Act”) on March 7, 2024. The
company’s ongoing reporting obligations under the Exchange
Act was immediately suspended upon filing the Form 15F with
the SEC and were terminated on June 5, 2024, 90 days after
the Form 15F was filed.
Canon’s consolidated financial statements are prepared in
accordance with U.S. GAAP.
The number of consolidated subsidiaries and affiliated com-
panies that were accounted for by the equity method as of
December 31, 2024 and December 31, 2023 are summarized
as follows:
December 31,
2024
December 31,
2023
Consolidated subsidiaries
334
336
Affiliated companies
10
10
Total
344
346
The main accounting principles, procedures, and presentation
methods adopted by Canon (Canon Inc. and its subsidiaries)
that differ from the Japanese consolidated financial statement
principles and regulations are as follows. For items of significant
monetary importance, Canon also disclose the impact on net
income before tax based on Japanese standards.
(i) The retirement benefits and pension plan are in accordance with ASC 715
“Compensation-Retirement Benefits,” and are recorded the pension cost
based on actuarial calculation. The effect of this change was ¥3,202 mil-
lion (decrease in profit) and ¥2,611 million (increase in profit) for the years
ended December 31, 2024 and 2023, respectively.
(ii) Share issuance cost is deducted from additional paid-in capital after tax
effects adjustment.
(iii) Derivatives is in accordance with ASC 815 “Derivatives and Hedging
Activities.”
(iv) Goodwill and other intangible assets with indefinite useful lives are in
accordance with ASC 350 “Intangibles - Goodwill and Other,” they are not
amortized but are instead tested for impairment at least annually. For the
year ended December 31, 2024, Canon recognized a goodwill impairment
loss of ¥165,100 million in the Medical Business Unit.
(v) Equity securities, in accordance with ASC 321 “Investments - Equity securi-
ties” are measured at fair value in principle, and the changes are recorded
in income before income taxes.
(vi) Leases, in accordance with ASC 842 “Leases,” operating lease right-of-use
assets and liabilities are recognized in the balance sheet based on the present
value of lease payments over the term of the lease. Lease costs are recog-
nized on a straight-line basis over the term of the lease.
(vii) Certain items in the consolidated statements of cash flows for the year
ended December 31, 2023, have been reclassified to conform to the pre-
sentation of year ended December 31, 2024.
(b) Description of Business
Canon reports in four reportable segments: the Printing
Business Unit, the Medical Business Unit, the Imaging
Business Unit and the Industrial Business Unit, with Others
and Corporate. Products of the Printing Business Unit consist
mainly of digital continuous feed presses, digital sheet-fed
presses, large format printers, office multifunction devices
(MFDs), document solutions, laser multifunction printers
(MFPs), laser printers, inkjet printers, image scanners and cal-
culators. Products of the Medical Business Unit consist mainly
of computed tomography (CT) Systems, diagnostic ultrasound
systems, diagnostic X-ray systems, magnetic resonance imag-
ing (MRI) systems, digital radiography systems, ophthalmic
equipment, in vitro diagnostic systems and reagents and
healthcare IT solutions. Products of the Imaging Business Unit
consist mainly of interchangeable-lens digital cameras, inter-
changeable lenses, digital compact cameras, compact photo
printers, MR systems, network cameras, video management
software, video content analytics software, digital camcorders,
digital cinema cameras and broadcast equipment. Products of
the Industrial Business Unit consist mainly of semiconductor
lithography equipment, FPD (Flat Panel Display) lithography
equipment, OLED display manufacturing equipment, vacuum
thin-film deposition equipment and die bonders. Others
consist mainly of handy terminals and document scanners.
Sales are made principally under the Canon brand name,
almost entirely through sales subsidiaries. These subsidiaries
are responsible for marketing and distribution, and primarily
sell to retail dealers in their geographic areas. Further segment
information is described in Note 23.
Canon sells laser printers on an OEM basis to HP Inc.; such
sales constituted 10.5% and 10.1% of consolidated net sales
for the years ended December 31, 2024 and 2023, respectively.
Canon’s manufacturing operations are conducted mainly in
Asia including Japan, and also in Europe and Americas.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of
the Company, its majority owned subsidiaries and those vari-
able interest entities where the Company or its consolidated
subsidiaries are the primary beneficiaries. All intercompany
balances and transactions have been eliminated.
(d) Use of Estimates
The preparation of the consolidated financial statements in
conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
CANON ANNUAL REPORT 2024
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Canon Inc. and Subsidiaries
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during
the period. Significant estimates and assumptions are reflected
in valuation and disclosure of accounts including: revenue
recognition, allowance for credit losses, inventories, securities,
long-lived assets, leases, goodwill and other intangible assets
with indefinite useful lives, environmental liabilities, deferred
tax assets, uncertain tax positions, employee retirement and
severance benefit obligations, accrued product warranty costs
and business combinations. Actual results could differ materi-
ally from those estimates. In addition, actual results and out-
comes of the Company may differ from management’s esti-
mates and assumptions due to pandemic, geopolitical risk and
economic slowdown including impacts of rising inflation.
(e) Translation of Foreign Currencies
Assets and liabilities of the Company’s subsidiaries located
outside Japan with functional currencies other than Japanese
yen are translated into Japanese yen at the rates of exchange
in effect at the balance sheet date. Income and expense items
are translated at the average exchange rates prevailing during
the year. Gains and losses resulting from translation of finan-
cial statements are excluded from earnings and are reported in
other comprehensive income (loss).
Gains and losses resulting from foreign currency transac-
tions and translation of assets and liabilities denominated in
foreign currencies are included in other income (deductions)
in the consolidated statements of income. Foreign currency
exchange gains and losses were net losses of ¥12,196 million
and ¥22,835 million for the years ended December 31, 2024
and 2023, respectively.
(f) Cash Equivalents
All highly liquid investments acquired with original maturities
of three months or less are considered to be cash equivalents.
Certain debt securities with original maturities of less than
three months, classified as available-for-sale debt securities of
¥1,500 million and ¥2,073 million at December 31, 2024 and
2023, respectively, are included in cash and cash equivalents
in the consolidated balance sheets.
(g) Investments
Investments consist primarily of time deposits with original
maturities of more than three months, debt and equity securi-
ties and investments in affiliated companies.
Canon classifies investments in debt securities as held-to-
maturity debt securities and available-for-sale securities. Canon
does not hold any trading securities which are bought and
held primarily for the purpose of sale in the near term. Canon
reports investments with maturities of less than one year as
short-term investments.
Available-for-sale debt securities and equity securities with
readily determinable fair value that are not accounted for under
the equity method are recorded at fair value which is deter-
mined based on quoted market prices, projected discounted
cash flows or other valuation techniques as appropriate. The
changes in fair value for equity securities are included in other,
net in the consolidated statements of income. The changes in
fair value for available-for-sale debt securities are included in
net unrealized gains and losses on securities in the consolidated
statements of comprehensive income.
Held-to-maturity debt securities are recorded at amortized
cost. The fair values of held-to-maturity debt securities are
mainly measured at the quoted market price.
Available-for-sale debt securities are regularly reviewed for
other-than-temporary declines in the carrying amount based
on criteria that include the length of time and the extent to
which the market value has been less than cost, the financial
condition and near-term prospects of the issuer and Canon’s
intent and ability to retain the investment for a period of time
sufficient to allow for any anticipated recovery in market value.
For available-for-sale debt securities for which the declines are
deemed to be other-than-temporary and there is no intent to
sell, the impairment is separated into the amount related to
credit loss, which is recognized in earnings and the amount
related to all other factors is recognized in other comprehen-
sive income (loss). For available-for-sale debt securities for
which the declines are deemed to be other-than-temporary
and there is an intent to sell, the impairment in its entirety is
recognized in earnings. Canon recognizes an impairment loss
to the extent the cost basis of the investment exceeds the fair
value of the investment.
Canon measures non-marketable equity securities without
readily determinable fair value at cost, minus impairment, if
any, plus or minus changes resulting from observable price
changes in orderly transactions for an identical or a similar
investment of the same issuer.
Realized gains and losses are determined by the average
cost method and reflected in earnings.
Investments in affiliated companies over which Canon has
the ability to exercise significant influence, but does not hold
a controlling financial interest, are accounted for using the
equity method.
(h) Allowance for Credit Losses
Allowance for Credit Losses for trade and lease receivables
is maintained for all customers based on ASC 326 “Financial
Instruments – Credit Losses,” based on historical experiences
of credit losses and reasonable and supportable forecasts. An
additional reserve for individual accounts is recorded when
Canon becomes aware of a customer’s inability to meet its
financial obligations, such as in the case of bankruptcy filings.
If circumstances related to customers change, estimates of the
recoverability of receivables would be further adjusted. When
all collection options are exhausted including legal recourse,
the accounts or portions thereof are deemed to be uncollect-
able and charged against the allowance.
(i) Inventories
Inventories are stated at the lower of cost or net realizable
CANON ANNUAL REPORT 2024
67
STRATEGY
BUSINESS
STRATEGY
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FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
value. Cost is determined by the average method for domestic
inventories and principally by the first-in, first-out method for
overseas inventories.
(j) Impairment of Long-Lived Assets
Long-lived assets, such as property, plant and equipment,
and acquired intangible assets subject to amortization, are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount
of the asset and the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount
of the asset exceeds its estimated sum of undiscounted future
cash flows, an impairment loss is recognized in the amount by
which the carrying amount of the asset exceeds the fair value
of the asset. Assets to be disposed of by sale are reported at
the lower of the carrying amount or fair value less costs to sell,
and are no longer depreciated.
(k) Property, Plant and Equipment, net
Property, plant and equipment are stated at cost less accumu-
lated depreciation. Depreciation is calculated principally by the
declining-balance method, except for certain assets which are
depreciated by the straight-line method over the estimated
useful lives of the assets.
The depreciation period ranges from 3 years to 60 years for
buildings and 1 year to 20 years for machinery and equipment.
Gains and losses from the sale of property, plant and
equipment are included in selling, general and administrative
expenses in the consolidated statements of income.
(l) Leases
As for lessor accounting, Canon provides leasing arrange-
ments to its customers primarily for the sale of office products.
Revenue from the sale of these products under sales-type
leases is recognized at the inception of the lease. Interest
income on sales-type leases and direct-financing leases is
recognized over the life of each respective lease using the
interest method. Leases not qualifying as sales-type leases or
direct-financing leases are accounted for as operating leases
and related revenue is recognized ratably over the lease term.
When product leases are bundled with maintenance contracts,
revenue is allocated based upon the estimated standalone
selling prices of the lease and non-lease components. Lease
components generally include product and financing while
non-lease components generally consist of maintenance
contracts and supplies. Some of the contracts include options
to extend or to terminate the lease. Canon takes such options
into account to determine the lease term when it is reasonably
certain that customers will exercise these options. The majority
of Canon’s lease contracts do not contain bargain purchase
options for their customers. Assets leased to others under
operating leases are stated at cost and depreciated to the esti-
mated residual value of the assets by the straight-line method
over a period of generally 2 years to 50 years.
As for lessee accounting, Canon has operating and finance
leases for various assets including office buildings, warehouses,
employees’ accommodations, and vehicles. Canon determines
if an arrangement is a lease at the inception of each contract.
Some of the contracts include options to extend or to ter-
minate the lease. Canon takes such options into account to
determine the lease term when it is reasonably certain that it
will exercise these options. Canon’s lease arrangements do not
contain material residual value guarantees or material restric-
tive covenants. As a rate implicit in the most of Canon’s leases
cannot be determined, Canon uses incremental borrowing
rates based on the information available at commencement
to determine the present values of lease payments. Canon has
lease contracts with lease and non-lease components, which
are accounted for separately. Canon allocates the consideration
in the lease contract to the lease and non-lease components
based upon the estimated standalone prices. Costs associated
with operating lease assets are recognized on a straight-line
basis over the term of the lease.
(m) Goodwill and Other Intangible Assets
Goodwill and other intangible assets with indefinite useful
lives are not amortized, but are instead tested for impairment
annually in the fourth quarter of each year, or more frequently
if indicators of potential impairment exist. All goodwill is
assigned to the reporting unit or units that benefit from the
synergies arising from each business combination. If the car-
rying amount assigned to the reporting unit exceeds the fair
value of the reporting unit, Canon recognizes an impairment
loss in an amount equal to that excess, limited to the total
amount of goodwill allocated to that reporting unit.
Intangible assets with finite useful lives consist primarily
of software, trademarks, patents and developed technology,
license fees and customer relationships, which are amortized
using the straight-line method. The estimated useful lives of
software are from 3 years to 9 years, trademarks are 15 years,
patents and developed technology are from 5 years to 21
years, license fees are 7 years, and customer relationships are
from 11 years to 19 years. Certain costs incurred in connec-
tion with developing or obtaining internal-use software are
capitalized. These costs consist primarily of payments made to
third parties and the salaries of employees working on such
software development. Costs incurred in connection with
developing internal-use software are capitalized at the appli-
cation development stage. In addition, Canon capitalizes the
cost which was incurred subsequent to the stage of assuring
the technological feasibility of the software, either developed
or acquired, for marketing purposes.
(n) Environmental Liabilities
Liabilities for environmental remediation and other environ-
mental costs are accrued when environmental assessments or
remedial efforts are probable and the costs can be reasonably
estimated, and are included in other noncurrent liabilities in
CANON ANNUAL REPORT 2024
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the consolidated balance sheets. Such liabilities are adjusted
as further information develops or circumstances change.
Costs of future obligations are not discounted to their
present values.
(o) Income Taxes
Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and oper-
ating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those tem-
porary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes
the enactment date. Canon records a valuation allowance
to reduce the deferred tax assets to the amount that is more
likely than not realizable.
Canon recognizes the financial statement effects of tax
positions when it is more likely than not, based on the
technical merits, that the tax positions will be sustained
upon examination by the tax authorities. Benefits from tax
positions that meet the more-likely-than-not recognition
threshold are measured at the largest amount of benefit that
is greater than 50% likely of being realized upon settlement.
Interest and penalties accrued related to unrecognized tax
benefits are included in income taxes in the consolidated
statements of income.
(p) Stock-Based Compensation
Canon measures stock-based compensation cost at the grant
date, based on the fair value of the award, and recognizes the
cost on a straight-line basis over the requisite service period,
which is the vesting period.
(q) Net Income Attributable to Canon Inc.
Shareholders per Share
Basic net income attributable to Canon Inc. shareholders
per share is computed by dividing net income attributable to
Canon Inc. shareholders by the weighted-average number
of common shares outstanding during each year. Diluted net
income attributable to Canon Inc. shareholders per share
includes the effect from potential issuances of common stock
based on the assumptions that all stock options were exercised.
