Citizen Watch : FY2023 Consolidated Business Results

C I T I Z E N W A T C H

Consolidated Financial Statements for the Year Ended March 31, 2024

These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan. All figures in these statements which are less than 1 million yen have been rounded down. (English translation)

	May 13, 2024
CITIZEN WATCH CO., LTD.	Listings: Prime section of Tokyo Stock Exchange
Code No.: 7762	(URL https://www.citizen.co.jp/global)
Representative: Toshihiko Sato, President and CEO

Contact: Toshiyuki Furukawa, Managing Director, In charge of Public & Investor Relations Department

Tel: [phone]

Scheduled ordinary general meeting of shareholders: June 25, 2024

Scheduled start of dividend payment: June 26, 2024

Scheduled release of fiscal 2023 Business Report: June 26, 2024

1. Results for the Year ended March 31, 2024 (April 1, 2023 to March 31, 2024)

1. Consolidated operating results

		(Millions of yen; Percentages represent changes over the previous fiscal year)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
March 31, 2024	312,830	3.8%	25,068	5.7%	30,810	5.9%	22,958	5.1%
March 31, 2023	301,366	7.1%	23,708	6.4%	29,096	6.4%	21,836	(1.4%)
Note: Comprehensive income:
As of March 31, 2024: ¥ 45,736 million	(43.6%)	As of March 31, 2023: ¥ 31,852 million	((15.3%))
	Earnings per share		Fully diluted			Ratio of Ordinary	Ratio of Operating
	earnings per share	Return on equity
	(Yen)		(Yen)				profit to total assets	profit to net sales
March 31, 2024		93.60			-		9.7%	7.7%		8.0%
March 31, 2023		75.25			-		9.6%	7.4%		7.9%
Reference: Equity in earnings of unconsolidated subsidiaries and affiliates:
As of March 31, 2024: ¥ 1,361 million	As of March 31, 2023: ¥ 1,248 million

1. Consolidated financial position

				(Millions of yen)
				Net assets per
	Total assets	Net assets	Equity ratio	share
				(Yen)
March 31, 2024	415,445	256,134	59.6%	1,015.74
March 31, 2023	389,982	232,775	57.5%	866.68
Reference: Shareholders' Equity:
As of March 31, 2024: ¥ 247,659 million	As of March 31, 2023: ¥ 224,179 million

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1. Consolidated cash flows

				(Millions of yen)
				Cash and cash
	Cash flows from	Cash flows from	Cash flows from	equivalents at end
	operating activities	investing activities	financing activities	of term
March 31, 2024	34,564	(12,697)	(26,994)	80,338
March 31, 2023	16,576	(13,526)	(40,062)	79,201

2. Dividends

		Dividends per share (Yen)		Total
			dividends		Dividends to
	First	Second	Third	Year-	Full	paid	Pay-out ratio
	consolidated
	(annual)	(Consolidated)
	quarter	quarter	quarter	end	year	(Millions of		net assets
	yen)
March 31, 2023	-	15.00	-	19.00	34.00	9,315	45.2%	4.2%
March 31, 2024	-	20.00	-	20.00	40.00	9,761	42.7%	4.2%
March 31, 2025 (E)	-	22.50		22.50	45.00		50.0%

3. Projected Consolidated Results for the Year ending March 31, 2025

								(Millions of yen)
	(Percentages represent changes over the corresponding period of the previous fiscal year)
									Earnings
	Net sales	Operating profit	Ordinary profit	Net income	per share
									(Yen)
Interim term	151,000	(1.3%)	11,000	(18.8%)	12,200	(30.0%)	12,500	(6.6%)	51.27
Full term	310,000	(0.9%)	23,000	(8.3%)	25,500	(17.2%)	22,000	(4.2%)	90.23

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C I T I Z E N W A T C H

4. Others

1. Important changes of subsidiaries during the term (change of specified subsidiaries that lead to a change in the scope of consolidation): None
2. Adoption of simplified accounting method and special accounting methods: None
3. Changes in principles, procedures and classifications of accounting standards associated with the preparation of consolidated financial statements.
4. 1. Changes associated with revised accounting standards: None
   2. Changes other than those in (i)above: None
   3. Changes in accounting estimate: None
   4. Restatements: None
5. Number of shares issued and outstanding (common stock)

			shares		shares
(i)	Number of shares issued and				294,000,000
	outstanding at the end of term	March 31, 2024	246,000,000	March 31, 2023
	(including treasury stock)
(ii)	Number of treasury stock at the	March 31, 2024	2,178,601	March 31, 2023	35,334,190
	end of term
(iii) Average number of common	March 31, 2024	245,277,690	March 31, 2023	290,183,268
	stocks

• The consolidated financial statements are not included in the scope of the audit.
• Explanation about the proper use of financial forecasts and other important notes

Statements above relating to financial forecasts are based on information available to the Company and certain assumptions the Company considers reasonable as of the date of the announcement of these statements. Actual results may differ materially from these forecasts, depending on a variety of factors.

