COMPANY RESEARCH AND ANALYSIS REPORTISEKI & CO., LTD.
6310
Tokyo Stock Exchange Prime Market

27-Apr.-2023
FISCO Ltd. Analyst

Yoichiro Shimizu

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Overview of FY12/22 results........................................................................................................................

02

2. Outlook for FY12/23. . ............................. ......................................................................................................

02

3. Mid-term Management Plan.................. ......................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 04
1. Company profile.. ................................... ......................................................................................................

04

2. Business description. . ..................................................................................................................................

06

3. The Company’s strengths............................................................................................................................

12■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 14
1. Overview of FY12/22 results........................................................................................................................

14

2. Progress on the Mid-term Management Plan...............................................................................................

16

3. Financial condition and management indicators. .........................................................................................

17■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 18
1. Outlook for FY12/23. . ............................. ......................................................................................................

18

2. Domestic Business......................................................................................................................................

19

3. Overseas Business......................................................................................................................................

19■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 20
1. New Mid-term Management Plan: Establishing a foundation of “change” for the next 100 years................

20

2. Selection & concentration............................................................................................................................

21

3. Business model transformation.. ............ ......................................................................................................

21

4. Improving profitability.. ........................... ......................................................................................................

22

5. ESG.............................................................................................................................................................

22■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 24

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/■ SummaryIntegrated manufacturer specializing in agricultural machinery
headed toward its 100th anniversary of foundation in 2025. Made
steady progress on various measures in FY12/22, the second year of
its Mid-term Management Plan
ISEKI & CO., LTD. <6310> (hereafter, “the Company”) is an integrated manufacturer specializing in agricultural
machinery that was founded in August 1926 under the principle of “free farmers from exhausting labor,” and has
its Head Office in Matsuyama City, Ehime Prefecture. The Company is engaged in a wide variety of businesses andthe development and manufacture, sales, and provision of after-sales service for cultivating and mowing machinery
such as tractors and riding mowers, harvesting and processing machinery such as combine harvesters, and planting
machinery such as rice transplanters and vegetable transplanters, and also sells items such as implements and parts
and OEM products, centered on farmers and large farming corporations in Japan and the rest of Asia, and landscapedevelopers, hobby farmers and general consumers in Europe and North America. For Japanese agriculture, theCompany’s feature is that it provides products in all phases of farming from plowing to rice harvesting onto drying
and conditioning.
The Company has three strengths: “technological capabilities,” “support capabilities to offer farm business proposals,” and “innovation based on collaboration.” In the number of published and registered patents by specialty
field, the Company ranked No. 1 from 2000 to 2006 in “agriculture and fishery” and since 2007 in “other special
machinery,” remaining in top place almost constantly since 2000 (it was in second place in 2018, 2020 and 2021). In
recent years it has also focused on strengthening services aspects in addition to sales of agricultural machinery. The
Company provides useful information for farmers, its customers, on its website and, in 2021, launched the Amoni
farm business solutions portal website providing weather information and data related to growth forecasts. In 2015,
the Company established the Dream Agricultural Research Institute under the slogan of “We will support new-age
agriculture through assistance to farmers: Come and see advanced farm business technologies.” The Company
conducts research, demonstrations and dissemination activities for smart agriculture in collaboration with outside
stakeholders such as governments, research institutes, universities and companies.
The three strengths of the Company are combined with its two basic strategies of “providing the best solutions”
and “Increase corporate value by strengthening earnings and governance” in the New Mid-term Management Plan
as the Company lays the foundation for the next 100 years and achieve the goal of an operating margin of 5% by2025, the 100th anniversary of its foundation.
As of December 31, 2022, the Company had share capital of ¥23,344mn. The total number of Group employees
was 5,454 and its Group companies were 20 consolidated subsidiaries (9 domestic sales companies, 5 manufacturing-related companies, and 5 other companies, 2 in Japan and 3 overseas), and 1 equity-method affiliated company.
The Company’s domestic sales network comprises 11 sales subsidiaries, including non-consolidated companies,
and its overseas sales network has 8 companies as it rolls out business globally.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Summary

1. Overview of FY12/22 results
In the Company’s FY12/22 consolidated results, net sales increased 5.3% year on year (YoY) to ¥166,629mn,
operating profit decreased 14.8% to ¥3,534mn, ordinary profit decreased 19.7% to ¥3,762mn and profit attributableto owners of parent increased 28.9% to ¥4,119mn.
Net sales on a consolidated basis surpassed those of the previous fiscal year amid persisting favorable results inoverseas business, and despite domestic net sales having underperformed those of the previous fiscal year due
to factors that included production delays associated with supply chain disruptions and diminished customer
willingness to make purchases due to low rice prices and soaring material prices. Meanwhile, the Company once
again achieved record highs with respect to overseas net sales. In Europe, the Company achieved growth in earnings
results in part because its sales were bolstered upon having made ISEKI-MASCHINEN GMBH DEUTSCHLAND(“ISEKI Germany”) a consolidated subsidiary, and also because ISEKI Germany, PREMIUM TURF-CARE LTD. (U.K.),
and ISEKI France spearheaded efforts to streamline the supply chain and strengthen the sales structure.
In terms of profit, the Company implemented sales price revisions both in Japan and overseas, but that did not
fully make up for effects of soaring prices of raw materials. Supply chain disruptions also weighed on profits. The
Company placed focus on sales of large-scale agricultural machinery and furthermore encountered strong interestin terms of inquiries from customers, but it ended up missing out on opportunities given a situation where parts
were not delivered according to schedule.
2. Outlook for FY12/23
The outlook for FY12/23 consolidated results is for net sales to increase 5.9% YoY to ¥176,500mn, operating profit
to increase 27.3% to ¥4,500mn, ordinary profit to increase 6.3% to ¥4,000mn and profit attributable to owners ofparent to decrease 36.9% to ¥2,600mn. Whereas the Company envisions a decrease in profits only with respect toprofit attributable to owners of parent in part given an absence of extraordinary income encountered in FY12/22 upon
having made ISEKI Germany a consolidated subsidiary, it projects results exceeding those of the previous year whenit comes to net sales and each of the other profit items. In Japan, despite the prospect of persisting effects of soaring
material prices and other such factors, the Company anticipates higher sales YoY due to large-scale agricultural
machinery and smart agricultural machinery sales as well as price revisions. Overseas, despite the likelihood that an
adjustment phase will continue to weigh on the North American compact tractor market, the Company anticipatesthat the overseas business overall will continue to perform well due to higher sales in Europe and Asia.
3. Mid-Term Management PlanIn FY12/21, the Company formulated the Mid-term Management Plan, which establishes FY12/25 as the final yearof the five-year plan. The Company is seeking to transform its business activities enlisting the four approaches of“selection & concentration,” “business model transformation,” “improving profitability,” and “ESG,” underpinned by
its two basic strategies of “providing the best solutions” and “increase corporate value by strengthening earnings
and governance.”

