ISEKI Report 2019

ISEKI Report2019

Achieving Harmony between Human Beings and the EarthContact about this ISEKI report

ISEKI Group supports the nationwide action“COOL CHOICE” for global warming
countermeasures.

Public & Investor Relations Section, ISEKI & CO., LTD.
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANTEL: +81(0)3 5604-7602 FAX: +81(0)3 5604-7701
E-mail: isk.info@iseki.co.jp
Issued in July 2019As a promotional partner, ISEKI
Group passes down the significanceof food production throughdelivering agricultural machinery.

ISEKI & CO., LTD

Message

Message

We strive to contribute to thecreation of a prosperous andsustainable society.

contents

A dream awaited by all the people on earth.
ISEKI Group is in pursuit of food production that secures our daily lives.
The growth of agriculture is a top-priority issue that holds the key toglobal food problems.
To realize a sustainable growth of agriculture in the future, ISEKI Groupwill contribute to the development of agriculture around the world.

Value creation of ISEKI Group

Message................................................................1

Value creation of ISEKI Group
Message from our President..............................3
Priority issues (materiality)..................................5
Value creation story...........................................7
Three strengths..................................................9Business development at ISEKI Group

Business development at ISEKI Group
Domestic business...........................................13
Overseas business............................................17
Development and production..........................21

Initiatives that support value creation
ISEKI Group’s stakeholders..............................25
Environment
ISEKI Group environmental management........26

Initiatives that support value creation

Environmental management............................27
GovernanceCorporate governance.....................................28
Risk management............................................30
Compliance......................................................32

Akio Kikuchi

Shirou Tomiyasu,

Representative Director,
Chairman & Executive Officer

Representative Director,
President & Executive Officer

Information included in this report

This report presents both financial and non-financial

As a general rule, this report covers the activities of ISEKI &information to introduce initiatives for improvement of theCo., Ltd. and ISEKI Group’s associated companies in Japan andcorporate value of ISEKI Group to a wide range of stakeholders

overseas. Notes will be added in this report when the range ofInformation presented on the company website
Various information that cannot be included in this report ispresented in the “About ISEKI” section of the company’s website.

including shareholders and investors in an easy-to-understandactivities and/or data is limited in certain part hereof.

Referenced guidelines

2019.

International Integrated Reporting Council (IIRC): “TheInternational Integrated Reporting Framework”
GRI*: “Sustainability Reporting Guidelines 4th Edition”
Ministry of the Environment: “Environmental Reporting
Guidelines (2012 Edition)” and “Guide to Descriptions inEnvironmental Reports (3rd Edition)”* GRI is an international organization established with the objective of
the creation and dissemination of international guidelines regarding
sustainability reporting by corporations.

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ISEKI Report 2019

Company information
Company information .....................................40“About ISEKI”
Information covered …https://www.iseki.co.jp/about/Company Information : Company outline, main locations,
R&D activities
Investor Information : Shareholder information, financial
results, IR briefing materials
CSR & Environment : Environmental site reports,
environmental, social and governance(ESG) data
Note on forward-looking statements
Forward-looking statements contained in this report wereprepared based on information available at the time of the
preparation and involve potential risks and uncertainties. Actual
results may differ from those expressed by the statements due tochanges in economic conditions and market trends.

Company informationmanner.

Financial data

Scope

Part of this report includes information in and after January

Consolidated Balance Sheets...........................36

Consolidated Statement of Cash Flows............39

Editing policy

From January 2018 through December 2018

Financial and non-financial highlights..............34

Consolidated Statements of Income................38

Editing policy

Covered period

Financial data

ISEKI Report 20192

Message from our President

Message

Value creation of ISEKI GroupWe aim to resolve social issues through our business while enhancing corporate value.

Representative Director,
President & Executive Officer

Since its establishment in 1926, with the passion of our founder
Kunisaburo Iseki, “free farmers from exhausting labor” as thecornerstone, ISEKI Group has been striving to contribute to themodernization of Japan’s agricultural industry as an integrated
manufacturer specializing in agricultural machinery. Over thisperiod, we have consistently pursued efficiency and laborsaving
advances in agriculture and have continued to provide products
to the market by pioneering the development of a significant
amount of revolutionary agricultural machinery and facilities.
In light of the increase in the global population, food issues,
food self-sufficiency, land conservation, and global
environmental issues, the role agriculture plays is significant,and consequently, we believe that the social mission of an
agricultural machinery manufacturer is becoming increasingly
important.

