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

9-May-2024
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

9-May-2024
https://www.iseki.co.jp/global/english/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Overview of FY12/23 results........................................................................................................................

02

2. Outlook for FY12/24. . ............................. ......................................................................................................

02

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

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

04

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

07

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

13■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 16
1. Overview of FY12/23 results........................................................................................................................

16

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

17

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

18■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 19
1. Outlook for FY12/24. . ............................. ......................................................................................................

19

2. Sweeping comprehensive business structural reforms under Project Z. ......................................................

20■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 21
1. Mid-term Management Plan and Project Z. .................................................................................................

21

2. Mid-term Management Plan: Establishing a foundation of “change” for the next 100 years. .......................

21■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/■ SummarySales increased and profits decreased in FY12/23, with the overseas
business continuing to perform well. Groundwork was laid forintensive, fundamental reforms from FY12/24
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 lawnmowers, harvesting and processing machinery such as combine harvesters, andplanting 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 landscape developers, hobby farmers and general consumers in Europe and North America. For Japanese
agriculture, the Company’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 remained among the top places almost constantly since 2000, from 2000 to 2006 in “agriculture andfishery” and since 2007 in “other special machinery,” (ranking No. 1 from 2000 to 2017 and again in 2019, and insecond place in 2018 and from 2020 to 2022). 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 informationand data related to growth forecasts. In 2015, the Company established the Dream Agricultural Research Instituteto create new value for agriculture. 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 “provision of the best solutions”
and “enhancement of corporate value by strengthening profits and reinforcing corporate governance” in the Mid-termManagement Plan as the Company aims to achieve the goal of a consolidated operating margin of 5% or more by2027.
As of December 31, 2023, the Company had share capital of ¥23,344mn. The total number of Group employees was
5,457 and its Group companies were 20 consolidated subsidiaries (9 domestic sales companies, 6 manufacturingrelated companies, and 5 other companies), and 1 equity-method affiliated company.

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01 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Summary

1. Overview of FY12/23 results
In the Company’s FY12/23 consolidated results, net sales increased 2.0% year on year (YoY) to ¥169,916mn,
operating profit decreased 36.2% to ¥2,253mn, ordinary profit decreased 44.4% to ¥2,092mn and profit attributableto owners of parent decreased 99.3% to ¥29mn. Net sales increased in both the domestic and overseas businesses,
lifting consolidated net sales to a record high. Overseas, Europe continued to drive growth, with net sales reachinga record high for the third consecutive year. In Japan, growth in maintenance-related income such as spare partsand repair fees – a key area of focus for the Company – contributed to higher net sales. However, operating profit
declined, mainly reflecting higher selling, general and administrative (SG&A) expenses and a drop in capacity
utilization due to lower production volumes. In FY12/23, the Company implemented various measures under its
Mid-term Management Plan, but structural reforms to address profitability were insufficient, resulting in weak profits.
In response, the Company launched Project Z, a package of fundamental reforms and growth strategies to be
implemented over the short- and medium-term. Starting off with the management integration of manufacturing
companies in July 2024, the Company plans to rapidly implement a range of fundamental structural reforms tackling
all areas of its operations by 2025.
2. Outlook for FY12/24
The outlook for FY12/24 consolidated results is for net sales to increase 0.0% YoY to ¥170,000mn, operating profit
to decrease 11.3% to ¥2,000mn, ordinary profit to decrease 52.2% to ¥1,000mn and profit attributable to ownersof parent of ¥400mn (profit of ¥29mn in the previous fiscal year). In the domestic business, the Company expects
demand to remain weak, but it forecasts higher net sales supported by price hikes and measures to expand sales oflarge-size agricultural machinery and new products. Overseas, it expects net sales to decline overall, but it forecasts
higher net sales in the North America business and a continued strong performance in the Europe business. The
Company expects profits to be impacted by ongoing production adjustments to improve asset efficiency and by
higher SG&A expenses, including personnel expenses and distribution costs. As noted above, 2024 will be the firstyear of Project Z. Under the project, the Company plans to decisively implement fundamental structural reforms,
including the management integration of manufacturing companies.
3. Mid-term Management 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 “provision of the best solutions” and “enhancement of corporate value by strengthening profits and reinforcing
corporate governance.” The Company has steadily implemented a range of measures since FY12/21, the first yearof the plan, but structural reforms mainly targeting improvements in asset efficiency and profitability have fallen
short. As such, the Company’s transition to a business structure that can reliably generate profits regardless ofsales levels is still incomplete. To address this, in February 2024 the Company launched Project Z, which includes
a further package of short- and medium-term measures to accelerate growth while improving asset efficiency andprofitability. The sweeping comprehensive business structural reforms are focused on three core themes: optimizationof production, optimization of development and intensification of domestic sales. With these measures, the Company
is aiming for a consolidated operating margin of 5% or higher, ROE of 8% or higher, DOE of 2% or higher and a
PBR of 1.0x or higher in FY12/27.

