Citizen Watch : FY2023 1Q Presentation with script

Earning Presentation

for Three months ended June 30, 2023

August 14, 2023

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Financial Results for 1Q of FY 2022

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My name is Toshiyuki Furukawa, in charge of the Public & Investor Relations Department. I will provide an explanation on the financial results for the first quarter of fiscal 2023.

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Financial Results for 1Q of FY 2023

	FY2022		FY2023
	1Q(Apr-Jun)		1Q(Apr-Jun)		YoY Change
（Unit:billion yen)	Result		Result		Amount	％

Net sales	71.3
Operating profit	5.5
Operating margin	7.8%
Ordinary Profit	8.5

Profit attributable to	7.2
owners of parent
Exchange rate	¥126/USD
¥137/EUR

72.6

5.5

7.6%

8.0

6.2

¥135/USD ¥147/EUR

+ 1.3 ＋ 1.9%

( 0.0 ) ( 0.9% )

- -

( 0.5 ) ( 6.5% )

( 0.9 ) ( 13.5% )

	Net sales	Sales increased, reflecting growth in the mainstay Watches segment
	Operating	Remained nearly unchanged YoY due to factors such as the slump in the
	profit	Machine Tools segment

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This is the outline of the statement of income for the first quarter.

Net sales increased 1.9% year on year, to JPY 72.6 billion, reflecting growth in the mainstay Watches business.

On the other hand, operating profit remained nearly unchanged year on year, at JPY 5.5 billion, due to factors such as the slump in the Machine Tools business.

Ordinary profit was 8.0 billion yen. It decreased 6.5% year on year due to a decrease in foreign exchange gains and an increase in expenses including commission for purchase of treasury shares.

Profit attributable to owners of parent decreased 13.5% year on year, to JPY 6.2 billion.

This mainly reflects a decline in extraordinary income as well as a decrease in ordinary profit.

While a gain on sale of investment securities of JPY 0.55 billion was posted this time, gain on sale of real estate larger than that was posted last fiscal year.

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Result by Business Segments for 1Q of FY 2023

			FY2022		FY2023
Net sales	1Q(Apr-Jun)		1Q(Apr-Jun)		YoY Change
(Unit:billion yen)		Result		Result		Amount	％
Watches	35.1	37.0	+ 1.9	＋ 5.5%
Machine Tools	19.9	19.5	( 0.4 )	( 2.2% )
Devices and Components	10.9	10.8	( 0.1 )	( 1.0% )
Electronic and Other Products	5.2	5.2	( 0.0 )	( 0.7% )
合計	71.3	72.6	+ 1.3	＋ 1.9%
Operating Profit
(Unit: billion yen, %:operating margin)
Watches	3.9	4.5	+ 0.5	＋ 14.8%
11.2%		12.2%
Machine Tools	2.7		2.3	( 0.3 )	( 13.4% )
13.5%		12.0%
Devices and Components	( 0.0 )		0.0	+ 0.0	-
( 0.5% )		0.4%
Electronic and Other Products	0.3		0.1	( 0.1 )	( 56.8% )
6.6%		2.9%
Eliminations or general corporate	( 1.3 )	( 1.5 )	( 0.1 )	-
Consolidated Total	5.5	5.5	( 0.0 )	( 0.9% )
7.8%	7.6%
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We are now looking at a breakdown of results by segment.

In the Watches business, net sales increased 5.5% year on year, to JPY 37.0 billion. Operating profit rose 14.8％ year on year, to JPY 4.5 billion. Thus, both net sales and operating profit grew year on year with an operating margin of 12.2%.

In the Machine Tools business, net sales decreased 2.2％ year on year to JPY 19.5 billion and operating profit declined 13.4% year on year to JPY 2.3 billion as sales grew sluggishly while orders received entered an adjustment phase. The operating profit margin stood at 12.0%.

Devices and Components recorded a decline in net sales but moved into the black due to control of fixed costs. Electronic and Other Products posted a decline in profit mainly reflecting saturation of demand for healthcare products.

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Watches （Operating Performance)

1Q（Apr.-Jun.）

	Finished watch	A trend toward recovery was seen in the domestic market. Additionally, sales
	sales	increased as the European market remained brisk.
	Movement sales	Despite a drop in sales, the trend toward recovery was visible in mechanical
		movements.
Net sales (billion yen)	Operating profit (billion yen)
■ FY2022 ■ FY2023	■ FY2022 ■ FY2023

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I will now give an overview of business by segment.

In the Watches business, finished watch sales increased in the domestic market due to gradual recovery of demand from inbound tourists as well as strong performance of core brands such as Attesa and Promaster. Sales in Europe also remained strong and increased year on year.

Regarding movement sales, sales of analog quartz movements declined due in part to a weak recovery in multi-hand movements while net sales of mechanical movements recovered to the year-ago level.

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