Good morning or good afternoon or good evening, ladies and gentlemen, and welcome to Canon's conference call. Please note that all financial comparison made during my presentation will be on a year-on-year basis unless otherwise stated.
Please turn to Slide 3. I will now review the business environment in 2013. Although the economies of the United States and Japan headed towards gradual recoveries in the latter half of the year, the global economic environment remained challenging. This was reflected in the prolonged economic weakness in Europe and slow growth in China's and the other emerging market. Contrary to the recovery we expected at the beginning of the year, a recent IMF information indicates that the world GDP growth in 2013 was 3%, the lowest rate since the Lehman shock. In our business areas as well, the environment was challenged, especially for consumer goods, where demand didn't pick up due to the economic slowdowns. As for exchange rates, we finally saw progress in correcting the excessively strong yen, and the weaker yen trend have become apparent.
Amidst these conditions, looking at our Camera business, the economic slowdowns and the effect of expanding sales of smartphones led to the continued contraction of the compact cameras market. And for interchangeable lenses cameras, we carried out inventory adjustment at the beginning of the year, after which we faced weaker-than-expected sales. As a result, we recorded unfavorable results in this business segment.
Within our Office segment, however, our laser printers business steadily recovered from the second quarter, thanks to growth in MFPs and the emerging market. As for the Industry & Others segment, business began to recover in the fourth quarter, particularly for lithography equipment. Overall, with the added benefits of the depreciation of the yen, we achieved sales and profit growth for the first time in 3 years. From a quarterly perspective, we returned to sales and profit growth from the second quarter. And with each passing quarters, the recovery trend became increasingly apparent. Please refer to Slide 4. This slide summarize our performance in 2013.
Please refer to Slide 5. I will now compare several results with our previous projections. Changes in exchange rate had a positive impact on both net sales and operating profit. As for changes in sales volumes, in addition to lower-than-projected growth for interchangeable lenses cameras during the year-end selling seasons in overseas market, we are not able to meet our target for either copiers or our lithography equipment. As a result, the impact was negative on all segments. In the other categories, price declines, cost reductions and expenses were basically in line with our peers.
Please turn to Slide 6. I will now discuss our projections for 2014, this year's. This slide shows our assumptions for exchange rate and the exchange rate sensitivity.
Please turn to Slide 7. As you can see, we expect the global economies to gradually recover after having hitting a bottom in 2013. Supported by the United States and the steady growth in Japan, we also expect Europe to return to positive growth. As for emerging market, we expect relatively high growth to continue. Overall, we also expect recoveries in our related market, particularly in the second half. Within the Office and Industry & Others segments, we will expand sales, taking advantage of market recoveries that started last year. Within the Imaging Systems segment, due to the delayed recoveries in market demand for interchangeable lenses cameras, we believe that in the first half of the year, a small amount of inventory adjustment will be necessary. Amidst this situations, we are focused on improving our product mix of entry-level models and maintaining the same level of unit sales as last year's. Accordingly, we aim to achieve our second consecutive year of sales and profit growth firmly returning to a possible [ph] expansions. Please refer to Slide 8. This slide summarizes our projections.
Please turn to Slide 9. I will now compare our projection with our 2013 result. Changes in exchange rates are expected to have a positive impact on both net sales and operating profit. As for changes in sales volumes, we expect a positive impact on our Office and Industry & Others segment amidst ongoing market recoveries. As for Imaging Systems, we expect a negative impact on compact cameras due to ongoing market contractions. For interchangeable-lens camera, however, we expect sales to be in line with those of last year's. And for inkjet printers, we expect growth mainly in emerging market. As for the Other categories, we plan to limit price declines to JPY 90 billion compared with JPY 138.2 billion last year. We also plan to reduce costs by JPY 40 billion, the same where it was as last year's.
Please refer to Slide 10. I will now discuss each business unit starting with Office segment. In 2013, the overall copier market grew at a gradual rate. Although the market for monochrome copier shrunk due to economic weakness in emerging market, the market for copiers continued to expand across the regions. This year, we executed a full scale rollout for our second-generation imageRUNNER ADVANCE series, which have a high areas [ph] of systems affinity. Leveraging this advantage, we strengthened our ability to offer solution focused on document management. As a result, we posted favorable sales. For the full year, we achieved an 8% increase in color unit sales. Overall, however, unit sales were down 2%, reflecting the sluggish sales of low-speed monochrome models in the first half of the year. However, we did show an improving trend in Q3 unit sales and enhanced product competitiveness gradually took effect, resulting in the 4% increase in total unit sales in the fourth quarter.
