Casio Computer: Sluggish Watch Sales Offset by System Equipment Cost-Cutting Efforts

We have fine-tuned no-moat Casio Computer’s earnings forecasts and lowered our operating income forecast for fiscal 2023 (ending March 2024) to JPY 17 billion from JPY 18 billion, as we have lowered the sales forecast for the timepieces segment, and we expect a larger operating loss for the system equipment segment due to sluggish demand. Moreover, we added an impairment loss of JPY 2.5 billion for fiscal 2023, as we expect Casio to undertake further restructuring to turn around the system equipment business. Although we slightly lower our watch sales forecasts going forward, this will be largely offset by the cost-cutting effects of the restructuring, so we broadly maintain our earnings forecasts for fiscal 2024 and beyond.