To contribute to agriculture both in Japan and throughout
the world, ISEKI will continue its business activities under thebasic business philosophy to “provide products that satisfy
customers.”
We believe that such activities will lead us to makecontributions to the “Sustainable Development Goals (SDGs)”
adopted by the United Nations Summit with the targets to beachieved by 2030.
We are committed to making ongoing efforts to further
enhance our corporate value with the aim of “contributing to
the creation of a prosperous and sustainable society,” whileworking on solving various types of social issues in cooperation
with our stakeholders.

Management Philosophy<Spirit of ISEKI – Passion of founder –><ISEKI Group Code of Ethical Behavior>“I want to free farmers from exhausting labor”

In order for ISEKI Group to fulfill its responsibility as amember of society and achieve development together
with society, ISEKI Group has established the “ISEKI
Group Code of Ethical Behavior,” which is comprised of
the common sense and basic <Fundamental principles>
to be observed by all of its members, as well as themore specific <Code of conduct>, both of which serveas the basis for its day-to-day activities.

Agriculture was hard work, done by hand and with thehelp of animal power. To change this, Kunisaburo Iseki,
the founder, realized laborsaving through mechanizationand endeavored to further develop agriculture.
“We produce good machinery that customers highly
praise,” Kunisaburo used to say. He devoted himself
to provide products that made customers happy. The
founder’s passion has been inherited in an unbroken line
until today as “Iseki’s spirit.”<Company Motto>
Our management philosophy is to provide:

1. Products that satisfy customers;
2. A stable workplace to the employees;
3. Appropriate dividend to theshareholders;
and thereby we will fulfil our social mission.

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ISEKI Report 2019

<Fundamental principles>
1. To comply with laws andregulations
2. To respect basic human rights
3. To respect social common sense
4. To disclose information properly
to fulfill social accountability
5. To make efforts forenvironmental preservation

Contributing to global needs to increase food production andefficient food production
The total world population in 2050 is expected to reach 9.7 billion
people, so there is a need to significantly increase food productivity.
To cope with the recent global needs to increase food production,
ISEKI Group will contribute to efficient food production by improving
productivity and saving labor through the use of agricultural
machinery. In addition, our products are used not only in agriculture
but also in landscaping such as lawn mowing, cleaning, and snow
removal on roads, mainly in Europe and America, and are wellreceived in over 100 countries and regions. Identifying Europe, North
America, China, and ASEAN as four core markets, ISEKI Group is
actively ascertaining the various needs in these countries and regions
to provide products accordingly.

Contributing to the development of a recycling-oriented society
Introduced an environmental management system on agroup-wide basis
With respect to environmental issues such as climate change, ISEKI
Group has positioned a contribution to the development of arecycling-oriented society as one of the management issues of thehighest priority and introduced an Environmental Management System(EMS) on a group-wide basis, covering overseas offices as well.
In addition to our domestic and overseas manufacturing bases,
non-manufacturing bases such as sales companies are involved inenvironmental conservation activities in tune with their businessactivities and local characteristics.
Promoting the development and spread of products that
reduce environmental impacts (eco-products)
ISEKI Group has established tangible environmental targets and thepromotion and management system since the initial productdevelopment phase in an effort for environmental preservation.
To convey the results of these approaches in an easy-tounderstand manner to all stakeholders and promote thedissemination of eco-products, ISEKI Group has set environmentallyfriendly design standards, and we are promoting the implementationof an “eco-product certification system.” Under this system, basedon the evaluation results, environmental labels are used only for
products that meet our own standards.

Human resource development
Commitment to human resource development and diversity promotion
ISEKI Group believes that what contributes to the solution of various
issues is people. We realize that “human resource development” isessential for us. ISEKI Group has promoted not only the improvement
and succession of skills and techniques indispensable at development
and production sites and the development of human resources whoare capable of offering comprehensive farm business proposals to
our customers or working actively in global fields, but also diversity
in the utilization of a wide range of human resources.
Engaging in activities to promote the active roles of women and children
In terms of human resource development, we actively engage inactivities aimed at the active roles of women in society and theValue creation of ISEKI Group

Demonstrating ISEKI’s strengths and working on sustained
improvement of corporate value
ISEKI & Co., Ltd. is going to mark the 100th anniversary of its
foundation in 2025.
It has upheld the Mid-term Vision of establishing a firm position as
an integrated manufacturer specializing in agricultural machinery
also in the global market by the 100th anniversary of its foundation.
ISEKI is committed to developing products that can compete in the
global market and offering proposals while demonstrating its
strengths. Through such group-wide efforts, ISEKI aims to strengthen
its responses to structural changes in the domestic agriculturalindustry, expand its overseas businesses and strengthen its
organization and governance on a group-wide basis, which will leadto the sustained improvement of corporate value.

