Seiko Holdings Corporation
4Q20 Consolidated Results Presentation
Summary of Q&ADate:

Wednesday, May 12, from 3:00-4:20 p.m.

Place:<Web conference>Respondent:

Shinji Hattori, Chairman & Group CEO & Group CCO,
Yoshinobu Nakamura, President,
Shuji Takahashi, Director,
Tetsu Kobayashi, Director (President of Seiko
Instruments Inc.),
Shimesu Takizawa, Executive Director and CFO

Summary of Q&A :Q1. I understand that SG&A expenses, such as advertising and promotion(A&P) expenses were restrained in FY20. What level of SG&A expenses
do you expect to return to in FY21?
A1. While it will also depend on the recovery of net sales, we plan to continue
with our aggressive approach, as indicated in the Mid-Term Management
Plan. If sales proceed as planned, we hope to invest actively inadvertising and other activities, and we believe that SG&A expenses willreturn to the level in previous years.

Q2. In the Watches Business, Global Brands (GB) grew at a high rate in FY20,
as well. What pace do you expect this high rate of growth to reach in
FY21 and beyond?
A2. First, let us explain our GB strategy, which was launched in 2017. Inaddition to shifting to mid- and high-priced products, this strategy aims topromote the brand story to enthusiasts who are highly attuned to watches.
Moreover, by taking advantage of being a later entrant compared to Swisscompanies, we have been focusing on digital and event marketing.
In FY20, these efforts generated results, especially overseas, and wewere able to achieve steady results through various initiatives centered onDigital Transformation (DX).
Although the coronavirus pandemic is expected to continue in FY21,

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especially in 1H21, we will continue to grow GB in terms of DX, and aim to
maintain our double-digit growth rate overseas. In Japan, we had
prepared a variety of real events in anticipation of the holding of theOlympics. However, since the underlying assumptions have changed
significantly, in FY21 we will proceed with DX as we have done overseas,in order to increase sales.

Q3. Can you tell us the ratio of GB to net sales?
A3. As GB is growing, the sales composition ratio of GB is rising, partly due toa decrease of affordable-priced products as a result of the pandemic.
Although the ratio varies from country to country, it is generally more thanhalf, and in some areas has reached 60-70%. We believe that the GB
sales composition ratio will rise further in the future.

Q4. How were overseas net sales of completed watches in 4Q20 year onyear?
A4. 4Q19 was already significantly impacted by the coronavirus, so overseas
net sales of completed watches have recovered on a year-on-year basis.
The largest recovery was seen in the U.S. and Asia, and particularly in
China, while Europe was largely unchanged year on year, due tosignificant impacts from the virus, including lockdowns. Unfortunately, inJapan, the progress of DX has not been as strong as overseas, and due
to a heavy reliance on real stores, such sales are still at a level of roughly
90% year on year, despite a considerable recovery.

Q5. In FY20, the gross profit of the Company overall has improved in 3Q20
and 4Q20, so I assume that the gross profit margin of the Watches
Business is improving. Can we expect that an increase in GB will improve
the gross profit margin, as well?
A5. While the Watches Business posted a record high operating profit for
4Q20, we believe this is due to several special factors. The first is thatwhile the 4Q is not normally a period of large business, the market was
just recovering from the coronavirus, so there was rebound demand in theU.S., China, and Asia. The second is that we carried out thorough cost
reductions, including investments in advertising. So, these two points
have acted as special factors. In addition, the 4Q is the time when watchbrands hold global trade shows and invest in advertising for products thatwill be available from April onward. However, in FY20, these initiatives
became digitalized due to the pandemic. This has resulted in increased
marketing efficiency.

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The expansion of GB has contributed to improved profitability, and thegross profit margin has been improving strongly over the past few years.

Q6. In FY21, net sales in the Watches Business are expected to increase by
21.0 billion yen year on year. Please tell us what kind of growth you
expect for each of the completed products, by region and movement.
A6. Recovery has been rapid in areas where the pandemic has been quickly
contained. However, in areas where vaccinations have not progressed
and the spread of the disease has been prolonged, as is the case inJapan, the recovery has been slow. Accordingly, we believe that theenvironment in Japan will remain severe. Especially in 1H21, we expect
the market conditions to continue as they were in 2H20. Overseas, we will
increase sales by making full use of digital technology in the U.S., China,and Asia, where sales have been strong. In Europe, we expect sales tobe weaker than in the U.S. and Asia, due to the lingering significant
influence of the pandemic.
Watch movements are often used in affordable-priced fashion watches,
an area which is shrinking. Although there may be a rebound from thepandemic, the market is recovering in FY21 in the U.S., China, and othermarkets, and we expect it to bottom out, and enter a trend toward arecovery.

Q7. Both net sales and profits in the Electronic Devices Business werefavorable in 4Q20. What were the reasons for the improvement inprofitability?
A7. We are engaged in a wide range of businesses, from electronic
components to precision processing components, and the profit margin
varies depending on the product mix. In 4Q20, sales of relatively
high-margin products were steady, which we believe was the reason forthe high profit margin.

Q8. The Systems Solutions Business continues to perform favorably. Are you
experiencing any special demand due to the coronavirus? What is its
expected impact on FY21?
A8. With regard to special demand, there are some cases in which new needs
that have arisen from the pandemic have led to an increase in sales.
However, most still represent inquiries that will lead to future business,
and we do not believe that they had a substantial impact on the results for
FY20. Meanwhile, a negative impact was seen in the B2B2C
mobile-related business, where net sales were affected from 2Q20

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onward. In addition, sales to customers that were particularly strongly
affected by the pandemic, such as the food service industry in Japan,
were quite severe.
The Systems Solutions Business is a business that is capable ofproviding “solutions” to the issues that arise in society under thecoronavirus situation. We regard this business as one which provides
many “seeds” that can lead to business opportunities in the future, withthe pandemic as a tailwind, such as computer performance managementand digital time stamps for remote work, etc.

Q9. The dividend payout ratio for FY21 will be over 50%. While the Company
wants to return its dividends to the previous level as soon as possible, I
would like to confirm whether there will be any change in its approach toshareholder returns.
A9. Our basic policy on dividends is to pay stable dividends, while taking into
account internal reserves and business performance. If the dividend
payout ratio is used as the standard to determine dividends, for example,
dividends may increase when extraordinary income is generated, and fallor not be distributed when extraordinary losses are incurred. We have notdetermined dividends based on a dividend payout ratio, as our basic
policy is to avoid this kind of situation. Our goal is to maintain stabledividends, and we will strive to return to the previous level of 75 yen, assoon as possible.

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