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Summary

With these four approaches, we at FISCO are of the understanding that the Company has an appropriate perspective
in terms of ascertaining the external environment changes encompassing it. “Selection & concentration” is one
example. Agricultural management is shifting from small-scale farmers such as family-run or farmers also performing
other jobs to large-scale management by organizations such as corporations, and this flow is expected to continue
going forward. As this goes on, the Company is concentrating its resources to focus on large-scale agricultural
machinery and smart agricultural machinery. For large products, the Company will probably be able to gain maximum
benefit by focusing on sales of the Japan series, its mainstay large-scale machinery. Further business expansion is
expected through steady implementation of the Mid-term Management Plan.
Key Points
Integrated manufacturer specializing in agricultural machinery headed toward its 100th anniversary of foundationin 2025• Higher sales yet lower operating profit in FY12/22 amid factors that included soaring material prices• Steady progress achieved with respect to the Mid-term Management Plan and record-high net sales in theoverseas business, thereby continuing the trend of the previous fiscal year•

Results trend
Net sales (left)

Operating profit (right)(¥mn)

176,500

180,000
155,955

149,899

149,304

158,192

166,629

150,000

(¥mn)
6,000

5,000

120,000

4,500

4,000

4,147
3,534

90,000

3,000

3,179
2,745

60,000

2,000
2,084

30,0001,000

00FY12/18

FY12/19

FY12/20

FY12/21

FY12/22

FY12/23 E

Source: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/■ Company profile
Integrated manufacturer specializing in agricultural machinery
headed toward its 100th anniversary of foundation in 2025,
supporting agricultural management for customers from bothtangible and intangible aspects
1. Company profile
Founded in August 1926 under the principle of “free farmers from exhausting labor,” the Company has contributed
to the modernization, laborsaving and efficiency improvement of Japanese agriculture, and also developing businessoverseas. Starting with the development of a fully-automated rice huller in 1926, the Company has developed many
types of original agricultural machinery that have been world-firsts, or industry-firsts. In 2014, the Company began
developing “smart agricultural machinery” using ICT such as robot tractors to make agriculture more laborsaving
and more efficient. By utilizing ICT to promote greater laborsaving and efficiency, the Company aims to contribute to
the realization of profitable agriculture and at the same time enhance the attractiveness of its agricultural machineryand its competitiveness. Moreover, the Company does not stop just at sales of agricultural machinery, but provides
farm business support in various forms under the concept of “supporting agriculture full of dreams (i.e., profitable
agriculture).” In 2015, it established the Dream Agricultural Research Institute and conducts research, demonstrations
and dissemination activities for smart agriculture utilizing robotic technologies and ICT in collaboration with outside
stakeholders such as governments, research institutes, universities and companies, in addition to the “Supporter for
the farming industry full of dreams” group delivering useful farm business information to farmers through its website,
producing an information magazine and helping farm producers to obtain JGAP* certification promoted by the JapanGAP Foundation. It can be said that one of the Company’s major features is that it supports the farmers who are its
customers and its agriculture management from both tangible and intangible aspects.
*	GAP is an acronym of good agricultural practices and refers to agricultural production process management methods
recommended by the Ministry of Agriculture, Forestry and Fisheries (MAFF). Introducing the methods enables producers
such benefits as standardization of agricultural management, enhanced trust as a farm and realization of stable business.

ISEKI’s product development history

Source: ISEKI Report 2021

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

The Company is engaged in a wide variety of businesses and the development and manufacture, sales, andprovision of after-sales service for cultivating and mowing machinery such as tractors and riding mowers, harvestingand processing machinery such as combine harvesters, and planting machinery such as rice transplanters andvegetable transplanters. It also sells items such as implements, parts and OEM products, mainly centered on
farmers and large farming corporations mainly in Japan and the rest of Asia, and landscape developers, hobby
farmers and general consumers in Europe and North America. For Japanese agriculture, the Company’s feature isthat it provides products in all phases of farming from plowing to rice harvesting onto drying and conditioning. In
Japan, the Company has 11 sales subsidiaries (of which 6 companies are wide-area direct dealers) covering theentire country, selling agricultural machinery to customers throughout all of Japan and appropriately absorbing theneeds of the front lines. Overseas, the Company develops business while stipulating the three key regions of North
America, Europe and Asia. The Company is rolling out business globally through production bases such as PT. ISEKI
INDONESIA (ISEKI INDONESIA) and has set up sales bases like N.V. ISEKI EUROPE S.A. (Belgium). For net sales
by region in FY12/22, Europe was highest at ¥25.1bn, followed by North America at ¥19.5bn and Asia with ¥8.6bn.
Although Asia currently trails Europe and the U.S. in terms of sales size, we at FISCO believe it is noteworthy as a
growing market for the future. This is because the Company will be able to leverage the technological capabilities
and experience it has cultivated in Japan against a backdrop of these countries where rice cultivation is popular andfood culture resembles that of Japan, and governments in the countries having policies to promote the modernizationof agriculture. In fact, the Company is steadily increasing its presence in the Asian region, having established ISEKI
INDONESIA in 2012 to serve as a regional production base, making a subsidiary of its Thai sales agent, IST FARM
MACHINERY CO., LTD. (“IST”), in 2020, and achieved strong results in South Korea in FY12/22. In environments
similar to that of Japanese agriculture, the high quality of the Company’s agricultural machinery has been wellreceived by customers, and inquiries for the Japan series of large agricultural machinery have increased.
Sales companies in Japan

Source: The Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

Overseas bases

Source: The Company’s website

History
Date
August 1926

Major events
Founded as Iseki Farm Implement Trading Co. in Aratama-cho, Matsuyama City, Ehime Prefecture

April 1936

Incorporated as ISEKI & CO., LTD.
Commenced production of ISEKI rice hullers and automatic rice graders

May 1946

Established new plant in Yashiro-machi, Matsuyama City, Ehime Prefecture

October 1949

Newly constructed Kumamoto Plant in Kengun-machi, Kumamoto City, Kumamoto Prefecture

June 1961

Listed shares on the Tokyo Stock Exchange

March 1967

Started production of rice transplanters, combine harvesters and binders
Accomplished mechanized integrated system for rice cultivation using those and tractors

February 1971
September 1972

Established N.V. ISEKI Europe S.A. in Brussels
Expanded Matsuyama Plant (Wake) and relocated Head Office to the same place

April 2001

Separated Matsuyama and Kumamoto plants and established Iseki-Kumamoto Mfg. and Iseki-Matsuyama Mfg. co., Ltd.

July 2011

Established Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd. in Hubei, China

October 2012

Established PT. ISEKI Indonesia in Indonesia

October 2013

Established ISEKI SALES (THAILAND) Co., Ltd. in Thailand (now IST FARM MACHINERY)
Established ISEKI Technical Training Center (ITTC) inside ISEKI-Matsuyama MFG. Co., Ltd.

May 2014

Integrated ISEKI-Changzhou Mfg. Co., Ltd. with Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd and established Dongfeng
Iseki Agricultural Machinery (Hubei) Co., Ltd.