(r) Revenue Recognition
Canon generates revenue mainly through the sale of products
of the Printing Business Unit, the Medical Business Unit, the
Imaging Business Unit and the Industrial Business Unit, sup-
plies and related services under separate contractual arrange-
ments. Revenue is recognized when, or as, control of prom-
ised goods or services transfers to customers in an amount
that reflects the consideration to which Canon expects to be
entitled in exchange for transferring these goods or services.
For further information, please refer to Note 15.
(s) Research and Development Costs
Research and development costs are expensed as incurred.
(t) Advertising Costs
Advertising costs are expensed as incurred. Advertising
expenses were ¥44,384 million and ¥52,570 million for the
years ended December 31, 2024 and 2023, respectively, and
are included in selling, general and administrative expenses in
the consolidated statements of income.
(u) Shipping and Handling Costs
Shipping and handling costs totaled ¥69,956 million and
¥64,707 million for the years ended December 31, 2024 and
2023, respectively, and are included in selling, general and
administrative expenses in the consolidated statements of
income.
(v) Derivative Financial Instruments
All derivatives are recognized at fair value and are included in
prepaid expenses and other current assets, or other current
liabilities in the consolidated balance sheets.
Canon uses and designates certain derivatives as a hedge
of a forecasted transaction or the variability of cash flows to
be received or paid related to a recognized asset or liability
(“cash flow” hedge). Canon formally documents all relation-
ships between hedging instruments and hedged items, as well
as its risk-management objective and strategy for undertaking
various hedge transactions. Canon also formally assesses, both
at the hedge’s inception and on an ongoing basis, whether
the derivatives that are used in hedging transactions are highly
effective in offsetting changes in cash flows of hedged items.
When it is determined that a derivative is not highly effective
as a hedge or that it has ceased to be a highly effective hedge,
Canon discontinues hedge accounting prospectively. Changes
in the fair value of a derivative that is designated and qualifies
as a cash flow hedge are recorded in other comprehensive
income (loss), until earnings are affected by the variability in
cash flows of the hedged item, and reclassified in the same
income statement line item in which the earnings effect of the
hedged item is reported.
Canon also uses certain derivative financial instruments
which are not designated as hedges. The changes in fair val-
ues of these derivative financial instruments are immediately
recorded in earnings.
Canon classifies cash flows from derivatives as cash flows
from operating activities in the consolidated statements of
cash flows.
(w) Guarantees
Canon recognizes, at the inception of a guarantee, a liability
for the fair value of the obligation it has undertaken in
issuing guarantees.
CANON ANNUAL REPORT 2024
69
STRATEGY
BUSINESS
STRATEGY
ESG
FINANCIAL
OVERVIEW
FINANCIAL
SECTION
CORPORATE
DATA
(x) Recent Accounting Guidance
Recently adopted accounting guidance
In November 2023, ASU No. 2023-07, “Improvements
to Reportable Segment Disclosures”-ASC 280 (“Segment
Reporting”), was issued by the Financial Accounting Standards
Board (“FASB”). The standard requires us to disclose significant
segment expenses by reportable segment if they are regularly
provided to the chief operating decision maker (CODM) and to
provide a qualitative disclosure describing the composition of
the other segment items. Also, all existing annual disclosures
about segment profit or loss must be provided on an interim
basis in addition to disclosures of significant segment expenses
and other segment items as noted above. Canon adopted
the standard from the end of the year beginning January 1,
2024 and retrospectively to all prior periods presented in the
financial statements. The standard’s requirement on an interim
basis is effective for interim reporting periods beginning after
December 15, 2024. The adoption of this standard did not
have a material impact on its disclosure.
For further information, please refer to Note 23.
Recently issued accounting guidance not yet adopted
In December 2023, ASU No. 2023-09, “Improvements to
Income Tax Disclosures”-ASC 740 (“Income Taxes”), was
issued by FASB. The standard requires us to disclose certain
categories in the tax rate reconciliation table, the amount of
corporate income tax paid (domestic and foreign), income
from continuing operations before income tax (domestic and
foreign), and income tax expense from continuing operations
(domestic and foreign). The standard is effective for annual
reporting periods beginning after December 15, 2024. Canon
is currently evaluating the effect that the adoption of the stan-
dard will have on its disclosure information. Canon does not
expect the adoption of the standard will have an effect on its
consolidated results of operation and financial condition.
In November 2024, ASU No. 2024-03, “Disaggregation
of Income Statement Expenses”-ASC 220-40 (“Income
Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures”), was issued by FASB. This stan-
dard requires us to disclose in a tabular format in the foot-
notes to the financial statements, disaggregated information
about specific categories underlying certain income statement
expense line items that contains any of the following five
costs or expenses: purchases of inventory, employee compen-
sation, depreciation, intangible asset amortization, and deple-
tion. Specified expenses, gains, or losses that may require
disclosure under existing U.S. GAAP, and that are recorded
in relevant expense captions, would need to be presented in
the same tabular disclosure. The standard also requires us to
disclose a qualitative description of the amounts remaining
in relevant expense captions that are not separately disag-
gregated quantitatively. In addition, the standard requires us
to disclose the total amount of selling expenses, in annual
reporting periods, its definition of selling expenses. The stan-
dard is effective for annual reporting periods beginning after
December 15, 2026, and interim reporting periods begin-
ning after December 15, 2027. Canon is currently evaluating
the effect that the adoption of the standard will have on its
disclosure information. Canon does not expect the adoption
of the standard will have an effect on its consolidated results
of operation and financial condition.
2. INVESTMENTS
Held-to-maturity debt securities included in short-term investments in the accompanying consolidated balance sheet were ¥142
million at December 31, 2024. There were no held-to-maturity debt securities at December 31, 2023.
Millions of yen
Carrying amount
Estimated fair value
Difference
Due within one year
142
142
—
The cost, gross unrealized holding gains, gross unrealized holding losses and fair value for available-for-sale debt securities
included in short-term investments and investments by major security type at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Current:
Corporate bonds
—
—
—
—
Noncurrent:
Corporate bonds
16,636
96
53
16,679
16,636
96
53
16,679
CANON ANNUAL REPORT 2024
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31
Millions of yen
2023
Cost
Gross unrealized
holding gains
Gross unrealized
holding losses
Fair value
Current:
Corporate bonds
883
1
—
884
Noncurrent:
Corporate bonds
8,242
56
19
8,279
9,125
57
19
9,163
Maturities of available-for-sale debt securities included in short-term investments and investments in the accompanying con-
solidated balance sheets at December 31, 2024 are as follows:
Millions of yen
Fair value
Due within one year
—
Due after one year through five years
16,679
Total
16,679
The unrealized and realized gains and losses related to equity securities for the years ended December 31, 2024 and 2023 are
as follows:
December 31
Millions of yen
2024
2023
Net gains (losses) recognized during the period on equity securities
(3,081)
8,323
Less: Net gains (losses) recognized during the period on equity securities sold
during the period
(6)
126
Unrealized gains (losses) recognized during the period on equity securities still
held at December 31
(3,075)
8,197
The carrying amount of non-marketable equity securities
without readily determinable fair value totaled ¥11,067 million
and ¥10,282 million at December 31, 2024 and 2023, respec-
tively. The impairment or other adjustments resulting from
observable price changes recorded during the years ended
December 31, 2024 and 2023 were not significant.
Time deposits with original maturities of more than three
months or less than one year are ¥4,633 million and ¥2,938
million at December 31, 2024 and 2023, respectively, and are
included in short-term investments in the accompanying con-
solidated balance sheets. Time deposits with original maturi-
ties of more than one year are ¥26,665 million at December
31, 2024, and are included in investments in the accompany-
ing consolidated balance sheets. There were no time deposits
more than one year as of December 31, 2023.
Investments in affiliated companies accounted for by the equity method for the years ended December 31, 2024 and 2023 are
as follows:
December 31
Millions of yen, except percentage data
2024
Voting rights held
by Canon Inc.
2024
2023
Canon Korea Inc.
50%
15,485
15,424
Others
—
13,496
13,166
—
28,981
28,590
The difference between the carrying amount of investment in
each affiliate and Canon’s share of its net assets is immaterial.
Share of profit of investments accounted for equity method
included in other income (deductions) of consolidated
statement of income, were gains of ¥729 million for the year
ended December 31, 2024, and earnings of losses of ¥485
million for the years ended December 31, 2023.
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3. TRADE RECEIVABLES
Trade receivables at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
2023
Notes
33,541
33,570
Accounts
672,050
621,890
Trade receivables
705,591
655,460
Allowance for credit losses
(14,856)
(13,276)
690,735
642,184
4. INVENTORIES
Inventories at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
2023
Finished goods
521,961
468,394
Work in process
250,939
255,849
Raw materials
68,936
72,638
841,836
796,881
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
2023
Land
286,826
283,530
Buildings
1,905,387
1,851,645
Machinery and equipment
2,043,569
1,983,907
Construction in progress
105,917
56,840
Finance lease right-of-use assets
9,008
8,606
Cost
4,350,707
4,184,528
Less accumulated depreciation
(3,203,327)
(3,088,649)
Property, plant and equipment, net
1,147,380
1,095,879
Depreciation expenses for the years ended December 31,
2024 and 2023 were ¥175,636 million, and ¥177,624 million,
respectively.
Amounts due for purchases of property, plant and equip-
ment were ¥46,010 million and ¥26,322 million at December
31, 2024 and 2023, respectively, and are included in other
current liabilities in the accompanying consolidated balance
sheets. Fixed assets presented in the consolidated statements
of cash flows include property, plant and equipment and
intangible assets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LESSOR ACCOUNTING
Lease income is included in products and equipment sales in the accompanying consolidated statements of income. Income state-
ment information about lease income is as follows:
Years ended December 31
Millions of yen
2024
2023
Lease income – sales-type and direct financing leases
Revenue at lease commencement
159,132
162,464
Interest income on lease receivables
32,680
26,789
Sales-type and direct financing leases income total
191,812
189,253
Lease income – operating leases
41,890
40,248
Variable lease income
7,438
5,822
Total lease income
241,140
235,323
Lease Receivables
Lease receivables represent financing leases, which consist of
sales-type leases and direct financing leases. These receivables
typically have terms ranging from 1 year to 20 years. Lease
receivables within one year and more than one year are pre-
sented in current lease receivables and noncurrent lease receiv-
ables in the accompanying consolidated balance sheets, respec-
tively. The components of the lease receivables are as follows:
December 31
Millions of yen
2024
2023
Total minimum lease payments receivable
585,136
511,737
Unguaranteed residual values
14,337
13,613
Executory costs
—
—
Unearned income
(68,112)
(53,961)
531,361
471,389
Allowance for credit losses
(6,861)
(5,871)
524,500
465,518
Current portion
(165,245)
(148,271)
359,255
317,247
Allowance for Credit Losses
The activities in the allowance for credit losses at December 31, 2024 and 2023 are as follows:
Years ended December 31
Millions of yen
2024
2023
Balance at beginning of year
5,871
5,596
Write-offs
(4,456)
(2,339)
Provision
4,096
2,075
Translation adjustments and other
1,350
539
Balance at end of year
6,861
5,871
Canon has policies in place to ensure that its products
are sold to customers with an appropriate credit history and
continuously monitors its customers’ credit quality based on
information including length of period in arrears, macroeco-
nomic conditions, initiation of legal proceedings against cus-
tomers and bankruptcy filings. The allowance for credit losses
of lease receivables is evaluated collectively based on historical
experiences of credit losses and reasonable and supportable
forecasts. An additional reserve for individual accounts is
recorded when Canon becomes aware of a customer’s inability
to meet its financial obligations, such as in the case of bank-
ruptcy filings. Lease receivables which are past due or individu-
ally evaluated for impairment at December 31, 2024 and 2023
are not significant.
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Equipment leased to customers
The costs of equipment leased to customers under operat-
ing leases included in property, plant and equipment, net at
December 31, 2024 and 2023 were ¥183,343 million and
¥181,022 million, respectively. Accumulated depreciation on
equipment under operating leases at December 31, 2024
and 2023 were ¥102,887 million and ¥101,515 million,
respectively.
Maturity Analysis
The following is a schedule by year of the future minimum lease payments to be received under finance leases and non-cancellable
operating leases at December 31, 2024.
Year ending December 31:
Millions of yen
Financing leases
Operating leases
2025
199,099
13,888
2026
155,983
7,617
2027
114,747
5,336
2028
70,931
2,378
2029
30,656
1,044
Thereafter
13,720
646
585,136
30,909
Information about transferring lease receivables
Canon has syndication arrangements to sell its entire
interests in lease receivables to the third-party financial
institutions. The transactions under the arrangements
are accounted for as sales in accordance with ASC 860
“Transfers and Servicing.” The transfers of lease receivables
for the year ended December 31, 2024 and 2023 were
¥34,007 million and ¥45,775 million. The amount that
remained uncollected was ¥72,969 million and ¥50,453
million at December 31, 2024 and 2023, respectively. Cash
proceeds from the transactions are included in increase in
lease receivables under the cash flow from operating activi-
ties in the consolidated statements of cash flows. Canon
continues to provide collection and administrative services
for the financial institutions. The amount associated with
the servicing liability measured at fair value was not signifi-
cant at December 31, 2024 and 2023. Canon also retains
limited recourse obligations which cover credit defaults. The
recourse obligations were not significant at December 31,
2024 and 2023.
7. ACQUISITIONS
On March 29, 2024, Canon Marketing Japan Inc., a subsid-
iary of the Company, acquired 100% of the issued shares of
Primagest, Inc. for cash consideration of ¥37,000 million so that
Primagest, Inc. and its three subsidiaries (hereinafter referred to
collectively as “Primagest”) became its owned subsidiaries.
The acquisition will enable Canon to further expand BPO
business by enhancing operational efficiency and service
quality through the use of Primagest’s knowledge and know-
how, and to create new services by combining its technology
and system development capabilities cultivated through video
solutions and digital document services.
The acquisition was accounted for using the acquisi-
tion method of accounting. Acquisition-related costs were
expensed as incurred and were not material.
CANON ANNUAL REPORT 2024
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The final allocation of the purchase price to the assets acquired and the liabilities assumed on the acquisition date was as follows:
Millions of yen
Current assets
8,617
Intangible assets
17,259
Goodwill
19,715
Others
3,734
Assets acquired
49,325
Liabilities assumed
12,307
Noncontrolling interests
(18)
Net assets acquired
37,000
The intangible assets acquired, which are subject to amorti-
zation, are composed of ¥16,219 million of customer relation-
ships and ¥1,040 million of software. The weighted average
useful lives of the customer relationships, patents and devel-
oped technology, and software are approximately 19 years and
approximately 5 years, respectively. The weighted average use-
ful life of the total intangible assets is approximately 18 years.