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02 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Summary

Key Points
FY12/23 sales rose in Japan and overseas, but operating profit declined
Earnings were driven by the Europe business and maintenance services in Japan• Launched Project Z, a package of short- and medium-term fundamental structural reforms to transform thebusiness structure••

Results trend
Net sales (left)

Operating profit (right)

(\mn)

(\mn)
180,000
149,899

149,304

158,192

166,629

169,916

170,000

150,000

6,000
5,000

120,000

4,000
4,147
3,534

90,00060,000

3,000

2,745
2,253

2,084

2,000
2,000

30,0001,000

00FY12/19

FY12/20

FY12/21

FY12/22

FY12/23

FY12/24 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

9-May-2024
https://www.iseki.co.jp/global/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 delivering usefulfarm business information to farmers through its website and the Amoni portal site, and helping farm producers to
obtain JGAP* certification promoted by the Japan GAP 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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile

The Company is engaged in a wide variety of businesses and the development and manufacture, sales, and provisionof after-sales service for cultivating and mowing machinery such as tractors and riding lawnmowers, harvestingand processing machinery such as combine harvesters, and planting machinery such as rice transplanters andvegetable transplanters and also sells items such as implements, parts and OEM products, mainly centered on
farmers and large farming corporations 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 is that itprovides products in all phases of farming from plowing to rice harvesting onto drying and conditioning. In Japan, theCompany has 11 sales subsidiaries (of which 6 companies are wide-area direct dealers) covering the entire country,
selling agricultural machinery to customers throughout all of Japan and appropriately absorbing the needs 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
and has set up sales bases like ISEKI France S.A.S (“ISEKI France”). For net sales by region in FY12/23, Europe
was highest at ¥33.2bn, followed by North America at ¥14.2bn and Asia with ¥8.1bn. 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 expertise it has cultivatedin Japan against a backdrop of these countries where rice cultivation is popular and food culture resembles that ofJapan, and governments in the countries having policies to promote the modernization of agriculture. In fact, theCompany is steadily increasing its presence in the Asian region, having established PT. ISEKI INDONESIA in 2012
to serve as a global production base (and strengthening its production system in 2023), making a subsidiary of its
Thai sales agent, IST Farm Machinery Co., Ltd. (“IST”), in 2020. The Company plans to integrate the managementof sales companies in Japan. In January 2025, regional sales companies in Hokkaido, Tohoku, Kanto Koshinetsu,
Kansai Chubu, Chu-Shikoku and Kyushu will be merged into a single company.

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile

ISEKI Group

Major domestic and overseas affiliates and sales companies

Japan: Main associated companies/sales subsidiaries
Associated companies
ISEKI-Matsuyama MFG. Co., Ltd.
ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.
ISEKI-Minamiyoshida MFG. Co., Ltd. (*1)
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

Sales subsidiaries
ISEKI Hokkaido Co., Ltd.
ISEKI Tohoku Co., Ltd.
ISEKI Kanto Koshinetsu Co., Ltd.
Gunma ISEKI Sales Co., Ltd.
Ishikawa Shokai Co., Ltd. (*1)
ISEKI Kansai Chubu Co., Ltd.
Mie ISEKI Sales Co., Ltd.
Nara Iseki Sales Co., Ltd. (*1)
Nishioka Shokai Co., Ltd. (*1)
ISEKI ChuShikoku Co., Ltd.
ISEKI Kyushu Co., Ltd.

We leverage group-wide strengths at home and abroad to engage in the business.
Our products are used in more than 100 countries and regions around the world.

Overseas: Main associated companies/strategic partners[Associated companies]
France
ISEKI France S.A.S. (ISEKI France)
Germany
ISEKI Europe GmbH (ISEKI Europe) (*1)
Iseki-Maschinen GmbH (ISEKI Germany)
U.K.
PREMIUM TURF-CARE LTD. (ISEKI UK & IRELAND) (*1)
ThailandIST Farm Machinery Co., Ltd. (IST)
Indonesia
PT. ISEKI INDONESIA (ISEKI INDONESIA)
China
Dongfeng Iseki Agricultural Machinery Co., Ltd. (Dongfeng Iseki)(*1, 2)

Production sites
Wide-area sales companies (our investment ratio: 100%)*1: Non-consolidated subsidiaries*2: Equity-method subsidiary *3: OEM customer[Strategic partners]
U.S.
AGCO Corporation of AGCO Group (*3) (AGCO)
India
Tractors and Farm Equipment Limited (TAFE) (business alliance)

Source: The Company’s website
Production sites/main machine types produced
Associatedcompanies(location)

ISEKI-Matsuyama MFG. ISEKI-Kumamoto MFG. ISEKI-Niigata MFG. Co., ISEKI-Shigenobu MFG.
Co., Ltd. (Japan)
Co., Ltd. (Japan)
Ltd. (Japan)
Co., Ltd. (Japan)

Dongfeng Iseki Agricultural
Machinery Xiangyang Factoryand Changzhou Factory(China)Main machine
mowers, high-clearance
types
multipurpose vehicles,
produced

Combine harvesters,
and carrot harvestingmachinery

Rice transplanters,
vegetable transplanters,
and rice hullers, binders

Tillers, multipurpose
vehicles,Tractors and riding lawn
and implements (rotaries, mowers
mowers, etc.)