Please refer to the attached "1. ANALYSIS OF OPERATIONG RESULTS, (4) Prospects for the Year ending March 31, 2025" on page 7 for assumptions underlying the above forecasts and precautions regarding their use.

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(Attached Documents)
○INDEX
1. ANALYSIS OF OPERATIONG RESULTS	5
(1)	Fiscal Year End Operating Results	5
(2)	Assets Outstanding at Fiscal Year End	6
(3)	Cash Flows at Fiscal Year End	6
(4)	Prospects for the Year ending March 31, 2025	7
2. FUNDAMENTAL VIEWS ON SELECTING ACCOUNTING STANDARDS	8
3. CONSOLIDATED FINANCIAL STATEMENTS AND PRIMARY NOTES	9
(1)	Consolidated Balance Sheet	9
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income	11
Consolidated Statement of Income	11
Consolidated Statement of Comprehensive Income	12
(3)	Consolidated Statements of Changes in Equity	13
(4)	Consolidated Statement of Cash Flow	15
(5)	Notes on the Consolidated Financial Statements	16
(Notes related to of going concern assumptions)	16
(Change in presentation method)	16
(Segment information)	16
(Per Share Information)	18
(Significant Subsequent Events)	19

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1. ANALYSIS OF OPERATIONG RESULTS

1. Fiscal Year End Operating Results

During the consolidated fiscal year under review, the Japanese economy continued to experience a moderate recovery in consumer spending, reflecting the normalization of economic activity. In North America and Europe, consumer spending remained firm due partly to increases in wages and employment, despite growing concern over an economic recession linked to inflation and rising interest rates. The Chinese economy experienced a sluggish recovery following the resumption of normal economic activity. Meanwhile, recoveries in other Asian regions were only moderate due to the lack of momentum in exports and weak demand for capital spending.

In this environment, the Citizen Group's consolidated results for the fiscal year under review showed increases in sales and profits, with net sales of 312.8 billion yen (up 3.8% year on year) and operating profit of 25.0 billion yen (up 5.7 year on year). These results were driven mainly by strong performance in Watches. Ordinary profit increased to 30.8 billion yen (up 5.9% year on year), while profit attributable to owners of parents came to 22.9 billion yen (up 5.1% year on year).

Watches

In the domestic market, sales of Citizen brand watches increased with the support of the strong performance of men's watches such as ATTESA and PROMASTER and the recovery of inbound tourism-related demand, despite a decline in consumer confidence linked to price increases.

Looking at overseas markets, the North American market showed signs of weakness in sales for distribution such as jewelry chain stores and department stores amid an increase in budget-minded consumers in response to the CPI remaining high. Even so, sales increased, reflecting the strong performance of online sales and sales for travel distribution. Even so, sales increased, chiefly reflecting the strong performance of online sales. The European market suffered price increases. Despite this, sales climbed due to the strong performance recorded mainly in the UK and Italy, as well as a steady increase in new retailers selling Citizen watches in France. In Asia, countries such as India and Singapore showed signs of a recovery, while sales varied by region. Sales grew in the Chinese market thanks to the success of collaboration merchandise and new initiatives using social media.

Sales of Bulova brand watches rose. This was attributable to, in the mainstay North American market, the cultivation of new sales channels including sales for tourism-related distribution, offsetting weak sales for main distribution channels such as jewelry chain stores.

Sales of movements climbed due to solid sales of mechanical movements, which offset slow sales of analog quartz movements due to concerns about a recession in the North American and European markets.

As a result, notwithstanding concerns about a decline in consumer confidence linked to the long-term price increases occurring globally, thanks to the progress made in initiatives for the enhancement of sales of global brands, premium brands and mechanical watches, the watches segment as a whole posted an increase in sales, with net sales of 162.2 billion yen (up 10.8% year on year). Operating profit increased 19.4% year on year, to 19.8 billion yen, given an increase in net sales and ongoing efforts to improve profitability.

Machine Tools

Sales declined in the domestic market with the continuation of a generally cautious stance regarding capital expenditures, sluggish growth in shipments of automobile-related products and a slump in the semiconductor equipment and pneumatic equipment markets. As for overseas markets, sales primarily of medical products remained strong in the European and American markets. However, this was offset by the ongoing sluggishness of markets in China and other Asian countries, which resulted in a decrease in sales.

As a result, the machine tools segment as a whole posted a decrease in sales, with net sales of 81.6 billion yen (down 5.3% year on year). Operating profit decreased to 9.0 billion yen (down 26.0% year on year), due mainly to rises in raw material prices and transportation expenses.

