Citizen Watch : Presentation with script

Earning Presentation

for Six months ended September 30, 2022

November 14, 2022

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Financial Results for 2Q 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 second quarter of fiscal 2022.

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Key Notes

Financial Results for 1H（Apr-Sep） of FY 2022

• Sales and profit increased, reflecting sales growth in the mainstay Watches segment.
• Ordinary profit climbed 39% year on year, partly due to the posting of foreign exchange gains.
• Profit attributable to owners of parent rose 28% year on year.

FY 2022 Forecasts

• Upward revisions have been made in consideration of the better-than-expected results in the first half.
  Forecasts for the second half reflect growing uncertainty about consumption trends, as well as rising costs.
• Net sales: 303.0 billion yen (Change from previous forecast: +9.5 billion yen)
  Operating profit: 23.0 billion yen (Change from previous forecast: +0.5 billion yen)
  Ordinary profit: 27.5 billion yen (Change from previous forecast: +1.5 billion yen)
  Profit attributable to owners of parent: 20.0 billion yen (Change from previous forecast: +1.0 billion yen)

Dividends Forecasts

• Change from previous forecast: up 4 yen per share Full year: 34 yen (interim: 15 yen, year-end: 19 yen)

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Let me begin the presentation by explaining the key points of our financial results for the six month ended September 30, 2022.

The financial results for the first six months posted higher sales and profits, reflecting a 9% year- on-year increase in net sales and a 16% year-on-year increase in operating profit, driven by continued growth in sales in the Watches segment mainly in Europe and the United States. Ordinary profit climbed 39% year on year, partly due to the posting of foreign exchange gains. In addition, profit attributable to owners of parent was up 28% year on year.

With respect to earnings forecast, we have raised the full-year forecast.

In consideration of growing uncertainty and rising material and energy costs driven by global inflation, we have lowered the operating profit forecast for the second half. Even so, on a full-year basis, we have made upward revisions to both net sales and operating profit to reflect the better- than-expected first half results.

Assumed exchange rates for the second half have been changed and pegged at JPY 140 to the U.S. dollar and the euro, respectively.

As the result of the revision of full-year forecasts, net sales, operating profit, ordinary profit and profit attributable to owners of parent will outperform the previous forecasts by JPY 9.5 billion, JPY 0.5 billion, JPY 1.5 billion and JPY 1.0 billion, to achieve JPY 303.0 billion, JPY 23.0 billion, JPY 27.5 billion and JPY 20.0 billion, respectively.

Furthermore, taking into account the upward forecast revision of profit attributable to owners of parent for the fiscal year under review, we have reviewed the dividend forecast and decided to pay an annual dividend of JPY 34.00 per share, an increase of JPY 4.00 from the previous forecast.

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Financial Results for 1H (Apr-Sep) of FY 2022

	FY2021	FY2022	YoY Change
（Unit︓billion yen)	1H Result	1H Result	Amount	％
Net sales	135.7	147.6	+11.9	＋8.8%
Operating profit	10.6	12.3	+1.6	＋15.6%
Operating margin	7.9%	8.4%	-	-
Ordinary Profit	12.0	16.8	+4.7	＋39.1%
Profit attributable to owners	9.8	12.6	+2.7	＋28.1%
of parent
Exchange rate	¥110/USD	¥131/USD	-	-
¥131/EUR	¥138/EUR

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

Net sales and operating profit stood at JPY 147.6 billion and JPY 12.3 billion, with an operating margin of 8.4%.

Ordinary profit was JPY 16.8 billion, partly reflecting the posting of JPY 3.0 billion in foreign exchange gains. Profit attributable to owners of parent increased to JPY 12.6 billion.

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Result by Business Segments for 1H (Apr-Sep) of FY 2022

Net sales	FY2021	FY2022	YoY change
（Unit: billion yen）	1H Result	1H Result	Amount	％
■ Watches	62.0	73.3	+11.3	+18.2%
■ Machine Tools	38.3	40.9	+2.5	+6.8%
■ Devices and Components	25.5	22.9	▲ 2.6	▲10.3%
■ Electronic and Other Products	9.8	10.4	+0.6	+6.8%
Consolidated Total	135.7	147.6	+11.9	+8.8%
Operating Profit
(Unit: billion yen, %:operating margin)
■ Watches	4.8	8.8	+3.9	+82.0%
(7.8%)	(12.0%)
■ Machine Tools	5.8	5.5	▲ 0.3	▲6.1%
(15.4%)	(13.5%)
■ Devices and Components	1.5	0.0	▲ 1.5	▲98.5%
(6.0%)	(0.1%)
■ Electronic and Other Products	0.7	0.7	+0.0	+0.3%
(7.6%)	(7.1%)
Eliminations or general corporate	▲ 2.3	▲ 2.7	▲ 0.4	-
Consolidated Total	10.6	12.3	+1.6	+15.6%
(7.9%)	(8.4%)

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To summarize financial results by segment, the Watches segment continued to perform strongly, achieving an 18.2% year-on-year increase in net sales and an 82% year-on-year increase in operating profit, or the operating margin of 12%.

The Machine Tools segment posted a 6.8% increase in net sales, but posted a 6.1% decrease in operating profit due to the impact of higher costs.

The Devices and Components segment recorded a decrease in both net sales and operating profit as business conditions remained unchanged from the first quarter.

Electronics and Other Products posted a 6.8% increase in net sales, but the segment's operating profit remained at the year-ago level.

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