Tractors, ricetransplanters,
combine harvesters,
high-clearance
multipurpose vehicles, andvegetable transplanters

Main
Japan, Asia, Europe,
destination
and North America
for shipment

Japan and Asia

Japan and Asia

Japan, Asia, Europe,and North America

Asia

Tractors, riding lawnand diesel engines

11

PT. ISEKI INDONESIA(Indonesia)

North America, Asia,
and Europe

ISEKI Report 2023

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile

History
Date

Major events

August 1926

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

Established N.V. ISEKI Europe S.A. in Brussels (now ISEKI Europe GmbH in France)

September 1972

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 Co., Ltd.)
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, 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 lawnmowers have beenstrong, particularly among landscaping developers, hobby farmers and general consumers in Europe and the
U.S., and accounted for 36.2% of Company-wide net sales in FY12/23, the highest ratio. Cultivating and mowing
machinery accounted for 69.3% of all overseas net sales.
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

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile

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 andhigh 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 themachinery, as well as being 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
and laborsaving in agricultural work. Furthermore, in June 2023, the Company launched a new mid-sized classtractor, the BF Series, which is in the volume zone. Like the large-sized class, the mid-sized models come withthe straight-travel assist function and compatibility with map data – features that are in high demand – as well asa continuously variable transmission (CVT), comfortable suspension seats and a seat belt reminder, resulting in a
product design that is comfortable, easy to operate and safe. The new model has been well received by customers
and is likely to contribute to earnings growth, as the Company is steadily winning new contracts.
A robot tractor equipped with the advanced automated driving technology (left)
and a new mid-sized class tractor, the BF Series, which is in the volume zone (right)

Source: The Company’s website(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 FY12/23, the category accounted for 10.1% of Company-wide net sales, following thecultivating and mowing machinery and implements, spare parts and repair fees, and other agriculture-related
categories. In addition, it accounts for 2.4% of overseas 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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile

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
give rise 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
across its main product categories of rice transplanters, tractors, and combine harvesters. In December 2023,
the Company also launched the Frontier Master (FM) series, a new range of combine harvesters that are easier tooperate and maintain, while also offering improved comfort. The FM series is aimed at large-scale farmers. Somevariants in the series are equipped with crop yield and moisture measurement functions. Amid growing needs fordata-driven farming and reduced environmental impact, the FM series is likely to see increasing uptake.
Japan HJ series are flagship models for combine harvesters

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Company profile(3) Planting machinery
The planting machinery category includes products such as rice transplanters used for transplanting seedlings
into rice paddies and vegetable transplanters. In FY12/23 the category accounted for 5.3% 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 size of 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 launched its new Sanae PJ10 large-scale 10-row ricetransplanter in 1H FY12/23. One distinctive characteristic of the new model is that it features a fundamentallyredesigned body with the engine positioned at the front of the rice transplanter. Given that the Company has comeup 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

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

9-May-2024
https://www.iseki.co.jp/global/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 FY12/23, the category
accounted for a ratio of 28.8% 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) Agricultural ICT contributing to improved productivity
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 Company is involved in activities topropose 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 technologies and proactively 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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11 26

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

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

9-May-2024
https://www.iseki.co.jp/global/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 stateof agricultural machinery using data obtained from the agricultural machinery. These enable agricultural machinery
to be inspected and undergo maintenance in advance, making it possible to prevent breakdowns by stoppingthem 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 and know-how 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 AGRISUPPORT can contribute 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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12 26

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

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

9-May-2024
https://www.iseki.co.jp/global/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 lawnmower in 1988 and the industry’s
fastest auto-threshing combine harvesters (seven-row reaping) in 2009. The Company has also maintained its
competitive edge through the technologies 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
remained among the top places almost constantly since 2000, in “agriculture and fishery” from 2000 to 2006 andsince 2007 in “other special machinery,” (ranking No. 1 from 2000 to 2017 and again in 2019, and in second placein 2018 and from 2020 to 2022), and although it was in third place among all industries in 2022, it has remainedin the top 2 in all industries for patent allowance rates since 2004 (the patent allowance rate has consistently
exceeded 90%, which is an extremely high result.)
The Company’s position in the number of publishedand registered patents by specialty field and patent allowance

Source: The Company’s financial results presentation materials

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13 26

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

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

9-May-2024
https://www.iseki.co.jp/global/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
in development departments submit ideas matching market needs, and in invention creation activities in whichveteran engineers pass on invention creativity know-how to younger engineers, as well as conducts technologicalresearch presentations to share the outcomes of research and development and invention information. These
activities make it possible for young employees to come up with innovative ideas, while at the same time ensuringthat expertise, which can tend to become tacit knowledge, is properly shared throughout all the Company’sengineers, 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 can imitate 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 themarket a variable fertilizing rice transplanter that plants rice at the same time as automatically adjusts the amountof fertilizer applied by using 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 advanced technology-related invention proposals to 60% by 2025 (39% in fiscal 2021
and 56% in fiscal 2022), it is implementing in-house training and proactively employing outside expert humanresources.
(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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14 26