Business development at ISEKI Group

Shirou Tomiyasu

Establishing a firm position in domestic and world market

Mid-term Management Plan – Henkaku (Change) –Opening up a new future through creating new value withthe essence of ISEKI
In 2016, ISEKI has formulated the “Mid-term Management Plan”
covering a five-year period (2016-2020) as its significant step toward
the target vision to be achieved in 10 years. In 2018, ISEKI hasreviewed the strategies for the three years up to 2020 so that the pathwill surely lead us to the realization of the plan. In light of the changes
in the market environment and other factors since the formulation,
the time limit to achieve the numerical targets was reset to 2022. ISEKI
is going to implement five basic strategies under the Mid-termManagement Plan with “Henkaku (Change)” as the keyword.
ISEKI strives to open up a new future through CSR activities
promoted and strengthened mainly by the company’s executives tomeet the demands of society and create value with the essence of
ISEKI utilizing our own strengths.

Initiatives that support value creation

Support from both hard and soft aspects for the growth anddevelopment of Japan’s sustainable agriculture
Japan has been facing various issues including a decline in the
agricultural workforce, an aging population, an increase in deserted
farmland, etc.
For the sustainable growth and development of Japan’s
agriculture, ISEKI Group provides support from both hard and soft
aspects. It offers not only improved agricultural efficiency andproductivity, the utilization of ICT and robotic technologies, as wellas energy-saving, low-cost, and environmentally-friendly products,
but also research, verification, dissemination, support, etc., ofadvanced farm business technologies. ISEKI Group also makes
group-wide efforts toward dietary and agricultural education in an
attempt to improve food self-sufficiency.

development of children. ISEKI Group is also committed to providing
learning opportunities including workshops for female farmers whoplay an important role in agricultural and regional activities as well as
food and agricultural events and craft events for children who willbear the future.

2020 Mid-term Management Plan [2018-2020]
Corporate philosophy
We are contributing to agriculture both in Japan andthroughout the world byFinancial data

Contributing to sustainable agriculture in Japan and around the World

“providing products that satisfy customers”
Mid-term Vision

2025 marks the 100th anniversary of ISEKI Group“To establish a firm position both indomestic and world market”
Basic strategies
Keyword Henkaku (Change)”“−Ensuring management transparency−−Commitment to earnings−

Company information

We strive to contribute to
the creation of a prosperous
and sustainable society.

Five basic strategies❶ Strengthen responsiveness to drastic changes inagriculture in Japan❷ Expand overseas businesses❸ Strengthen profitability by optimizing development& production❹ Make active capital investment for growth❺ Enhance corporate value by reinforcing personnel &corporate governance

ISEKI Report 20194

Priority issues (materiality) of ISEKI GroupIn order to achieve sustainable growth and increase corporate value, ISEKI Group has identified priority
issues that link social issues to be addressed and management strategies together. We will endeavor tofulfill our social responsibility through CSR activities that focus on stakeholder communication.

Message

Priority issues (materiality)

Priority issues to be addressed by ISEKI GroupThe “materiality for stakeholders” and the “materiality for ISEKI Group” are evaluated and eight items with particularly high materiality
are positioned as priority issues. The CSR-promotion departments have established initiatives and targets (KPIs) for the promotion of
CSR that are linked with the Mid-term Management Plan and business plans. In addition, the relationship between the priority issues
and the 17 SDGs is summarized as shown in the figure below. ISEKI Group will help satisfy the demands of global society through its
business activities.

Value creation of ISEKI Group

Value creation of ISEKI Group

Eight priority issues

Process for making decisions on priority issues

Stakeholders, etc.

ISEKI Group has identified social issues to be addressed by itself, evaluated them from the perspectives of the “degree of interest of
stakeholders” and the “materiality for ISEKI Group” to determine the priority issues, and thereby determined the “priority issues to beaddressed by ISEKI Group” as part of its CSR activities.

Priority issues

Related key SDGs

Provision of products and services that satisfy customers
Customers

addressed by ISEKI Group

STEP2

Evaluation of materiality
Identification of priority issues

ISEKI Group evaluated the “degree ofinterest of stakeholders” and the“materiality for ISEKI Group” of theidentified social issues to determine
the priority issues for each stakeholder
in association with the Group’s
management strategies.

