Citizen Watch Co.,Ltd. Q4 FY2025 earnings call

• Overall 2024 Full Year Financial Performance

  • Consolidated revenue 316.8 billion yen, +1.3% YoY; Operating profit 20.5 billion yen, -17.9% YoY; Operating margin 6.5%
  • Net income attributable to parent company shareholders hit a new all-time high of 23.8 billion yen
  • ROE reached 9.5%, exceeding the mid-term management plan 2024 target of 8%+ for the third consecutive year, driven by improved profitability and reduced equity

• Watch Business Strategic Updates

  • Global average selling price growth: Domestic selling prices up 30% vs 2021, North American selling prices up 20% in local currency vs 2021, driven by premium product mix and implemented price increases
  • Under the new Mid-Term Management Plan 2027, the Attesa brand launched global expansion: it started sales of GPS-focused models through direct-to-consumer channels and jewelry retail chains in North America, and is hosting global exhibitions highlighting its proprietary titanium processing technology, with new Japanese-launched products to be rolled out globally. The brand will continue focusing on the high-value ~$2,000 price segment to expand sales
  • Bulova is celebrating its 150th anniversary in 2025: the brand held a commemorative event in New York (simulcast to Latin America) to improve brand image in the Americas, and plans to release limited anniversary models and expanded media outreach to strengthen positioning in the North American market

• Machine Tool Business Operational Trends

  • Full year order recovery has been slower than initially expected; Q4 total order volume decreased 27% YoY, partially due to pull-forward demand from price increases in the year-ago period
  • Sequentially (vs previous quarter), orders show a mild recovery trend across most regions. Strong positive growth was seen in the Americas (+122% YoY, driven by low base effect and solid medical-related orders) and Europe (+14% YoY, solid medical orders offsetting weak automotive investment), while China saw nascent recovery in automotive and semiconductor-related demand despite overall regional order declines

2024 Full Year Consolidated:

• Watch Business: Revenue 177.1 billion yen, +6.6% YoY; Operating profit 17.8 billion yen, -9.9% YoY; Operating margin 10.1%. Revenue contribution: 55.9% of total consolidated revenue.
• Machine Tool Business: Revenue 74.3 billion yen, -9.0% YoY; Operating profit 5.6 billion yen, -37.2% YoY. Revenue contribution: 23.4% of total consolidated revenue.
• Combined Devices & Electronic Products Business (post-restructuring 2024 alignment): Full year revenue of 65.4 billion yen, with full year operating profit secured in positive territory; the legacy Devices segment alone reported Q4 2024 revenue 9.9 billion yen, +0.2% YoY, and a 180 million yen operating loss, while legacy Electronic Products Other reported full year revenue growth and profit growth.

2024 Q4 (Jan-Mar) Consolidated:

• Watch Business: Revenue grew YoY, driven by strong performance in Europe and North America that offset weaker domestic inbound demand and declining revenue in China. Finished goods and value-added movements both delivered revenue growth.
• Machine Tool Business: Revenue 18.3 billion yen, -5.6% YoY; Operating profit 1.2 billion yen, -15.9% YoY. Overseas revenue grew (driven by China sales growth and solid medical-related demand in the Americas) while domestic revenue declined due to persistent cautious capital investment in the automotive sector.
• Devices Business: Revenue 9.9 billion yen, +0.2% YoY, recorded an operating loss of 180 million yen. Full year 2024 secured positive operating profit via fixed cost reduction efforts.

• 2025 Full Year Consolidated Guidance assumes an exchange rate of 145 JPY/USD and 160 JPY/EUR. Guidance targets: Revenue 318.0 billion yen (+0.3% YoY); Operating profit 200 billion yen (-2.4% YoY); Net income 200 billion yen (-16.0% YoY)
• Segment-level 2025 guidance: Watch business targets 180.0 billion yen revenue (+1.6% YoY) and 18.5 billion yen operating profit, expecting continued solid performance to deliver both revenue and profit growth; Machine tool business expects full year revenue and profit growth, with a full recovery in orders projected to start in the second half of 2025; Combined Devices business expects a decline in both revenue and operating profit year-over-year
• Dividend guidance: A 2 JPY increase year-over-year to 47 JPY per share for full year 2025, aligned with the shareholder return policy of Mid-Term Management Plan 2027
• US tariff impact guidance: Management expects that price increases implemented by the watch business will fully absorb the incremental cost from the expected extended 10% additional US tariffs, with minimal impact to overall profitability; very little tariff impact is expected for non-watch business segments

• Slow recovery in global capital investment: Machine tool business has experienced slower-than-expected full recovery of orders, with persistent cautious investment sentiment in the automotive sector across domestic Japan, Europe, and other regions, leading to year-over-year revenue and profit declines
• Market weakness in China: Watch business has faced continued weak market conditions in China, leading to sustained year-over-year revenue decline in the region, creating pressure on overall segment growth
• US tariff policy uncertainty: Additional US tariffs on Chinese-origin goods create incremental cost pressure primarily for the watch and printer businesses, even though management currently expects the impact to be fully absorbed via price increases
• Domestic demand weakness: Domestic Japanese watch market saw inbound demand come in below expectations and sluggish internal demand, while automotive-related demand weakness continues to pressure domestic machine tool sales

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