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

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

9-May-2024
https://www.iseki.co.jp/global/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.) In addition, in June 2023, theCompany established a budget of up to ¥1.0bn for investment in venture companies to enhance its innovation
capabilities while also gaining access to know-how from venture companies. The following month it set up theInvestment Management Committee as a deliberative body to support rapid decision-making on investments.
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. The Company provides various solutions
in collaboration with external organizations, including variable fertilizer machinery, developed with academic andcorporate partners. The machinery is equipped with technology that precisely applies fertilizer according to field
conditions to reduce chemical fertilizer volumes. It has also created a J-credit application service with Faeger Co.
Ltd. Additionally, the Company is actively working with local governments and other bodies. It currently has partnership agreements with more than 10 local governments to promote the uptake of sustainable, environmentallysound agriculture and related production areas. In June 2022, the Company invested in Yukimai Design Co., Ltd.
(now NEWGREEN, Inc.) 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. The Aigamo robot has
the potential to significantly reduce weeding work, which has been an obstacle to the growth of organic paddy
rice cultivation. By deepening cooperation with NEWGREEN, the Company plans to spur even wider adoptionof organic farming.
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.

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15 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/■ Results trends
FY12/23 sales increased, and profits decreased; record-highconsolidated net sales and overseas net sales
1. Overview of FY12/23 results
In the Company’s FY12/23 consolidated results, net sales increased 2.0% YoY to ¥169,916mn, operating profit
decreased 36.2% to ¥2,253mn, ordinary profit decreased 44.4% to ¥2,092mn and profit attributable to ownersof parent decreased 99.3% to ¥29mn. Net sales increased in both the domestic and overseas businesses, lifting
consolidated net sales to a record high. Overseas, Europe continued to drive growth, with net sales reaching a record
high for the third consecutive year. Operating profit declined, reflecting a modest drop in the gross profit margin due
to lower capacity utilization amid weaker production volumes, and an increase in SG&A expenses that outpaced
growth in net sales. Ordinary profit and profit attributable to owners of parent were impacted by higher interest
expenses due to an increase in interest-bearing liabilities, and by the absence of extraordinary income booked in
FY12/22 related to the consolidation of Iseki-Maschinen GmbH (“ISEKI Germany”).
Domestic net sales increased 0.4% YoY to ¥113,060mn. Net sales of agricultural machinery products declined
YoY, but maintenance revenue increased amid the Company’s shift to a services-oriented business model under its
Mid-term Management Plan. Orders for large agricultural facilities also contributed to sales growth. In agricultural
machinery products, sales of the newly launched BF series of mid-sized tractors were firm and net sales of smart
agricultural machinery surged 20% YoY on strong support from customers for tractors and combine harvesters
with straight-line assist systems. However, demand was sluggish overall, with a pullback from a rush in demandahead of price hikes weighing on sales. Also, the Company is working to expand sales of large-size agricultural
machinery, leading to a high level of inquiries about these models, but it was unable to convert these opportunities
into earnings due to production bottlenecks and other issues. By product category, net sales of cultivating andmowing machinery such as tractors decreased 3.6% YoY to ¥22,083mn, net sales of planting machinery such as
rice transplanters decreased 8.5% to ¥7,235mn, and net sales of harvesting and processing machinery such as
combine harvesters decreased 2.2% to ¥15,741mn. Meanwhile, net sales from implements, spare parts and repair
fees such as maintenance revenue increased 1.1% YoY to ¥42,506mn, and net sales from other agriculture-related
business including facility construction increased 7.5% to ¥25,493mn.
Overseas net sales increased 5.3% YoY to ¥56,855mn. The European market continued to drive earnings, supporting
record-high net sales for the third consecutive year. Sales in the European region jumped 32.3% YoY to ¥33,262mn.
The top line was boosted by strong demand from dealers despite price hikes, and by the consolidation of ISEKI
Germany from 2H FY12/22. ISEKI France also contributed to the solid earnings. Net sales in the North American
region decreased 26.8% YoY to ¥14,298mn. Despite a range of sales measures implemented by partner AGCO,
such as extending the term of interest-free loans, sales were impacted by a continued correction in the compact
tractor market. Net sales in the Asian region decreased 5.7% YoY to ¥8,139mn. Although shipments of production
parts for rice transplanters were strong in China due to factors such as the promotion of seedling cultivation in thesouth of the country, shipments to South Korea fell amid shrinking demand caused by weak rice prices and otherfactors.

