Citizen Watch : FY2023 2Q Presentation with script

Earning Presentation

for Six months ended September 30, 2023

November 13, 2023

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Financial Results for 2Q of FY 2023

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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 second quarter of fiscal 2023.

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Financial Results for 1H (Apr-Sep) of FY 2023

	FY2022	FY2023
	1H(Apr.-Sep.)	1H(Apr.-Sep.)
（Unit︓billion yen)	Result	Result
Net sales	147.6	152.9
Operating profit	12.3	13.5
Operating margin	8.4%	8.9%
Ordinary Profit	16.8	17.4
Profit attributable to	12.6	13.3
owners of parent
Exchange rate	¥131/USD	¥139/USD
¥138/EUR	¥152/EUR

YoY Change

Amount ％

• 5.2 ＋ 3.5%
• 1.1 ＋ 9.6%
• • -
• 0.6 ＋ 3.7%
• 0.7 ＋ 5.9%

	Net sales	Sales increased, reflecting continuing growth in the mainstay
		Watches segment
	Operating	Profit increased, mainly driven by the Watches segment
	profit	3

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

Net sales increased 3.5% to JPY 152.9 billion, reflecting strong performance mainly in the Watches segment.

Operating profit rose 9.6% to JPY 13.5 billion due partly to the effects of a weak yen. The operating profit margin stood at 8.9%.

Ordinary profit and profit attributable to owners of parent climbed 3.7% and 5.9% respectively, to JPY 17.4 billion and JPY 13.3 billion.

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Result by Business Segments for 1H (Apr-Sep) of FY 2023

				FY2022	FY2023
	Net sales	1H(Apr.-Sep.)	1H(Apr.-Sep.)	YoY Change
	(Unit︓billion yen)		Result	Result	Amount	％
	Watches	73.3	78.5	+ 5.1	＋ 7.0%
	Machine Tools	40.9	41.4	+ 0.5	＋ 1.3%
	Devices and Components	22.9	22.1	( 0.7 )	( 3.2% )
	Electronic and Other Products	10.4	10.7	+ 0.3	＋ 3.0%
	Consolidated Total	147.6	152.9	+ 5.2	＋ 3.5%
	Operating Profit
	(Unit: billion yen, %:operating margin)
	Watches		8.8	10.2	+ 1.3	＋ 15.9%
	12.0%	13.0%
	Machine Tools	5.5	5.2	( 0.3 )	( 5.5% )
	13.5%	12.6%
	Devices and Components	0.0	0.4	+ 0.3	＋ 1,708.2%
	0.1%	1.8%
	Electronic and Other Products	0.7	0.6	( 0.0 )	( 9.3% )
	7.1%	6.3%
	Eliminations or general corporate	( 2.7 )	( 2.9 )	( 0.2 )	-
	Consolidated Total	12.3	13.5	+ 1.1	＋ 9.6%
	8.4%	8.9%	4

This list shows financial results by business segment.

The Watches segment continued to perform strongly, achieving an 7.0% year-on-year increase in net sales and an 15.9% year-on-year increase in operating profit, or the operating margin of 13.0%.

The Machine Tools segment posted a 1.3% increase in net sales, but posted a 5.5% decrease in operating profit largely due to the impact of the higher cost of purchased materials.

Devices and Components segment recorded a dip in net sales, but profit rose slightly. Electronics and Other Products segment posted an increase in net sales.

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Financial Results for 2Q (Jul-Sep) of FY 2023

	FY2022
	2Q(Jul.-Sep.)
（Unit︓billion yen)	Result
Net sales	76.3
Operating profit	6.7
Operating margin	8.9%
Ordinary Profit	8.2
Profit attributable to

owners of parent	5.3
Exchange rate	¥137/USD
¥140/EUR

FY2023

2Q(Jul.-Sep.)

Result

80.2

8.0

10.0%

9.4

7.1

¥144/USD ¥157/EUR

YoY Change

Amount ％

• 3.8 ＋ 5.1%
• 1.2 ＋ 18.3%
• • -
• 1.1 ＋ 14.2%
• 1.7 ＋ 32.0%

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Next, I will describe the consolidated financial results for the second quarter.

Net sales increased 5.1% to JPY 80.2 billion. Operating profit climbed 18.3% to JPY 8.0 billion, with an operating margin of 10.0%.

Ordinary profit and profit attributable to owners of parent rose 14.2% and 32.0%, respectively, to JPY 9.4 billion and JPY 7.1 billion.