July 2014

Acquired ownership of French sales agencies Yvan Beal S.A. and YB Holding S.A.S (now ISEKI France S.A.S.)

October 2015
April 2016
January 2017
December 2020

Established Dream Agricultural Research Institute in Tsukubamirai City, Ibaraki Prefecture
Established Iseki Basic Engineering Training Center (IETC) in the Tobe Office
Established ISEKI Global Training Center (IGTC) in Tsukubamirai City, Ibaraki Prefecture
Made a consolidated subsidiary of IST Farm Machinery Co., Ltd.

April 2022

Reorganized on the Tokyo Stock Exchange Prime Market

July 2022

Made a consolidated subsidiary of ISEKI - MASCHINEN GMBH DEUTSCHLAND, its German sales agent

Source: Prepared by FISCO from the Company’s Securities Report and news releases

2. Business description(1) Cultivating and mowing machinery
In the cultivating and mowing machinery category, the Company handles tractors and tillers used for soil cultivation
before planting for agriculture, as well as high-clearance multipurpose vehicles used for pest control and otherpurposes. Sales of tractors for civil engineering use, tractors for landscaping and riding mowers have been strong,particularly among landscaping developers, hobby farmers and general consumers in Europe and the U.S., andaccounted for 38.4% of Company-wide net sales in FY12/22, the highest ratio. Cultivating and mowing machinery
accounted for 76.1% of all overseas net sales.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

Landscaping machinery and other machinery selling strongly overseas
Tractor for overseas markets

Tractor for overseas markets(for light civil engineering)(for landscaping)

Riding lawnmower

Source: ISEKI Report 2021

In the tractor category, the flagship model is the T. Japan (TJ) series. The lineup is comprised of the three series
of TJV5, TJX3 and TJW3, ranging from 65 to 130 horsepower. In addition to being highly efficient, highly durable
and high performance, a feature of this series is its installation of ICT. For example, the TJV5 series and TJW3
series can collect information on farm machinery using GPS antennas and communication terminals mounted on
the machinery, as well as equipped with theft deterrent functions and operational information management tools.
In the TJX3 series, ISEKI AGRI-SUPPORT, which provides work management support and machine maintenancesupport through the use of ICT, can be introduced to the machinery. Furthermore, the robot tractor TJV series
equipped with the most advanced automated driving technology, allows the operator to select the mode that suits
the situation from the following three operation modes: (1) robot mode, in which the tractor is operated withoutboarding and under manned monitoring; (2) auto mode, in which the operator boards the tractor and operates it
automatically onboard; and (3) automatic steering mode, which assists the operator in straight travel operations.
Launching agricultural machinery utilizing ICT onto the market has contributed significantly to greater efficiency andlaborsaving in agricultural work. Furthermore, in June 2023, the Company plans to launch a new mid-sized classtractor, the BF Series, which is in the volume zone. These products offer improved ease of use and operational
efficiency, and the Company will focus on expanding sales.
A robot tractor quipped with the advanced automated driving technology
A driving force to paving the way to the future of
agricultureISEKI’s robot technology
Manned monitoring-based machinery
Manned onboard-based machinery

Robot tractor TJV series [75•98PS]

Source: The Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile(2) Harvesting and processing machinery
In the harvesting and processing machinery category, the Company handles such machinery as combine harvesters that combine grain harvesting and threshing, dryers for drying harvested rice, rice hullers and vegetable
harvesting machinery. In FY12/22, the category accounted for 10.8% of Company-wide net sales, following thecultivating and mowing machinery and implements, spare parts and repair fees categories. In addition, it accounts
for 3.5% of overseas sales, once again following the cultivating and mowing machinery and implements, spareparts and repair fees categories in size.
Product examples
Frontier Fighter

Common rail

HC1153(auto-threshing combine harvester)turbo engine(general purpose combine harvester)

Source: The Company’s website

This category’s flagship models are the HJ series of combine harvesters. Not only do HJ series combine harvesters
offer high efficiency, durability and performance mirroring that of the Company’s tractors, but they also comeequipped with ISEKI AGRI-SUPPORT as a standard feature for enabling efficient work management and machinery
management through the use of the latest ICT. Certain types of HJ series combine harvesters are also equippedwith ISEKI REMOTE, which features remote monitoring to deter theft of agricultural machinery and management
services for operational information. In December 2022, the Company launched its new HJ6130-Z combine harvester equipped with its straight-travel assist system, in response to mounting demand for agricultural machinerywith automatic steering. Introduction of the straight-travel assist system reduces operator fatigue and helps giverise to a more comfortable agricultural work environment. The advent of straight-travel assist functionality in the
Company’s combine harvester category provides it with a complete lineup of straight-travel assist models acrossits main product categories of rice transplanters, tractors, and combine harvesters.
Japan HJ series are flagship models for combine harvesters

Give form to the concept of the strongest.

Japan HJ series [Five-row reaping, six-row reaping]

Source: The Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile(3) Planting machine
The planting machinery category includes products such as rice transplanters used for transplanting seedlings
into rice paddies and vegetable transplanters. In FY12/22 the category accounted for 5.6% of Company-wide
net sales.
The flagship models of the category are the Sanae Japan PRJ8 and Sanae Japan PRJ8 robot rice transplanter. In
addition to being highly efficient, highly durable and high performance, the Sanae Japan PRJ8 is equipped with
the ISEKI straight travel and turning assisting system, a steering operation assisting system using GPS technology.
In addition, the robot rice transplanter model is also equipped with a function that enables unmanned operation
under remotely controlled manned monitoring.
The addition of the Japan series to the rice transplanter lineup in FY12/21 means that all of the Company’s
main product categories of tractors, combine harvesters and rice transplanters now feature products bearing
the “Japan” name. These can all be classified as large-scale agricultural machinery. With the increasing sizeof agricultural land in the future, sales of Japan series products are expected to grow, contributing to greater
efficiency and laborsaving in agriculture. Additionally, the Company has plans for market launch of its new Sanae
PJ10 large-scale ten-row rice transplanter in April 2023. One distinctive characteristic of the new model is that itfeatures a fundamentally redesigned body with the engine positioned at the front of the rice transplanter. Given
that the Company has come up with this design concept of positioning the engine at the front with its sights set
on global expansion, the Sanae PJ10 has potential when it comes to prospects for taking on overseas markets
going forward.
Sanae Japan PRJ8, a flagship model of rice transplanter

Rice transplanter“Japan,” the top domestic model
Promising high performance,high-precision work to all professional
producers supporting Japanese agriculture.

Source: The Company’s website

Main features of Sanae Japan PRJ8■ Remote control switch■ Automatic differential lock

■ Forced four-wheel drive control

Use for automated operation. Visible color LCD display with a signal
range extending to 300 meters.

Maintains propulsive force when tire
idling is detected when turning by activating an automatic differential lock.

Forced four-wheel drive control can beapplied automatically when further propulsive force is needed. And this can be
operated remotely.