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16 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Results trends

Overview of FY12/23 results(¥mn)
FY12/22
Results

FY12/23

vs. Net sales

Results

YoY

vs. Net sales

ChangeamountChange %Net sales

166,629-

169,916

-

3,287

2.0%

Gross profit

49,89029.9%

50,359

29.6%

469

0.9%

SG&A

46,35627.8%

48,105

28.3%

1,749

3.8%

Operating profit

3,534

2.1%

2,253

1.3%

-1,281-36.2%

Ordinary profit

3,762

2.3%

2,092

1.2%

-1,670-44.4%

Profit attributable toowners of parent

4,119

2.5%

29

0.0%

-4,090-99.3%

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

One of the key developments in FY12/23 was the Company’s decision in June 2023 to establish a budget of up to¥1.0bn to invest in early-stage venture companies. The Company has invested in startup company NEWGREEN(June 2022) as part of efforts to promote environmentally sound smart agriculture. MAFF’s Strategy for Sustainable
Food Systems (MIDORI) and discussions around revisions to the Basic Law on Food, Agriculture and Rural Areas
herald major changes to the business environment surrounding the Company and the structure of the agriculturalindustry itself. Against this backdrop, the Company created the investment fund to accelerate innovation throughcollaboration – one of the Company’s strengths – to help solve various issues faced by the agricultural industry
through business. Target investment fields are advanced technology and ICT that contribute to automation andelectrification, the environment, and improvements in food self-sufficiency, including participation in projects related
to Japan’s sixth agricultural industrialization. In these areas, the goal is to create new products, services and businessmodels through collaboration with venture companies in Japan and overseas. In line with this strategy, the Company
has recently entered into a capital and business alliance with WaterCell Inc. to jointly develop and sell agricultural
machinery-related systems. Since the start of their collaboration in 2018, the Company and WaterCell have beenpromoting efficient ICT-powered agricultural management by linking data between the ISEKI AGRI-SUPPORT farmmachinery data management system and the agri-note farm management support tool. By forming the capital andbusiness alliance, the goal is to further strengthen collaboration to help solve issues in the agricultural industry
through their business activities. Other developments in FY12/23 included a business alliance with Faeger and acollaboration agreement with Kagoshima Organic Farmer’s Association (Minamitane, Kumage-gun, Kagoshima
Prefecture) as part of moves to step up initiatives in environmentally sound smart agriculture.
2. Progress on the Mid-term Management Plan
While overall progress with fundamental structural reforms to improve capital efficiency and profitability has beenslower than expected, the Company has made steady progress with individual initiatives.
(1) Provision of the best solutions: Selection & concentration (domestic market)
In Japan, the Company continued to focus on sales activities aimed at large-scale farmers and it booked strong
sales of the newly launched BF series of mid-sized tractors.
(2) Provision of the best solutions: Selection & concentration (overseas markets)
Overseas, the European market remained strong, driving overall sales. In Europe, the Company is selling its
electric mower on a limited basis for now, but the model has been well received by the market and the Company isgathering customer feedback ahead of a full-scale launch. It is also steadily improving efficiency in the supply chain
and strengthening the sales structure, centered on ISEKI Germany and ISEKI France, contributing to earnings.

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17 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Results trends(3) Provision of the best solutions: Selection & concentration (product and development strategies)
In Japan, mid-sized tractor models, aimed at the volume zone, were revamped for the first time in 10 years, andthe new BF series was launched. Sales of the BF series have been strong, with its premium design features andimprovements to usability, comfort and safety well received by customers. Also, as noted above, the Company ispreparing to start volume production of electric mowers for Europe as part of its response to environmental issues.
(4) Provision of the best solutions: Business model transformation
Maintenance revenues remained strong, reflecting the Company’s shift to services as part of its ongoing businessrestructuring. In FY12/23, maintenance revenue was the main factor driving sales growth in Japan.
(5) Enhancement of corporate value by strengthening profits and reinforcing corporate governance:
Improving profitability (structural reform and improvement of management efficiency)
The Company is taking various steps such as rebuilding its production and supply chain system around PT
ISEKI INDONESIA, including relocating production of some products from the Matsuyama Plant in Japan to
ISEKI INDONESIA, to build a system capable of manufacturing products at optimal prices. However, more work
is needed to improve profitability. In response, the Company launched Project Z, a package of short- and medium-term sweeping comprehensive business structural reforms.
3. Financial condition and management indicators
With respect to the Company’s financial condition at the end of FY12/23, total assets were ¥217,102mn, for an
increase of ¥10,611mn relative to the end of FY12/22. Primary factors attributable to changes in the amount include
a decrease of ¥848mn in cash and deposits, against an increase of ¥8,535mn in merchandise and finished goods
due mainly to filling inventories that had been at a low level at overseas subsidiaries.
Total liabilities were ¥142,886mn, for an increase of ¥8,740mn. This mainly reflected increases of ¥2,865mn for
short-term loans payable and ¥8,356mn for long-term loans payable related to an increase in working capital suchas inventories. Total net assets were ¥74,215mn, an increase of ¥1,870mn. The main factors were an increase of¥1,013mn for valuation difference on available-for-sale securities and an increase of ¥672mn for foreign currencytranslation adjustments.
Looking at management indicators, the Company’s current ratio and fixed asset ratio are 120.8% and 146.8%,
respectively. The equity ratio was 31.9%. The equity ratio declined slightly from the end of the previous fiscal year,
but given the Company’s focus on paring back inventories, the ratio is likely to improve over the long term asinterest-bearing liabilities is reduced.

