Seiko Group Corporation · TSE:8050

Seiko — Q1 FY2023 Earnings Presentation

29 slides from Seiko's earnings presentation, Aug 9, 2023

  1. Slide 1: Consolidated Results for the 3 months (April 1 to June 30, 2023)

    Consolidated Results for the 3 months (from April 1 to June 30, 2023) August 9, 2023

  2. Slide 2: Net Sales and Operating Profit by Domain

    Net Sales and Operating Profit by Domain EVS: Emotional Value Solutions Domain  Both net sales and operating profit increased in the two strategic domains of EVS and SS. DS: Devices Solutions Domain However, due to a decline in operating profit in the DS, the consolidated result was an increase SS:

  3. Slide 3: Business Environment

    Business Environment Positive Economic Environment Market Environment factors EVS Steady performance Strong performance of high-end watches and mid-priced- of overseas business EVS range watches (Japan, Europe, and the U.S.) ★ Impact of the 【Overseas net sales ratio】(Year-on-year changes) depreciati

  4. Slide 4: KPIs of SMILE145 (8th Mid-Term Management Plan)

    KPIs of SMILE145 (8th Mid-Term Management Plan) MVP Ratio GP% Operating Profit FY2023 3M (Changes from FY2022) Year-on-year changes (3M) Amount (FY2023 3M) Year-on-year changes Luxury domain and products with high emotional value, such as GB, as % of net sales approx. 50 % (approx. +5pt) Target for

  5. Slide 5: Financial Forecast for FY2023

    Financial Forecast for FY2023  During the three-month period ended June 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 second quarter onward, we expect the EVS B

  6. Slide 6: 1. Consolidated Results

    1. Consolidated Results  Reported segments have been changed from the fiscal year ended March 31, 2023. The actual results of FY2020 and FY2021 have been reclassified to reflect the new disclosure segments. The reclassified figures for FY2020 in this presentation are unaudited and provided for refe

  7. Slide 7: Consolidated P/L for 3M FY2023 (Apr. - Jun. 2023)

    Consolidated P/L for 3M FY2023 (Apr. - Jun. 2023) (Billions of yen) FY22 FY23 Variance 3M 3M Amt. % Net Sales 62.0 62.9 +0.8 +1.4% Net Sales： y/y +0.8 Exchange rate fluctuations c. +1.8 Gross Profit 26.1 27.5 +1.3 +5.0% % 42.2% 43.7% +1.5pt Operating Profit： y/y -0.2 Operating Profit 3.1 2.8 -0.2 -9

  8. Slide 8: Consolidated Quarterly Performance

    Consolidated Quarterly Performance Net NetSales Sales Operating Profit 260.5 (Billions of yen) 237.3 (Billions of yen) 12.4 197.4 173.8 202.6 11.2 129.9 145.9 110.3 8.8 87.4 8.7 62.9 67.8 67.5 62.0 63.4 63.5 54.6 55.7 58.5 56.6 63.0 6.4 51.8 5.7 35.6 2.8 3.4 3.1 3.5 3.0 2.1 2.2 2.2 1.5 0.61.9 0.6 1.

  9. Slide 9: Emotional Value Solutions Business (EVS)

    Emotional Value Solutions Business (EVS) Net Sales Operating Profit 170.7 11.5 (Billions of yen) 150.8 (Billions of yen) 11.0 129.5 110.6 127.8 83.1 92.4 68.2 8.2 52.5 6.9 42.3 6.1 44.1 46.3 3.4 4.5 5.2 42.3 40.241.2 4.0 39.0 39.9 34.535.4 35.3 3.3 32.8 2.7 2.9 2.4 3.2 1.9 1.9 2.1 1.6 0.5 18.0 1.0 0

  10. Slide 10: Watches Business in EVS *Reference

    Watches Business in EVS *Reference Net Sales Operating Profit (Billions of yen) (Billions of yen) 144.2 11.1 125.7 10.7 110.2 92.3 105.0 71.8 77.0 57.5 7.6 7.2 43.4 36.5 5.8 5.6 37.8 38.4 3.5 4.5 33.9 33.534.8 33.333.9 4.0 3.4 27.7 28.729.8 27.9 3.3 2.9 2.6 2.4 2.2 1.9 1.4 1.5 1.7 14.6 1.0 0.3 -1.1

  11. Slide 11: Watches Business in EVS

    Watches Business in EVS  Watches : Net sales of completed watches in Japan grew year on year due to favorable performance of new products of Global Brands such as (In Japan) Grand Seiko and Seiko Prospex against the background of demand from inbound tourists, which showed a clear recovery trend. 

  12. Slide 12: Watches Business in EVS

    Watches Business in EVS GB & GS Net Sales Growth Ratio of GB to Net Sales (year-on-year) FY23 200% Japan 3M Japan GB GS FY22 3M FY21 100% 3M c.70% c. 65% 0% c. 55% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY22 FY23 Overseas 200% GB GS Overseas FY23 3M FY22 3M 100% FY21 3M c. 75% c. 75% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q c.

  13. Slide 13: Devices Solutions Business (DS)

    Devices Solutions Business (DS) Net Sales Operating Profit (Billions of yen) (Billions of yen) 64.5 61.0 5.6 49.9 47.5 5.2 44.3 5.0 34.3 32.9 2.3 29.3 21.0 4.1 3.8 17.8 1.7 1.7 16.5 13.9 16.6 15.0 14.3 15.015.6 14.5 14.5 2.5 1.3 1.3 1.2 1.2 11.8 1.1 10.3 10.7 1.3 0.1 0.2 0.0 0.0 FY20FY21FY22 FY23 -0

  14. Slide 14: Devices Solutions Business (DS)

    Devices Solutions Business (DS)  Net sales and operating profit decreased significantly year on year due to the sluggish Chinese economy, HDD inventory adjustments in its markets, and stagnant semiconductor market conditions, resulting in weak performance for thermal printers, quartz crystals, high

  15. Slide 15: Systems Solutions Business (SS)

    Systems Solutions Business (SS) Net Sales Operating Profit (Billions of yen) (Billions of yen) 4.3 36.6 3.9 34.4 3.1 3.5 26.9 34.1 2.8 25.3 1.9 2.0 2.5 18.0 25.1 16.8 1.0 9.3 1.6 1.1 1.1 16.7 9.6 1.0 1.0 9.1 8.8 8.9 8.9 9.1 0.9 0.9 0.9 0.9 0.9 8.7 8.8 8.0 8.0 8.3 8.4 0.8 0.8 0.8 FY20FY21 FY22FY23 1Q

  16. Slide 16: Systems Solutions Business (SS)

    Systems Solutions Business (SS)  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, also expanded, r

  17. Slide 17: Balance Sheets as of June 30, 2023

    Balance Sheets as of June 30, 2023 (Billions of yen) Interest Bearing Debt Jun. 30, Jun. 30, Mar. 31, Jun. 30, Variance 2021 2022 2023(a) 2023(b) (b)-(a) Cash & Deposits Interest Bearing Debt (Billions of yen) Net Interest Bearing Debt (Interest Bearing Debt - Cash & Deposits) Inventories 72.0 80.6

  18. Slide 18: Statement of Cash Flows (approximate figure)

    Statement of Cash Flows (approximate figure) (Billions of yen) (Billions of yen) CF from operating activities CF from investing activities FY21 FY22 FY23 6.0 Free CF 3M 3M 3M Profit before income taxes 1.3 3.9 3.7 4.0 Depreciation 2.5 2.9 3.0 Others 0.7 -6.6 -2.6 2.8 Net cash provided by 4.7 0.2 4.1

  19. Slide 19: KPIs of SMILE145: Gross Profit Margin

    KPIs of SMILE145 (8th Mid-Term Management Plan) Gross Profit Margin（GP%） (%) Cons. Total FY22 FY23 FY23 45.0 3M Total 3M Target 44.0 Target for FY 23: 43.9% Cons. Total 42.2% 42.9% 43.7% 43.9% +1.0pt 43.0 Result for FY22: 42.9% GP% by Segment (y/y) 3M 42.0 Emotional Value Solutions Business (EVS) ＋2

  20. Slide 20: 2. Financial Forecast for FY2023

    2. Financial Forecast for FY2023 19

  21. Slide 21: Summary of Financial Forecast for FY2023

    Summary of Financial Forecast for FY2023 (Billions of yen) Full Year 2Q-4Q (9 months) FY23 FY23 FY22 Variance FY22 Variance Forecast vs. FY22 Forecast vs. FY22 Actual (Aug. 8) Actual (Aug. 8) Net sales 260.5 268.0 +7.4 198.4 205.0 +6.6 Operating profit 11.2 12.0 +0.7 8.1 9.1 +1.0 % 4.3% 4.5% +0.2pt

  22. Slide 22: Financial Forecast for FY2023 by Segment

    Financial Forecast for FY2023 by Segment (Billions of yen) Net sales Operating profit FY2023 Forecast Variance Variance FY2023 Forecast Variance Variance FY2022 FY2022 vs. vs. vs. vs. Actual Previous Current Actual Previous Current FY2022 Previous FY2022 Previous (May. 9) (Aug. 8) (May. 9) (Aug. 8)

  23. Slide 23: Financial Forecast for FY2023 by Segment

    Financial Forecast for FY2023 by Segment Net sales Operating profit (Billions of yen) 2Q-4Q (9 months) 2Q-4Q (9 months) FY2023 FY2023 FY2022 Variance FY2022 Variance Forecast Forecast Actual vs. FY22 Actual vs. FY22 (Aug. 8) (Aug. 8) Watches 110.2 111.9 +1.6 8.4 9.1 +0.7 Emotional Value Others･adj.

  24. Slide 24: Investment / R&D Expenses

    Investment / R&D Expenses Investment R&D Expenses (Billions of yen) (Billions of yen) 10.0 5.0 8.0 4.0 6.0 3.0 8.7 9.0 8.5 4.0 2.0 4.1 3.9 4.0 2.0 1.0 0.0 0.0 FY2021 FY2022 FY2023 FY2021 FY2022 FY2023 Actual Actual Forecast Actual Actual Forecast *No changes in the forecast for FY2023 from that rele

  25. Slide 25: Shareholder Returns

    Shareholder Returns Dividend per share (JPY) Dividend payout ratio 80.00 75.00 75.00 75.00 75.00 75.00 75.00 91.1% 62.50 60.00 50.00 50.00 57.4% 61.5% 40.00 37.50 44.5% 38.7% 20.00 33.4% 32.1% 21.3% 26.8% 9.5% 0.00 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 (Forecast) *The

  26. Slide 26: Exchange Rates

    Exchange Rates Exchange Rate Sensitivity (Jul. 2023 - Mar. 2024) FY2023 Forecasted (Millions of yen) USD EUR (JPY) 1Q rate Exchange rate USD 137.5 135.0 forecast JPY 135.0 JPY 145.0 Average EUR 149.6 145.0 For Net sales c. 600 c. 90 Closing USD 145.0 135.0 For Operating Date c. 75 c. 30 EUR 157.6 14

  27. Slide 27: Reference

    Reference SEIKO GROUP CORPORATION

  28. Slide 28: Net Sales & Operating Profit by Segment for 3M FY2023

    Net Sales & Operating Profit by Segment for 3M FY2023 (Apr. - Jun. 2023) (Billions of yen) Net Sales Operating Profit (Composition ratio) FY22 FY23 FY22 FY23 Variance Variance 3M 3M 3M 3M Watches 33.9 36.5 +2.6 2.6 3.5 +0.8 Emotional (55%) (58%) Value Others・Adj. 5.1 5.7 +0.6 -0.2 -0.0 +0.2 (8%) (9%

  29. Slide 29: End

    End *The forecasted results which appear in this presentation are based on the information which we have obtained as of now, and on certain assumptions deemed reasonable. As a result, actual results, etc. may differ significantly from the forecasted figures due to a wide range of factors. *Numbers a

Seiko Group — Q1 FY2023 Earnings Presentation on 6ix