Source: The Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile(4) Implements, spare parts and repair fees
Implements refers to work tools fixed to agricultural machinery, of which “Eco unemaze kun” ridge-making tool is
one kind. Other operations at its maintenance bases throughout Japan include repairing breakdowns in agricultural
machinery it has sold and maintenance repairs to prevent breakdowns from occurring. In FY12/22, the category
accounted for a ratio of 28.2% of Company-wide net sales, giving it a sales size following the cultivating andmowing machinery category. The Company rigorously conducts maintenance repairs to prevent breakdowns andearn trust from customers, ensuring stable earnings unaffected by the external environment, such as unseasonable
weather, and for that reason is focusing on incidental services such as repairs and maintenance, and increasing
sales.
“Eco unemaze kun” implements attached to agricultural machinery

Source: The Company’s website(5) “Supporter for the farming industry full of dreams,” ICT for agriculture
In addition to tangible aspects such as sales of agricultural machinery, the Company also focuses on intangible
aspects such as disseminating beneficial farm business information. The “Supporter for the farming industry
full of dreams” group is involved in activities to propose or support farm business mainly through the Dream
Agricultural Research Institute under the concept of “supporting agriculture full of dreams (i.e., profitable agriculture).” Moreover, it uses its website to send out information related to low-cost rice cultivation technologies andproactively disseminates articles related to the latest technical trends on the Amoni farm business solutions portal
website. Currently, the main objective of the activities is to transmit information to farmers and create contact
points with them, but in the future, it has an eye on commercializing this in the form of consulting services.
Moreover, it also utilizes ICT proactively to make agriculture more laborsaving and more efficient. In addition toproviding ISEKI AGRI-SUPPORT and ISEKI AGRI-SUPPORT linked with farm business support software agri-note
as farm management systems and the ISEKI REMOTE service for remote monitoring, it also provides services
such as IROHA drone related to growth management and that sends farm images taken by drone to be savedon the cloud, and Up-a-ray, which makes agricultural work more efficient by utilizing analyses of images taken
by drone and satellite.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

The functions that ISEKI AGRI-SUPPORT provides can be divided into two major sections: work management
support and machine maintenance support. Work management support helps achieve more efficient farming bybreaking away from the conventional reliance on experience and intuition by recording, analyzing and managing
data obtained through ICT-equipped agricultural machinery. Machine management support ascertains the state of
agricultural machinery using data obtained from the agricultural machinery. These can be inspected and undergo
maintenance in advance, making it possible to prevent breakdowns by stopping them before they can happen.
ISEKI AGRI-SUPPORT

Tabletterminal
Unit

AGRI-SUPPORTWork management
supportMachine maintenancesupportFertilizer and agrichemical dispersion management

Machinery information management

Field operations management

Alert information management

Work process recording

Alert occurrence information

Source: The Company’s website

We at FISCO believe that farm business support utilizing ICT will become increasingly important in the future.
According to a survey conducted by MAFF in 2021, 45.7% of respondents to a question of what they use to
manage farm business information replied, “writing notes in a business diary or the like,” which accounted for thehighest ratio of responses. In addition, 84.9% said they are “not utilizing” smart agricultural machinery in their farmbusiness. Meanwhile, 51.8% of respondents said they “intend to utilize” a farm business management system.
The survey results show how much room there is to improve agricultural efficiency and how much room for growth
there is through the use of ICT-based farm business support and smart agricultural machinery.
In light of this situation, the Company has indicated that it will focus on providing information-based services
and new business creation in the Business Model Transformation section of its Mid-term Management Plan. For
agriculture where ICT utilization has not made progress there are many areas where ISEKI AGRI-SUPPORT cancontribute to making farm business more efficient, increasing the attractiveness of the Company’s agricultural
machinery and raising expectations of a contribution to expanding sales.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

3. The Company’s strengths
The strengths that the Company has cultivated over a long business history since its founding in 1926 can be divided
into three broad categories. There will be more in detail below on each of the strengths, but we at FISCO believethat the important point is that each strength works with and complements the others, creating a virtuous cycle.
The Company’s three strengths
Technological capabilities

Capability as a front runner to develop groundbreaking agricultural machinery and landscaping machinery, and tocreate innovation

Support capabilities to offer
farm business proposals

Capability to solve customers’ issues from both tangible (agricultural machinery) and intangible (production
management and advanced farm business technologies) aspects

Innovation based oncollaboration

Capability to work together with partners in each field and each region in Japan and overseas to develop and provide
groundbreaking products and services and create new value for new markets

Source: Prepared by FISCO from ISEKI Report 2021

(1) Technological capabilities
The first of the Company’s strengths is its advanced technological capabilities that have enabled it to introduce
to the market many “industry firsts” and “world firsts” since its founding in 1926. It has developed many productsthat have been industry leading from a functional aspect, starting in 1926 with its fully-automated rice hullers,
the world-first autothreshing combine harvesters in 1966, its first riding mower in 1988 and the industry’s fastest
auto-threshing combine harvesters in 2009. The Company has also maintained its competitive edge through thetechnologies it has developed, and its consistent intellectual property strategy has been to acquire patents. In
the number of published and registered patents by specialty field, the Company ranked No. 1 from 2000 to 2006
in “agriculture and fishery” and since 2007 in “other special machinery,” remaining in top place almost constantly
since 2000 (it was in second place in 2018, 2020 and 2021), and it has remained in the top 2 in the industry forpatent allowance rates since 2004 (the patent allowance rate has consistently exceeded 90%. In 2021, it left an
extremely high result of 97.2%)
The Company’s position in the number of published and registered patents by specialty field and patent allowance
rate

Source: Annual Report on Patent Administration 2022 (Japan Patent Office)Source: Prepared by FISCO from the Company’s financial results presentation materials

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12 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile

We at FISCO believe that the factors that made these advanced technological capabilities possible are theCompany’s R&D base, in-house systems and sales framework. On a daily basis, the Company conducts latest
research as a matter of course at its R&D base in Ehime Prefecture and at the Dream Agricultural ResearchInstitute in Ibaraki Prefecture, but it also proactively engages in invention proposal activities where employees indevelopment departments submit ideas matching market needs, and invention creation activities in which veteranengineers pass on invention creativity know-how to younger engineers. These activities make it possible for young
employees to come up with innovative ideas, while at the same time ensuring that expertise, which can tend to
become tacit knowledge, is properly shared throughout all the Company’s engineers, raising the level of innovation
creation output overall. We at FISCO believe that the invention creation activities in particular, which are conducted
to share tacit knowledge within the Company, and the company culture, are not something that competitors canimitate overnight, which gives the Company a powerful competitive edge. In recent years, as a result of these
activities, the Company was able to develop and introduce to the market a variable fertilizing rice transplanterthat plants rice at the same time as adjusts the amount of fertilizer applied by using a sensor (real-time sensing),
as well as the Sanae Japan PRJ series equipped with advanced, straight travel and turning-assist functions.
Moreover, a sales network spanning nationwide also enables technological development that meets farmers’
needs. Sales employees at sales stores communicate closely with farmers to accurately ascertain their needs
and properly pass on that information to development departments, which enables development of technologies
that are attractive to customers. Development departments also conduct direct market surveys, so efforts toascertain market needs are also a feature.
Looking ahead, it seems that the Company wants to proactively engage in ICT-related R&D. In the belief that itshould raise the rate of ICT-related invention proposals to 60% by 2025 (currently at approximately 40%), it is
implementing in-house training and proactively employing outside expert human resources.
(2) Support capabilities to offer farm business proposals
The Company leverages the experience it has built up over many years of involvement in agriculture to proactively
aid in achieving profitable agriculture. Specifically, this is support for farm business from intangible aspects
such as providing information and proposals on low-cost agriculture via the “Supporter for the farming industry
full of dreams” group, supporting acquisition of JGAP certification and delivering farm business information
via its website. In addition, the Dream Agricultural Research Institute established in 2015 conducts research,demonstrations and dissemination activities for smart agriculture utilizing advanced farm business and robot
technologies and ICT, then spreading information about this on the Amoni farm business solutions portal website.
It seems that one of the factors that enables the Company to realize advanced proposal and support capabilities
is a sales network spanning nationwide. By having a wide network rooted in communities it enables frequent
communication with customers and allows for rapid support and proposals on agricultural efficiency to be carriedout. In addition to tangible sales, it is extremely important to also focus on intangible aspects. The Company can
expand its contact points with customers and increase the number of its fans by showing an attitude of friendly
support for agricultural management.

