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Overall Consolidated Performance

• Both the 3-month Q3 period and 9-month cumulative period achieved year-over-year growth in both revenue and profit.
• Cumulative 9-month consolidated net sales reached 257.1 billion yen (+6.4% YoY); operating profit reached 23.8 billion yen (+25.5% YoY) with an operating margin of 9.3%; ordinary profit reached 30.3 billion yen (+38.2% YoY); net income attributable to parent shareholders was 22.2 billion yen, flat year-over-year.
• Q3 3-month consolidated net sales reached 97.8 billion yen (+14.9% YoY); operating profit reached 10.8 billion yen (+62.5% YoY) with an operating margin of 11.1%; ordinary profit reached 14.1 billion yen (+46% YoY); net income attributable to parent shareholders reached 10.3 billion yen (+4.2% YoY). All three business segments achieved growth in both revenue and profit in Q3.

Watch Business Operational Highlights

• By Brand & Product:
  • Citizen brand: Domestic market domestic demand held flat year-over-year, but revenue declined due lower inbound demand; overseas markets grew revenue, with strong performance in Europe and North America driven by global sub-brands, and growth in select Asian markets despite overall weak regional conditions.
  • Bulova brand: 150th anniversary marketing initiatives drove strong revenue growth, with solid performance across North American department stores, jewelry chains, and the company's own e-commerce channel.
  • Movements: Analog quartz movements performed steadily, and mechanical movements continued their strong growth trend, driving overall revenue growth for the segment.
• By Region (local currency basis):
  • Japan: Premium brands like The Campanola performed steadily, Attessa held flat year-over-year, but overall revenue declined due to lower inbound demand.
  • Asia: Mechanical watches performed well in Thailand and India, and sales grew in China, but overall regional revenue declined due to weak performance in other Asian markets.
  • North America: Citizen and Bulova performed strongly in department stores and specialty watch retailers; high-price models like Attessa grew on the company's own e-commerce channel, driving overall revenue growth.
  • Europe: Global sub-brand Promaster performed steadily, and mechanical watches maintained strong sales, driving overall revenue growth.
• Strategic Updates:
  • Bulova renewed its 10-year sponsorship of the Latin Grammys (a partnership dating back to 2016). The sponsorship supports outreach to new potential customers via music and influencer amplification, improving brand awareness particularly among Hispanic consumers, with plans to expand share across the U.S. and grow brand image in Central and South America.
  • Citizen Group subsidiary La Joux-Peré (based in Switzerland) accepted an equity investment from LVMH Group in November 2025. La Joux-Peré has supplied high-precision solar quartz movements to LVMH brands TAG Heuer and Tiffany & Co. since 2022; the strategic partnership will expand collaboration with additional LVMH watch brands and strengthen long-term relations between the two groups.
  • Premium brand Campanola celebrated its 25th anniversary in 2025, launching 3 limited-edition models (including one equipped with a La Joux-Peré mechanical movement) in November and December. The brand plans to continue expanding sales to grow its customer base beyond its core loyal following.

Machine Tool Business Operational Highlights

• Domestic market: Automobile-related demand remained sluggish, but conditions showed signs of bottoming out, so performance was flat year-over-year; semiconductor-related orders grew despite weak auto demand.
• Overseas market: Medical-related sales remained steady in the Americas, though customer caution over capital expenditure persisted; Europe saw steady sales to medical and job shop customers; Asia grew overall regional revenue driven by rising semiconductor-related demand in China.
• Order trends: China saw a large increase in orders driven by semiconductor-related demand; other Asian markets saw a sharp order increase as caution over capital expenditure related to U.S. tariffs softened; the Americas saw a pullback from pre-price-hike rush demand in September, but medical demand held steady and orders still exceeded prior year levels; Europe continued to see sluggish auto-related demand and cautious capital expenditure sentiment centered in Germany.

Device Business Operational Highlights

• Automotive components: Market recovery remained limited, but sales held firm in Japan and China, driving year-over-year revenue growth.
• Small motors: Customer inventory adjustments concluded, leading to a gradual recovery and flat performance year-over-year.
• Ceramics: Submount products for optical communications performed steadily, driving revenue growth.
• Printers: Photo printers grew sales on the back of stable demand, driving year-over-year revenue growth.

