Consolidated Financial Results
for the Six Months Ended SEPTEMBER 30, 2023
(Under Japanese GAAP)
November 14, 2023 | |||
Company name: | SEIKO GROUP CORPORATION | Listing: Tokyo | |
Securities code: | 8050 | URL: https://www.seiko.co.jp/en/ | |
Representative: | Shuji Takahashi, President | ||
Inquiries: | Masanobu Minami, General Manager, Accounting Department | Telephone: +81-3-3563-2111 |
Scheduled date to file quarterly securities report: | November 14, 2023 (in Japanese) | ||||||||||||||||
Scheduled date to commence dividend payments: | December 5, 2023 | ||||||||||||||||
Preparation of supplementary material on quarterly financial results: | Available | ||||||||||||||||
Holding of quarterly financial results briefing: | Scheduled (for institutional investors and analysts) | ||||||||||||||||
(Yen amounts are rounded down to millions, unless otherwise noted.) | |||||||||||||||||
1. Consolidated financial results for the six months ended September 30, 2023 (from April 1, 2023 to September 30, 2023) | |||||||||||||||||
(1) Consolidated operating results (cumulative) | (Percentages indicate year-on-year changes.) | ||||||||||||||||
Net sales | Operating profit | Ordinary profit | Profit attributable to | ||||||||||||||
owners of parent | |||||||||||||||||
Six months ended | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % | |||||||||
September 30, 2023 | 131,295 | 1.1 | 8,160 | (7.8) | 9,247 | (3.3) | 6,281 | 18.7 | |||||||||
September 30, 2022 | 129,921 | 17.7 | 8,847 | 156.2 | 9,567 | 168.7 | 5,292 | 343.5 | |||||||||
Note: Comprehensive income | For the six months ended September 30, 2023: | 16,062 million | [22.1%] | ||||||||||||||
For the six months ended September 30, 2022: | 13,152 million | [136.7%] | |||||||||||||||
Basic earnings | Diluted earnings | ||||||||||||||||
per share | per share | ||||||||||||||||
Six months ended | Yen | Yen | |||||||||||||||
September 30, 2023 | 152.13 | - | |||||||||||||||
September 30, 2022 | 128.29 | 128.29 | |||||||||||||||
(2) Consolidated financial position | |||||||||||||||||
Total assets | Net assets | Equity-to-asset ratio | |||||||||||||||
As of | Millions of yen | Millions of yen | % | ||||||||||||||
September 30, 2023 | 373,307 | 146,268 | 38.6 | ||||||||||||||
March 31, 2023 | 355,915 | 131,748 | 36.5 | ||||||||||||||
Reference: Equity | As of September 30, 2023: | 144,028 million | |||||||||||||||
As of March 31, 2023: | 129,792 million | ||||||||||||||||
2. Cash dividends | |||||||||||||||||
Annual dividends per share | |||||||||||||||||
First quarter-end | Second quarter-end | Third quarter-end | Fiscal year-end | Total | |||||||||||||
Fiscal year ended | Yen | Yen | Yen | Yen | Yen | ||||||||||||
March 31, 2023 | - | 37.50 | - | 37.50 | 75.00 | ||||||||||||
Fiscal year ending | - | 37.50 | |||||||||||||||
March 31, 2024 | |||||||||||||||||
Fiscal year ending | - | 37.50 | 75.00 | ||||||||||||||
March 31, 2024 | |||||||||||||||||
(Forecast) |
Note: Revisions to the forecast of cash dividends most recently announced: None
3. Consolidated financial forecast for the fiscal year ending March 31, 2024 (From April 1, 2023 to March 31, 2024)
( Percentages indicate year-on-year changes.)