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13 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Company profile(3) Innovation based on collaboration
The Company naturally engages in development of new technologies at its own R&D base, and aggressively
conducts research, and development activities in collaboration with outside stakeholders such as governments,
research institutes, universities and companies. We at FISCO believe that this will enhance the speed of R&D
activities and add new perspectives within the Company, and it will also enable generation of groundbreaking
innovation. (Generally, the effectiveness of open innovation is widely known.)
Actually, the Company has been proactively collaborating with Ehime University and set up the “Design Engineeringfor Horticultural and High-technology Greenhouse” endowed course in the university in 2010. As a result, it
succeeded in the industry’s first commercialization of the “plant diagnosis system ‘PD6C’” in 2015. Going forward,
the Company plans to deepen its collaboration with Ehime University in cutting edge technologies such as ICT
and AI.
In recent years, the Company has furthermore been actively promoting ties with external entities upon having set
new targets for giving rise to environmentally sound smart agriculture. In June 2022, the Company invested in
Yukimai Design Co., Ltd. a startup company with which it has formed a business alliance involving development
and sales of the Aigamo robot, an automatic weed control robot for use in rice paddies. Going forward, theCompany seeks to further heighten its capacity to generate innovation while enlisting expertise held by venturecompanies.
Considering the Company’s strengths, the important thing about these three strengths is that they influence eachother and are complementary. It is easy to understand how technological capabilities could improve by innovation
based on collaboration, but if advanced technological capabilities are not used for developments that meet needs,
they are a wasted treasure. By accurately absorbing front line needs during activities for farm business proposals
and support and providing that information to development divisions it enables those advanced technologicalcapabilities to be used in a form that meets needs.

■ Results trends
Sales increased but profits decreased in FY12/22, while making
steady progress with respect to various measures under the Midterm Management Plan. Achieved record-high net sales in theoverseas business, continuing the trend of the previous fiscal year
1. Overview of FY12/22 results
With respect to the Company’s FY12/22 consolidated results, net sales to increased 5.3% YoY to ¥166,629mn,
operating profit decreased 14.8% to ¥3,534mn, ordinary profit decreased 19.7% to ¥3,762mn and profit attributableto owners of parent increased 28.9% to ¥4,119mn. Net sales gained YoY amid strong performance of overseas
business. In terms of profit, the Company engaged in initiatives to ensure adequate earnings in part by revising sales
prices due to escalating costs, but surging prices of raw materials weighed on profits.

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14 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Results trends

Domestic net sales fell 4.1% YoY to ¥112,638mn. Under the Mid-term Management Plan, the Company focusedon generating sales of large-scale agricultural machinery such as that of the T.Japan (TJ) series of tractors, the
HJ series of combine harvesters, and Sanae PRJ8 rice planters. However, the Company encountered diminishedcustomer willingness to make purchases due to factors that included low rice prices, soaring material prices, andadverse effects from the absence of government subsidies for business continuity that had been available in theprevious fiscal year. The Company also missed out on opportunities due to supply chain disruptions. By productcategory, net sales of cultivating and mowing machinery such as tractors decreased 4.3% YoY to ¥22,908mn, net
sales of planting machinery such as rice transplanters decreased 12.9% to ¥7,907mn, and net sales of harvestingand processing machinery such as combine harvesters decreased 3.3% to ¥16,090mn. Meanwhile, maintenancerevenue such as that from parts and repair fees remained on par with levels of the previous fiscal year. As a result,net sales from implements, spare parts and repair fees decreased 3.1% YoY, thereby holding to ¥42,023mn.
Overseas net sales increased 32.3% YoY to ¥53,991mn for yet another record high after having done so in theprevious fiscal year. In the North America region, whereas the compact tractor market entered into an adjustment
phase, the Company’s shipments rose as local inventory levels mounted a recovery. As a result, net sales increased
29.1% YoY to ¥19,500mn. In Europe, the Company achieved growth in sales mainly targeting consumers as a resultof having tapped into market trends associated with changing lifestyles. In addition, sales targeting professionals also
increased amid recovery in demand for landscaping. The addition of ISEKI Germany as a consolidated subsidiaryalso contributed to earnings growth. The Company’s operations in Europe have been making steady progressin strengthening the sales structure and streamlining the supply chain, with such efforts spearheaded by ISEKI
Germany, ISEKI France and PREMIUM TURF-CARE. As a result, European region net sales increased 57.9% to¥25,100mn. In the Asian region, net sales decreased largely due to a lower volume of shipments of semi-finishedgoods to China, and despite a higher volume of shipments to South Korea amid strong performance of Japan series
large-scale agricultural machinery. As a result, Asian region net sales decreased 5.5% to ¥8,600mn.
In terms of profit, the Company implemented sales price revisions with its sights set on ensuring adequate earnings
both in Japan and overseas, but such measures did not fully make up for effects of soaring prices of raw materials.
Moreover, profits also incurred downward pressure due to the Company having missed out on opportunities because
it was unable to make deliveries to its customers amid supply chain disruptions. Profit attributable to owners ofparent increased, despite recognition of impairment loss, as a result of the Company having recorded extraordinary
income that included gain on change in equity associated with the addition of ISEKI Germany as a consolidated
subsidiary and also associated with an equity method affiliate in China.
Overview of FY12/22 results(¥mn)
FY12/21
Results

FY12/22

vs. Net sales

Results

YoY

vs. Net sales

ChangeamountChange %Net sales

158,192-

166,629

-

8,437

5.3%

Gross profit

46,841

29.6%

49,890

29.9%

3,049

6.5%

SG&A

42,69327.0%

46,356

27.8%

3,663

8.6%

Operating profit

4,147

2.6%

3,534

2.1%

-613

-14.8%

Ordinary profit

4,687

3.0%

3,762

2.3%

-925

-19.7%

Profit attributable toowners of parent

3,196

2.0%

4,119

2.5%

923

28.9%

Source: Prepared by FISCO from the Company’s financial results

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15 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Results trends