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Result by Business Segments for 2Q (Jul-Sep) of FY 2023

				FY2022	FY2023
	Net sales	2Q(Jul.-Sep.)	2Q(Jul.-Sep.)	YoY Change
	(Unit︓billion yen)		Result	Result	Amount	％
	Watches	38.2	41.4	+ 3.1	＋ 8.4%
	Machine Tools	20.9	21.9	+ 0.9	＋ 4.6%
	Devices and Components	11.9	11.3	( 0.6 )	( 5.2% )
	Electronic and Other Products	5.2	5.5	+ 0.3	＋ 6.6%
	Consolidated Total	76.3	80.2	+ 3.8	＋ 5.1%
	Operating Profit
	(Unit: billion yen, %:operating margin)
	Watches	4.8	5.6	+ 0.8	＋ 16.8%
	12.7%	13.7%
	Machine Tools	2.8	2.8	+ 0.0	＋ 2.0%
	13.5%	13.1%
	Devices and Components	0.0	0.3	+ 0.2	＋ 385.6%
	0.6%	3.1%
	Electronic and Other Products	0.3	0.5	+ 0.1	＋ 32.4%
	7.6%	9.4%
	Eliminations or general corporate	( 1.3 )	( 1.4 )	+ 0.0	-
	Consolidated Total	6.7	8.0	( 1.2 )	＋ 18.3%
	8.9%	10.0%	6

Results by business segment for the second quarter are shown here.

All segments achieved growth in net sales and in operating income.

I will provide an overview of each business in the next slide.

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Watches （Operating Performance)

2Q (Jul-Sep)

	Finished watch	A trend toward recovery was seen in the domestic market. Additionally, sales increased as the
	sales	European market remained brisk.
	Movement sales	Sales increased due to solid sales of mechanical movements despite sluggish growth of analog
		quartz movements
Net sales (billion yen)	Operating profit (billion yen)
■ FY2022 ■ FY2023	■ FY2022 ■ FY2023

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Slide 8>7 shows the results for the Watches segment.

In finished watches sales, the domestic market trended toward recovery and the European market continued to perform strongly. As a result, net sales increased.

In sales of movements, analog quartz movements did not grow as expected. Even so, net sales increased because mechanical movements remained firm.

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Watches Net sales growth rate by region

	* The rate of change in total sales of CITIZEN brand watches and BULOVA
Rate of change year on year
brand watches only for North America. For other regions, the rate of change
only in sales of CITIZEN brand watches.
	* Rate of change based on local currency

Sales remained at the year-ago level in Japan and

Asia (except China).

The strong performances of North America and Europe contributed to a rise in overall sales, offsetting a significant decline in China.

	Japan	Attesa and Promaster led the overall business. In addition, inbound demand continued to recover.
	China	Consumer confidence continued to be weak.
	Asia (except China)	Inbound demand was firm in Singapore, among other countries, but sales in Hong Kong were sluggish.
	America	The attitude of jewelry chains, department stores and others was clearly cautious, but e-commerce
		performed strongly.
	Europe	Italy maintained their strong performance, and the number of new dealers rose in France.
		8

Next, I would like to talk about year-on-year changes in net sales by region on a local currency basis.

The chart on the left shows year-on-year changes for the second quarter alone.

The red bar shows Japan, where net sales increased because core brands such as ATTESA led the overall business and inbound demand continued to trend toward recovery.

Light yellow is China, where net sales decreased slightly due to continued weak consumer confidence.

In Asia, shown in light green, net sales fell due to weak performance in Hong Kong in particular, despite strong inbound demand in Singapore, among other countries.

In North America, the region indicated by the light blue bar, jewelry chains, department stores and others showed a cautious attitude toward purchases. Still, net sales increased due to strong e-commerce sales.

Europe, indicated by the light purple bar, recorded an increase in net sales due to a continued rise in sales in France, coupled with the strong performance maintained in Italy, among other countries.

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Watches: Premium brands

Launched a limited-edition model watch with a washi (traditional Japanese paper) face featuring platinum leaves falling like snow.

• Incorporates highly accurate solar power-basedeco-drive movements that have a variation of +/- 5 seconds per year.
• The model with a Tosa washi face decorated with platinum leaves will be sold in limited quantities.

Release date: November 2023
Recommended retail price: 451,000 yen (tax included)
Quantity: 500 units worldwide	9

Next, I would like to introduce our new premium brand products.

We launched a new model in The CITIZEN line this month. The model, which will be sold in limited quantities, is equipped with a highly accurate solar power-basedeco-drive movement, which has a variation of +/- 5 seconds per year, and a new platinum leaf- decorated version of the well-receivedTosa-Washipaper-inspired face.

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Watches: Enhancement of global model collections

The TSUYOSA collection gaining popularity for its rich color options.

• A popular model known overseas for its TSUYOSA Collection nickname.
• Mechanical watches whose neat design appeals thanks to their vividly colored faces featuring combination with simple and basic hands.

Recommended retail price: 63,800 yen - 66,000 yen (tax included)

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This slide shows a group of mechanical watches nicknamed the TSUYOSA Collection. They are hero products that have achieved the largest sales quantities among the CITIZEN-branded global models this year.

These watches were initially sold under the TSUYOSA nickname in France and gained popularity quickly in Europe. Subsequently, we launched them in North America and started to sell them in Japan as well in September.

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