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18 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Results trends

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

FY12/20

FY12/21

FY12/22

FY12/23

Change87,15989,97991,103

109,414

115,322

5,908

8,404

10,787

14,85010,749

9,901

-848

Non-current assets

110,352

97,44996,581

97,076

101,780

4,704

Total assets

197,511

187,428

187,684

206,491

217,102

10,611

Total liabilities

128,259

125,009

121,123

134,146

142,886

8,740

Net assets

69,25262,41966,561

72,34574,2151,870

17,025

14,493

17,69021,131

20,474

-657

34.2%

32.4%

34.5%

32.9%

31.9%

Current assets
Cash and deposits

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

0.6%

0.9%

2.5%

1.9%

1.0%

ROE (return on equity)

1.1%

-8.8%

5.1%

6.2%

0.0%

Operating margin

1.8%

1.4%

2.6%

2.1%

1.3%

Source: Prepared by FISCO from the Company’s financial results■ Outlook
ISEKI forecasts steady sales and lower profits in FY12/24. Launched
Project Z – package of short- and medium-term fundamental
structural reforms to transform the business structure
1. Outlook for FY12/24
The outlook for FY12/24 consolidated results is for net sales to increase 0.0% YoY to ¥170,000mn, operating profit
to decrease 11.3% to ¥2,000mn, ordinary profit to decrease 52.2% to ¥1,000mn and profit attributable to ownersof parent of ¥400mn (profit of ¥29mn in the previous fiscal year). The Company sees net sales declining overseas,
but it forecasts broadly steady net sales YoY on a consolidated basis due to higher sales in Japan. It forecasts
operating profit and ordinary profit will decline due to the impact of ongoing production adjustments to improveasset efficiency and higher SG&A expenses, including personnel expenses and distribution costs.
The Company forecasts net sales in the domestic business will increase 1.8% YoY to ¥115,000mn. In terms ofthe market environment, it assumes continued weak demand, but it is targeting top-line growth by focusing on
expanding sales of large-size agricultural machinery and the BF series, a new tractor for the volume zone. Price hikes
are also expected to contribute to sales growth. Net sales in FY12/23 were impacted by production bottlenecks forlarge-size agricultural machinery due to supply chain disruption, but these bottlenecks have recently been resolved.
As production recovers, it aims to carefully capture market needs and expand earnings. Also, sales of the BF series
have been strong and are expected to contribute to earnings in FY12/24. Additionally, the Company will focus on
increasing sales of smart agricultural machinery in tractors and rice transplanters by stepping up demonstrations
when the new smart models are launched this spring. Based on the above, the Company forecasts net sales of¥46,000mn for agricultural machinery products, an increase of 2.2% YoY, and ¥43,700mn for implements, partsand repair fees, an increase of 2.8% YoY.

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19 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Outlook

The Company forecasts net sales in the overseas business will decrease 3.2% YoY to ¥55,000mn. By region, it
sees sales increasing in the North American market but contracting in the European, Asian and other markets. In
North America, it assumes continued sluggish demand in the compact tractor market, but expects the market tobottom. Against this backdrop, the Company plans to expand the top line by stepping up cooperation with AGCO
and implementing various sales initiatives. Price hikes are also likely to support sales growth. In Europe, sales are
expected to decline, but the Company forecasts continued high sales levels after steady business expansion inrecent years. We think the Company’s outlook for softer demand in Europe due to an economic slowdown and cuts
to national and local public budgets for landscape improvement projects looks slightly cautious. It plans to maintainits strong performance in Europe by strengthening sales and services, centered on European subsidiaries, and by
focusing on growing sales of consumer products. In Thailand, part of the ASEAN market, it expects demand toremain weak due to the lingering impact of drought, among other factors. Despite these challenges, the Company
will focus on turning round sales by signing up new dealers and reinforcing its sales network, centered on local
subsidiary IST. In the East Asian market, it expects sales to decline due to temporary inventory adjustments at a
distributor in South Korea. As a result, the Company forecasts net sales of ¥16,000mn in North America, an increaseof 12.7% YoY, ¥32,000mn in Europe, a decrease of 3.6%, and ¥6,400mn in Asia, a decrease of 21.0%.
2. Sweeping comprehensive business structural reforms under Project Z
As noted above, FY12/24 marks the first year of Project Z. Under Project Z, the Company aims to accelerate growth
while improving asset efficiency and profitability in a short- and medium-term time frame. In a first phase of rapid,
fundamental reforms, by 2025 the Company plans to integrate the management of manufacturing companies(scheduled for July 2024), merge regional sales companies (scheduled for January 2025), and improve productprofit margins. Manufacturing companies ISEKI-Matsuyama MFG and ISEKI-Kumamoto MFG will be integrated.
By merging these companies and consolidating human resources, investment and IT systems, the Company aims
to improve production efficiency, effectively utilize human resources, optimize assets, reduce inventories and lower
fixed costs. Meanwhile, regional sales companies in Hokkaido, Tohoku, Kanto Koshinetsu, Kansai Chubu, ChuShikoku and Kyushu will be merged into a single company to optimize inventory hubs, rebuild logistics systems andimplement centralized inventory management. The goal is to reduce distribution costs and inventories. Additionally,
the Company plans to improve product profit margins by focusing resources on a narrower range of development
models. Specifically, it aims to lift product development efficiency and improve product profit margins by reducing
the number of models and types by 30% or more based on two criteria: growth rate and market size. The Company
will implement these intensive, fundamental reforms in the short term while also planning further far-reaching reforms
aimed at increasing asset efficiency and profitability. These reforms will be announced before the end of 2024.