• Full-year FY2025 consolidated guidance has been upwardly revised to reflect better-than-expected performance through the first 9 months of the fiscal year. Management also updated the assumed foreign exchange rate for Q4 to reflect current market conditions, which is incorporated into the updated guidance.
• Full-year consolidated net sales is revised up by 10.5 billion yen to 337.5 billion yen.
• Full-year consolidated operating profit is revised up by 2.5 billion yen to 27 billion yen.
• Full-year consolidated ordinary profit is revised up by 4.5 billion yen to 33.5 billion yen.
• Full-year consolidated net income attributable to parent shareholders is revised up by 2 billion yen to 24 billion yen.
• All three business segments received upward revisions to both full-year net sales and operating profit guidance.

FY2025 9-Month Cumulative (April-December 2025)

• Watch Business: Net sales of 147.5 billion yen, +7.3% year-over-year; Operating profit of 20.7 billion yen, +29.2% year-over-year; Operating margin of 14%. Contribution to cumulative consolidated net sales is ~57.3%.
• Machine Tool Business: Net sales of 62.2 billion yen, +11.2% year-over-year; Operating profit of 5.1 billion yen, +18.2% year-over-year. Contribution to cumulative consolidated net sales is ~24.2%.
• Device Business: Net sales and operating profit decreased year-over-year, due to a pullback from large bulk photo printer deliveries in the prior year period. Contribution to cumulative consolidated net sales is ~18.5%.

FY2025 Q3 (October-December 2025, 3-month period)

• Watch Business: Net sales of 58.2 billion yen, +12.5% year-over-year; Operating profit of 8.9 billion yen, +40.2% year-over-year; Operating margin of 15.4%. Contribution to Q3 consolidated net sales is ~59.5%.
• Machine Tool Business: Net sales of 23.7 billion yen, +27.8% year-over-year; Operating profit of 2.5 billion yen, +84.2% year-over-year. Contribution to Q3 consolidated net sales is ~24.2%.
• Device Business: Net sales of 15.9 billion yen, +7.1% year-over-year; Operating profit of 0.9 billion yen, +166.1% year-over-year. Contribution to Q3 consolidated net sales is ~16.3%.

• Persistent uncertainty over the global economic outlook creates headwinds for all business segments.
• Inbound tourism demand in Japan remains depressed due to reduced group tourist travel from China, negatively impacting domestic watch sales.
• Overall market conditions in most of Asia (outside of China and select markets) remain weak, pressuring regional watch sales performance.
• Automobile-related demand remains sluggish globally, with continued cautious capital expenditure sentiment in European (especially German) auto sectors, pressuring machine tool segment performance.
• Customer caution over capital expenditure persists in the Americas' machine tool market, limiting near-term growth potential.

Q: What drove the difference between Q3 performance and management's initial forecast?

A: Net sales came in above forecast across all business segments. Operating profit significantly outperformed forecast in the watch and machine tool businesses, and also beat forecast in the device business. Strong performance in the North American watch market, paired with higher revenue in the machine tool segment, were the core contributors to the upside.

Q: Can you elaborate on the market environment driving strong performance in North America's watch business?

A: North America has remained strong for two consecutive quarters. All major distribution channels have performed well, and high-margin direct e-commerce has grown sharply, with its revenue share now reaching the same level as major traditional distribution channels. Even after the June 2024 retail price increase implemented to offset additional U.S. tariffs, both sell-in and sell-through have remained strong.

Q: Can you update on domestic Japan's internal demand and inbound demand for watches?

A: Inbound demand declined year-over-year due to factors including a reduction in group tourist travel from China. Domestic internal demand held steady year-over-year, supported by strong performance from premium brands like Campanola.

Q: Can you elaborate on machine tool order trends, and what specific semiconductor-related demand is driving order growth in China?

A: The semiconductor-related demand growing in China is for processing probe pins for semiconductor inspection equipment and parts for data center cooling systems. Order volume has grown sharply in China, and orders are also recovering gradually in developed markets including Japan. Global total order value in Q3 is now near the peak historical level.

Q: What is your outlook for future machine tool order trends?

A: Strong order growth in China is expected to continue for the foreseeable future. Developed markets are in the middle of a gradual recovery, so management will continue to closely monitor market conditions, with particular attention to the timing of a recovery in automobile-related capital expenditure.