Looking at noteworthy developments in FY12/22, the Company invested in start-up enterprise Yukimai Design
Co., Ltd. as part of its efforts to promote environmentally sound smart agriculture in the domestic market. The
Company has orchestrated market launches thus far of products equipped with automatic steering functions andrice transplanters capable of adjusting fertilization levels using sensors, in response to the Strategy for Strategy
for Sustainable Food Systems (MeaDRI) advocated by MAFF. Through partnerships with start-up enterprises, theCompany aims to swiftly prompt innovation while incorporating external expertise, as it also advances the “businessmodel transformation” cited in its Mid-term Management Plan. Meanwhile, Yukimai Design started selling its Aigamo
robot in January 2023, and seeks to sell 500 units annually. Under its Strategy for Sustainable Food Systems(MeaDRI), MAFF aims to achieve a 25% increase in cultivated acreage devoted to organic farming by 2050. In March
2022, MAFF administered a survey looking toward the consumer perspective. Some 87.5% of those surveyed
answered in the affirmative when asked if they feel it is important that they choose eco-friendly agricultural, forestry
and marine products and food items (agricultural, forestry and marine products and food items that have low impact
on the environment, including organic farm products grown without using pesticides or chemical fertilizers, andlow-waste products without excess packaging). Looking toward the external environment, it also seems likely that
the Company will encounter mounting interest in organic agriculture going forward. This scenario suggests that theCompany is taking a proactive approach looking toward organic business development through its investment inYukimai Design.
2. Progress on the Mid-term Management Plan
The Company has achieved steady progress with respect to various measures stipulated in its Mid-term Management
Plan. It accordingly seems that the Company has firmly established foundations toward achieving objectives of its
Mid-term Management Plan and further accelerating its growth.
(1) Providing the best solutions: Selection & concentration (domestic market)
In the domestic market, the Company has achieved a more extensive range of large-scale customers amid growthin sales of smart agricultural machinery. It has furthermore made progress in terms of improving its sales andservice capabilities by deploying its Amoni farm business solutions portal website and also in terms of achieving
revenue-expenditure structural reform of its sales subsidiaries by optimizing its operational bases and workforce
enlisting an approach that entails a block-based business territory and sales strategy.
(2) Providing the best solutions: Selection & concentration (overseas markets)
With respect to its overseas markets, the Company achieved record-high net sales again this fiscal year, with such
results driven by performance in Europe and North America. In Europe, the Company marked further progressin terms of streamlining its supply chain and strengthening its sales structure as a result of having made ISEKI
Germany a consolidated subsidiary. In Asia, IST of Thailand secured an operating profit by making improvements
to its profit structure. Meanwhile in Thailand, the Company expanded the product lineup by rolling out small-scale
tractors manufactured by TAFE of India.
(3) Providing the best solutions: Selection & concentration (product and development strategies)
In addressing the shift to larger scale of farm operations and adoption of IT solutions, the Company has madesteady progress in terms of upgrading its smart agricultural machinery. In Europe, the Company has been engaging
in trial adoption of electric mowers amid a progressive shift to decarbonization in looking toward achieving carbon
neutrality. Going forward, the Company seeks to commercialize products as it monitors market feedback.

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16 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Results trends(4) Providing the best solutions: Business model transformation
The Company has achieved favorable results with respect to domestic maintenance revenue, and has beensteadily working toward creating and establishing new businesses, which in part has entailed its investment inYukimai Design. In addition, the Company has made progress in terms of introducing its i-Magazine cloud-based
mobile tool, and has furthermore streamlined its sales activities and improved service quality through digitaltransformation (DX).
(5) Increase corporate value by strengthening earnings and governance: Improving profitability (structuralreform and improvement of management efficiency)
The Company relocated production of certain products previously manufactured at its Matsuyama Plant in Japan
to ISEKI INDONESIA. Rebuilding the production framework and supply chain centered around ISEKI INDONESIA
has enabled the Company to establish a system capable of manufacturing products at optimal prices. In addition,
the Company has been steadily improving management efficiency through structural reform, in part by discontinuing in-house development and production of dryers.
3. Financial condition and management indicators
With respect to the Company’s financial condition at end-FY12/22, total assets were ¥206,491mn, for an increaseof ¥18,806mn relative to end-FY12/21. Primary factors attributable to changes in the amount include a decreaseof ¥4,101mn in cash and deposits, against increases of ¥6,037mn in notes and accounts receivable - trade, andcontract assets and ¥15,460mn in inventories.
Total liabilities were ¥134,146mn, for an increase of ¥13,022mn. Primary factors attributable to the higher amountinclude gains of ¥6,221mn in trade payables and ¥6,164mn in short-term loans payable and long-term loans payable.
Total net assets were ¥72,345mn, for an increase of ¥5,784mn. Primary factors attributable to the higher amountinclude gains of ¥3,440mn in retained earnings and ¥2,564mn in non-controlling interests. The Company’s retained
earnings in particular have been steadily increasing year after year, suggesting that the Company has progressively
continued to generate profits.
Looking at management indicators, the Company’s current ratio and fixed asset ratio are 111.4% and 142.8%,
respectively. The equity ratio was 32.9%.
ROA and operating margin as of December 31, 2022, were 1.9% and 2.1%, respectively. Based on these indicators,
FISCO deems there to be room for improvement in terms of the Company’s profitability. In its Mid-term Management
Plan, the Company has set as one of its objectives the aim of improving gross profit margin and operating margin
through structural reform, improvement of management efficiency, and fixed cost optimization. These measures arelikely to bring about higher ROA and operating margin (the Mid-term Management Plan sets an operating margin
target of 5% for FY12/25).

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17 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Results trends

Consolidated balance sheets and management indicators(¥mn)
FY12/19

FY12/20

FY12/21

FY12/22

Change87,15989,97991,103

109,41418,311

8,404

10,787

14,85010,749-4,101

Non-current assets

110,352

97,44996,581

97,076495

Total assets

197,511

187,428

187,684

206,491

18,806

Total liabilities

128,259

125,009

121,123

134,146

13,022

Net assets

69,25262,41966,561

72,345

5,784

17,025

14,493

17,69021,131

3,440

34.2%

32.4%

34.5%

32.9%

Current assets
Cash and deposits

Retained earnings
Stability
Equity ratio
Profitability
ROA (return on assets)

0.6%

0.9%

2.5%

1.9%

ROE (return on equity)

1.1%

-8.8%

5.1%

6.2%

Operating margin

1.8%

1.4%

2.6%

2.1%

Source: Prepared by FISCO from the Company’s financial results■ Outlook
Sales and operating profit gains forecast for FY12/23. Higher sales
both in Japan and overseas likely as the Company furthermore
promotes various measures under its Mid-term Management Plan
1. Outlook for FY12/23
The outlook for FY12/23 consolidated results is for net sales to increase 5.9% YoY to ¥176,500mn, operating profit
to increase 27.3% to ¥4,500mn, ordinary profit to increase 6.3% to ¥4,000mn and profit attributable to ownersof parent to decrease 36.9% to ¥2,600mn. The Company anticipates sales gains both in Japan and overseas as
it promotes various measures under its Mid-term Management Plan, and despite the notion that some degreeof lingering uncertainty persists with respect to the external environment particularly in terms of the COVID-19
pandemic, supply chain disruptions, and soaring prices of raw materials. In terms of profit, the Company seeks toincrease gross profit through higher sales and price revisions, and also intends to achieve greater profitability byfurther promoting structural reform and management efficiency improvement, which in part will entail undertaking
revenue-expenditure structural reform of sales subsidiaries and establishing an optimal production framework
centered on ISEKI INDONESIA.