Devices and Components

Sales of automotive parts increased with the easing of shortages of parts supplies that had been caused by semiconductor shortages, together with a recovery in production at car manufacturers. Sales of small motors rose,

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C I T I Z E N W A T C H

reflecting market recoveries in a broad range of areas including medical products. However, sales of crystal devices decreased, reflecting sluggish demand growth in demand in the personal computer and IoT markets. Sales of opto-devices decreased due to sluggish demand.

As a result, the devices and components segment overall recorded a decrease in sales and an increase in profit, with net sales of 42.4 billion yen (down 5.0% year on year) and operating profit of 0.4 billion yen (compared to operating loss of 0.8 billion yen in the same period of the previous fiscal year).

Electronic and Other Products

In information equipment, the recovery of demand was weak due to the deterioration of the market environment outlook, resulting in the sluggish growth of POS printers and bar code printers. Even so, sales increased, reflecting strong sales of photo printers due to the growth of demand. Sales of healthcare equipment decreased given ongoing weakness in demand for thermometers and sales of blood pressure monitors, which fell short of sales in the previous year despite a recovery trend.

As a result, the electronic and other products segment overall recorded an increase in both sales and profits with net sales of 22.5 billion yen (up 10.0% year on year) and operating profit of 1.5 billion yen (up 38.7% year on year).

(2) Assets Outstanding at Fiscal Year End

As of the end of the consolidated fiscal year under review, total assets had increased by 25.4 billion yen from the end of the previous consolidated fiscal year, to 415.4 billion yen. Current assets increased by 8.0 billion yen, mainly reflecting rise of 4.0 billion yen and 7.5 billion yen in notes and accounts receivable - trade and inventories, more than offsetting a 1.1 billion yen decrease in cash and deposits and inventories. Non-current assets increased by 17.3 billion yen, reflecting an 8.4 billion yen increase in total property, plant and equipment and a 7.5 billion yen increase in investment securities.

Liabilities had increased by 2.1 billion yen from the end of the previous consolidated fiscal year, to 159.3 billion yen. This was primarily due to increases of 1.6 billion yen in electronically recorded obligations - non-operating and 2.7 billion yen in lease liabilities, which was partly offset by a decrease of 3.8 billion yen in electronically recorded obligations - operating.

Net assets increased by 23.3 billion yen from the end of the previous consolidated fiscal year, to 256.1 billion yen, primarily reflecting a 15.8 billion yen increase in foreign currency translation adjustment and a 6.4 billion yen increase in valuation difference on available-for-sale securities.

(3) Cash Flows at Fiscal Year End

For the cash status of the Citizen Group, cash provided from operating activities was 34.5 billion yen an increase of 17.9 billion yen in income from the previous fiscal year. This was attributable primarily to factors of increase such as 29.3 billion yen in profit before income taxes and 12.3 billion yen in depreciation, which more than offset factors of decrease such as a decrease of 8.6 billion yen in trade payables and 6.2 billion in income taxes paid.

Cash used in investing activities was 12.6 billion yen, a decrease of 0.8 billion yen in expenditure from the previous fiscal year. This was due to factors including 1.9 billion yen in purchase of property, plant and equipment, which more than offset factors such as proceeds from the sale of investment securities of 2.7 billion yen.

Cash used in financing activities was 26.9 billion yen, a decrease of 13.0 billion yen in expenditure from the previous fiscal year. This resulted chiefly from factors such as 12.8 billion yen in purchase of treasury shares, and 9.8 billion yen in dividends paid.

As a result, cash and cash equivalents increased 1.1 billion yen year on year to total 80.3 billion yen at the end of the fiscal year under review.

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1. Prospects for the Year ending March 31, 2025 Year ended March 31,

Millions of yen	2024	2025
Net sales	312,830	310,000
Operating profit or	25,068	23,000
loss
Ordinary profit or loss	30,810	25,500
Profit or loss attributable	22,958	22,000
to owners of parent
Breakdown of sales by segment
	Year ended March 31,
Millions of yen	2024	2025
Watches	166,205	171,500
Machine Tools	81,629	73,000
Devices and	42,487	42,500
components
Electronic and Other	22,507	23,000
Products
Total net sales	312,830	310,000
Breakdown of operating profit by segment
	Year ended March 31,
Millions of yen	2024	2025
Watches	19,851	20,500
Machine Tools	9,029	6,600
Devices and	463	800
components
Electronic and Other	1,588	1,500
Products
Eliminations or	(5,864)	(6,400)
general corporate
Total Operating profit	25,068	23,000
or loss

Year-on-year

change%

(2,830) (0.9%)

(2,068) (8.2%)

(5,310) (17.2%)

1. (4.2%)

Year-on-year
change	%
+5,295	+3.2%
(8,629)	(10.6%)
+13	+0.0%
+493	+2.2%
(2,830)	(0.9%)

Year-on-year

change%

+649 +3.3%

(2,429) (26.9%)

+337 +72.8%

1. (5.5%)

1. ₋

(2,068) (8.2%)

The Group anticipates weakness in certain sectors of the economy as the post-pandemic recovery in demand runs its course. The economy will still continue to recover moderately. The Group projects that consumer demand and inbound tourism-related demand will recover to a certain degree in Japan, while overseas, consumer spending will remain firm despite concerns about uncertain market conditions.