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20 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/■ Medium- to long-term growth strategy
Aiming for another 100 years, guided by the key word “change.”
Combining Project Z with the basic strategies of the Mid-termManagement Plan to improve profitability and accelerate businessexpansion
1. Mid-term Management Plan and Project Z
The Company is implementing various measures under its Mid-term Management Plan, which ends in FY12/25,
the Company’s 100th anniversary. It has been steadily rolling out a range of initiatives in line with the plan’s basic
strategies. However, as of the end of FY12/23, the Company’s transition to a business structure that can reliably
generate profits regardless of sales levels was incomplete. We believe the basic strategies are taking the Company
in the right direction, but measures to improve asset efficiency and profitability have been insufficient. To address
this, the Company formulated Project Z, which includes a further package of measures to accelerate growth while
improving asset efficiency and profitability in a short- and medium-term time frame. The sweeping comprehensive
business structural reforms are focused on three core themes – optimization of production, optimization of development and intensification of domestic sales. With these reforms, the Company is aiming for a consolidated operating
margin of 5% or higher, ROE of 8% or higher, DOE of 2% or higher and a PBR of 1.0x or higher in FY12/27.
Overview of Project Z

Source: The Company’s Project Z material

2. Mid-term Management Plan: Establishing a foundation of “change” for the next 100 years
The keyword of the Mid-term Management Plan is “change.” This expresses the desire of the Company’s aim to be
one that continues for another 100 years beyond 2025, and the main objective of the plan is to lay a foundation forthat purpose. It is largely divided into the following two basic strategies.
(1) P rovision of the best solutions: Focus on providing not only products but also services from tangible tointangible(2) E nhancement of corporate value by strengthening profits and reinforcing corporate governance: Make aprofitable corporate structure that can surely raise profits beyond sales ups and downs

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21 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Medium- to long-term growth strategy

Under these two basic strategies, the Company intends to focus on expanding business and improving profitability
under a basic strategy encompassing the four perspectives of “selection & concentration,” “business model transformation” (these two are included in “provision of the best solutions”), “improving profitability” and “ESG” (these two
are included in “enhancement of corporate value by strengthening profits and reinforcing corporate governance”).
Project Z is a package of fundamental structural reforms to be implemented in the short- and medium-term, targetingan improvement in profitability from three perspectives – optimization of production, optimization of development
and intensification of domestic sales.
Direction of the basic strategies and initiatives in the Mid-term Management Plan

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

1) Selection & concentration
The first example of a concrete initiative is “selection & concentration.” The Company will aim to efficiently utilize
the limited 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 the robot tractor TJV
series and Sanae Japan PRJ8 robot rice transplanter.

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22 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Medium- to long-term growth strategy

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 partner in
its global strategy, in an aim to expand its share of the compact tractor market, as well as plans to introduce new
eco-friendly products in response to growing environmental awareness. 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. (Plans
are to start mass production of highly commended electric mowers in 2024.) In addition, it made preparations torebuild 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 andaccelerate business with its Thai company IST as a starting point while developing the rice cultivation expertiseand its agricultural machinery it has amassed in Japan. It also plans to increase sales of production machineryfrom Indian agricultural machinery manufacturer TAFE, with which it has a business partnership. Under Project
Z, the Company has set out new targets for the pace of overseas business expansion, aiming for sales CAGR of
10% and operating profit CAGR of 20% through 2030.
In product development, particularly advanced development aimed at the future, the Company has set threeimportant measures: “globally strategic machines,” “development of electrified products,” and “developmentof smart agricultural machinery.” For globally strategic machines, it intends to reduce costs and improve theefficiency 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 adapted to Level 3 (fully unmanned and remotely monitored robotic agricultural machinery models)
for full-scale use. Going forward, 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 otherfactors into consideration, we at FISCO believe that focusing on the development of smart agricultural machinerywill be extremely important.
2) 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.
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 forcustomers. 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, andestablishes structures that 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, depending on the idea.
The Company will also collect data from this type of ICT agricultural machinery, and accelerate the flow of use
by customers. It will utilize data at sales sites and work to develop new services including maintenance, as wellas bridge the data to improvements in work styles. It also intends to utilize data for product development andproduction, and accelerate DX in such ways as improving productivity.