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18 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Outlook

2. Domestic BusinessIn the domestic business, whereas the Company faces concerns such as those regarding how soaring material
prices might affect agricultural machinery demand, the external environment is poised to remain strong. This is inpart because adverse effects attributable to the discontinuation of government subsidies for business continuity havesubsided and also given that rice prices are no longer heading lower. Amid these circumstances, the Company aims
to achieve higher sales by steadily promoting various measures under its Mid-term Management Plan. The company
will specifically focus on selling both large-scale agricultural machinery and smart agricultural machinery to address
structural changes with respect to agriculture. In addition, the Company will set its sights on improving service quality
by streamlining sales operations and providing appropriate information through its i-Magazine cloud-based mobile
tool. The company also plans to engage in business activities in looking toward expanding its organic business andaccordingly seeks to achieve Aigamo robot sales of 500 units. Furthermore, the company will continue to implement
sales price revisions in response to effects of soaring prices of raw materials.
As a result of this scenario, the Company anticipates net sales of agricultural machinery products of ¥52,500mn, an
increase of 11.9% YoY, and net sales from implements, spare parts and repair fees of ¥43,800mn, an increase 4.3%.
In FY12/22, the Company focused on sales of large-scale agricultural machinery and smart agricultural machinery,
but missed out on opportunities due to supply chain disruptions. In FY12/23, despite persisting uncertainties withrespect to the external environment, the Company is poised to achieve better results as a result of efforts that entail
effectively catering to market needs for large-scale agricultural machinery and other such products. In addition,
maintenance revenue is likely to remain strong amid a scenario where the Company places focus on achieving
greater results from its incidental services as one of its business model transformation initiatives.
3. Overseas BusinessIn the overseas business, although the North American compact tractor market is poised to remain in an adjustment
phase, the Company projects net sales on par with those of the previous fiscal year as it proceeds with shipments
geared to bringing local inventories up to appropriate levels. In Europe, earnings results are likely to remain favorable.
The Company accordingly anticipates an increase in sales centered on the professional market encompassing
products such as landscaping tractors for which the Iseki Group boasts a substantial presence. Meanwhile, budgets
previously allocated to COVID-19 countermeasures are now being redirected to other areas such as landscaping
as the impact of the pandemic gradually wanes. Given the likelihood of strong results brought about by recoveryof budgets allocated to landscaping, the Company will seek to replenish distributor inventories, which were at low
levels in the previous fiscal year. In FY12/23, the Company will furthermore proceed with customer assessments
looking toward full-scale adoption of electric mowers, which it has started to sell on a limited basis. The Company
will also move forward in extending its lineup of eco-friendly electric products for consumers. Efforts by the Company
to extend its lineup of eco-friendly products in the environmentally advanced nations of Europe may contribute toenhancing the appeal of its product offerings. In Asia, the Company anticipates higher sales as a result of initiatives
that entail having its Thai-based consolidated subsidiary IST and other such entities strengthen sales networks,
and expanding sales of low-priced, small-scale tractors manufactured in India, which it began selling in Thailand
during the previous fiscal year.
As a result of this scenario, the Company anticipates North American net sales of ¥18,800mn, a decrease of 3.6%
YoY, European net sales of ¥26,200mn, an increase of 4.4%, and Asian net sales of ¥9,400mn, an increase of 9.3%.
The Company made progress particularly in Europe with respect to streamlining the supply chain and strengthening
sales structures during the previous fiscal year, thereby contributing to record-high overseas net sales. This favorable
performance is likely to persist going forward.

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19 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

OutlookDuring the previous fiscal year, the Company established foundations for achieving objectives of its Mid-termManagement Plan and attaining further growth in the future. FISCO envisions a scenario whereby the Company
achieves greater earnings results in FY12/23, based on these accomplishments.

■ Medium- to long-term growth strategy
Aim to be a company that continues for another 100 years, andachieve its targets through the four main pillars of “selection &concentration,” “business model transformation,” “improving
profitability” and “ESG” based on the keyword of “change”
1. Mid-term Management Plan: Establishing a foundation of “change” for the next 100 years
In FY12/21, the Company formulated the Mid-term Management Plan, which establishes FY12/25 as the final yearof the five-year plan, in anticipation of the 100th anniversary of its foundation. A Companywide effort is being madeto achieve the plan.
The keyword of the Mid-term Management Plan is “change.” The Company will aim to be one that continues foranother 100 years beyond 2025, and the main objective of the plan is to lay a foundation for that purpose. It islargely divided into the following two basic strategies.
(1) Providing the best solutions: Focus on providing not only products but also services from tangible to intangible(2) Increase corporate value by strengthening earnings and governance: Make a profitable corporate structurethat can surely raise profits beyond sales ups and downs
Under these two basic strategies, the Company intends to move toward implementing a basic strategy encompassing the four perspectives of “selection & concentration,” “business model transformation” (these two are included
in “providing the best solutions”), “improving profitability” and “ESG” (these two are included in “Increase corporate
value by strengthening earnings and governance”).
Direction of the basic strategies and initiatives in the New Mid-term Management Plan

Source: The Company’s New Mid-term Management Plan

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20 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Medium- to long-term growth strategy