Net sales | Operating profit | Ordinary profit | Profit attributable to | Basic earnings | ||||||
owners of parent | per share | |||||||||
Fiscal year ending | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % | Yen | |
March 31, 2024 | 268,000 | 2.9 | 12,000 | 6.8 | 12,000 | 7.5 | 8,000 | 59.1 | 193.72 |
Note: Revision to the financial forecast most recently announced: None
* Notes
- Changes in significant subsidiaries during the period (changes in specified subsidiaies resulting in the change in scope of consolidation): Not applicable
Newly included: Not applicable | Excluded: Not applicable |
- Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Not applicable
- Changes in accounting policies, changes in accounting estimates, and restatement
i) Changes in accounting policies due to revisions to acounting standards and other regulations | : Not applicable |
ii) Changes in accounting policies due to other reasons | : Not applicable |
iii) Changes in accounting estimates | : Not applicable |
iv) Restatement | : Not applicable |
- Number of issued shares (common shares)
- Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2023 | 41,404,261 | shares / | As of March 31, 2023 | 41,404,261 | shares | |
ii) Number of treasury shares at the end of period | 99,683 | 132,337 | ||||
As of September 30, 2023 | shares / | As of March 31, 2023 | shares | |||
iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) | ||||||
Six months ended September 30, 2023 | 41,288,186 | shares | ||||
Six months ended September 30, 2022 | 41,252,302 | shares |
(Note) For the purpose of calculating the number of treasury shares at the end of period and the average numbers of shares outstanding during the period, treasury shares held in the Board Benefit Trust (BBT) are included in the treasury shares deducted in the calculation.
- Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
- Proper use of earnings forecasts, and other special matters
(Cautionary statements with respect to financial forecast)
The financial forecasts which appear in this report have been prepared based solely on the information which was available to the Company as of the date on which the report was released and the Company does not in any way guarantee the achievement of the forecasts. Actual results may differ significantly from the forecasted figures due to a number of factors. For assumptions used in the financial forecasts and instructions to use the financial forecasts, refer to (3) Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2024 (FY2023), 1. Business Results, for detail.
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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Contents
1. Business Results
(1) | Overview | 4 |
(2) | Financial Condition | 6 |
(3) | Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2024 | |
(FY2023) | 8 |
2. Quarterly Consolidated Financial Statements and Major Notes
(1) | Quarterly Consolidated Balance Sheets | 9 |
(2) | Quarterly Consolidated Statements of Income and Comprehensive Income | 12 |
(3) | Quarterly Consolidated Statements of Cash Flows | 14 |
(4) | Notes to Quarterly Consolidated Financial Statements | 16 |
(Going concern assumption) | 16 | |
(Significant changes in shareholder's equity) | 16 | |
(Segment information) | 17 |
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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1. Business Results
(1) Overview
During the six-month period ended September 30, 2023, a slowdown in the European economy became more apparent due to continuation of monetary tightening caused by continuous high inflation, especially in Europe and the U.S. In China, adjustments continue to be made in the real estate market, and there are concerns about a prolonged economic slump.
In Japan, personal consumption is resuming even amid an inflationary trend, and demand from inbound tourists continues to recover.
(Millions | of yen) | ||||||
6M FY2021 | 6M FY2022 | 6M FY2023 | Variance | Variance | |||
(a) | (b) | ① | ① - (a) | ① - (b) | |||
Net sales | 110,395 | 129,921 | 131,295 | 20,899 | 1,373 | ||
Operating profit | 3,453 | 8,847 | 8,160 | 4,706 | ( | 687) | |
% | 3.1% | 6.8% | 6.2% | 3.1pt | 0.6)pt | ||
Ordinary profit | 3,561 | 9,567 | 9,247 | 5,686 | ( | ( | 320) |
% | 3.2% | 7.4% | 7.0% | 3.8pt | ( | 0.4)pt | |
Profit attributable to owners of parent | 1,193 | 5,292 | 6,281 | 5,088 | 989 | ||
% | 1.1% | 4.1% | 4.8% | 3.7pt | 0.7pt | ||
Exchange rate (v. JPY) | |||||||
USD | 109.8 | 134.0 | 141.1 | 31.3 | 7.1 | ||
EUR | 130.9 | 138.8 | 153.5 | 22.6 | 14.7 |
Amid these circumstances, in the "Emotional Value Solutions Business," the Watches Business and WAKO Business for the Japanese market recorded significant net sales growth against the backdrop of a recovery in personal consumption and demand from inbound tourists. The Watches Business for overseas markets also grew, mainly in Europe and Asia, and net sales were higher year on year. In the "Devices Solutions Business," net sales were significantly lower year on year amid an uncertain recovery of the business environment, which had deteriorated since the third quarter of the previous fiscal year due to factors such as prolonged stagnation of the Chinese economy and inventory adjustments in the electronic devices market. In the "Systems Solutions Business," net sales were higher year on year, thanks to ongoing successful efforts to diversify business and expand the stock business. As a result, for the sixth-month period ended September 30, 2023, the Group reported consolidated net sales of 131.2 billion yen, a year-on-year increase of 1.1%.
