Seventh Mid-Term Management Plan
(FY2019-FY2021)
May 16, 2019

Contents

1. Review of the 6th Mid-Term Management Plan
2. The 7th Mid-Term Management Plan-Premises-Outline-Policy by Segments-Strategies (Branding / Human Resource /Financial / Corporate)-Target Figures11. Review of the 6th Mid-TermManagement Plan

2

Consolidated Profit and Loss FY2010-FY2018(Billions of yen)

4th MTP

5th MTP

6th MTPFY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2018MTP

Net sales

313.8

296.9

283.7

308.2

293.4

296.7

257.1

268.5

247.2

310.0

Operatingprofit

11.6

6.7

5.5

14.0

11.6

13.3

7.4

10.8

9.3

17.0％

3.7%

2.3%

1.9%

4.5%

4.0%

4.5%

2.9%

4.0%

3.8%

5.5%

Ordinary
profit

6.5

1.2

3.2

10.1

12.3

11.8

6.6

10.9

11.4

18.0

2.1%

0.4%

1.1%

3.3%

4.2%

4.0%

2.6%

4.1%

4.6%

5.8%

2.1

-11.0

5.5

7.4

21.7

12.1

5.3

11.5

9.2

12.5

0.7%

-3.7%

1.9%

2.4%

7.4%

4.1%

2.1%

4.3%

3.7%

4.0%

％

Profitattributableto owners ofparent％3Net Sales by Reported Segment FY2010-FY2018
4th MTP

5th MTP

6th MTPFY20184

Operating Profit by Reported Segment FY2010-FY2018
4th MTP

5th MTP

6th MTP

Consolidated Total

11.6

6.7

5.5

14.0

11.6

13.3

7.4

10.8

9.3 17.0

5Non-Operating Income and Expenses FY2010-FY2018
4th MTP

5th MTP

6th MTP(Billions of yen)

6

Net Interest-Bearing Debt FY2010-FY2018
4th MTP

5th MTP

6th MTP(Billions of yen)Interest-bearing debt

7Equity Capital Ratio FY2010-FY2018
4th MTP

5th MTP

6th MTP(Billions of yen)

*The Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16,2018), etc. from the beginning of the first quarter of the fiscal year ending March 31, 2019. Accordingly, equity capital ratio as of March 31,2018 is presented after reclassification.

8

Summary –the 6th Mid-Term Management PlanStrengthening Profitability and Investing for Growth Shrinking of affordable watches market in the global watch industry
from FY2016
 Shifted to mid-high price range, mainly for Global Brands (GB) Developed overseas boutiques and strengthened e-commerce initiatives
 Increased profitability of the Electronic Devices Business Achieved plan ahead of schedule for strengthening profitability in
the Systems Solutions Business

Reinforcing the Management Foundation
 Equity capital ratio (35.0% or higher)
 Net interest-bearing debt (JPY 75.0 billion or less) Continuing to pay stable dividends(JPY 75.0 per share for 3 straight fiscal years)

Achieved
6th MTP targets

Recognized a certain degree of financial improvement
and a need of taking a more aggressive approach to growth9

2. 7th Mid-Term Management Plan-Premises-10Images on our Value Creation Process

Resources supporting
our business activities
Wide range of stakeholders,Brands, Technology,History, etc.

Values created bybusiness activities
Revenue, Brand image,Developed human resources,
Social Contributions, etc.

Values stakeholders gain
Resources Reinforced
Bond with stakeholders,
Loyalty for our brands,Abilities, Experiences,Funds, etc.

Credibility, Satisfaction,Excitements, Solutions,Growth, Pride, etc.

11

CSR of Seiko Holdings Group

Seiko has established an individual philosophy and a long-term
vision and formulated various basic policies, etc., including ourfundamental philosophy of corporate ethics, in addition topracticing risk management, guided by our corporate philosophy of
being “A Company that is Trusted by Society” and founded on
corporate governance. On this basis, we will engage in businessactivities with targets that are shared throughout the entire Group.
We believe that our corporate social responsibility (CSR) is tocontribute to the sustainable development of society and pursue
enhancement of corporate value through these business activities.

12

CSR of Seiko Holdings Group -Conceptual Image-“A Company that is Trusted by Society”
Basic Principles of Corporate Ethics, Environmental
Philosophy, Technological Philosophy, etc.

Long-Term Vision
Basic Policy for the Mid-Term Management Plan,
Environmental Policy, IR Policy, Basic Principlesof Corporate Governance
Manufacturing & Sales, Environmental
Conservation Activities,
Support/ Sponsor for Sports & Musical
Activities, Promoting the Active Role of All
Employees, etc.