Goodwill is composed of future excess profitability expected
from business development which is not tax deductible. For
management reporting purposes, goodwill is not allocated to
the business unit. The goodwill is allocated to the reporting
unit belonging to the Printing Business Unit for impairment
testing. Net sales and net income of Primagest generated from
the acquisition date which is reflected in the consolidated
statement of income for the year ended December 31, 2024
was not material. The operating results with the assump-
tion of including the financial statements of Primagest in
Canon’s consolidated financial statements for the year ended
December 31, 2023 and the year beginning on January 1,
2024 were not disclosed because the impact was not material.
On July 3, 2023, Canon Medical Systems Corporation, a
subsidiary of the Company, acquired 100% of the issued
shares of Minaris Medical Co., Ltd. and Minaris Medical
America, Inc., (hereinafter referred to collectively as “Minaris
Medical”) from Resonac Corporation for cash consideration of
¥33,418 million.
In the medical business, Canon is working to strengthen
its core business of diagnostic imaging systems, while also
working to expand into areas such as healthcare IT and in-
vitro diagnostics. This acquisition will allow synergy between
Minaris Medical’s diverse solutions in the in-vitro diagnostics
business, and Canon’s technologies in the fields of automated
biochemical analyzers, diagnostic imaging, and healthcare
IT. By leveraging this synergy, Canon will be able to provide
added value to meet the demands of the market.
The acquisition was accounted for using the acquisi-
tion method of accounting. Acquisition-related costs were
expensed as incurred and were not material.
The final allocation of the purchase price to the assets acquired and the liabilities assumed on the acquisition date was as follows:
Millions of yen
Current assets
9,249
Intangible assets
8,394
Goodwill
17,842
Others
5,365
Assets acquired
40,850
Liabilities assumed
7,432
Net assets acquired
33,418
The intangible assets acquired, which are subject to amorti-
zation, are composed of ¥6,416 million of customer relation-
ships, ¥1,949 million of patents and developed technology and
¥26 million of software. The weighted average useful lives of
the customer relationships, patents and developed technology,
and software are approximately 21 years, approximately 10
years and 5 years, respectively. The weighted average useful
life of the total intangible assets is approximately 17 years. The
intangible assets acquired, which are not subject to amortiza-
tion, composed by ¥3 million of other intangible assets.
Goodwill is composed of the synergy effects of merging
Minaris Medical and Canon which is not tax deductible. For
management reporting purposes, goodwill is not allocated to
the business unit. The goodwill is allocated to the reporting
unit belonging to the Medical Business Unit for impairment
testing. Net sales and net income of Minaris Medical generated
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from the acquisition date which is reflected in the consolidated
statement of income for the year ended December 31, 2023
was not material.
The operating results with the assumption of including the
financial statements of Minaris Medical in Canon’s consolidated
financial statements the year beginning on January 1, 2023
were not disclosed because the impact was not material.
On October 2, 2023, Canon Marketing Japan Inc., a subsid-
iary of the Company, acquired 93.10% of the issued shares
of Tokyo Nissan Computer System Co., Ltd. (currently, TCS
Co., Ltd., changed the company name on November 1, 2023,
“TCS”) excluding treasury stock through a public tender offer
for cash consideration of ¥10,249 million in order to expand
its IT solution business. In addition, on November 1, 2023, it
acquired 6.90% of the issued shares of the acquired company
through a squeeze out so that the acquired company became
its wholly owned subsidiary company for a total cash consider-
ation of ¥11,009 million.
The acquisition was accounted for using the acquisition
method of accounting. Acquisition-related costs were expensed
as incurred and were not material.
The final allocation of the purchase price to the assets acquired and the liabilities assumed on the acquisition date was as follows:
Millions of yen
Current assets
4,476
Intangible assets
3,841
Goodwill
4,579
Others
707
Assets acquired
13,603
Liabilities assumed
2,594
Net assets acquired
11,009
The intangible assets acquired are composed of ¥3,712
million of customer relationships and ¥129 million of software,
and are subject to amortization. The weighted average use-
ful lives of the customer relationships and the software are 15
years and 5 years, respectively. The weighted average useful
life of the total intangible assets is approximately 15 years.
Goodwill is composed of future excess profitability expected
from business development which is not tax deductible. For
management reporting purposes, goodwill is not allocated to
the business unit. The goodwill is allocated to the reporting
unit belonging to the Printing Business Unit for impairment
testing. Net sales and net income of TCS generated from the
acquisition date which is reflected in the consolidated state-
ment of income for the year ended December 31, 2023 was
not material. The operating results with the assumption of
including the financial statements of TCS in Canon’s consoli-
dated financial statements for the year beginning on January 1,
2023 were not disclosed because the impact was not material.
CANON ANNUAL REPORT 2024
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets subject to amortization acquired during the
year ended December 31, 2024, including those recorded
from businesses acquired as stated in Note 7, totaled ¥49,961
million, which primarily consist of software of ¥33,501 mil-
lion. The weighted average amortization periods for intangible
assets in total acquired during the year ended December 31,
2024 are approximately 9 years. The weighted average amor-
tization period for software acquired during the year ended
December 31, 2024 is approximately 5 years.
Intangible assets subject to amortization acquired during
the year ended December 31, 2023, including those recorded
from business acquired as stated in Note 7, totaled ¥42,820
million, which primarily consist of software of ¥30,064 mil-
lion. The weighted average amortization periods for intangible
assets in total acquired during the year ended December 31,
2023 are approximately 8 years. The weighted average amor-
tization period for software acquired during the year ended
December 31, 2023 is approximately 5 years.
The components of intangible assets subject to amortization at December 31, 2024 and 2023 were as follows:
December 31
Millions of yen
2024
2023
Gross carrying
amount
Accumulated
amortization
Gross carrying
amount
Accumulated
amortization
Software
490,350
376,658
463,275
357,657
Customer relationships
192,672
97,407
174,441
84,223
Patents and developed technology
129,278
88,792
129,418
79,273
Trademarks
53,409
34,326
51,540
30,655
License fees
6,124
4,713
12,474
10,407
Other
16,635
11,194
16,158
12,341
888,468
613,090
847,306
574,556
Aggregate amortization expenses for the years ended
December 31, 2024 and 2023 were ¥61,259 million, ¥61,052
million, respectively. Estimated amortization expense at
December 31, 2024, for intangible assets currently held for
the next five years are ¥58,030 million in 2025, ¥50,742 mil-
lion in 2026, ¥36,529 million in 2027, and ¥30,830 million in
2028, and ¥25,206 million in 2029.
Intangible assets not subject to amortization other than
goodwill at December 31, 2024 and 2023 were not significant.
For management reporting purposes, goodwill is not allo-
cated to the reporting unit. Goodwill has been allocated to its
respective reporting unit for impairment testing.
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The changes in the carrying amount of goodwill by segment for the years ended December 31, 2024 and 2023 were as follows:
Year ended December 31
Millions of yen
2024
Printing
Medical
Imaging
Industrial
Others and
Corporate
Total
Goodwill - gross
176,067
565,687
331,334
11,730
701
1,085,519
Accumulated impairment losses
(40,119)
—
—
—
—
(40,119)
Balance at beginning of year
135,948
565,687
331,334
11,730
701
1,045,400
Goodwill acquired during the year
19,715
—
—
—
—
19,715
Impairment loss*
—
(165,100)
—
—
—
(165,100)
Translation adjustments and other
5,307
2,544
6,057
1,353
(18)
15,243
Goodwill - gross
203,081
568,231
337,391
13,083
683
1,122,469
Accumulated impairment losses
(42,111)
(165,100)
—
—
—
(207,211)
Balance at end of year
160,970
403,131
337,391
13,083
683
915,258
Year ended December 31
Millions of yen
2023
Printing
Medical
Imaging
Industrial
Others and
Corporate
Total
Goodwill - gross
157,561
542,695
296,825
10,975
693
1,008,749
Accumulated impairment losses
(36,123)
—
—
—
—
(36,123)
Balance at beginning of year
121,438
542,695
296,825
10,975
693
972,626
Goodwill acquired during the year
4,579
17,842
—
—
—
22,421
Translation adjustments and other
9,931
5,150
34,509
755
8
50,353
Goodwill - gross
176,067
565,687
331,334
11,730
701
1,085,519
Accumulated impairment losses
(40,119)
—
—
—
—
(40,119)
Balance at end of year
135,948
565,687
331,334
11,730
701
1,045,400
* Canon considers the medical related market to be stable and growing in the long term. However, it is difficult to achieve the plan set at the time of acquisi-
tion in the short term due to stagnation of limited businesses led by rising geopolitical risks, prolonged economic downturn in China, and deterioration of the
financial situation of medical institutions in Japan. Additionally, in February 2024, Canon established the Medical Business Advancement Committee, initiating
fundamental structural reforms aimed at improving profitability, based on the synergy between CMSC and Canon. These factors resulted in lower operating
margin than expected, which led to the decline in the estimated fair value of this business which was determined based on the income approach. As the result
of the annual goodwill impairment test as of October 1, 2024, it was determined that the estimated fair value of commercial printing business was less than its
carrying value of the reporting unit. Based on the accounting policy described in Note 1, Canon recognized an impairment loss of ¥165,100 million representing
the excess of the carrying amount over the reporting unit’s fair value.
CANON ANNUAL REPORT 2024
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SHORT-TERM LOANS AND LONG-TERM DEBT
Short-term loans related to financial services are external loans
held by Canon’s lease subsidiaries for the purpose of financ-
ing its customers through loans. Short-term loans related to
financial services consisting of bank loans at December 31,
2024 and 2023 were ¥40,400 million and ¥38,900 million,
and other short-term loans consisting of bank loans were
¥276,106 million and ¥346,005 million respectively. The
weighted average interest rate on short-term loans outstand-
ing at December 31, 2024 and 2023 were 0.38% and 0.14%,
respectively. Unused overdraft facilities at December 31, 2024
were ¥775,000 million. The overdraft facilities bear interest at
a rate equal to a base rate plus a spread.
Long-term debt at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
2023
Loan from banks; bearing interest rates of 0.80% at December 31, 2024 *1
201,909
—
Other debt *2
4,990
4,249
206,899
4,249
Less current portion
(1,824)
(1,295)
205,075
2,954
*1 Loans included ¥200,000 million in syndicated loans. Of this amount, ¥100,000 million was procured in the fiscal year ended December 2024 and will be
matured in the fiscal year ended December 2026. 100,000 million yen was procured in the fiscal year ended December 2024 and will be matured in the fiscal
year ended December 2027.
*2 Other debt consisted of long-term loans and finance lease obligations.
The aggregate annual maturities of long-term debt outstanding at December 31, 2024 were as follows:
Year ending December 31:
Millions of yen
2025
1,824
2026
101,524
2027
101,947
2028
786
2029
715
Thereafter
103
206,899
Both short-term and long-term bank loans are primarily
made under general agreements which provide that security
and guarantees for present and future indebtedness shall be
given upon request of the bank, and that the bank shall have
the right to offset cash deposits against obligations that have
become due or, in the event of default, against all obligations
due to the bank.
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10. TRADE PAYABLES
Trade payables at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
2024
2023
Notes payables
78,485
73,926
Accounts payables
271,643
236,004
350,128
309,930
Canon has supplier finance programs with particular third-
party financial institutions where Canon agrees to pay the
financial institutions after 20 to 180 days based on the con-
tracts agreed to with the suppliers. The financial institutions
offer earlier payment of the invoices at the sole discretion of
the supplier for a discounted amount. Canon does not provide
assets pledged as security or any other forms of guarantees
under the arrangements. Canon is not a party to any arrange-
ment between its suppliers and the financial institutions. The
amount of liabilities under these programs, which is included
in the above trade payables, as of December 31, 2024 and
2023 were ¥91,407 million and ¥87,026 million, respectively.
The activities in the liabilities under supplier finance programs are as follows:
December 31
Millions of yen
2024
2023
Balance at beginning of period
87,026
95,389
Increase
293,949
293,179
Decrease
(289,575)
(301,546)
Others
7
4
Balance at end of period
91,407
87,026
CANON ANNUAL REPORT 2024
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. ACCRUED PENSION AND SEVERANCE COST
The Company and certain of its subsidiaries have contribu-
tory and noncontributory defined benefit pension plans
covering substantially all of their employees. Benefits payable
under the plans are based on employee earnings and years of
service. The Company and certain of its subsidiaries also have
defined contribution pension plans covering substantially all
of their employees.
Obligations and funded status
Reconciliations of beginning and ending balances of the projected benefit obligations and the fair value of the plan assets are
as follows:
December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Change in benefit obligations:
Projected benefit obligations at beginning of year
765,725
794,749
410,599
343,703
Service cost
22,723
24,703
2,318
2,668
Interest cost
11,700
11,080
15,528
12,172
Plan participants’ contributions
—
—
932
837
Actuarial (gain) loss
(30,495)
(18,765)
(18,773)
20,137
Benefits paid
(46,720)
(47,644)
(16,311)
(14,856)
Acquisition
330
2,232
—
—
Plan amendments
(3,695)
—
—
(263)
Foreign currency exchange rate changes
—
—
29,232
46,201
Projected benefit obligations at end of year
719,568
765,725
423,525
410,599
Change in plan assets:
Fair value of plan assets at beginning of year
749,219
683,828
346,125
288,551
Actual return on plan assets
79,465
67,792
(649)
12,312
Employer contributions
13,212
31,889
15,638
19,758
Plan participants’ contributions
—
—
932
837
Benefits paid
(34,789)
(36,674)
(16,265)
(14,776)
Acquisition
244
2,384
—
—
Foreign currency exchange rate changes
—
—
26,771
39,443
Fair value of plan assets at end of year
807,351
749,219
372,552
346,125
Funded status at end of year
87,783
(16,506)
(50,973)
(64,474)
Amounts recognized in the consolidated balance sheets at December 31, 2024 and 2023 are as follows:
December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Other assets
176,556
78,211
32,568
17,943
Accrued expenses
(4,637)
(3,885)
(1,524)
(1,470)
Accrued pension and severance cost
(84,136)
(90,832)
(82,017)
(80,947)
87,783
(16,506)
(50,973)
(64,474)
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Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2024 and 2023 before the effect of
income taxes are as follows:
December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Actuarial loss
(32,774)
53,787
105,437
111,234
Prior service credit
(8,253)
(7,671)
(6,562)
(7,921)
(41,027)
46,116
98,875
103,313
The accumulated benefit obligation for all defined benefit plans was as follows:
December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Accumulated benefit obligation
705,204
752,165
407,160
394,104
The projected benefit obligations and the fair value of plan assets for the pension plans with projected benefit obligations in
excess of plan assets, and the accumulated benefit obligations and the fair value of plan assets for the pension plans with accu-
mulated benefit obligations in excess of plan assets are as follows:
December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations
135,025
181,684
389,669
406,779
Fair value of plan assets
48,680
92,955
335,785
340,508
Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligations
122,511
177,499
64,495
364,970
Fair value of plan assets
42,157
92,955
24,840
313,862
Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss)
Net periodic benefit cost for Canon’s employee retirement and severance defined benefit plans for the years ended December
31, 2024 and 2023 consisted of the following components:
Years ended December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Service cost
22,723
24,073
2,318
2,668
Interest cost
11,700
11,080
15,528
12,172
Expected return on plan assets
(23,261)
(21,708)
(21,138)
(15,098)
Amortization of prior service credit
(3,113)
(5,991)
(1,352)
(939)
Amortization of actuarial loss
7
4,956
8,828
4,309
(Gain) loss on curtailments and settlements
(145)
119
(17)
—
7,911
12,529
4,167
3,112
Service cost component of net periodic benefit cost for
Canon’s employee retirement and severance defined benefit
plans is included in cost of sales and operating expenses in
the consolidated statements of income. The components
other than the service cost component are included in other,
net of other income (deductions) in the consolidated state-
ments of income.
