Seiko Group Corporation · TSE:8050

Seiko — FY2022 Earnings Presentation

34 slides from Seiko's earnings presentation, May 10, 2023

  1. Slide 1: FY2022 Consolidated Results

    FY2022 Consolidated Results (from April 1, 2022 to March 31, 2023) May 10, 2023

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

    Net Sales and Operating Profit by Domain EVS: Emotional Value Solutions Domain DS: Devices Solutions Domain  Both net sales and operating profit increased in the two strategic domains of the SS: Systems Solutions Domain EVS and SS, and operating profit remained lower while net sales grew in the DS.

  3. Slide 3: Business Environment

    ★MVP Products Business Environment High-added-value, highly profitable products that move people Positive Economic Environment Market Environment factors EVS Steady performance Watches EVS DS of overseas business High-priced watches ★ • Strong performance of luxury Impact of the (Japan, Europe, and

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

    KPIs of SMILE145 (8th Mid-Term Management Plan) MVP Ratio GP% Operating Profit FY2022 (Year-on-year changes) Year-on-year changes Amount (FY2022) Year-on-year changes 50 Luxury domain and products with high emotional value, such as GB, (approx. +5pt) as % of net sales approx. % + 1.8pt 11.5 60% + 39

  5. Slide 5: Cash Allocation & ROIC of SMILE145

    Cash Allocation & ROIC of SMILE145 Cash Allocation FY2022 Details of Growth Investment （Billions of yen） SMILE145 (8th Mid-Term Management Plan) 20.0 （Billions of yen） Growth Investment Areas Branding approx. 5.0 （Billions of yen） ・Branding Over 20.0 Growth investment ・Capital investment Over 50.0 1

  6. Slide 6: Actual results for FY2022

    Actual results for FY2022  Net sales and operating profit increased year on year in FY2022.  Net Sales ：260.5 billion yen (year-on-year +9.7%) In the Emotional Value Solutions Business, the Watches Business and WAKO Business for the Japanese market recovered significantly on the back of improved p

  7. Slide 7: Financial Forecast for FY2023

    Financial Forecast for FY2023  Although it is difficult to forecast when the device market will recover, personal consumption, primarily of high-end products, is growing steadily, and demand from foreign tourists is expected to recover in Japan. Accordingly, we forecast increases in both net sales

  8. Slide 8: Changes in Segments

    Changes in Segments  To realize the Group 10-year vision, we have established three strategic domains based on the solutions we provide, and formulated and implemented strategies for each domain under the 8th Mid-Term Management Plan, “SMILE145.” Accordingly, reported segments have been changed fro

  9. Slide 9: 1. Consolidated Results

    1. Consolidated Results SEIKO GROUP CORPORATION

  10. Slide 10: Consolidated P/L for FY2022 (Apr. 2022 - Mar. 2023)

    Consolidated P/L for FY2022 (Apr. 2022 - Mar. 2023) (Billions of yen) FY21 FY22 Variance Net Sales： y/y +23.1 Actual Actual Amt. % Exchange rate fluctuations c. +17.0 Net Sales 237.3 260.5 +23.1 +9.7% Operating Profit： y/y +2.4 (Exchange rate fluctuations c. +3.5) Gross Profit 99.1 111.7 +12.6 +12.7

  11. Slide 11: Analysis of Differences between Forecasts and Actual Results for FY2022

    Analysis of Differences between Forecasts and Actual Results for FY2022 Revised forecast of non-operating （Billions of yen） income and DS expenses Foreign exchange losses in 3Q Revised forecast of Other EVS Others extraordinary income and SS losses and taxes, etc. adj. DS Other Details: DS: Shortfal

  12. Slide 12: Consolidated Quarterly Performance

    Consolidated Quarterly Performance Net NetSales Sales 260.5 Operating Profit (Billions of yen) 239.1 (Billions of yen) 12.4 197.4 237.3 11.2 129.9 184.7 173.8 202.6 122.1 8.8 110.3 145.9 5.7 8.7 8.1 87.4 67.5 63.0 67.8 7.0 6.4 63.6 63.5 6.1 62.0 62.5 63.4 58.5 55.7 58.5 56.6 3.5 54.6 4.1 3.0 51.8 54

  13. Slide 13: Emotional Value Solutions Business (EVS)

    Emotional Value Solutions Business (EVS) Net Sales Operating Profit 170.7 (Billions of yen) 129.5 163.4 150.8 (Billions of yen) 11.0 11.5 83.1 128.9 110.6 84.9 127.8 10.6 10.1 68.2 92.4 8.2 8.2 52.5 6.9 41.2 6.1 44.1 46.3 44.8 44.0 4.5 39.0 42.3 40.2 5.2 40.0 39.9 4.8 4.0 34.535.4 34.435.3 3.4 3.3 3

  14. Slide 14: Watches Business in EVS *Reference

    Watches Business in EVS *Reference Net Sales 144.2 Operating Profit (Billions of yen) 135.4 (Billions of yen) 110.2 125.7 108.0 92.3 11.1 71.8 105.0 10.6 10.7 71.0 10.1 57.5 77.0 43.4 8.2 38.4 33.9 7.6 37.1 37.8 36.9 7.2 33.9 34.8 33.9 33.5 33.3 5.8 28.729.8 4.5 27.7 27.427.9 4.4 5.6 3.7 4.0 3.4 3.3

  15. Slide 15: Watches Business in EVS

    Watches Business in EVS  Watches : Net sales of completed watches in Japan grew significantly year on year, especially for Grand Seiko (GS) and Seiko Prospex, due to a (In Japan) recovery in personal consumption.  Watches : Net sales in the U.S. also rose significantly, driven by Global Brands (GB

  16. Slide 16: Watches Business in EVS

    Watches Business in EVS GB & GS Net Sales Growth Ratio of GB to Net Sales (year-on-year) 300% FY22 Japan GB GS Japan FY21 200% FY20 c.70% 100% c. 60% c. 55% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY21 FY22 300% Overseas GB GS Overseas FY22 200% FY21 FY20 100% c. 75% c. 65% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q c. 60% FY21

  17. Slide 17: Devices Solutions Business (DS)

    Devices Solutions Business (DS) Net Sales 64.5 Operating Profit (Billions of yen) 61.0 (Billions of yen) 5.6 49.9 47.5 5.2 44.3 5.0 34.3 46.9 34.8 4.1 29.3 2.3 23.5 32.9 3.8 21.0 1.7 1.7 17.8 16.5 16.6 14.5 2.5 15.6 1.3 15.0 15.0 14.5 1.2 1.3 14.3 1.2 12.1 1.1 11.6 11.8 11.211.8 10.3 10.7 1.3 0.5 0.

  18. Slide 18: Devices Solutions Business (DS)

    Devices Solutions Business (DS)  From the third quarter onward, although a slowdown trend became apparent in orders for devices for use in consumer and general-purpose products, favorable performance continued for micro batteries for medical equipment, high- performance metals for semiconductor pro

  19. Slide 19: Systems Solutions Business (SS)

    Systems Solutions Business (SS) Net Sales 36.6 Operating Profit (Billions of yen) 34.4 (Billions of yen) 4.3 26.9 34.1 3.9 25.3 32.8 3.1 3.5 25.1 18.0 23.8 2.0 2.8 3.0 16.8 2.5 1.1 16.7 9.6 1.9 1.1 15.6 1.6 2.2 8.9 8.9 8.9 9.1 1.0 1.0 9.1 8.8 8.7 8.8 8.2 8.3 8.4 1.4 0.9 0.9 0.9 7.7 7.8 8.0 8.0 0.8 0

  20. Slide 20: Systems Solutions Business (SS)

    Systems Solutions Business (SS)  In some industries, such as food service, a trend toward recovery from the coronavirus pandemic was observed. In addition, businesses supporting digital infrastructure, such as performance management and security-related business and other businesses, performed stea

  21. Slide 21: Balance Sheets as of March 31, 2023

    Balance Sheets as of March 31, 2023 (Billions of yen) Interest Bearing Debt Mar. 31, Mar. 31, Mar. 31, Variance 2021 2022(a) 2023(b) (b)-(a) Cash & Deposits Interest Bearing Debt (Billions of yen) Net Interest Bearing Debt (Interest Bearing Debt - Cash & Deposits) Inventories 68.4 73.0 83.7 +10.7 13

  22. Slide 22: Statement of Cash Flows

    Statement of Cash Flows (Billions of yen) (Billions of yen) CF from operating activities CF from investing activities Free CF FY20 FY21 FY22 Full Year Full Year Full Year 19.0 Profit before income taxes 6.4 8.8 9.6 Depreciation 10.6 10.8 12.3 20.3 Others -14.2 0.6 -12.7 14.0 Net cash provided by 11.

  23. Slide 23: KPIs of SMILE145 (8th Mid-Term Management Plan)

    KPIs of SMILE145 (8th Mid-Term Management Plan) Gross Profit Margin（GP%） Non-Financial KPIs (%) Cons. Total Reducing CO₂ Emissions 45.0 8.4% reduction compared to FY20 Target achieved 43.0 Result for FY 22: 42.9% Target for FY 22: 42.8% +1.0pt Result for FY21: 41.8% 41.0 FY20 FY21 FY22 39.0 *Result

  24. Slide 24: 2. Financial Forecast for FY2023

    2. Financial Forecast for FY2023 23

  25. Slide 25: Summary of Financial Forecast for FY2023

    Summary of Financial Forecast for FY2023 (Billions of yen) Full Year FY23 FY22 Variance Forecast vs. FY22 Actual (May. 9) Net sales 260.5 268.0 +7.4 Gross profit margin (GP%) 42.9% 43.9% +1.0pt Operating profit 11.2 12.0 +0.7 % 4.3% 4.5% +0.2pt Ordinary profit 11.1 12.0 +0.8 % 4.3% 4.5% +0.2pt Profi

  26. Slide 26: Financial Forecast for FY2023 by Segment

    Financial Forecast for FY2023 by Segment (Billions of yen) Net Sales Operating Profit FY23 FY23 FY22 Variance FY22 Variance Forecast Forecast Actual vs. FY22 Actual vs. FY22 (May. 9) (May. 9) Watches 144.2 147.0 +2.7 11.1 12.0 +0.8 Emotional Value Others･adj. 26.5 28.0 +1.4 0.4 1.0 +0.5 Solutions Su

  27. Slide 27: 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 4.0 4.0 2.0 1.0 0.0 0.0 FY2021 FY2022 FY2023 FY2021 FY2022 FY2023 Actual Actual Forecast Actual Actual Forecast *Amount of R&D expenses for FY2022 is an approximate

  28. Slide 28: 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

  29. Slide 29: Exchange Rates

    Exchange Rates Exchange Rate Sensitivity (Apr. 2023 - Mar. 2024) FY2022 Year (Millions of yen) USD EUR (JPY) 1Q 2Q 3Q 4Q Total Exchange rate USD 129.7 138.3 141.4 132.4 135.5 forecast JPY 135.0 JPY 140.0 Average EUR 138.3 139.3 144.3 142.2 141.0 For Net sales c. 800 c. 120 Closing USD 136.7 144.8 13

  30. Slide 30: Reference

    Reference SEIKO GROUP CORPORATION

  31. Slide 31: Net Sales & Operating Profit by Segment for FY2022

    Net Sales & Operating Profit by Segment for FY2022 (Apr. 2022 - Mar. 2023) (Billions of yen) Net Sales Operating Profit (Composition ratio) FY21 FY22 FY21 FY22 Variance Variance Actual Actual Actual Actual Watches 125.7 144.2 +18.4 7.6 11.1 +3.4 Emotional (53%) (55%) Value Others・Adj. 25.1 26.5 +1.4

  32. Slide 32: Consolidated P/L for 4Q of FY2022 (Jan. - Mar. 2023)

    Consolidated P/L for 4Q of FY2022 (Jan. - Mar. 2023) FY21 FY22 Variance (Billions of yen) 4Q 4Q Amt. % Net Sales： y/y -0.4 Exchange rate fluctuations c. +3.0 Net Sales 63.5 63.0 -0.4 -0.7% Gross Profit 25.9 25.7 -0.2 -0.9% Operating Profit： y/y -3.4 % 40.9% 40.9% -0.0pt Impact of decrease in Net sal

  33. Slide 33: Net Sales & Operating Profit by Segment for 4Q of FY2022

    Net Sales & Operating Profit by Segment for 4Q of FY2022 (Jan. - Mar. 2023) (Billions of yen) Net Sales Operating Profit (Composition ratio) FY21 FY22 FY21 FY22 Variance Variance 4Q 4Q 4Q 4Q Watches 33.3 33.9 +0.6 1.7 0.3 -1.3 Emotional (53%) (54%) Value Others・Adj. 6.8 7.2 +0.4 0.4 0.1 -0.2 (11%) (

  34. Slide 34: 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 — FY2022 Earnings Presentation on 6ix