13

SDGs of Seiko Holdings GroupThe Seiko Holdings Group’s basic approach to product development is todevelop “products that never break” and “products that last” in order tomaintain the reputation for reliability of the Watches Business and othersegments. This is at the root of our spirit of commitment to sustainablesocial development.
Furthermore, our development technologies based on our technologicalphilosophy of Craftsmanship, Miniaturization and Efficiency help savepower and space, and make a significant contribution to society by
reducing resource waste.
We are also taking action centered on our production sites to effectively
use resources, reduce CO2 emissions and preserve the naturalenvironment.
Meanwhile, we have been making efforts for many years to encouragevitality among employees by promoting the active participation of womenand all employees.
147th Mid-Term Management Plan
-Outline-15

Outline of the 7th Mid-Term Management Plan
1. “Long-Term Vison” to be continued“We aim to be a trend-setting and innovative global group thatshares excitement with all our stakeholders around the world by
providing products and services that exceed the highest
expectations of our customers.”
2. What the Seiko Holdings Group Aims to be in FY2025“Being a leading global player, SEIKO continues to strive
beyond all expectations.
Growing our fields of expertise and meeting challenges in new areas
with the highest level of reliability.
Being expected by the world to create the future.
We will grow with our sophisticated structures and human resources,
as a solid and united group.”16

Outline of the 7th Mid-Term Management Plan
3. Basic Policies of the 7th Mid-Term Management Plan
“With everyone fully committed and focused,
We will invest aggressively in scenarios for the future.
Backed by the strength of the SEIKO brand, our precision technologies andability to propose solutions
Will provide us with the sustained growth.”

4. Positioning of the 7th MTP: “Aggressive Approach”
6th MTP: “Continuing organizational reform to take on the aggressiveapproach”
7th MTP: “Aggressive Approach”
Aim to win by stepping up investment for further growth17Policies by Segments

18

Watches Business
Review of the 6th MTP
1. Shrinking of affordable watches market in the global watch industry from FY2016(Wearable devices, Amazon Effect, Chinese economy, Inbound demand, etc.)
2. Change to GB strategy and shift & accelerate to mid-high price range
Grand Seiko (GS) as an independent brand (Expanding product lineup andaccelerating overseas development) Opened GS Boutiques (Promoting overseas logistics strategy）
3.



Established Grand Seiko Corporation of America(Further accelerating overseas development)

The Prospex 1968 Diver's Re-creation won the Sports Watch Prize at the 2018
Grand Prix d'Horlogerie de Genève (Proven product appeal)

Opened Seiko Dream Square (Enhancing communications capabilities for2020 Tokyo Olympics)Integrated the complete watch business (planning, designing, purchasing, etc.)(for the further growth and to speed up decision making)Stagnation in analog quartz movements and growth in mechanical movements
19

Watches Business
What We Aim to be in FY2025
By the year 2025, SEIKO will be a major global brand,
Known for cutting-edge technology, expert craftsmanship,
and a uniquely Japanese sense of beauty.
We will be a leading player in the world watch market.

Basic Policy for the 7th Mid-Term Management Plan
Keep expanding GB sales and accelerate GB strategy to accomplish“Revolutionary (Extraordinary) Transformation”

1. Increase overseas sales as well as in Japan:
Growth in the U.S. and Asia, and also in Japan
2. Investment in advertising, manufacturing and after-sales service
20Electronic Devices Business
Review of the 6th MTP
1. The inkjet print heads business was sluggish

2. Secured stable earnings in high performance metals, precision parts and thermal printers
3. Improved unprofitable businesses
4. Current stagnation due to U.S.-China trade friction, etc.

What We Aim to be in FY2025
Develop “Craftsmanship, Miniaturization and Efficiency”* technologies
to “influence” the future and enriching time for people

Basic Policy for the 7th Mid-Term Management Plan
1. Further evolve Craftsmanship, Miniaturization and Efficiency technologies andshift key product portfolio to areas of strength and growth markets
2. Carry out investments and strengthen management in new growth areas* “Craftsmanship” creates new value based on our advanced techniques and know-how. “Miniaturization” reduces product size throughprecision processing and high-density assembly technologies. “Efficiency” promotes the most efficient use of all resources includingenergy.

21Systems Solutions Business
Review of the 6th MTP
1. Cultivated and established business control
2. Achieved a stable earnings structure by adding services by expanding stockbusiness including capturing the IIM business
3. Reorganized unprofitable businesses and reallocated indirect HQ staff

What We Aim to be in FY2025
Achieve long-term, continuous increase in earnings and profit

Basic Policy for the 7th Mid-Term Management Plan
1. Improve sustainable growth and reliability of business2. Create business structure resilient to environmental changes and shift to highadded value through diversification
3. Continuously transform practices and strengthen organizational structure

22Clock / Wako / Time Systems Business
Review of the 6th MTP
1. Despite sluggish sales, the Clocks Business made strenuous efforts ina stagnant market
2. Wristwatches drove sales in the Wako Business3. The Time Systems Business had a stable performance
What We Aim to be in FY2025
Creating significant value as legacy business that contributes
substantially to the SEIKO brandBasic Policy for the 7th Mid-Term Management Plan
Selection and concentration, and reinforcement of the foundation
to contribute to the brand and further growth23

R & D for new products

Watches
Business

Proactive investment to achieve shift to high-end,high-added-value products

New high-end movement, new materials, connected modules, etc.