Taking this situation into account, the Group forecasts net sales of 310.0 billion yen (down 0.9% year on year), operating profit of 23.0 billion yen (down 8.2% year on year), ordinary profit of 25.5 billion yen (down 17.2% year on year) and profit attributable to owners of parent of 22.0 billion yen (down 4.2% year on year) for consolidated financial results for the next fiscal year.

The foreign exchange rates are assumed to be 145 yen against the U.S. dollar and 155 yen against the euro.

Actual foreign exchange rates were 144 yen against the U.S. dollar and 156 yen against the euro in the

consolidated fiscal year under review.

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C I T I Z E N W A T C H

2. Fundamental Views on Selecting Accounting Standards

The Citizen Group will continue to compile its consolidated financial statements using Japanese standards for the foreseeable future, as they enable comparison of fiscal years in the consolidated financial statements as well as a comparison among companies.

The Group has the policy of appropriately dealing with the application of IFRS, by taking into consideration circumstances in Japan and overseas.

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C I T I Z E N W A T C H

3. Consolidated Financial Statements and Primary Notes

(1) Consolidated Balance Sheet

		（	）
			Millions of yen
	As of March 31,	As of March 31,
	2023		2024
Assets
Current assets
Cash and deposits	82,490		81,312
Notes and accounts receivable - trade	53,718		57,754
Electronically recorded monetary claims - operating	2,081		3,056
Merchandise and finished goods	58,604		64,977
Work in process	24,291		26,472
Raw materials and supplies	25,595		24,600
Consumption taxes refund receivable	3,052		2,659
Other	10,907		8,178
Allowance for doubtful accounts	(1,099)		(1,272)
Total current assets	259,642		267,741
Non-current assets
Property, plant and equipment
Buildings and structures, net	41,808		43,146
Machinery, equipment and vehicles, net	15,868		18,634
Tools, furniture and fixtures, net	3,899		4,477
Land	10,367		10,529
Leased assets, net	5,134		7,722
Construction in progress	2,443		3,477
Total property, plant and equipment	79,521		87,987
Intangible assets
Software	3,951		4,368
Other	799		837
Total intangible assets	4,751		5,206
Investments and other assets
Investment securities	39,021		46,602
Long-term loans receivable	163		182
Deferred tax assets	5,581		6,058
Other	1,675		1,979
Allowance for doubtful accounts	(236)		(313)
Allowance for investment loss	(138)		－
Total investments and other assets	46,066		54,510
Total non-current assets	130,340		147,703
Total assets	389,982		415,445

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C I T I Z E N W A T C H	（	）
			Millions of yen
	As of March 31,	As of March 31,
	2023		2024
Liabilities
Current liabilities
Notes and accounts payable - trade	18,889		18,712
Electronically recorded obligations - operating	13,325		9,482
Notes payable - facilities	18		115
Electronically recorded obligations - non-operating	384		2,057
Short-term borrowings	3,787		10,077
Current portion of bonds payable	10,000		－
Income taxes payable	2,179		2,315
Accrued expenses	10,997		12,252
Provision for bonuses	6,156		6,548
Provision for bonuses for directors (and other officers)	303		328
Provision for product warranties	1,244		1,264
Provision for loss on reorganization	110		104
Other	11,918		12,381
Total current liabilities	79,317		75,641
Non-current liabilities
Bonds payable	－		10,000
Long-term borrowings	51,328		42,433
Deferred tax liabilities	3,628		5,334
Provision for loss on reorganization	6		5
Retirement benefit liability	16,572		16,777
Lease liabilities	4,679		7,380
Other	1,673		1,737
Total non-current liabilities	77,889		83,668
Total liabilities	157,206		159,310
Net assets
Shareholders' equity
Share capital	32,648		32,648
Capital surplus	33,740		33,739
Retained earnings	150,483		124,466
Treasury shares	(28,581)		(1,698)
Total shareholders' equity	188,290		189,156
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	10,161		16,561
Foreign currency translation adjustment	25,659		41,558
Remeasurements of defined benefit plans	67		382
Total accumulated other comprehensive income	35,888		58,502
Non-controlling interests	8,596		8,475
Total net assets	232,775		256,134
Total liabilities and net assets	389,982		415,445

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