On an overall consolidated basis, domestic net sales came to 67.2 billion yen (a year-on-year increase of 5.9%), and overseas net sales were 64.0 billion yen (a year-on-year decrease of 3.6%). Net sales in overseas comprised 48.8% of net sales overall.
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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Advertising and promotion expenses for the six-month period ended September 30, 2023 increased by approximately 10% from the same period of previous fiscal year, resulting in a year-on-year increase of 3.5 billion yen in selling, general and administrative expenses. Operating profit was 8.1 billion yen (a year-on-year decrease of 7.8%), a deterioration of 0.6 billion yen year on year, due to deceleration of the Devices Solutions Business. Although non-operating income and expenses improved year on year due to factors including increases in interest income and dividend income, ordinary profit decreased by 0.3 billion yen year on year to 9.2 billion yen (a year-on-year decrease of 3.3%). Information security expenses of 0.2 billion yen were posted as extraordinary losses in response to unauthorized access to the Company's servers. However, profit attributable to owners of parent increased by 0.9 billion yen year on year to 6.2 billion yen (a year-on-year increase of 18.7%), mainly due to a decrease in income taxes - deferred in conjunction with the improvement of revenue in domestic operating companies.
The average exchange rates for the six-month period ended September 30, 2023 were 141.1 yen to 1 US dollar and 153.5 yen to 1 euro.
Results by Segment
Results for each segment are as follows:
a. Emotional Value Solutions Business (EVS Business)
Net sales under the EVS Business came to 89.9 billion yen, a year-on-year increase of 6.8 billion yen, or 8.2%.
Net sales of completed watches in Japan grew year on year due to favorable performance of Global Brands such as Grand Seiko and Seiko Prospex against the background of personal consumption and demand from inbound tourists, which showed a recovery trend. Overseas, net sales increased year on year as Global Brands grew in the U.S., Europe, and Asia, especially for Seiko Presage and Seiko 5 Sports, despite a delayed recovery in China. In the watch movements business, net sales decreased year on year due to the sluggish Chinese economy.
Net sales in the WAKO Business grew significantly year on year against the backdrop of favorable demand from inbound tourists. However, net sales of the clocks business declined year on year due to the sluggish Chinese economy, which caused net sales in overseas markets to struggle.
Operating profit increased by 2.6 billion yen year on year, resulting in operating profit of 9.5 billion yen (a year-on-year increase of 37.4%).
b. Devices Solutions Business (DS Business)
Net sales under the DS Business came to 27.6 billion yen, a year-on-year decrease of 19.6%. Operating profit was 0.2 billion yen, a year-on-year decrease of 93.9%.
Net sales and operating profit decreased significantly year on year due to the prolonged stagnation of the Chinese economy and continued inventory adjustments in the electronic devices market, resulting
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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in weak performance for thermal printers, quartz crystals, high-performance metals for semiconductor production equipment, and precision components.
c. Systems Solutions Business (SS Business)
Net sales under the SS Business came to 18.9 billion yen, a year-on-year increase of 4.9%. Operating profit was 2.2 billion yen, a year-on-year increase of 10.9%.
There was growth in businesses related to digital contracts that captured digitalization and legal reforms. In addition, businesses supporting digital infrastructure, such as performance management and businesses including those related to security, expanded, resulting in continued year-on-year growth both in net sales and operating profit for 30 consecutive quarters.