ElectronicDevices
Business

Further deepening of research on compact precision designs andprocessing technologies to develop products for long-term growth markets

Precision components for automobiles, reducers, medical field, etc.

Systems
Solutions
Business

Developing “new products and new services” to expand businessdomains. Researching and acquiring new technologies for that purpose

Network solution by delivering the highly reliable and accurate
standard time data, IT service management, IoT service, etc.
24Strategies(Branding / Human Resources /Financial / Corporate)

25

BrandingContinuing investment to enhance corporate brand value
from mid- to long-term viewpointActions
 Concentrating investment on leveraging “strengths”‐Sports : Continuing to strengthen image, “Sports watches =SEIKO”‐Music : Emphasizing social contribution activities andstrengthening public relations‐Continuing to strengthen investment in branding in cooperation
with other businesses


Spreading appeals through digital communications

Enhancing events for younger generations

Further boosting image as dynamic company
26

Human Resources Strategies
Preparing an environment where personnel with diverse senses of value canwork enthusiastically, aiming for sustainable growth of the Group by creating avirtuous cycle of “recruiting,” “cultivating,” and “leveraging” human resources
New graduates

Mid-careers

RecruitGlobal adoptions

Cultivate
Promote the activerole of all employees

Women

Health management

Productivity
management

Leverage
Employees withtime constraints

Seniors

Improve personnel
systems

Develop work
environment
27

Financial Strategies

Thoroughly implementing investment management to achieve “wins”
through the generation of operating cash flow to support the “aggressiveapproach” period, well-balanced investing cash flow, and cost-controlled
financing cash flow

Continuously improving equity capital ratio (to 40%) by accumulating
profit, and maintaining stable dividends

Stabledividends
Generate
Op. C/F

Wellbalanced
Inv. C/F

Op.
C/FInv.
C/FFin.
C/F

Costcontrolled Fin.
C/F

Improve
E/C ratio

Implement Inv. Management
28

Corporate
Corporate GovernanceContinuously reviewing and supplementing the present
governance system

Continuing to emphasize compliance risk

Risk Management
Checking governance and risk management systems at overseas
subsidiaries

Strengthening response to business risk

Corporate Communication


Actively promoting PR and IR activities

Enhancing digital communications

29

CorporateSDGs
Continuing to promote, strengthen and expand current initiatives

Actively ensuring that SDG initiatives are disseminated throughout theGroup
5. Gender Equality

Achieve gender equality and empower all
women and girls

6. Clear Water andSanitation

Ensure availability and sustainable
management of water and sanitation for all

7. Affordable andClean Energy

Ensure access to affordable, reliable,sustainable and modern energy for all

12. ResponsibleConsumptionand Production

Ensure sustainable consumption andproduction patterns

13. Climate ActionTake urgent action to combat climate change
and its impacts
30

Target Figures（FY2019-FY2021）

31

Target Figures (Consolidated)

FY2021 Target
Net sales

285.0 billions of yen(Approx. 15% growth in 3 years)

Operating profit

14.2 billions of yen(Approx. 50% growth in 3 years)

Profit attributableto owners of parent

12.5 billions of yen

Equity capital ratio

40.0 %Net interest-bearing
debt

Maintain current level(Approx. 35% growth in 3 years)

32

Target Figures (Consolidated)(Billions of yen)

FY2018ActualFY2021
MTP

247.2

255.0285.0

9.3

9.5

14.2

3.8%

3.7%

5.0%

11.4

11.5

16.0

4.6%

4.5%

5.6%

9.2

9.5

12.5

3.7%

3.7%

4.4%

USD

110.9 yen

110.0 yen

110.0 yen

EUR

128.4 yen

125.0 yen

125.0 yen

Net sales
Operating profit%

Ordinary profit%
Profit attributable toowners of parent%
Exchange rate

FY2019LE33

Target Figures (by Segment)(Billions of yen)

Operating profit

Net sales
FY2018Actual

FY2019LE

FY2021MTP

FY2018Actual

FY2019LE

FY2021
MTP

Watches

141.7

148.0

165.0

10.3

11.5

14.5

Electronic Devices

55.555.0

63.0

1.4

2.5

3.0

Systems Solutions

30.8

32.0

35.0

2.4

2.5

3.0

Others

28.3

29.0

31.0

0.6

0.8

1.0

Adjustments

-9.2

-9.0

-9.0

-5.5

-7.8

-7.3

Consolidated Total

247.2

255.0

285.0

9.3

9.5

14.2

34

Together with SEIKO Athletes
Sharpen, sharpen, and sharpen
C Fukushima (Women 100m)

Hit a top speed with a strong start
Keeping powerful

R Yamagata (Men 100m)

Aim for even greater heights
M Sakai (Swimming)

To be what we aim to bein 2025!
G Munetomo (Trampoline)

End37