Next, our laser printers. For the full year, while sales were sluggish at the start of the year were due to the slow economies, the market grew a few percentage points for the full year, thanks to double-digit growth of color MFPs and the new demand in emerging markets. During the year, we worked to broadly expand sales from the low end to the high end. As a result, we were able to raise our market shares, thanks to a 14% increase in unit sales. Unit sales of consumables for the year, however, were slightly below that of the previous year's, reflecting sluggish hardware sales over the past several years and resulting in flat in the installed base.
Please turn to Slide 11. Next, our projection for this business unit. As for copiers in terms of unit, we expect the overall market to remain on a path of gradual growth, driven by continued expansion of colors. Based on this outlook, we work to enhance our abilities to compete for large deals as well as expand sales in emerging market by strengthening our lineup. Additionally, we'll take steps to continue strengthening our solutions business. For example, globally deploying services that make use of the cloud. In the commercial printing areas, we will take further measures to expand sales, capturing growth opportunities in such areas as digital printing, where demand for short-run jobs and faster turnaround times are increasing. We'll also work to maximize synergies with the process.
Next, laser printers. Similar to last year, we expect the overall market to continue to grow at a gradual rate. The last year, we focused on actively expanding sales and raising our market shares. And we have seen some positive result. This year, in turn, we will concentrate our focus on expanding sales of MFPs released since autumn of 2012. These efforts are expected to effectively expand future sales of toner cartridges. As for hardware unit sales, we aim to steadily realize growth in line with the overall market. And for unit sales of consumables, we expect this to be basically in line with those of last year's.
Please refer to Slide 12. So next, I will discuss our Imaging Systems Business Unit, starting with cameras. As for interchangeable lenses cameras, although the Japanese market continued to expand, the market overall shrank due to lower sales of entry-level models in overseas market. Overseas sales were particularly weak in Russia and in China, where we saw impact from the government thrift campaign. Lower-than-expected sales during the year-end selling season in the United States and Europe and the sluggish economic growth in other emerging market also had an impact. The reason behind the delayed recoveries in sales of entry-level models is prolonged economic weakness, which reduced consumer purchasing power. People have become more selective in their purchasing decision and seems to give higher priority to the purchase of other type of mobile devices. Additionally, it took until the middle of 2013 to adjust the channel inventory situations, which was high at the end of 2012. The market fell 3% to 17.5 million units.
Furthermore, while we have high hopes for the new models that we launched in the spring, unit sales didn't match our original expectations. One of the reasons why this occurred is because we are not able to fully convey to the market the products' new features and the ease-of-use. Additionally during the second half, in considering the market environment, we chose to give priority to profitabilities, resulting in a 7% decline in sales to 7.65 million units.
As for compact cameras, the market saw further contractions, shrinking 31% to 64 million units. Although we planned to expand sales during the year-end selling seasons, we decided to give priority to profitabilities due to the price reductions we saw for low-end models. As a result, our full year sales dropped 28% to 13.2 million units. Due to the sharp decline in volumes, utilization rates have come down, which have negatively affected profitabilities. That said, we have already taken steps to consolidate production mainly at overseas production sites.
Next, the inkjet printers. In 2013, the market shrank 5% due to continued economic weakness. Despite such conditions, however, we are able to expand unit sales for the full year, maintaining steady growth in the Americas and Europe. We also made good progress in growing consumable sales, thanks to steady hardware sales and subsequent growth in our installed base.
Please turn to Slide 13. Next, our projection for this business unit, starting with cameras. As for interchangeable lenses cameras, because channel inventory was a little heavy at the end of 2013, we expect the first quarter to be rather weak. Furthermore, we expect that China's thrift campaign to have lingering effect. We believe that we need to improve our product mix for entry-level models. In order to accomplish this, we'll review our marketing activities and promote the switch to new products. In fact, by reviewing our marketing activities and strengthening the promotions, sales are starting to recover in certain regions.
Going forward, we will promote similar activities in other regions as well. In this way, we expect the overall market and our unit sales this year to be basically flat at 17.3 million and 7.6 million units respectively. In recent years, this business has suffered from such unforeseen events as the Japan earthquake and tide threat. Furthermore, due to confusion in supply and demand after the tide threat, as well as changes in users' consumption patterns, we are seeing numerous changes in the market. Given this, we are unlikely to see the rapid growth among entry-level models that we have seen up to now. This year, we will thoroughly review what is happening in this complex market and take measures to prepare for renewed growth. In order to realize this, we plan to make improvement in profitabilities by switching to new products and strengthening sales of interchangeable lenses. And in order to ensure steady growth from the next year on, we will try to solve the issues we are facing from new perspectives.