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Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended
December 31, 2024 and 2023 are summarized as follows:
Years ended December 31
Millions of yen
Japanese plans
Foreign plans
2024
2023
2024
2023
Current year actuarial (gain) loss
(86,699)
(64,849)
3,014
22,923
Current year prior service credit
(3,695)
—
7
(263)
Amortization of actuarial loss
(7)
(4,956)
(8,828)
(4,309)
Amortization of prior service credit
3,113
5,991
1,352
939
Curtailments and settlements
145
(119)
17
—
(87,143)
(63,933)
(4,438)
19,290
Assumptions
Weighted-average assumptions used to determine benefit obligations are as follows:
December 31
Japanese plans
Foreign plans
2024
2023
2024
2023
Discount rate
1.9%
1.5%
3.9%
3.7%
Assumed rate of increase in future compensation levels
2.3%
2.3%
2.2%
2.1%
Interest crediting rate for cash balance plans
1.7%
1.7%
1.8%
1.7%
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
Years ended December 31
Japanese plans
Foreign plans
2024
2023
2024
2023
Discount rate
1.5%
1.2%
3.7%
4.1%
Assumed rate of increase in future compensation levels
2.3%
2.6%
2.1%
2.5%
Expected long-term rate of return on plan assets
3.1%
3.2%
6.0%
5.7%
Interest crediting rate for cash balance plans
1.7%
1.8%
1.7%
1.0%
Canon determines the expected long-term rate of return
based on the expected long-term return of the various asset
categories in which it invests. Canon considers the current
expectations for future returns and the actual historical returns
of each plan asset category.
Plan assets
Canon’s investment policies are designed to ensure adequate
plan assets are available to provide future payments of pen-
sion benefits to eligible participants. Taking into account the
expected long-term rate of return on plan assets, Canon
formulates a model portfolio which comprises of the optimal
combination of equity securities and debt securities. Plan
assets are invested in individual equity and debt securities
using the guidelines of the model portfolio in order to produce
a total return that will match the expected return on a mid-
term to long-term basis. Canon evaluates the gap between
expected return and actual return of invested plan assets on
an annual basis to determine if such differences necessitate
a revision in the formulation of the model portfolio. Canon
revises the model portfolio when and to the extent considered
necessary to achieve the expected long-term rate of return on
plan assets.
Canon’s model portfolio for Japanese plans consists of three
major components: approximately 30% is invested in equity
securities, approximately 50% is invested in debt securities,
and approximately 20% is invested in other products, such
as investments in insurance contracts including life insurance
company general accounts.
Outside Japan, investment policies vary by country, but
Canon’s model portfolio for foreign plans consists of three
major components: approximately 10% is invested in equity
securities, approximately 50% is invested in debt securities,
and approximately 40% is invested in other products, such as
investments in real estate assets.
The target allocation percentages of plan assets set by
Canon’s investment policies approximate the actual allocation
percentages of plan assets at December 31, 2024 and 2023.
The equity securities are selected primarily from stocks that
are listed on securities exchanges. Prior to investing, Canon
investigates the business condition of the investee companies,
and appropriately diversifies investments by type of industry
and other relevant factors. The debt securities are selected
primarily from government bonds, public debt instruments,
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and corporate bonds. Prior to investing, Canon investigates
the quality of the issue, including rating, interest rate, and
repayment dates, and appropriately diversifies the investments.
Pooled funds are selected using strategies consistent with
the equity and debt securities described above. As for insur-
ance contracts, there are several types of insurance contracts
between Canon and the life insurance companies including
life insurance company general accounts which guarantee
the payments of interest based on expected interest rates
and return of capital, and insured pension plans which cover
future designated contractual benefit payments to covered
participants. With respect to investments in foreign financial
products, Canon investigates the stability of the underlying
governments and economies, the market characteristics such
as settlement systems and the taxation systems. For each such
investment, Canon selects the appropriate investment country
and currency.
The three levels of input used to measure fair value are more fully described in Note 22. The fair values of Canon’s pension
plan assets at December 31, 2024 and 2023, by asset category, are as follows:
December 31
Millions of yen
2024
Japanese plans
Foreign plans
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Equity securities:
Japanese companies (a)
134,756
—
—
134,756
—
—
—
—
Foreign companies
21,957
—
—
21,957
8,746
—
—
8,746
Pooled funds (b)
—
203,668
—
203,668
—
33,934
—
33,934
Debt securities:
Government bonds (c)
107,134
—
—
107,134
—
—
—
—
Municipal bonds
—
1,123
—
1,123
—
5,752
—
5,752
Corporate bonds
—
21,035
—
21,035
—
8,049
—
8,049
Pooled funds (d)
—
180,553
—
180,553
—
170,566
—
170,566
Mortgage backed securities
(and other asset backed securities)
—
18,141
—
18,141
—
23,186
—
23,186
Insurance contracts
—
69,425
—
69,425
—
16,036
35,967
52,003
Other assets
—
33,004
466
33,470
—
51,491
—
51,491
Investment measured at net asset value
—
—
—
16,089
—
—
—
18,825
263,847
526,949
466
807,351
8,746
309,014
35,967
372,552
(a) The plan’s equity securities include common stock of the
Company and certain of its subsidiaries in the amounts of
¥359 million.
(b) These funds invest in listed equity securities consisting of
approximately 20% Japanese companies and 80% foreign
companies for Japanese plans, and mainly foreign compa-
nies for foreign plans.
(c) This class includes approximately 75% Japanese govern-
ment bonds and 25% foreign government bonds for
Japanese plans, and mainly foreign government bonds for
foreign plans.
(d) These funds invest in approximately 30% Japanese gov-
ernment bonds, 55% foreign government bonds, 5%
Japanese municipal bonds, and 10% corporate bonds for
Japanese plans. These funds invest in approximately 50%
foreign government bonds and 50% corporate bonds for
foreign plans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31
Millions of yen
2023
Japanese plans
Foreign plans
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Equity securities:
Japanese companies (e)
111,525
—
—
111,525
—
—
—
—
Foreign companies
20,175
—
—
20,175
9,957
—
—
9,957
Pooled funds (f)
—
184,673
—
184,673
—
30,684
—
30,684
Debt securities:
Government bonds (g)
115,204
—
—
115,204
—
—
—
—
Municipal bonds
—
1,319
—
1,319
—
4,069
—
4,069
Corporate bonds
—
15,740
—
15,740
—
7,183
—
7,183
Pooled funds (h)
—
161,386
—
161,386
—
162,456
—
162,456
Mortgage backed securities
(and other asset backed securities)
—
14,309
—
14,309
—
10,855
—
10,855
Insurance contracts
—
74,214
—
74,214
—
14,732
31,303
46,035
Other assets
—
35,840
3,454
39,294
—
51,606
—
51,606
Investment measured at net asset value
—
—
—
11,380
—
—
—
23,280
246,904
487,481
3,454
749,219
9,957
281,585
31,303
346,125
(e) The plan’s equity securities include common stock of the
Company and certain of its subsidiaries in the amounts of
¥321 million.
(f) These funds invest in listed equity securities consisting of
approximately 20% Japanese companies and 80% foreign
companies for Japanese plans, and mainly foreign compa-
nies for foreign plans.
(g) This class includes approximately 75% Japanese govern-
ment bonds and 25% foreign government bonds for
Japanese plans.
(h) These funds invest in approximately 30% Japanese gov-
ernment bonds, 55% foreign government bonds, 5%
Japanese municipal bonds, and 10% corporate bonds for
Japanese plans. These funds invest in approximately 75%
foreign government bonds and 25% corporate bonds for
foreign plans.
Each level into which assets are categorized is based on
inputs used to measure the fair value of the assets, and does
not necessarily indicate the risks or ratings of the assets.
Level 1 assets are comprised principally of equity securities
and government bonds, which are valued using unadjusted
quoted market prices in active markets with sufficient volume
and frequency of transactions.
Level 2 assets are comprised principally of pooled funds
that invest in equity and debt securities, corporate bonds,
investments in life insurance company general accounts and
other assets. Pooled funds are valued at their net asset values
that are calculated by the sponsor of the fund and have daily
liquidity. Corporate bonds are valued using quoted prices for
identical assets in markets that are not active. Investments in
life insurance company general accounts are valued at conver-
sion value. Other assets are comprised principally of interest
bearing cash and hedge funds.
The fair values of Level 3 assets, consisting of investments in
insured pension plans and hedge funds, were ¥36,433 million
and ¥34,757 million at December 31, 2024 and 2023, respec-
tively. Actual returns on, purchases and sales of these assets
during the years ended December 31, 2024 and 2023 were
not significant.
Contributions
Canon expects to contribute ¥11,623 million to its Japanese defined benefit pension plans and ¥7,058 million to its foreign
defined benefit pension plans for the year ending December 31, 2025.
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Estimated future benefit payments
The estimated future benefit payments as of December 31, 2024, are as follows:
Year ending December 31:
Millions of yen
Japanese plans
Foreign plans
2025
48,469
17,769
2026
45,843
18,478
2027
50,823
19,635
2028
49,838
21,065
2029
47,624
22,665
2030 – 2034
216,065
121,534
Multiemployer pension plans
The amounts of cost recognized for the multiemployer pen-
sion plans primarily in the Netherlands for the years ended
December 31, 2024 and 2023 were ¥6,353 million and
¥5,447 million, respectively. The multiemployer pension plan
in which the subsidiaries in the Netherlands participated was
109.4% funded as of December 31, 2023. The terms of the
collective bargaining agreements are negotiated on a regu-
lar basis between the local labor unions and participating
employers. Canon is not liable for other participating employ-
ers’ obligations under the terms and conditions of the
agreements.
Defined contribution plans
The amounts of cost recognized for the defined contribution
pension plans of the Company and certain of its subsidiaries
for the years ended December 31, 2024 and 2023 were
¥29,302 million and ¥27,667 million, respectively.
12. INCOME TAXES
Domestic and foreign components of income before income taxes and the current and deferred income tax expense attributable
to such income are summarized as follows:
Years ended December 31
Millions of yen
2024
Japanese
Foreign
Total
Income before income taxes
120,709
180,452
301,161
Income taxes:
Current
91,361
41,497
132,858
Deferred
(4,597)
(9,974)
(14,571)
86,764
31,523
118,287
Years ended December 31
Millions of yen
2023
Japanese
Foreign
Total
Income before income taxes
243,123
147,644
390,767
Income taxes:
Current
77,628
39,071
116,699
Deferred
(9,056)
(1,297)
(10,353)
68,572
37,774
106,346
The Company and its domestic subsidiaries are subject to a number of income taxes, which, in the aggregate, represent a
statutory income tax rate of approximately 31% for the years ended December 31, 2024 and 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the Japanese statutory income tax rate and the effective income tax rate as a percentage of income before
income taxes is as follows:
Years ended December 31
2024
2023
Japanese statutory income tax rate
31.0%
31.0%
Increase (reduction) in income taxes resulting from:
Expenses not deductible for tax purposes
Impairment losses on Goodwill
17.0
—
Other
1.1
0.8
Income of foreign subsidiaries taxed at lower than Japanese statutory tax rate
(2.9)
(2.3)
Tax credit for research and development expenses
(5.8)
(3.4)
Change in valuation allowance
(2.2)
0.4
Deferred tax liabilities on undistributed earnings of foreign subsidiaries
2.2
1.4
Tax credit at foreign subsidiaries
(0.4)
(0.2)
Effect of enacted changes in tax laws
0.1
(0.0)
Other
(0.8)
(0.5)
Effective income tax rate
39.3%
27.2%
Net deferred income tax assets and liabilities are included in the accompanying consolidated balance sheets under the follow-
ing captions:
December 31
Millions of yen
2024
2023
Other assets
101,705
119,086
Other noncurrent liabilities
(37,346)
(40,853)
64,359
78,233
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The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities at December 31,
2024 and 2023 are presented below:
December 31
Millions of yen
2024
2023
Deferred tax assets:
Inventories
14,082
14,141
Accrued business tax
4,114
3,658
Accrued pension and severance cost
2,635
32,667
Research and development – costs capitalized for tax purposes
9,491
8,474
Property, plant and equipment
48,392
42,731
Operating lease liabilities
25,375
23,523
Accrued expenses
28,687
27,457
Net operating losses carried forward
38,745
38,025
Other
60,158
53,393
231,679
244,069
Less valuation allowance
(18,272)
(21,230)
Total deferred tax assets
213,407
222,839
Deferred tax liabilities:
Undistributed earnings of foreign subsidiaries
(19,526)
(17,903)
Tax deductible reserve
(3,292)
(3,396)
Financing lease revenue
(19,670)
(18,384)
Operating lease right-of-use assets
(24,683)
(22,749)
Intangible assets
(37,892)
(43,168)
Other
(43,985)
(39,006)
Total deferred tax liabilities
(149,048)
(144,606)
Net deferred tax assets
(After the deduction of deferred tax liabilities)
64,359
78,233
The net changes in the total valuation allowance were
a decrease of ¥2,958 million and an increase of ¥3,498
million for the years ended December 31, 2024 and 2023,
respectively.
Based on the level of historical taxable income and
projections for future taxable income over the periods, man-
agement believes it is more likely than not that Canon will
realize the benefits of these deferred tax assets, net of the
valuation allowance, at December 31, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2024, Canon had net operating losses which can be carried forward for income tax purposes to reduce
future taxable income. Periods available to reduce future taxable income vary in each tax jurisdiction and generally range from
one year to an indefinite period as follows:
Millions of yen
2025
1,484
2026 to 2029
19,148
2030 to 2034
28,225
2035 to 2044
9,920
Indefinite period
126,684
185,461
Income taxes have not been accrued on undistributed earn-
ings of domestic subsidiaries as the tax law provides a means
by which the dividends from a domestic subsidiary can be
received tax free.
Canon has not recognized deferred tax liabilities of ¥17,002
million for a portion of undistributed earnings of foreign
subsidiaries of ¥706,458 million as of December 31, 2024
because Canon intends to permanently reinvest such undis-
tributed earnings of foreign subsidiaries. Deferred tax liabilities
will be recognized when such undistributed earnings are no
longer permanently reinvested.
A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31, 2024 and 2023 are as
follows:
Years ended December 31
Millions of yen
2024
2023
Balance at beginning of year
8,796
8,354
Additions for tax positions of the current year
575
—
Reductions for tax positions of the current year
(8,911)
—
Additions for tax positions of prior years
101
342
Reductions for tax positions of prior years
—
(445)
Settlements with tax authorities
—
(171)
Other
389
716
Balance at end of year*
950
8,796
* The unrecognized tax benefits were offset by deferred tax assets in the amount of ¥524 million and ¥1,960 million as of December 31, 2024 and 2023, respec-
tively, and reported under “other noncurrent liabilities” on the consolidated balance sheets.
The total amounts of unrecognized tax benefits that
would reduce the effective tax rate, if recognized, were
¥950 million and ¥8,796 million at December 31, 2024 and
2023, respectively.
Although Canon believes its estimates and assumptions of
unrecognized tax benefits are reasonable, uncertainty regard-
ing the final determination of tax examination settlements
and any related litigation could affect the effective tax rate in
a future period. Based on each of the items of which Canon
is aware at December 31, 2024, no significant changes to
the unrecognized tax benefits are expected within the next
twelve months.
Canon recognizes interest and penalties accrued related to
unrecognized tax benefits in income taxes. Both interest and
penalties accrued at December 31, 2024 and 2023, and inter-
est and penalties included in income taxes for the years ended
December 31, 2024 and 2023 were not significant.
Canon files income tax returns in Japan and various for-
eign tax jurisdictions. In Japan, Canon is no longer subject to
regular income tax examinations by the tax authority for years
before 2021. Canon is also no longer subject to a transfer
pricing examination by the tax authority for years before 2021.
In other major foreign tax jurisdictions, including the United
States and the Netherlands, Canon is no longer subject to
income tax examinations by tax authorities for years before
2014 with a few exceptions.
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13. LEGAL RESERVE AND RETAINED EARNINGS
The Corporation Law of Japan provides that an amount equal
to 10% of distributions from retained earnings paid by the
Company and its Japanese subsidiaries be appropriated as a
legal reserve. No further appropriations are required when the
total amount of the additional paid-in capital and the legal
reserve equals 25% of their respective stated capital. The
Corporation Law of Japan also provides that additional paid-
in capital and legal reserve are available for appropriations by
resolution of the shareholders. Certain foreign subsidiaries are
also required to appropriate their earnings to legal reserves
under the laws of their respective countries.
Cash dividends and appropriations to the legal reserve
charged to retained earnings for the years ended December
31, 2024 and 2023 represent dividends paid out during those
years and the related appropriations to the legal reserve.
Retained earnings at December 31, 2024 did not reflect
current year-end dividends in the amount of ¥75,519 million
which were approved by the shareholders in March 2025.
The amount available for dividends under the Corporation
Law of Japan is based on the amount recorded in the
Company’s non-consolidated financial statements in accor-
dance with financial accounting standards of Japan. Such
amount was ¥1,206,256 million at December 31, 2024.
Retained earnings at December 31, 2024 included Canon’s
equity in undistributed earnings of affiliated companies
accounted for by the equity method in the amount of
¥22,528 million.
14. OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2024 and 2023 are as follows:
Millions of yen
Foreign currency
translation
adjustments
Net unrealized
gains and losses on
securities
Gains and losses
on derivative
instruments
Pension
liability
adjustments
Total
Balance at December 31, 2023
374,937
26
924
(107,129)
268,758
Other comprehensive income (loss)
before reclassifications
144,270
63
(4,360)
56,335
196,308
Amounts reclassified from accumulated
other comprehensive income (loss)
154
(58)
1,917
3,818
5,831
Net change during the period
144,424
5
(2,443)
60,153
202,139
Balance at December 31, 2024
519,361
31
(1,519)
(46,976)
470,897
Millions of yen
Foreign currency
translation
adjustments
Net unrealized
gains and losses on
securities
Gains and losses
on derivative
instruments
Pension
liability
adjustments
Total
Balance at December 31, 2022
191,287
(34)
(428)
(128,202)
62,623
Other comprehensive income (loss)
before reclassifications
183,663
102
(756)
19,275
202,284
Amounts reclassified from accumulated
other comprehensive income (loss)
(13)
(42)
2,108
1,798
3,851
Net change during the period
183,650
60
1,352
21,073
206,135
Balance at December 31, 2023
374,937
26
924
(107,129)
268,758
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2024 and 2023 are
as follows:
Years ended December 31
Amount reclassified from accumulated
other comprehensive income (loss)*
Millions of yen
Affected line items in consolidated
statements of income
2024
2023
Foreign currency translation adjustments
223
(32)
Selling, general and administrative expenses
(69)
10
Income taxes
154
(22)
Consolidated net income
—
9
Net income attributable to noncontrolling
interests
154
(13)
Net income attributable to Canon Inc.
Net unrealized gains and losses on securities
(73)
(53)
Other, net
15
11
Income taxes
(58)
(42)
Consolidated net income
—
—
Net income attributable to noncontrolling
interests
(58)
(42)
Net income attributable to Canon Inc.
Gains and losses on derivative instruments
2,604
2,790
Net sales
(797)
(764)
Income taxes
1,807
2,026
Consolidated net income
110
82
Net income attributable to noncontrolling
interests
1,917
2,108
Net income attributable to Canon Inc.
Pension liability adjustments
4,208
2,454
Other, net
(700)
(525)
Income taxes
3,508
1,929
Consolidated net income
310
(131)
Net income attributable to noncontrolling
interests
3,818
1,798
Net income attributable to Canon Inc.
Total amount reclassified,
net of tax and noncontrolling interests
5,831
3,851
* The increase (decrease) in amounts indicates a decrease (increase) in profit as presented in the consolidated statement of income.
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Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments, including
amounts attributable to noncontrolling interests, are as follows:
Years ended December 31
Millions of yen
Before-tax
amount
Tax (expense) or
benefit
Net-of-tax
amount
2024:
Foreign currency translation adjustments
Amount arising during the year
146,399
(829)
145,570
Reclassification adjustments for gains and losses realized in net income
223
(69)
154
Net change during the year
146,622
(898)
145,724
Net unrealized gains and losses on securities:
Amount arising during the year
79
(16)
63
Reclassification adjustments for gains and losses realized in net income
(73)
15
(58)
Net change during the year
6
(1)
5
Net gains and losses on derivative instruments:
Amount arising during the year
(5,945)
1,705
(4,240)
Reclassification adjustments for gains and losses realized in net income
2,604
(797)
1,807
Net change during the year
(3,341)
908
(2,433)
Pension liability adjustments:
Amount arising during the year
87,373
(23,891)
63,482
Reclassification adjustments for gains and losses realized in net income
4,208
(700)
3,508
Net change during the year
91,581
(24,591)
66,990
Other comprehensive income (loss)
234,868
(24,582)
210,286
2023:
Foreign currency translation adjustments
Amount arising during the year
186,559
(1,701)
184,858
Reclassification adjustments for gains and losses realized in net income
(32)
10
(22)
Net change during the year
186,527
(1,691)
184,836
Net unrealized gains and losses on securities:
Amount arising during the year
129
(27)
102
Reclassification adjustments for gains and losses realized in net income
(53)
11
(42)
Net change during the year
76
(16)
60
Net gains and losses on derivative instruments:
Amount arising during the year
(848)
216
(632)
Reclassification adjustments for gains and losses realized in net income
2,790
(764)
2,026
Net change during the year
1,942
(548)
1,394
Pension liability adjustments:
Amount arising during the year
42,189
(19,829)
22,360
Reclassification adjustments for gains and losses realized in net income
2,454
(525)
1,929
Net change during the year
44,643
(20,354)
24,289
Other comprehensive income (loss)
233,188
(22,609)
210,579
CANON ANNUAL REPORT 2024
92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. REVENUE
Revenue from sales of products of the Printing Business Unit,
such as office MFDs, laser printers and inkjet printers, and
the Imaging Business Unit, such as digital cameras, is primar-
ily recognized at a point in time upon shipment or delivery,
depending upon when the customer obtains controls of
these products.
Revenue from sales of equipment of the Medical Business
Unit and the Industrial Business Unit that are sold with
customer acceptance provisions related to their functional-
ity, including certain medical equipment such as CT systems
and MRI systems, and lithography equipment such as semi-
conductor and FPD lithography equipment, is recognized at
a point in time when the equipment is installed at the cus-
tomer site and the agreed-upon specifications are objectively
satisfied and confirmed.
Most of Canon’s service revenue is generated from main-
tenance service in the products of the Printing Business Unit
and the Medical Business Unit which is recognized over time.
For the service contracts of the Printing Business Unit, the
customer typically pays a variable amount based on usage, a
stated fixed fee or a stated base fee plus a variable amount
which frequently include the provision of consumables as
well as break fix activities. The majority portion of service
revenue from the products of the Printing Business Unit is
recognized as billed since the invoiced amount directly corre-
lates with the value to the customer of the underlying perfor-
mance obligation delivered to date. For the service contracts
of the Medical Business Unit, the customer typically pays a
stated fixed fee for the stand ready maintenance service and
revenue is recognized ratably over the contract period.
The majority of service arrangements for the products are
executed in combination with related products. Transaction
prices for printing products and services need to be allocated
to each performance obligation on a relative standalone
selling price basis where judgements are required. Canon
estimates the standalone selling price using a range of prices
that would meet the allocation objective based on all the
information that is reasonably available including market
conditions and other observable inputs. If transaction prices
of the product or service contracts are not within the accept-
able range then the revenue is subject to allocation based on
the estimated standalone selling prices. Canon recognizes
the incremental costs of obtaining a contract as an expense
when related products of the Printing Business Unit are sold.
Revenue from sales of certain industrial equipment
which do not have alternative use and for which Canon
has enforceable right to payment to the customers for the
performance completed to date is recognized over time
with progress towards completion measured using the cost
based input method as the basis to recognize revenue and
an estimated margin. Provisions for estimated losses on
uncompleted contracts are made in the period in which
such losses become evident. Changes in job performance,
job conditions, estimated margin and final contract settle-
ments may result in revisions to projected costs and revenue
and are recognized in the period in which the revisions to
estimates are identified and the amounts can be reasonably
estimated. Factors that may affect future project costs and
margins include, production efficiencies, availability and costs
of labor and materials. These factors can impact the accuracy
of Canon’s estimates and materially impact future reported
revenue and cost of sales.
The transaction prices that Canon is entitled to receive in
exchange for transferring goods or services to the customer
include certain forms of variable consideration, including
product discounts, customer promotions and volume-based
rebates mainly for the products of the Imaging Business
Unit, which are sold predominantly through distributors and
retailers. Canon includes estimated amounts in the transac-
tion price only to the extent it is probable that a significant
reversal of cumulative revenue recognized will not occur
when the uncertainty associated with the variable consider-
ation is resolved. Variable considerations are estimated based
upon historical trends and other known factors at the time
of sale, and are subsequently adjusted in each period based
on current information. In addition, Canon may provide a
right of return on its products for a short time period after a
sale. These rights are accounted for as variable consideration
when determining the transaction price, and accordingly
Canon recognizes revenue based on the estimated amount
to which Canon expects to be entitled after considering
expected returns.
CANON ANNUAL REPORT 2024
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DATA
Disaggregated revenue by timing is as follows. Disaggregated revenue by business unit, product and geographic area are
described in Note 23.
Millions of yen
Printing
Medical
Imaging
Industrial
Others and
Corporate
Eliminations
Consolidated
2024:
Revenue recognized at a point
in time
1,845,411
380,598
928,462
283,101
222,415
(109,311)
3,550,676
Revenue recognized over time
677,314
188,210
8,929
73,361
11,331
—
959,145
Total
2,522,725
568,808
937,391
356,462
233,746
(109,311)
4,509,821
2023:
Revenue recognized at a point
in time
1,703,204
377,979
852,580
251,042
197,402
(104,072)
3,278,135
Revenue recognized over time
642,872
175,801
9,045
63,677
11,442
—
902,837
Total
2,346,076
553,780
861,625
314,719
208,844
(104,072)
4,180,972
In order to manage the performance of each reportable seg-
ment more appropriately, Canon has changed its performance
management method regarding intercompany transactions for
Others and Corporate from the beginning of the first quarter
of 2024. Operating results for the year ended December 31,
2023 have also been reclassified.
Revenue recognized over time includes primarily revenue
from maintenance service in the products of the Printing
Business Unit and the Medical Business Unit and sales of
certain equipment of the Industrial Business Unit which do not
have an alternative use and for which Canon has enforceable
right to payment to the customers for the performance com-
pleted to date.
Canon recognizes contract assets primarily for unbilled
receivables mainly arising from services contracts for the
products of the Printing Business Unit. Contract assets are
reclassified to trade receivables when they are billed under the
terms of the contract. The difference between the opening
and closing balances of contract assets primarily results from
the timing difference of Canon’s performance and billing to
customers. Contract assets at December 31, 2024 and 2023
were ¥46,046 million and ¥45,354 million, respectively, and
are included in prepaid expenses and other current assets in
the consolidated balance sheets.
Canon typically bills to the customer when the perfor-
mance obligation is satisfied and collects the payment in
relatively short term except for certain maintenance service
of the products of the Printing Business Unit and the Medical
Business Unit and certain industrial equipment for which
Canon occasionally receives the payment in advance from
customers. The amount received in excess of revenue recog-
nized is recorded as deferred revenue until the performance
obligation for distinct goods or services are satisfied. Deferred
revenue at December 31, 2024 and 2023 were ¥178,436 mil-
lion and ¥141,578 million, respectively, ¥159,326 million and
¥128,414 million of which is included in other current liabili-
ties, and ¥19,110 million and ¥13,164 million in other non-
current liabilities in the accompanying consolidated balance
sheets. Revenue recognized for the year ended December 31,
2024, which had been included in the deferred revenue bal-
ance at December 31, 2023, was ¥113,978 million.
Remaining performance obligations for products and equip-
ment at December 31, 2024 primarily arise from the sales of
certain industrial equipment, amounting to ¥136,373 million,
83% of which is expected to be recognized as revenue within
one year and remaining 17% is within two years. Remaining
performance obligations from the fixed maintenance service
contracts with original expected duration of more than one
year at December 31, 2024 amounting to ¥235,210 million,
36% of which is expected to be recognized as revenue within
one year and the average remaining period for these fixed
contracts is about 3 years. Disclosure of remaining perfor-
mance obligations is not required for the majority of services
since the related revenue is recognized on an as billed basis
applying the right to invoice practical expedient or is gener-
ated from the contracts with original expected duration of less
than one year.
Taxes collected from customers and remitted to governmen-
tal authorities are excluded from revenues in the consolidated
statements of income.
CANON ANNUAL REPORT 2024
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. STOCK-BASED COMPENSATION
On April 30, 2024, based on the approval of the board of
directors held on March 28, the Company granted stock
options to its directors and executive officers to acquire
65,900 shares of common stock. Those to whom stock acqui-
sition rights are granted (the “Holder(s)”) shall be entitled
to exercise all the stock acquisition rights together within 10
days (in case the last day is not a business day, the following
business day) from after the date when they cease to hold any
position as a director or an executive officer of the Company.
These option awards have a 30 year exercisable period. The
grant-date fair value per share of the stock options was
¥3,762.
On March 25, 2024, based on the approval of the board
of directors held on February 9, the Company granted stock
options to its executive officers to acquire 20,400 shares of
common stock. Those to whom stock acquisition rights are
granted (the “Holder(s)”) shall be entitled to exercise all the
stock acquisition rights together within 10 days (in case the
last day is not a business day, the following business day)
from after the date when they cease to hold any position as a
director or an executive officer of the Company. These option
awards have a 30 year exercisable period. The grant-date fair
value per share of the stock options was ¥3,945.
On April 28, 2023, based on the approval of the board
of directors held on March 30, the Company granted stock
options to its directors and executive officer to acquire 84,000
shares of common stock. Those to whom stock acquisition
rights are granted (the “Holder(s)”) shall be entitled to exercise
all the stock acquisition rights together within 10 days (in case
the last day is not a business day, the following business day)
from after the date when they cease to hold any position as a
director or an executive officer of the Company. These option
awards have a 30 year exercisable period. The grant-date fair
value per share of the stock options was ¥2,799.
On March 27, 2023, based on the approval of the board
of directors held on February 10, the Company granted stock
options to its executive officers to acquire 9,300 shares of
common stock. Those to whom stock acquisition rights are
granted (the “Holder(s)”) shall be entitled to exercise all the
stock acquisition rights together within 10 days (in case the
last day is not a business day, the following business day)
from after the date when they cease to hold any position as a
director or an executive officer of the Company. These option
awards have a 30 year exercisable period. The grant-date fair
value per share of the stock options was ¥2,445.
The compensation cost recognized for these stock options
for the years ended December 31, 2024 and 2023 were ¥328
million and ¥258 million, respectively and is included in selling,
general and administrative expenses in the consolidated state-
ments of income.
The fair value of the option award was estimated on the date of grant using the Black-Scholes option pricing model that incor-
porates the assumptions presented below:
Years ended December 31
2024
2023
*1
*2
*3
*4
Expected term of option (in years)
4.0
4.0
4.0
4.0
Expected volatility
27.43%
27.21%
28.25%
28.26%
Dividend yield
3.09%
3.22%
4.08%
3.64%
Risk-free interest rate
0.31%
0.40%
(0.00%)
0.06%
*1 Granted on March 25, 2024
*2 Granted on April 30, 2024
*3 Granted on March 27, 2023
*4 Granted on April 28, 2023
CANON ANNUAL REPORT 2024
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FINANCIAL
SECTION
CORPORATE
DATA
A summary of option activity under the stock option plans as of and for the years ended December 31, 2024 and 2023 is
presented below:
Shares
Weighted-
average
exercise price
Weighted-average
remaining
contractual term
Aggregate
intrinsic value
Yen
Year
Millions of yen
Outstanding at January 1, 2023
350,600
1
27.2
1,001
Granted
93,300
1
Exercised
(25,700)
1
Outstanding at December 31, 2023
418,200
1
26.9
1,513
Granted
86,300
1
Exercised
(19,400)
1
Outstanding at December 31, 2024
485,100
1
26.4
2,503
Exercisable at December 31, 2024
485,100
1
26.4
2,503
The total fair values of shares vested were ¥328 million and
¥258 million for the years ended December 31, 2024 and
2023, respectively. Cash received from the exercise of stock
options for the years ended December 31, 2024 and 2023
were not significant.
17. NET INCOME ATTRIBUTABLE TO CANON INC. SHAREHOLDERS PER SHARE
A reconciliation of the numerators and denominators of basic and diluted net income attributable to Canon Inc. shareholders per
share computations at December 31, 2024 and 2023 are as follows:
Years ended December 31
Millions of yen
2024
2023
Basic net income attributable to Canon Inc.
160,025
264,513
Diluted net income attributable to Canon Inc.
160,018
264,508
Number of shares
Weighted average common shares outstanding
966,762,583
1,001,199,905
Effect of dilutive securities:
Stock options
471,590
404,097
Diluted common shares outstanding
967,234,173
1,001,604,002
Yen
Net income attributable to Canon Inc. shareholders per share:
Basic
165.53
264.20
Diluted
165.44
264.08
CANON ANNUAL REPORT 2024
96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. DERIVATIVES AND HEDGING ACTIVITIES
Risk management policy
Canon operates internationally, exposing it to the risk of
changes in foreign currency exchange rates. Derivative finan-
cial instruments are comprised principally of foreign exchange
contracts utilized by the Company and certain of its subsid-
iaries to reduce the risk. Canon assesses foreign currency
exchange rate risk by continually monitoring changes in the
exposures and by evaluating hedging opportunities. Canon
does not hold or issue derivative financial instruments for
speculative purposes. Canon is also exposed to credit-related
losses in the event of non-performance by counterparties to
derivative financial instruments, but it is not expected that any
counterparties will fail to meet their obligations. Most of the
counterparties are internationally recognized financial institu-
tions and selected by Canon taking into account their financial
condition, and contracts are diversified across a number of
major financial institutions.
Foreign currency exchange rate risk management
Canon’s international operations expose Canon to the risk
of changes in foreign currency exchange rates. Canon uses
foreign exchange contracts to manage certain foreign cur-
rency exchange exposures principally from the exchange of
U.S. dollars and euros into yen. These contracts are primarily
used to hedge the foreign currency exposure of forecasted
intercompany sales and intercompany trade receivables that
are denominated in foreign currencies. In accordance with
Canon’s policy, a specific portion of foreign currency exposure
resulting from forecasted intercompany sales is hedged using
foreign exchange contracts which principally mature within
three months.
Cash flow hedge
Changes in the fair value of derivative financial instruments
designated as cash flow hedges, including foreign exchange
contracts associated with forecasted intercompany sales,
are reported in accumulated other comprehensive income
(loss). These amounts are subsequently reclassified into earn-
ings in the same period as the hedged items affect earnings.
All amounts recorded in accumulated other comprehensive
income (loss) as of December 31, 2024 are expected to be
recognized in net sales over the next twelve months. Changes
in the fair value of a foreign exchange contract for the period
between the date that the forecasted intercompany sales
occur and its maturity date are recognized in earnings.
Derivatives not designated as hedges
Canon has entered into certain foreign exchange contracts
to primarily offset the earnings impact related to fluctuations
in foreign currency exchange rates associated with certain
assets denominated in foreign currencies. Although these
foreign exchange contracts have not been designated as
hedges as required in order to apply hedge accounting, the
contracts are effective from an economic perspective. The
changes in the fair value of these contracts are recorded in
earnings immediately.
Contract amounts of foreign exchange contracts at December 31, 2024 and 2023 are set forth below:
December 31
Millions of yen
2024
2023
To sell foreign currencies
180,366
194,053
To buy foreign currencies
18,836
24,116
Fair value of derivative instruments in the consolidated balance sheets
The following tables present Canon’s derivative instruments measured at gross fair value as reflected in the consolidated balance
sheets at December 31, 2024 and 2023.
CANON ANNUAL REPORT 2024
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Derivatives designated as hedging instruments
December 31
Millions of yen
Fair value
Account
2024
2023
Assets:
Foreign exchange contracts
Prepaid expenses and other current assets
184
2,205
Liabilities:
Foreign exchange contracts
Other current liabilities
1,690
13
Derivatives not designated as hedging instruments
December 31
Millions of yen
Fair value
Account
2024
2023
Assets:
Foreign exchange contracts
Prepaid expenses and other current assets
42
1,695
Liabilities:
Foreign exchange contracts
Other current liabilities
1,690
915
Effect of derivative instruments in the consolidated statements of income
The following tables present the effect of Canon’s derivative instruments in the consolidated statements of income for the years
ended December 31, 2024 and 2023.
Derivatives in cash flow hedging relationships
December 31
Millions of yen
Gain (loss) recognized
in OCI
Gain (loss) reclassified from
accumulated OCI into income
Amount
Account
Amount
2024: Foreign exchange contracts
(5,945)
Net sales
(2,604)
2023: Foreign exchange contracts
(848)
Net sales
(2,790)
Derivatives not designated as hedging instruments
December 31
Millions of yen
Gain (loss) recognized in income on derivative
2024
2023
Account
Amount
Account
Amount
Foreign exchange contracts
Other, net
(12,934)
Other, net
(13,996)
CANON ANNUAL REPORT 2024
98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. LESSEE ACCOUNTING
Lease costs are included in cost of sales or selling general and administrative expense in accompanying consolidated statements
of income. Income statement information about lease costs is as follows:
Years ended December 31
Millions of yen
2024
2023
Operating lease cost
55,461
48,207
Short-term lease cost
15,156
16,237
Other lease cost
296
280
Total
70,913
64,724
Operating lease cash flow
Cash flow information about lease is as follows.
Years ended December 31
Millions of yen
2024
2023
Cash paid for amount included in the measurement of lease liabilities
Operating cash flows from operating leases
50,232
44,068
Noncash activity - Rights of use assets obtained in exchange for lease liabilities
Operating leases
53,692
45,510
Maturity Analysis
The following is a schedule by year of the future minimum lease payments under operating leases at December 31, 2024.
Years ending December 31:
Millions of yen
2025
44,701
2026
34,076
2027
22,857
2028
15,368
2029
10,998
Thereafter
22,707
Total future minimum lease payments
150,707
Less Imputed Interest
(10,612)
140,095
Remaining lease term and discount rate
The following is remaining lease term and discount rate under operating leases.
December 31
2024
2023
Weighted-average remaining lease term
55 months
53 months
Weighted-average discount rate
3.0%
2.7%
CANON ANNUAL REPORT 2024
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FINANCIAL
SECTION
CORPORATE
DATA
20. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments
At December 31, 2024, commitments outstanding for
the purchase of property, plant and equipment approxi-
mated ¥112,760 million, and commitments outstanding
for the purchase of parts and raw materials approximated
¥227,455 million.
Guarantees
Canon occupies sales offices and other facilities under lease
arrangements accounted for as operating leases. Deposits
mainly for restoration made under such arrangements aggre-
gated ¥12,328 million and ¥10,516 million at December 31,
2024 and 2023, respectively, and are included in noncurrent
receivables in the accompanying consolidated balance sheets.
Canon provides guarantees for its employees, affiliates
and other companies. The guarantees for the employees are
principally made for their housing loans. The guarantees for
affiliates and other companies are made for their lease obliga-
tions and bank loans to facilitate financing.
Canon would have to perform under a guarantee if the
borrower defaults on a payment within the contract terms.
The contract terms are 1 year to 10 years in case of employ-
ees with housing loans, and 1 year to 5 years in case of affili-
ates and other companies with lease obligations and bank
loans. The maximum amount of undiscounted payments
Canon would have had to make in the event of default is
¥2,014 million at December 31, 2024. The carrying amounts
of the liabilities recognized for Canon’s obligations as a guar-
antor under those guarantees at December 31, 2024 were
not significant.
Canon also offers assurance-type warranties under which it generally guarantees the performance of products delivered and
services rendered for a certain period or term. Estimated product warranty costs are recorded at the time revenue is recognized
and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.
Estimates for accrued product warranty costs are based on historical experience. Accrued product warranty costs are included in
accrued expenses in the accompanying consolidated balance sheets and the changes for the years ended December 31, 2024
and 2023 are summarized as follows:
December 31
Millions of yen
2024
2023
Balance at beginning of the year
23,290
20,887
Additions
20,039
19,859
Utilization
(16,867)
(16,001)
Other
(2,777)
(1,455)
Balance at end of the year
23,685
23,290
Legal proceedings
Canon is involved in various claims and legal actions arising
in the ordinary course of business. Canon has recorded provi-
sions for liabilities when it is probable that liabilities have been
incurred and the amount of loss can be reasonably esti-
mated. Canon reviews these provisions at least quarterly and
adjusts these provisions to reflect the impact of the negotia-
tions, settlements, rulings, advice of legal counsel and other
information and events pertaining to a particular case. Based
on its experience, although litigation is inherently unpredict-
able, Canon believes that any damage amounts claimed in
outstanding matters are not a meaningful indicator of Canon’s
potential liability. In the opinion of management, any reason-
ably possible range of losses from outstanding matters would
not have a material adverse effect on Canon’s consolidated
financial position, results of operations, and cash flows.
CANON ANNUAL REPORT 2024
100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF
CREDIT RISK
Fair value of financial instruments
The estimated fair values of Canon’s financial instruments at December 31, 2024 and 2023 are set forth below. The following
summary excludes cash and cash equivalents, time deposits, trade receivables, noncurrent receivables, short-term loans, trade
payables and accrued expenses, and the fair values of these instruments approximate their carrying amounts. The summary also
excludes investments and derivative instruments which are disclosed in Note 2 and Note 22, and Note 18, respectively.
December 31
Millions of yen
2024
2023
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Long-term debt, including current portion of long-term debt
(202,031)
(201,944)
(161)
(161)
The following methods and assumptions are used to esti-
mate the fair value in the above table.
Long-term debt
Canon’s long-term debt instruments are classified as Level 2
instruments and valued based on the present value of future
cash flows associated with each instrument discounted using
current market borrowing rates for similar debt instruments
of comparable maturity. The levels are more fully described in
Note 22.
Limitations of fair value estimates
Fair value estimates are made at a specific point in time, based
on relevant market information and information about the
financial instruments. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment
and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Concentrations of credit risk
No single customer accounted for more than 10 percent of con-
solidated trade receivables as of December 31, 2024 or 2023.
22. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A
three-level fair value hierarchy that prioritizes the inputs used to measure fair value is as follows:
Level 1 – Inputs are quoted prices in active markets for identi-
cal assets or liabilities.
Level 2 – Inputs are quoted prices for similar assets or liabili-
ties in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not
active, inputs other than quoted prices that are
observable, and inputs that are derived principally
from or corroborated by observable market data by
correlation or other means.
Level 3 – Inputs are derived from valuation techniques in
which one or more significant inputs or value drivers
are unobservable, which reflect the reporting entity’s
own assumptions about the assumptions that mar-
ket participants would use in establishing a price.
CANON ANNUAL REPORT 2024
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CORPORATE
DATA
Assets and liabilities measured at fair value on a recurring basis
The following tables present Canon’s assets and liabilities that are measured at fair value on a recurring basis consistent with the
fair value hierarchy at December 31, 2024 and 2023.
December 31
Millions of yen
2024
Level 1
Level 2
Level 3
Total
Assets:
Cash and cash equivalents
—
1,500
—
1,500
Short-term investment:
Available-for-sale:
Corporate bonds
—
—
—
—
Investments:
Available-for-sale:
Corporate bonds
—
16,679
—
16,679
Fund trusts and others
3,944
450
—
4,394
Equity securities
25,455
—
—
25,455
Prepaid expenses and other current assets:
Derivatives
—
226
—
226
Total assets
29,399
18,855
—
48,254
Liabilities:
Other current liabilities:
Derivatives
—
3,380
—
3,380
Total liabilities
—
3,380
—
3,380
December 31
Millions of yen
2023
Level 1
Level 2
Level 3
Total
Assets:
Cash and cash equivalents
—
2,073
—
2,073
Short-term investment:
Available-for-sale:
Corporate bonds
—
884
—
884
Investments:
Available-for-sale:
Corporate bonds
—
8,279
—
8,279
Fund trusts and others
351
457
—
808
Equity securities
27,283
—
—
27,283
Prepaid expenses and other current assets:
Derivatives
—
3,900
—
3,900
Total assets
27,634
15,593
—
43,227
Liabilities:
Other current liabilities:
Derivatives
—
928
—
928
Total liabilities
—
928
—
928
CANON ANNUAL REPORT 2024
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Level 1 investments are comprised principally of Japanese
equity securities, which are valued using an unadjusted quoted
market price in active markets with sufficient volume and
frequency of transactions.
Level 2 assets and liabilities are comprised principally of cash
and cash equivalents, corporate bonds included in investments
or short-term investments, and derivatives. Cash and cash
equivalents, corporate bonds included in investments or
short-term investments are valued using quoted prices for
identical assets in markets that are not active or quotes
obtained from counterparties or third parties.
Assets and liabilities measured at fair value on a nonrecurring basis
Assets and liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2024 as follows. There
were no significant assets or liabilities to be measured at fair value on a nonrecurring basis during the year ended December 31,
2023.
December 31
Millions of yen
2024
Impairment Loss
Level 1
Level 2
Level 3
Total
Assets:
goodwill
(165,100)
—
—
403,131
403,131
Goodwill is classified as Level 3 and is valued based on an
income approach using unobservable inputs. Our company
conducted an annual goodwill impairment test as of October
1, 2024, which resulted in the fair value of the reporting
unit containing the above assets being less than its carrying
amount. Our company recognizes the difference between fair
value and carrying amount as an impairment loss on goodwill.
The fair value of the reporting unit is measured using the dis-
counted cash flow method using a weighted average cost of
capital of 6.0% and future cash flows. Future cash flows are
calculated based on management’s estimates of sales, gross
profit, operating expenses and growth in perpetuity, taking
into account industry trends and market conditions.
23. SEGMENT INFORMATION
Canon reports in four reportable segments: the Printing
Business Unit, the Medical Business Unit, the Imaging
Business Unit and the Industrial Business Unit with Others and
Corporate, which are based on the organizational structure
and information reviewed by Canon’s management to evalu-
ate results and allocate resources.
In order to manage the performance of each reportable seg-
ment more appropriately, Canon has changed its performance
management method regarding intercompany transactions for
Others and Corporate from the beginning of the first quarter
of 2024. Operating results for the year ended December 31,
2023 have also been reclassified.
Canon has modified the presentation of segment informa-
tion in accordance with the requirements set forth in ASU
2023-07, Segment Reporting – Improvements to Reportable
Segment Disclosures from the fourth quarter of 2024.
Operating results for the year ended December 31, 2023 have
also been reclassified.
The primary products included in each segment are as follows:
Printing Business Unit:
Digital continuous feed presses / Digital sheet-fed presses /
Large format printers / Office MFDs / Document solutions /
Laser MFPs / Laser printers / Inkjet printers / Image scanners /
Calculators
Medical Business Unit:
CT systems / Diagnostic ultrasound systems /
Diagnostic X-ray systems / MRI systems /
Digital radiography systems / Ophthalmic equipment /
In vitro diagnostic systems and reagents / Healthcare IT Solutions
Imaging Business Unit:
Interchangeable-lens digital cameras / Interchangeable lenses /
Digital compact cameras / Compact photo printers /
MR Systems / Network cameras / Video management software /
Video content analytics software / Digital camcorders /
Digital cinema cameras / Broadcast equipment
CANON ANNUAL REPORT 2024
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DATA
Industrial Business Unit:
Semiconductor lithography equipment /
FPD lithography equipment /
OLED Display Manufacturing Equipment /
Vacuum thin-film deposition equipment / Die bonders
Others:
Handy terminals / Document scanners
The accounting policies of the segments are substantially
the same as those described in the significant accounting poli-
cies in Note 1. Canon evaluates results and allocates resources
for each segment based on income before income taxes.
Information about operating results and assets for each segment as of and for the years ended December 31, 2024 and 2023
is as follows:
Millions of yen
Printing
Medical
Imaging
Industrial
Others and
Corporate
Eliminations
Consolidated
2024:
Net sales:
External customers
2,515,543
568,260
937,028
345,863
143,127
—
4,509,821
Intersegment
7,182
548
363
10,599
90,619
(109,311)
—
Total
2,522,725
568,808
937,391
356,462
233,746
(109,311)
4,509,821
Cost of sales
1,356,530
308,642
425,663
201,125
186,273
(111,507)
2,366,726
Gross profit
1,166,195
260,166
511,728
155,337
47,473
2,196
2,143,095
Research and
development expenses
100,361
52,639
101,200
30,559
52,589
—
337,348
Selling, general and
administrative expenses
775,950
347,964
259,224
55,875
86,058
922
1,525,993
Operating profit
289,884
(140,437)
151,304
68,903
(91,174)
1,274
279,754
Other income (deductions)
14,262
929
3,004
1,500
1,712
—
21,407
Income before income taxes
304,146
(139,508)
154,308
70,403
(89,462)
1,274
301,161
Total assets
1,354,948
421,453
425,515
238,625
3,329,047
(3,342)
5,766,246
Depreciation and amortization
63,356
13,132
19,984
11,590
127,403
—
235,465
Capital expenditures
70,075
16,663
38,922
13,109
117,498
—
256,267
2023:
Net sales:
External customers
2,339,718
552,296
861,456
303,807
123,695
—
4,180,972
Intersegment
6,358
1,484
169
10,912
85,149
(104,072)
—
Total
2,346,076
553,780
861,625
314,719
208,844
(104,072)
4,180,972
Cost of sales
1,288,172
307,881
384,453
177,652
153,947
(100,043)
2,212,062
Gross profit
1,057,904
245,899
477,172
137,067
54,897
(4,029)
1,968,910
Research and
development expenses
97,925
47,182
93,834
27,872
65,101
—
331,914
Selling, general and
administrative expenses
731,670
167,068
237,759
50,597
76,141
(1,605)
1,261,630
Operating profit
228,309
31,649
145,579
58,598
(86,345)
(2,424)
375,366
Other income (deductions)
6,752
490
854
568
6,932
(195)
15,401
Income before income taxes
235,061
32,139
146,433
59,166
(79,413)
(2,619)
390,767
Total assets
1,247,666
361,251
406,390
244,275
3,180,186
(23,191)
5,416,577
Depreciation and amortization
69,712
14,041
22,062
12,931
119,930
—
238,676
Capital expenditures
65,175
12,094
28,922
10,432
115,102
—
231,725
CANON ANNUAL REPORT 2024
104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The CEO as chief operating decision maker (CODM) uses Net
sales, Gross profit to net sales ratio, Operating expense to net
sales ratio and Operating profit to net sales and Income before
income taxes to net sales ratio to assess segment performance
and make decisions about resource allocation.
Intersegment sales are recorded at the same prices used in
transactions with third parties. Expenses not directly associ-
ated with specific segments are allocated based on the most
reasonable measures applicable. Corporate expenses include
certain corporate research and development expenses.
Amortization costs of identified intangible assets resulting
from the purchase price allocation of Toshiba Medical
Systems Corporation (currently, Canon Medical Systems
Corporation) are also included in corporate expenses.
Segment assets are based on those directly associated with
each segment. Corporate assets primarily consist of cash and
cash equivalents, investments, deferred tax assets, goodwill,
identified intangible assets from acquisitions and corporate
properties. Capital expenditures represent the additions to
property, plant and equipment and intangible assets mea-
sured on an accrual basis.
Other operating expense includes personnel expenses.
Information about sales by product and service to external customers for each segment for the years ended December 31,
2024 and 2023 is as follows:
Years ended December 31
Millions of yen
2024
2023
Printing
Production
440,718
401,237
Office multifunction devices
645,617
620,843
Office others
406,912
362,618
Office
1,052,529
983,461
Laser printers
676,582
606,639
Inkjet printers and Others
345,714
348,381
Prosumer
1,022,296
955,020
Total
2,515,543
2,339,718
Medical
Diagnostic equipment
568,260
552,296
Imaging
Cameras
579,593
544,366
Network cameras and Others
357,435
317,090
Total
937,028
861,456
Industrial
Optical equipment
253,216
212,505
Industrial equipment
92,647
91,302
Total
345,863
303,807
Others and Corporate
143,127
123,695
Consolidated
4,509,821
4,180,972
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SECTION
CORPORATE
DATA
Information by major geographic area as of and for the years ended December 31, 2024 and 2023 is as follows:
Millions of yen
2024
2023
Net sales:
Japan
955,456
901,589
Americas
1,429,201
1,312,438
Europe
1,184,389
1,111,211
Asia and Oceania
940,775
855,734
Total
4,509,821
4,180,972
Long-lived assets:
Japan
998,506
966,960
Americas
191,000
174,877
Europe
223,922
217,244
Asia and Oceania
146,059
137,865
Total
1,559,487
1,496,946
Net sales are attributed to areas based on the location
where the products are shipped and the services are per-
formed to the customers. Other than in Japan and the United
States, Canon does not conduct business in any individual
country in which its sales in that country exceed 10% of
consolidated net sales. Net sales in the United States were
¥1,311,397 million and ¥1,232,452 million for the years
ended December 31, 2024 and 2023, respectively.
Long-lived assets represent property, plant and equipment,
intangible assets, and operating lease right-of-use assets for
each geographic area.
24. SUBSEQUENT EVENT
Canon evaluated the subsequent events up to March 28, 2025, the filing date of Annual Securities Report.
Borrowing Funds
Canon borrowed funds as follows under its existing overdraft facilities with Mizuho Bank, Ltd. and SMBC Bank, Ltd.
(1) Use of funds:
Operating funds
(2) Borrowing date and amount: January 6, 2025
¥200,000 million
February 19, 2025
¥50,000 million
February 26, 2025
¥20,000 million
March 12, 2025
¥30,000 million
March 19, 2025
¥70,000 million
(3) Lender:
Mizuho Bank, Ltd. and SMBC Bank, Ltd.
(4) Interest rate:
Base rate plus a spread
CANON ANNUAL REPORT 2024
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Repurchase of own share
1. Content of resolution for the repurchase of own share
On January 30, 2025, the Board of Directors of Canon approved a plan to repurchase its own shares under the Article 156, as
applied pursuant to Paragraph 3, Article 165, of the Companies Act of Japan, as follows.
(1) Reason for repurchase:
Canon decided to acquire its own shares with the aim of further improving its corporate value through active growth invest-
ment and enhancing shareholder returns by improving capital efficiency. As a part of this approach for shareholder returns,
Canon passed a resolution to acquire its own shares.
(2) Type of shares and Total number of shares to be repurchased: Up to 26 million shares of common stock
(3) Total cost of repurchase:
Up to ¥100,000 million
(4) Period of repurchase:
From February 3, 2025 to January 30, 2026
(5) Method of acquisition:
Market purchases on the Tokyo Stock Exchange
1) Purchases through the Tokyo Stock Exchange Trading
Network Off-Auction Own Share Repurchase Trading
System (ToSTNeT-3)
2) Market purchases based on a discretionary trading
contract regarding acquisition of own shares
2. Completion of repurchase of own share
The acquisition of own shares has completed the acquisition in accordance with a Board of Directors’ resolution passed by Canon
Inc. on January 30, 2025.
(1) Type of shares and total number of shares acquired:
Shares of common stock
19,685,200 shares
(2) Total cost of acquisition:
¥99,999,605,100
(3) Period of acquisition:
From February 3, 2025 to March 7, 2025
3. Content of resolution for the repurchase of own share
On March 13, 2025, the Board of Directors of Canon approved a plan to repurchase its own shares under the Article 156, as
applied pursuant to Paragraph 3, Article 165, of the Companies Act of Japan, as follows.
(1) Reason for repurchase:
Canon decided to acquire its own shares with the aim of further improving its corporate value through active growth invest-
ment and enhancing shareholder returns by improving capital efficiency. As a part of this approach for shareholder returns,
Canon passed a resolution to acquire its own shares.
(2) Type of shares and total number of shares to be repurchased: Up to 26 million shares of common stock
(3) Total cost of repurchase:
Up to ¥100,000 million
(4) Period of repurchase:
From March 14, 2025 to January 30, 2026
(5) Method of acquisition:
Market purchases on the Tokyo Stock Exchange
1) Purchases through the Tokyo Stock Exchange Trading
Network Off-Auction Own Share Repurchase Trading
System (ToSTNeT-3)
2) Market purchases based on a discretionary trading
contract regarding acquisition of own shares
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SUPPLEMENTARY SCHEDULE
Schedule of Bonds
Not applicable.
Schedule of Borrowings
This information is presented in the note 9 to the consolidated financial statements.
Schedule of Asset Retirement Obligations
As the amount of asset retirement obligations as of the end of the previous consolidated fiscal year and the end of the cur-
rent consolidated fiscal year are a hundredth or less of the sum of liabilities and net assets each of the said period, it has been
omitted.
Schedule of valuation allowance
Years ended December 31
Millions of yen
Balance at beginning
of period
Addition-charged
to income
Deduction bad debts
written off
Translation
adjustments and other
Balance at end
of period
2024:
Allowance for credit losses
Trade receivables
13,276
2,051
(1,457)
986
14,856
Lease receivables
5,871
4,096
(4,456)
1,350
6,861
CANON ANNUAL REPORT 2024
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CONSOLIDATED SUPPLEMENTARY SCHEDULE
1. Matters relating to the basic framework for internal control over financial reporting
Fujio Mitarai, Chairman & CEO, and Toshizo Tanaka, Executive Vice President & CFO are responsible for designing and operat-
ing effective internal control over financial reporting of Canon (the “Company”) and have designed and operated internal
control over financial reporting in accordance with the basic framework for internal control set forth in “On the Setting of
the Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial
Reporting (Council Opinions)” released by the Business Accounting Council.
The internal control is designed to achieve its objectives to the extent reasonable through the effective function and combina-
tion of its basic elements. Therefore, there is a possibility that misstatements may not be completely prevented or detected by
internal control over financial reporting.
2. Matters relating to the scope of assessment, the basis date of assessment and the assessment procedures
The assessment of internal control over financial reporting was conducted as of the end of the fiscal year, December 31, 2024,
in accordance with assessment standards for internal control over financial reporting generally accepted in Japan.
In conducting this assessment, the Company’s management evaluated internal controls which may have a material effect on
our entire financial reporting on a consolidation basis (“entity-level controls”) and based on the results of this assessment,
management selected business processes to be tested. Management analyzed these selected business processes, identified
key controls that may have a material impact on the reliability of the Company’s financial reporting, and assessed the design
and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of the internal controls
of the Company.
Management determined the required scope of assessment of internal control over financial reporting for the Company,
as well as its consolidated subsidiaries and equity-method affiliated companies, from the perspective of the materiality that
may affect the reliability of their financial reporting. The materiality that may affect the reliability of the financial reporting
is determined by taking into account the materiality of quantitative and qualitative impacts on financial reporting. In light of
the results of assessment of entity-level controls conducted for the Company and its consolidated subsidiaries, management
reasonably determined the scope of assessment of internal controls over business processes. Consolidated subsidiaries and
equity-method affiliated companies determined to have an insignificant quantitative and qualitative influence on the reliability
of financial reporting are not included in the scope of assessment of entity-level controls.
Regarding the scope of assessment of internal control over business processes, management added up the net sales (after
the elimination of transactions between consolidated companies) of each subsidiary in the previous year from the highest and
selected the companies with net sales that account for approximately two-thirds of the total amount on a consolidated basis
as “significant locations and/or business units.” At selected significant locations and/or business units targeted for assess-
ment, our scope of assessment included business processes leading to sales, accounts receivable and inventories as signifi-
cant accounts that may have a material impact on the business objectives of the Company. Further, in addition to selected
significant locations and/or business units, management also included in the scope of assessment, as business processes
having greater materiality, business processes relating to (i) greater likelihood of material misstatements and/or (ii) significant
accounts involving estimates and the management’s judgment and/or (iii) a business or operation dealing with high-risk trans-
actions, taking into account their impact on the financial reporting.
3. Matters relating to the results of the assessment
As a result of the assessment described above, as of the end of this fiscal year, management concluded that the Company’s
internal control over financial reporting was effective.
4. Additional notes
No material items to report
5. Special notes
No material items to report
CANON ANNUAL REPORT 2024
109
MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
March 28, 2025
To the Board of Directors of
Canon Inc.
Deloitte Touche Tohmatsu LLC
Tokyo office
Designated Engagement Partner,
Certified Public Accountant:
Masayuki Yamada
Designated Engagement Partner,
Certified Public Accountant:
Susumu Nakamura
Designated Engagement Partner,
Certified Public Accountant:
Hideaki Takagi
Designated Engagement Partner,
Certified Public Accountant:
Masayoshi Nakai
Opinion
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the consolidated
financial statements of Canon Inc. and its consolidated subsidiaries (the “Group”) included in the Financial Section, namely,
the consolidated balance sheet as of December 31, 2024, and the consolidated statement of income, consolidated statement
of comprehensive income, consolidated statement of equity and consolidated statement of cash flows for the fiscal year from
January 1, 2024 to December 31, 2024, and the related notes, and consolidated supplementary schedules.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as of December 31, 2024, and its consolidated results of its operations and its consolidated
cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America
pursuant to the provisions of the third paragraph of the Supplementary Provisions of the Cabinet Office Ordinance for Partial
Amendment of the Ordinance for Terminology, Forms and Preparation Methods of Consolidated Financial Statements (No.11 of
the Cabinet Office Ordinance in 2002).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of
our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and
we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
CANON ANNUAL REPORT 2024
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(TRANSLATION) INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated
financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.
Goodwill—Medical Reporting Unit—Refer to Notes 1 and 8 to the Consolidated Financial Statements
Key Audit Matter Description
How the Key Audit Matter Was Addressed in the Audit
The Group’s total goodwill was ¥915,258 million (15.9% of
Total assets) as of December 31, 2024, of which ¥403,131
million (44.0% of Goodwill) was allocated to the Medical
Reporting Unit.
The Group tests goodwill for impairment annually in the
fourth quarter of each year, or more frequently if indicators
of potential impairment exist. The fair value of the Medical
Reporting Unit is determined primarily based on a discounted
cash flow analysis, which involves estimates of projected
future cash flows and discount rates. The estimates of
projected future cash flows are based on a mid-term
management plan and a long-term growth rate for the
subsequent periods (“the long-term growth rate”) that
considered the future market growth of medical equipment
and growth in geographies where the Group operates
its medical business. The estimate of the discount rate is
determined based on the weighted average cost of capital,
which considers primarily market and industry data as well as
specific risk factors.
As of the measurement date, the fair value of the Medical
Reporting Unit fell short of its carrying amount, and
therefore the Group recognized ¥165,100 million of goodwill
impairment loss in the current fiscal year.
We determined the valuation of goodwill allocated to
the Medical Reporting Unit as a key audit matter given
it represents 44.0% of the total goodwill and there are
significant judgements made by management on estimates
and assumptions related to the projected future cash flows
and the discount rate to measure the fair value of the
Medical Reporting Unit on which performing audit
procedures required a high degree of auditor judgment and
an increased extent of effort, including the need to involve
our fair value specialists.
Our audit procedures related to the projected future cash
flows, the discount rate and the long-term growth rate used
by management to measure the fair value of the Medical
Reporting Unit included the following, among others:
(1) Evaluation of internal controls
• We tested the effectiveness of controls over
management’s goodwill impairment evaluation, including
those over management’s estimates and assumptions
used in the projected future cash flows, the discount rate
and the long-term growth rate.
(2) Evaluation of the reasonableness of management’s
projected future cash flows
• We evaluated management’s ability to accurately project
future cash flows by comparing actual results to
management’s historical projections.
• We made inquiries of management to understand
significant assumptions used in the projected future
cash flows.
• We evaluated the reasonableness of management’s
projected future cash flows by comparing the projections
to actual results, documents reported to management,
and other related documents for respective revenue, cost
of sales and other elements, which together comprise
management’s projected future cash flows.
• We evaluated the reasonableness of management’s
significant assumptions regarding the revenue growth
rate used in the projected future cash flows, which could
have a significant impact on the fair value of the Medical
Reporting Unit, by comparing the revenue growth rate to
the expected market growth rates for each type of
medical equipment and each region in which the Group
operates its medical business as included in independent
third-party industry reports.
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(3) Evaluation of the reasonableness of the valuation
methodology, the discount rate, and the long-term
growth rate
• With the assistance of our fair value specialists,
we evaluated the reasonableness of the valuation
methodology, the discount rate and the long-term
growth rate by:
– examining whether the valuation methodology
used, including the determination of the discount
rate and the long-term growth rate, was consistent
with existing valuation practices that are both
generally accepted in practice and acceptable in the
circumstance.
– testing the underlying data used in the determination
of the discount rate and the long-term growth rate,
and the mathematical accuracy of the calculation; and
– developing a range of independent estimates and
comparing those to the discount rate and the long-
term growth rate selected by management.
Other Information
Management is responsible for the other information. Audit & Supervisory Board members and the Audit & Supervisory Board
are responsible for overseeing the Directors’ execution of duties relating to the design and operating effectiveness of the controls
over the other information. The other information comprises the information included in the Annual Securities Report, but does
not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for the
Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally
accepted in the United States of America.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the Directors’ execution of
duties relating to the design and operating effectiveness of the controls over the Group’s financial reporting process.
CANON ANNUAL REPORT 2024
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(TRANSLATION) INDEPENDENT AUDITOR’S REPORT
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor’s judgment. In
addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance with
accounting principles generally accepted in the United States of America, as well as the overall presentation, structure and
content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we have
complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with Audit & Supervisory Board members and the Audit & Supervisory Board, we determine
those matters that were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
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Opinion
Pursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited
management’s report on internal control over financial reporting of Canon Inc. as of December 31, 2024.
In our opinion, management’s report on internal control over financial reporting referred to above, which represents that the
internal control over financial reporting of Canon Inc. as of December 31, 2024, is effectively maintained, presents fairly, in
all material respects, the results of the assessment of internal control over financial reporting in accordance with assessment
standards for internal control over financial reporting generally accepted in Japan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting
generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Internal Control Audit section of our report. We are independent of the Group in accordance with the provisions of the
Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for
Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the preparation
and fair presentation of its report on internal control in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan. Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for
overseeing and verifying the design and operating effectiveness of internal control over financial reporting. There is a possibility
that misstatements may not be completely prevented or detected by internal control over financial reporting.
Auditor’s Responsibilities for the Internal Control Audit
Our objectives are to obtain reasonable assurance about whether management’s report on internal control over financial
reporting is free from material misstatement and to issue an auditor’s report that includes our opinion.
As part of an audit in accordance with auditing standards for internal control over financial reporting generally accepted in
Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Perform audit procedures to obtain audit evidence regarding the results of the assessment of internal control over financial
reporting in management’s report on internal control. The procedures selected depend on the auditor’s judgment, including the
significance of effects on reliability of financial reporting.
• Examine representations on the scope, procedures and results of the assessment of internal control over financial reporting
made by management, as well as evaluating the overall presentation of management’s report on internal control.
• Obtain sufficient appropriate audit evidence regarding the results of the assessment of internal control over financial reporting.
We are responsible for the direction, supervision and performance of the internal control audit. We remain solely responsible
for our audit opinion.
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(TRANSLATION) INDEPENDENT AUDITOR’S REPORT
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding, among other matters,
the planned scope and timing of the internal control audit, result of the internal control audit, including any identified material
weakness which should be disclosed and the result of remediation.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we have
complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
Fees for audit and other services for the year ended December 31, 2024, which were charged by us and our network firms to
Canon Inc. and its subsidiaries are disclosed in (3) Status of audit in Corporate Governance, included in Information on
Reporting Company of the Annual Securities Report.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.
Notes to the Readers of Independent Auditor’s Report
This is an English translation of the independent auditor’s report as required by the Financial Instruments and Exchange Act
of Japan for the conveniences of the reader. The other information in the Annual Securities Report referred to in the “Other
Information” section of this English translation is not translated.
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DATA
Manufacturing
Canon Precision Inc.
Canon Tokki Corporation
Fukushima Canon Inc.
Canon Medical Systems Corporation
Canon Electron Tubes & Devices Co., Ltd.
Canon Components, Inc.
Canon Semiconductor Equipment Inc.
Canon Chemicals Inc.
Canon Electronics Inc.
Canon Finetech Nisca Inc.
Minaris Medical Co., Ltd.
Canon ANELVA Corporation
Nagahama Canon Inc.
Canon Machinery Inc.
Oita Canon Materials Inc.
Oita Canon Inc.
Nagasaki Canon Inc.
Miyazaki Canon Inc.
Canon Virginia, Inc.
Quality Electrodynamics, LLC
Canon Bretagne S.A.S.
Canon Production Printing Netherlands B.V.
Canon Production Printing Germany GmbH & Co.KG
Axis Communications AB
Canon Dalian Business Machines, Inc.
Canon (Suzhou) Inc.
Canon Zhongshan Business Machines Co., Ltd.
Canon Inc., Taiwan
Canon Vietnam Co., Ltd.
Canon Hi-Tech (Thailand) Ltd.
Canon Prachinburi (Thailand) Ltd.
Canon Business Machines (Philippines), Inc.
Canon Opto (Malaysia) Sdn. Bhd.
Canon Machinery (Malaysia) Sdn. Bhd.
Research & Development
Canon Research Centre France S.A.S.
Marketing & Other
Canon Marketing Japan Inc.
Canon System and Support Inc.
Canon IT Solutions Inc.
Primagest,Inc.
Canon Medical Finance Co., Ltd.
Canon U.S.A., Inc.
Canon Canada Inc.
Canon Financial Services, Inc.
Canon Medical Systems USA, Inc.
Axis AB
Canon Europa N.V.
Canon Europe Ltd.
Canon Ru LLC
Canon (UK) Ltd.
Canon Deutschland GmbH
Canon (Schweiz) AG
Canon Nederland N.V.
Canon France S.A.S.
Canon Middle East FZ-LLC
Canon Italia S.p.A.
Canon Medical Systems Europe B.V.
Milestone Systems A/S
Canon (China) Co., Ltd.
Canon Hongkong Co., Ltd.
Canon Semiconductor Equipment Taiwan, Inc.
Canon Singapore Pte. Ltd.
Canon India Pvt. Ltd.
Canon Australia Pty. Ltd.
MAJOR CONSOLIDATED SUBSIDIARIES
(As of December 31, 2024)
Canon Inc.
30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan
Manager of the Register of Shareholders
Mizuho Trust & Banking Co., Ltd.
1-3-3, Marunouchi, Chiyoda-ku, Tokyo 100-8241, Japan
Depositary and Agent with Respect to American
Depositary Receipts for Common Shares
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 11, New York, NY 10179, USA
Stock Exchange Listings:
Tokyo, Nagoya, Fukuoka and Sapporo Stock exchanges
Ordinary General Meeting of Shareholders:
March of each year
Further Information:
For publications or information, please contact the
Public Affairs Headquarters, Canon Inc., Tokyo,
or access Canon’s Website at global.canon/en
CANON ANNUAL REPORT 2024
116
TRANSFER AND
REGISTRAR’S OFFICE
SHAREHOLDER
INFORMATION
30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan
CANON INC.
©Canon Inc. 2024 PUB.BEP034 0325