(2) Financial Condition
a. Status of Assets, Liabilities, and Net Assets -Assets-
Total assets at the close of the six-month period ended September 30, 2023 amounted to 373.3 billion yen, an increase of 17.3 billion yen from the close of the previous fiscal year, including the effect of exchange rates. Total current assets came to 178.7 billion yen, an increase of 5.3 billion yen from the close of the previous fiscal year. This was due to factors such as an increase of 6.9 billion yen in inventories. Total non-current assets came to 194.5 billion yen, an increase of 12.0 billion yen from the close of the previous fiscal year. This was due to increases of 5.3 billion yen in total property, plant and equipment and 6.5 billion yen in total investments and other assets.
-Liabilities-
For liabilities, total borrowings came to 124.5 billion yen, due to decreases of 4.9 billion yen in short- term borrowings and 2.7 billion yen in long-term borrowings. In addition, accounts payable - other decreased by 1.9 billion yen, while notes and accounts payable - trade increased 4.1 billion yen, electronically recorded obligations - operating increased 3.0 billion yen, and deferred tax liabilities increased 1.0 billion yen. As a result, total liabilities amounted to 227.0 billion yen, an increase of 2.8 billion yen from the close of the previous fiscal year, including the effect of exchange rates.
-Net assets-
With regard to net assets, total net assets increased by 14.5 billion yen over the close of the previous fiscal year to become 146.2 billion yen, mainly owing to increases of 4.7 billion yen in shareholders' equity and 5.7 billion yen in foreign currency translation adjustment.
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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b. Overview of Cash Flows
The balance of cash and cash equivalents at the end of the six-month period ended September 30, 2023 came to 35.9 billion yen, a decrease of 0.2 billion yen relative to the end of the previous fiscal year. This is primarily due to the following factors:
-Cash flows from operating activities-
Net cash provided by operating activities came to positive 17.7 billion yen (compared to a positive cash flow of 3.2 billion yen for the same period of the previous fiscal year), an increase of 14.5 billion yen year on year. This was the result of the Company posting 9.1 billion yen in income before income taxes, factoring in depreciation amounting to 6.3 billion yen, as well as adjustments such as a 3.2 billion yen increase in inventories (posted as a decrease) and a 1.9 billion yen decrease in accounts payable - other (posted as a decrease).
-Cash flows from investing activities-
Net cash used in investing activities came to negative 7.8 billion yen (compared to a negative cash flow of 8.1 billion yen for the same period of the previous fiscal year) due to cash outflows consisting mainly of 6.4 billion yen in purchase of property, plant and equipment (posted as a decrease).
-Cash flows from financing activities-
Net cash used in financing activities came to negative 11.8 billion yen (compared to a positive cash flow of 7.1 billion yen for the same period of the previous fiscal year) due mainly to repayments of long- and short-term borrowings, as well as dividends paid.
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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- Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2024 (FY2023) During the six-monthperiod ended September 30, 2023, both net sales and operating profit increased year on year in the EVS Business, while both net sales and operating profit declined year on year in the DS Business. From the third quarter onward, we expect the EVS Business to continue to perform steadily. Accordingly, the Company has not changed its consolidated financial forecast but has revised its forecasted results by segment as described below.
■ Forecast for the consolidated business results for the year ending March 31, 2024 (FY2023)
Current forecast | Year-on-year | |
(Billions of yen) | change (%) | |
Net sales | 268.0 | 2.9 |
Operating profit | 12.0 | 6.8 |
Ordinary profit | 12.0 | 7.5 |
Profit attributable to owners of parent | 8.0 | 59.1 |
Earnings per share | 193.72 yen |
■ Forecasted results by segment for the year ending March 31, 2024 (FY2023)
(Billions of yen) | Net Sales | Operating Profit | ||
Current | Previous | Current | Previous | |
Emotional Value Solutions Business | 180.0 | 177.0 | 15.0 | 14.0 |
Devices Solutions Business | 60.0 | 63.0 | 2.3 | 3.6 |
Systems Solutions Business | 39.0 | 39.0 | 5.0 | 5.0 |
Total for reported segments | 279.0 | 279.0 | 22.3 | 22.6 |
Others | 1.0 | 1.0 | 0.1 | 0.1 |
Consolidated total | 268.0 | 268.0 | 12.0 | 12.0 |
Note: Consolidated total represents figures after consolidation adjustment such as the elimination of inter-segment sales.