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

23 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Medium- to long-term growth strategy

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 maintenancebases and enhance these large-scale maintenance bases. Business model transformation is progressing steadily,with the Company becoming a driving force for increased domestic business sales in FY12/23.
3) Improving profitability
The Company will work on structural overhaul to stably increase earnings unaffected by external environment andimprove profitability. In specific terms, it improved the fixed cost ratio by consolidating functions, etc. that wereoverlapping at each production factory and reviewed segregation of in-house and external production, reduced
workloads by placing outside orders for a portion of parts, made business activities more efficient by introducing
IT, and improved asset efficiency by reducing inventory. The newly launched Project Z sets out specific measures
to fundamentally restructure the business, mainly targeting improvements in asset efficiency and profitability.
The aim is to accelerate the pace of improvement in profitability based on three core themes – optimization of
production, optimization of development and intensification of domestic sales.
With optimization of production, the Company will seek optimal allocation of manufacturing sites and models
produced, forward-looking capital investment and respond to the environment and enhance efficiency. First, under
an initial phase of intensive, fundamental structural reforms to be implemented in the short term, the Company
plans to integrate the management of manufacturing companies in July 2024. With optimization of development,
it has already been working to reduce development costs and improve efficiency by developing shared platforms,
but it plans to accelerate these efforts by narrowing down the number of models under development based on
two criteria: growth rate and market size. Specifically, it aims to reduce the number of models and types by 30%
or more to lift product profit margins, as well as improve efficiency by consolidating manufacturing processes
and back-office departments by integrating manufacturing companies. To increase product profit margins, itaims to reduce variable costs by 10% or more. With intensification of domestic sales, the Company will improve
management efficiency and reduce inventories by integrating the operations of regional sales companies. In
addition to implementing these intensive, fundamental reforms in the short term to increase asset efficiency andprofitability, the Company also intends to start rolling out a further package of sweeping comprehensive businessstructural reforms before the end of 2024 targeting all areas of the business.
4) 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 endorsementof the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Specifically, theCompany’s plans now entail achieving a 46% reduction in CO2 emissions by 2030 compared with 2014 at all of its
consolidated Group companies while also increasing its ratio of eco-products in domestic sales to 65% or moreby 2025, and establishing reduction targets in cooperation with suppliers, who account for 70% of transaction
amounts, and move forward on developing environmentally friendly products. Its CO2 emissions reduction targets
have been expanded from applying to global manufacturing sites to include all consolidated Group companies.
This will further accelerate ESG management. In addition to these promotions of environmental management,
the Company aims to contribute to realization of the SDGs through its business on three fronts: “supporting theenhancement of resilience in agriculture,” “landscaping for comfortable villages and towns,” and “environmental
preservation for a recycling-oriented society.”

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

24 26

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

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

9-May-2024
https://www.iseki.co.jp/global/english/ir/

Medium- to long-term growth strategy

For in-house activities, the Company intends to increase employee engagement by enhancing the work-lifebalance and ensuring diversity, among other things.
ESG investment has been spreading rapidly in recent years among institutional and private investors in response
to frequent natural disasters and human rights issues in supply chains, etc. In this environment, we at FISCO
predict that 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 sutainable
investment balance in total funds under management
Investment balance (left)(\mn)
600,000,000
500,000,000

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

400,000,000

61.9%

60.0%
493,597,729

41.7%

336,039,620

70.0%

310,039,275

50.0%
40.0%

300,000,000
231,952,250

30.0%

200,000,000

20.0%

100,000,000

10.0%

0

0.0%
2018

2019

2020

2021

2022

Note: The percentage shows the ratio of sustainable investment balance in total assets under management by respondent
institutions.
Source: Prepared by FISCO from the Japan Sustainable Investment ForumThe Company has also stated that management decisions will take into account the cost of capital and the shareprice. Given its current low level of profitability and asset efficiency, the Company plans to improve profitability,
asset efficiency and growth by steadily implementing the measures in Project Z while also targeting a PBR of 1.0x
or higher by stepping up IR activities and ESG initiatives. It says it will work to continuously increase corporate
value through priority investments of cash generated from improved asset efficiency and profitability in strategic
growth areas.

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

25 26

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

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

9-May-2024
https://www.iseki.co.jp/global/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). The Company paid a dividend of ¥30 for FY12/23. Its forecast for the FY12/24 year-end
dividend is ¥30 (dividend payout ratio of 169.6%). Also, under Project Z, it aims to achieve a DOE of 2% or higher
in 2027.

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

Dividend payout ratio (right)(%)

2335.450.0

2,500.0

40.0

2,000.0

30.01,500.0

20.0

30.0

1,000.0

30.0

30.0

30.0

30.0

10.0

500.0
93.7

21.2

16.5

FY12/21

FY12/22

169.6

0.0

0.0
FY12/19

FY12/20

FY12/23

FY12/24 E

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

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

26 26

Disclaimer
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◾ 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