Next, I will discuss these initiatives. Developing products that accurately reflect the market need is the single most important requirement for the manufacturers. Amidst the diversifying needs of users, having more contact with users, more chances to hear their opinions and taking steps to swiftly reflect those opinions into product development is something we'll put even more emphasis on. We'll not only improve the picture-taking features and ease-of-use of our hardwares, we will also work to improve services for the saving and sharing of images. In each regions, our sales companies are holding amateur photography contests and photography workshops as a way to cultivate photography cultures. We'd like to expand these type of events and activities as these also offers us good opportunity to listen to the opinion of users who want to take good pictures. In order to respond to diversifying users' needs, it is also important to expand opportunities for taking still pictures or movies. This is why we're developing cameras based on new concept. Last year's launch of the Powershot N and iVIS mini are 2 examples of what I mean. And going forward, we want to expand our efforts in these areas.
From a marketing perspective as well, we will deepen communication with users. In India, we are expanding Canon Image Square shops, which allow users greater opportunity to handle our products. This factor is contributing to our success in this country. In the future, we plan to triple the number of the shops we currently have in India and expand this to other emerging market. In Brazil, we aim to expand sales by leveraging the advantage of localized productions, including interchangeable-lens cameras. On top of this, we'll enhance cost reductions by furthering automated lens productions. Additionally, we'll promote the optimization of our global production site.
Next, compact cameras. This year, we expect the market to continue to shrink, contracting 25% to 48 million units and our own unit sales to decline by 20% to 10.5 million units. Even within this market, we expect to see solid demand for high value-added products. We'll also strengthen this segment. At the same time, we will review our product lineups with a view of consolidations. Also we'll work to achieve the optimal allocations of development resources. Through these measures, we aim to improve our profit structures.
Next, the inkjet printers. In 2014, we expect the market to remain basically flat. Here, we'll work to expand sales by offering product that suits the unique market characteristics in each region. Especially in emerging markets of Asia, we'll leverage our #1 position in order to achieve our goal of 2% unit sales growth. And for consumables, with further expansion of our installed base, we anticipate steady growth.
Please turn to Slide 14. So next, Industry & Others. And for IC lithography equipment, although KrF unit sales increased, thanks to the introduction of the new high productivity equipment, total unit sales were down for the full year. And for FPD lithography equipment, we sold 16 units in the fourth quarter, thanks to the restarts of the customers' investment. And for the medical segment, we posted steady sales, thanks to new OCT products. And for the independent business group companies, due to the restrained capital investment by customers, manufacturing equipment-related sales declined, which pulled down sales of the other segment as a whole.
Please refer to Slide 15. Next, our projection for this business unit. In 2014, thanks to the restarts of investment from the second half of last year and expanding demand for memories and image sensors used in mobile devices, like smartphones, I expect the market segment as well as our unit sales of IC lithography equipment to increase. In the FPD lithography equipment market, we anticipate demand for even higher-definition panels to increase. In the second half of last year, we commercialized the high-definition FPD lithography equipment for large panels. And this year, we plan to launch industry-leading high-definition FPD lithography equipment for small- and medium-sized panels. Through this product, we aim to expand our market shares, selling 27 units for the year.
For the medical equipment segment, we expect sales to increase mainly through expanded sales of high value-added products, such as DR systems. And for the independent business group companies, we anticipate increased customers' investment, which will have a positive impact on sales in such sectors as Tokki's OLED and solar panel production equipment and [indiscernible] memory and radio-related production equipment.
Please refer to Slide 16. Now I will discuss our financial situation. At the end of December, inventory turnover was 52 days. Since Japan's earthquakes and tide threat, we have been working to optimize inventory levels. With the goal of avoiding lost sales opportunities and in view of optimizing logistics, we are now targeting an overall inventory level of around 46 to 50 days. Within this, our targets for sales company and work in process are around 4 weeks and 10 days, respectively. Inventory held by sales company at the end of last year stood at 26 days, which is 1 and 2 days lower than at the end of September and last year respectively. Although we didn't achieve our year-end sales target, mainly for cameras, we took quick steps to adjust the production, so inventory at the end of December fell within acceptable orange [ph] limits. As for work in process, as of the end of December, inventory was 14 days, a 3 days improvement compared to the end of 2012. There is, however, still room for improvement. As such, we will continue to actively manage supply chain activities in order to further reduce excess inventory.
Next, please refer to Slide 17. This slide highlights our projection for capital expenditures and cash flows. Through comprehensive cash flow management, we'll have continuous effort to maintain our financial health.
Please turn to Slide 18. At the end of the year, cash on hand was JPY 788.9 billion equivalent to 2.4 months of net sales, thanks to comprehensive cash flow management. As for dividend, we plan to pay year-end dividends of JPY 65 per share, bringing the full year total of JPY 130, the same amount as last year's. Although we expect the business environment to remain challenging for the time being, we aim to increase both sales and profit, making this the year in which we return to a positive growth.
This concluded my presentation. Thank you very much for your kind attention.
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