2. Selection & concentration
The first example of a concrete initiative is “selection & concentration.” The Company will aim to efficiently utilize thelimited in-house resources in accordance with changes in the external environment.
In sales activities for the domestic market, as agricultural management entities continue to expand in scale, theCompany has established further increases in large-scale farming customers and a focus on sales of the flagshipmodel Japan series, which consists of large-scale agricultural machinery in the categories of tractors, combine
harvesters, and rice transplanters, as its basic policies. Based on the recent flow of introducing ICT to agriculture,
it is also planning to concentrate resources on sales of smart agricultural machinery such as robot tractor TJV
series and Sanae Japan PRJ8 robot rice transplanter. By looking at data presented by MAFF, it can be seen thatcultivated agricultural land is increasing in size as family-run management entities are decreasing and organizational
management entities are on the rise.
In sales activities for the overseas market, the Company will focus on sales of products matched to demand ineach region. In North America, it will focus on sales of products such as compact tractors from AGCO, a partnerin its global strategy, in an aim to expand its share of the compact market. In Europe, it will aim to further expand
its share of the landscaping market and intends to focus on sales of landscaping machinery tractors, as well as on
new launches onto the market of electrified products in response to heightening environmental awareness. (Limited
sales of electric mowers were launched in Europe in FY12/22). In addition, it made preparations to rebuild its sales
network with an eye on consolidation to expand shares, making a consolidated subsidiary of ISEKI Germany in July
2022 and strengthening its sales structure in Europe. In the Asian market, it plans to expand and accelerate businesswith its Thai company IST as a starting point while developing the rice cultivation expertise and its agricultural
machinery it has amassed in Japan.
In product development, particularly advanced development aimed at the future, the Company has set threeimportant measures: “globally strategic machines,” “development of electrified products,” and “development ofsmart agricultural machinery.” For globally strategic machines, it intends to reduce costs and improve the efficiency
of development by developing common platforms for the categories of tractors, combine harvesters, and rice transplanters. In development of smart agricultural machinery, it will focus on developing agricultural machinery adaptedto Level 3 (fully unmanned and remotely monitored robotic agricultural machinery models) for full-scale use. Goingforward, more efficient agriculture will become necessary as the size of farms increases, and there is a possibility
that various new businesses based on data will be generated. Taking these and other factors into consideration,
we at FISCO believe that focusing on the development of smart agricultural machinery will be extremely important.
3. Business model transformation
It is becoming widely recognized that business models to earn sales continually through services are superior tobusinesses in which items are completely sold off. Amid these conditions, the Company plans to shift from its existing
business model focused on completely selling all its agricultural machinery to one in which it will continually increase
earnings through the provision of services focused on “data,” repairs, and maintenance, etc.

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21 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Medium- to long-term growth strategy

Specifically, it provides a low-cost and advanced location information service (required to operate robotic agricultural
machinery or agricultural machinery equipped with automatic steering functions) utilizing GNSS (Global Navigation
Satellite System) for ¥3,300 per month that reduces the initial costs of antenna construction for customers.
Furthermore, going forward, new businesses such as consulting services based on data obtained from smart
agricultural machinery, outside sales of data and fee-based information provided by Amoni may be considered. The
Company currently launches agricultural machinery equipped with ICT in the market, and establishes structuresthat enable it to collect data related to agricultural machinery and agricultural work. We at FISCO think that in the
future, the Company will be able to generate a great number of businesses that turn data into earnings, dependingon the idea.
The Company will also collect data from this type of ICT agricultural machinery, and accelerate the flow of use bycustomers. Alternatively, it will utilize data at sales sites and work to develop new services including maintenance,
as well as bridge the data to improvements in work styles. It also intends to utilize data for product development
and accelerate DX in such ways as improving productivity.
Additionally, it is engaged in steady expansion of sales of spare parts and repair fees, which are an after-sales service.
In concrete terms, it is striving to transition to a service structure focused on large-scale maintenance bases andenhance these large-scale maintenance bases.
4. Improving profitability
The Company will work on structural overhaul to stably increase earnings unaffected by external environment.
In specific terms, it will improve the fixed cost ratio by consolidating functions, etc. that were overlapping at eachproduction factory and review segregation of in-house and external production, reduce workloads by placing outsideorders for a portion of parts, make business activities more efficient by introducing IT, and improve asset efficiency
by reducing inventory. By doing so, the Company intends to achieve an operating margin of 5%, ROE of 8%, andoperating cash flows of ¥60.0bn (5-year aggregate) by FY12/25.
5. ESGThe fourth initiative is to conduct business with ESG in mind. In that regard, the Company previously establishedtargets of achieving a 26% reduction in CO2 emission volumes generated by production activities in Japanesemanufacturing locations by 2030 compared to FY2013 (in 2019, the Company achieved a reduction rate of 12%,exceeding its target of 9%), and also of increasing its eco-product ratio in domestic net sales to 50% or more by2030. Meanwhile, the Company will further promote environmental management underpinned by its endorsement of
the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Specifically, the Company’splans now entail achieving a 46% reduction in CO2 emissions by 2030 compared with 2014 at its global manufacturing sites while also increasing its ratio of eco-products in domestic sales to 65% by 2025. In addition to promoting
environmental management, the Company aims to contribute to realization of the SDGs through its business on
three fronts: “supporting resilient agriculture,” “landscaping for livable villages and towns,” and “environmental
conservation for a recycling-oriented society.”
For in-house activities, the Company intends to increase employee engagement by enhancing the work-life balanceand ensuring diversity, among other things.

We encourage readers to review our complete legal statement on “Disclaimer” page.

22 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/

Medium- to long-term growth strategy

ESG investment has been spreading rapidly in recent years among institutional and private investors in response tofrequent natural disasters and human rights issues in supply chains, etc. In this environment, we at FISCO predictthat companies that do not take ESG into consideration will experience increasing difficulty with funding in the future.
In that sense, conducting business activities with ESG in mind will certainly be important.

Sustainable investment balance and percentage of sustainable
investment balance in total funds under management
Investment balance (left)(¥mn)
700,000,000
600,000,000

500,000,000
400,000,000

50.0%

41.7%
35.0%

300,000,000
200,000,000

Percentage of sustainable investment balance
in total funds under management (right)
70.0%
61.5%
55.9%
60.0%
51.6%
514,052,801

336,039,620

40.0%
310,039,275
30.0%

231,952,250

20.0%

136,595,941

100,000,000

10.0%

0

0.0%

2017

2018

2019

2020

2021

Source: Prepared by FISCO from the Japan Sustainable Investment ForumWe encourage readers to review our complete legal statement on “Disclaimer” page.

23 24

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

ISEKI & CO., LTD.
6310 Tokyo Stock Exchange Prime Market

27-Apr.-2023
https://www.iseki.co.jp/english/ir/■ Shareholder return policy
Positions shareholder return policy as a key policy, and pays stabledividends
As a policy for profit distribution, the Company positions the allocation of stable dividend payments to shareholders
as a key policy. Dividends were ¥30 in FY12/18, ¥30 in FY12/19, ¥0 in FY12/20, ¥30 in FY12/21 and ¥30 in FY12/22.
Due to the recording of a net loss in FY12/20, no dividend was paid, but a dividend of ¥30 has been paid during allother periods. The dividend payout ratio during these periods was respectively 62.1%, 93.7%, 21.2% and 16.5%(no dividend in FY12/20). For FY12/23, the Company plans to implement a stable shareholder return, paying a
year-end dividend of ¥30 per share (dividend payout ratio 26.1%).

Dividend per share and dividend payout ratio
Dividend per share (left)

(¥)
50.0

Dividend payout ratio (right)

(%)
100.0

93.7

40.0

80.0
62.1

30.0

20.0

60.0

30.0

30.0

30.0

10.0

40.0
30.0

30.0
26.1

21.2

20.0

16.5
0.0

0.0
FY12/18

FY12/19

FY12/20

FY12/21

FY12/22

FY12/23 E

Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

24 24

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp