Seiko Holdings Corporation
FY2018 2nd Quarter Consolidated Results Presentation
Summary of Q&A

Date:Thursday, November 15, 2018, from 3:00-3:55 p.m.

Place:Seiko Holdings Corporation, Head OfficeSummary of Q&A :Q1. Year-on-year growth in the Watches Business weakened slightly in the 2ndquarter compared to the 1st quarter. Could you tell us about the situation
by region for the Watches Business in the 2nd quarter?
A1. Watches in Japan performed strongly in the first half, progressing fasterthan planned.
Looking overseas, while Seiko brand remained strong in the 2nd quarter as
well, sales were sluggish for affordable-priced watches that are in below
price range compared to Seiko brand, particularly in Europe and the U.S.
Some of the shipments to customers in Asia were ahead of schedule andcompleted in the 1st quarter.

Q2. How do you think watch consumption will progress in the second half going
into the Christmas sales season, amid risks such as the trade friction
between the U.S. and China?
A2. In Japan, consumption has progressed without any problems, and weexpect strong performance by high-end watches because unit prices havebeen rising up to the 2nd quarter.
Overseas, there are some concerns about the European economy, while inAsia, in addition to U.S.-China trade friction, there is a sense that personal
consumption has slowed down in China. While it is becoming difficult toexpect the kind of growth we have seen previously, we believe that we canachieve sales on the same level with the previous year overall.
Both in Japan and overseas, we think that mid- to high-end products with asolid concept can grow steadily.

Q3. The current situation for low-priced watches continues to be tough. Whatkind of measures are you taking? And when do you expect the decline tostop?
A3. Rather than recovering sales of low-priced watches, we are taking

measures to strengthen mid- to high-end products that have a solid
concept and are performing favorably. Although we do not believe that
low-priced watches will continue to decline further in this fiscal year, wethink it will be difficult to head for a recovery.
Q4. Regarding the revised structure of the U.S. sales company announced inOctober, could you explain the reasons for adding "Grand Seiko" to thecompany name? Also, please tell us about rollout to other regions.
A4. Seiko has a strong image as an affordable-priced brand in the U.S., so the"affordable" image gets attached to the high-end Grand Seiko as well. Wechanged the company name to "Grand Seiko Corporation of America" inorder to send a strong message that we will be rolling out high-end watches
going forward . We will also bolster Grand Seiko in a similar way in otherregions, including Europe and Asia.

Q5. What is the future outlook regarding the slowdown in the Chinese market?
A5. We believe that the trade friction between the U.S. and China has had animpact. The figures are also showing a decline in areas such as personal
consumption and GDP, and we are currently seeing a trend to hold off onpurchasing and a shift to lower prices. We are also hearing that the numberof e-commerce accesses is decreasing, but we do not know whether thissituation will continue.
We are cautious about the Chinese economy as it impacts Japan'scomponent business and others. While we do not anticipate a dramatic
drop in sales of our watches in China, constant growth of the kind we haveseen thus far is not likely to continue.
Q6. In the movements business during the first half, income improved year on
year mainly due to the effects of cost-cutting efforts during the previous
fiscal year. Are these factors considered not to be there in the second half?
Could you tell us your views regarding the second half?
A6. The special factors of the first half will be absent in the second half. The
situation was tough for analog quartz movements in the first half, and we
do not believe this trend will change in the second half. On the other hand,mechanical movements are performing strongly and are contributing toearnings. In light of these factors, we are aiming for second half income on
the same level as the previous year in the Watches Business as a whole
including completed watches.

Q7. Please share your thoughts with regard to smartwatches.
A7. We have made preparations to respond without delay if the market
environment becomes more receptive to smartwatches, but at this point weare still keeping an eye on the situation.
We have heard that smartwatches are making considerable inroads in thelow-priced watches market, but since we are shifting our focus to high-end
watches, we do not expect smartwatches to have very much impact.
Q8. Operating income of 0.6 billion yen is forecast for the Electronic Devices
Business in the second half. How is the balance between the first half andsecond half in the Electronic Devices Business?
A8. We do not think there is very much seasonal fluctuation, but each fiscal
year, some deviation occurs owing to factors such as the timing of new
products. In addition, there may be some impact in the 4th quarter due tothe suspension of production by some clients for Chinese New Year and soon.

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