The forecasted results which appear in this report have been prepared based solely on the information which was available to us as of the date on which the report was released. As a result, actual results may differ from the forecasted figures due to a number of factors, such as changes in the business environment in the future.
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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2. Quarterly Consolidated Financial Statements and Major Notes
(1) Quarterly Consolidated Balance Sheets
(Millions of yen) | |||||
As of March 31, | As of September | ||||
2023 | 30, 2023 | ||||
Assets | |||||
Current assets | |||||
Cash and deposits | 36,324 | 36,046 | |||
Notes and accounts receivable - trade, and | 38,647 | 40,666 | |||
contract assets | |||||
Inventories | 83,776 | 90,688 | |||
Accounts receivable - other | 6,577 | 3,587 | |||
Other | 9,381 | 9,275 | |||
Allowance for doubtful accounts | (1,297) | (1,476) | |||
Total current assets | 173,410 | 178,787 | |||
Non-current assets | |||||
Property, plant and equipment | |||||
Buildings and structures | 79,280 | 81,937 | |||
Machinery, equipment and vehicles | 86,117 | 90,956 | |||
Tools, furniture and fixtures | 39,233 | 41,335 | |||
Other | 12,699 | 15,837 | |||
Accumulated depreciation | (163,232) | (170,713) | |||
Land | 54,182 | 54,404 | |||
Construction in progress | 2,867 | 2,762 | |||
Total property, plant and equipment | 111,149 | 116,520 | |||
Intangible assets | |||||
Goodwill | 6,901 | 6,302 | |||
Other | 8,620 | 9,290 | |||
Total intangible assets | 15,522 | 15,593 | |||
Investments and other assets | |||||
Investment securities | 45,490 | 51,377 | |||
Deferred tax assets | 1,923 | 2,054 | |||
Other | 8,572 | 9,129 | |||
Allowance for doubtful accounts | (153) | (155) | |||
Total investments and other assets | 55,833 | 62,406 | |||
Total non-current assets | 182,505 | 194,520 | |||
Total assets | 355,915 | 373,307 | |||
SEIKO GROUP CORPORATION
Consolidated Financial Statements: 6M FY2023
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(Millions of yen) | |||
As of March 31, | As of September | ||
2023 | 30, 2023 | ||
Liabilities | |||
Current liabilities | |||
Notes and accounts payable - trade | 18,790 | 22,950 | |
Electronically recorded obligations - operating | 6,212 | 9,234 | |
Short-term borrowings | 72,598 | 67,643 | |
Current portion of bonds payable | 300 | - | |
Current portion of long-term borrowings | 22,117 | 22,115 | |
Accounts payable - other | 11,344 | 9,356 | |
Income taxes payable | 1,793 | 3,787 | |
Provision for bonuses | 4,879 | 4,992 | |
Other provisions | 1,452 | 1,290 | |
Asset retirement obligations | 9 | 22 | |
Other | 22,659 | 22,926 | |
Total current liabilities | 162,157 | 164,320 | |
Non-current liabilities | |||
Long-term borrowings | 37,525 | 34,802 | |
Deferred tax liabilities | 4,285 | 5,307 | |
Deferred tax liabilities for land revaluation | 3,614 | 3,614 | |
Other provisions | 742 | 732 | |
Retirement benefit liability | 6,894 | 6,849 | |
Asset retirement obligations | 1,079 | 1,075 | |
Other | 7,867 | 10,335 | |
Total non-current liabilities | 62,009 | 62,718 | |
Total liabilities | 224,166 | 227,039 | |
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Seiko Holdings Corporation published this content on 21 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2023 06:39:08 UTC.