Seiko : FY2023 Q1 Consolidated Financial Statements

Consolidated Financial Results

for the Three Months Ended JUNE 30, 2023

(Under Japanese GAAP)

			August 8, 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: [phone]

Scheduled date to file quarterly securities report:			August 10, 2023 (in Japanese)
Scheduled date to commence dividend payments:			-
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 three months ended June 30, 2023 (from April 1, 2023 to June 30, 2023)
(1) Consolidated operating results (cumulative)					(Percentages indicate year-on-year changes.)
	Net sales			Operating profit		Ordinary profit	owners of parent
Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
June 30, 2023	62,949	1.4		2,823	(9.1)	3,732	(8.0)	2,411	41.2
June 30, 2022	62,078	13.7		3,105	105.3	4,056	126.4	1,707	-

Note: Comprehensive income	For the three months ended June 30, 2023:		9,130	million	[33.5%]
	For the three months ended June 30, 2022:		6,837	million	[263.3%]
	Basic earnings	Diluted earnings
	per share		per share
June 30, 2023	58.43		-
June 30, 2022	41.40		41.40
(2) Consolidated financial position
	Total assets		Net assets			Equity-to-asset ratio
As of	Millions of yen	Millions of yen		%
June 30, 2023	367,533		139,361		37.3
March 31, 2023	355,915		131,748		36.5
Reference: Equity		As of June 30, 2023:				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
March 31, 2024		-
Fiscal year ending
March 31, 2024			37.50	-		37.50	75.00
(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	193.75
Note: Revision to the financial forecast most recently announced: None

* Notes

1. 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

1. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Not applicable
2. 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

1. Number of issued shares (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 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
As of June 30, 2023	108,122	shares /	As of March 31, 2023	132,337	shares
iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)
Three months ended June 30, 2023			41,275,959	shares
Three months ended June 30, 2022			41,245,268	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: 3M 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)	7

2. Quarterly Consolidated Financial Statements and Major Notes

(1)	Quarterly Consolidated Balance Sheets	8
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	11
(3)	Notes to Quarterly Consolidated Financial Statements	13
(Going concern assumption)	13
(Significant changes in shareholder's equity)	13
(Segment information)	14

SEIKO GROUP CORPORATION

Consolidated Financial Statements: 3M FY2023

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1. Business Results

(1) Overview

During the three-month period ended June 30, 2023, the world economic growth has slowed after a post-coronavirus recovery period, due to continuation of monetary tightening caused by continuous high inflation, especially in Europe and the U.S. In China, while the economy recovered from the slowdown at the end of last year, which was due to severe activity restrictions under the government's "zero-COVID" policy and the spread of infection, the outlook remains uncertain with a continued decline in real estate investment.

The Japanese economy is on a recovery trend, mainly in metropolitan area, due to the downgrading of the legal status of the novel coronavirus to Class V and a drastic recovery in consumption by Japan- bound tourists.

				(Millions of yen)
	3M FY2021	3M FY2022	3M FY2023	Variance	Variance
	(a)	(b)	①	① - (a)	① - (b)
Net sales	54,609	62,078	62,949	8,340	870
Operating profit	1,512	3,105	2,823	1,311	(281)
%	2.8％	5.0％	4.5％	1.7pt	(0.5pt)
Ordinary profit	1,791	4,056	3,732	1,940	(324)
%	3.3％	6.5％	5.9％	2.6pt	(0.6pt)
Profit attributable to owners of parent	53	1,707	2,411	2,358	703
%	0.1％	2.8％	3.8％	3.7pt	1.0pt
Exchange rate (v. JPY)
USD	109.5	129.7	137.5	28.0	7.8
EUR	131.9	138.3	149.6	17.7	11.3

Amid these circumstances, in the "Emotional Value Solutions Business (EVS Business)," the Watches Business and WAKO Business for the Japanese market recorded significant net sales growth against the backdrop of demand from inbound tourists. In the Watches Business for overseas markets, mainly in Europe and Asia, net sales were also higher year on year. In the "Devices Solutions Business (DS 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 the sluggish Chinese economy, HDD inventory adjustments, and weak semiconductor market conditions. In the "Systems Solutions Business (SS 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 three-month period ended June 30, 2023, the Group reported consolidated net sales of 62.9 billion yen, a year-on-year increase of 1.4%.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: 3M FY2023

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On an overall consolidated basis, domestic net sales came to 32.8 billion yen (a year-on-year increase of 6.3%), and overseas net sales were 30.1 billion yen (a year-on-year decrease of 3.4%). Net sales in overseas comprised 47.9% of net sales overall.

Advertising and promotion expenses for the three-month period ended June 30, 2023 increased by approximately 9% from the same period of previous fiscal year, resulting in selling, general and administrative expenses were a year-on-year increase of 1.5 billion yen. Operating profit was 2.8 billion yen (a year-on-year decrease of 9.1%), a deterioration of 0.2 billion yen year on year, due to deceleration of the DS Business. Non-operating income and expenses deteriorated year on year due to factors including a decrease in foreign exchange gains, and ordinary profit decreased by 0.3 billion yen year on year to 3.7 billion yen (a year-on-year decrease of 8.0%). Profit attributable to owners of parent increased by 0.7 billion yen to 2.4 billion yen (a year-on-year increase of 41.2%), due to a decrease in loss on the spread of infectious disease and income taxes - deferred, which were posted in the previous fiscal year.

The average exchange rates for the three-month period ended June 30, 2023 were 137.5 yen to 1 US dollar and 149.6 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 42.3 billion yen, a year-on-year increase of 3.2 billion yen, or 8.4%.

Net sales of completed watches in Japan grew year on year due to favorable performance of new products of Global Brands such as Grand Seiko and Seiko Prospex against the background of demand from inbound tourists, which showed a clear recovery trend. Overseas, net sales increased year on year as Global Brands grew in the U.S., Europe, and Asia, especially for Seiko Prospex 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 with the recovery of demand from inbound tourists. However, net sales of the clocks business for overseas markets declined year on year due to the sluggish Chinese economy.

Operating profit increased by 1.0 billion yen year on year, resulting in operating profit of 3.4 billion yen (a year-on-year increase of 45.0%).

b. Devices Solutions Business (DS Business)

Net sales under the DS Business came to 13.9 billion yen, a year-on-year decrease of 15.8%. Operating profit was 0.1 billion yen, a year-on-year decrease of 90.3%.

Net sales and operating profit decreased significantly year on year due to the sluggish Chinese