Employees

Improvement of employee satisfaction (ES)Suppliers

Fair and equitable trade

Priority issues (materiality)

Local community

Contribution to society and the local community

Environment

Environmental preservation that allows for thecreation of a sustainable society

Initiatives that support value creation

Identification of social issues to be

To respond to the diverse needs and demands that are obtained
through communication with its stakeholders, ISEKI Groupidentified social issues to be addressed by itself in reference toISO26000, international standards related to corporate social
responsibility, the United Nations Sustainable Development Goals(SDGs), etc.

degree of interest of
stakeholders

STEP1

Business development at ISEKI Group

Provision of high-quality and safe products and services

materiality for ISEKI Group

STEP3

Determination of priority issues

The identified eight priority issues are determined as the “priority
issues to be addressed by ISEKI Group” through deliberation by
the Board of Directors.

Shareholders
andinvestors

Management

Improvement of corporate governanceThorough implementation of compliance

System for promoting CSR

These refer to the “Sustainable Development
Goals” laid out in the 2030 Agenda for
Sustainable Development which was adopted
at the United Nations Sustainable Development
Summit in 2015.
The SDGs are common global targets for all
developed and developing nations to realize asociety that balances the three dimensions of
economy, society, and environment by 2030,
and consist of 17 goals and 169 associatedtargets.

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ISEKI Report 2019

Major meeting bodies
Activities in general

Public Relations Liaison
Committee

Customers(products)

Product Planning Committee
Advanced Technology
Strategic Committee
Quality Improvement
Committee

Employees

Human Resources Committee

Environment

Environmental PlanningGroup Meeting

ComplianceManagement Supervisory
Committee

ISEKI Report 2019

Company information

Sustainable Development Goals (SDGs)

The “Corporate Social Responsibility Committee” is in place todiscuss CSR-related topics at ISEKI Group. The committee ischaired by the director in charge of the Corporate Planning
Department, a CSR-promotion department, and is comprisedof the members of the Directors’ Operation Committee fordeliberation and the department heads of CSR-promotion
departments for promotion, and promotes management
activities based on the PDCA cycle.
Meetings of the Corporate Social Responsibility Committee
are held twice a year to deliberate matters including the visionand strategies related to CSR management, review of priority
issues to be addressed by ISEKI Group, and initiatives topromote CSR, and manages the progress of such matters.
Upon deliberation, the Committee submits important mattersto the Directors’ Operation Committee and the Board of
Directors for their decision.
In terms of CSR promotion activities, departments in charge
manage the implementation and progress of major initiatives,
while relevant meeting bodies report to the company’s
executives and conduct evaluation.

Corporate Social Responsibility Committee

In September 2015, the United Nations Summit formulated the“Sustainable Development Goals (SDGs)” comprised of 17 goals and
169 targets to be addressed in a joint effort by the whole world toattain a sustainable society. ISEKI Group is committed to contributing
to the demands of global society through its business activities.

Financial data

For the details of initiatives and targets in CSR activities, please refer to our website.

6

Social issues and needs

The ISEKI Group has been engaging in business activities that are founded on its corporate philosophy andgovernance and combine our unique strengths with development, production, and sales and services thatleverage the capital supporting us, such as human resources and intellectual property. In doing so, we havebeen providing customers with products and services that meet a variety of needs, thereby creating social andeconomic value. By continuing this cycle of value creation, we strive to contribute to solving social issues inagriculture and other areas, while achieving sustainable growth and enhancing corporate value, and ultimately
contributing to the creation of a prosperous and sustainable society.

Structural changes in Japan’s agriculture

Changes in global population (population growth)

Environmental issues such as climate change● Labor shortage due to a decline in and● Stable food supply● Labor shortage due to reduced agricultural● Climate change● Reduction of● Laborsaving and improved productivity through● Needs for machinery to be used in environmental

aging of the agricultural workforce● Introduction of large-scale farming andcrop conversion● Dissemination of smart agriculture

workforce resulting from economic development
agricultural mechanization

environmental burden

Value creation of ISEKI Group

Value creation by ISEKI Group by utilizing
our unique strengths

Message

Value creation story

Value creation of ISEKI Group● Global warming● Biodiversity

and landscaping improvements

Intellectual property

Three strengths that support ISEKI Group■ Provision of agricultural machinery contributing tosolving social issues● Realization of laborsaving and highly-profitable agriculture● Promotion of success of new farmers and female farmers

A high level oftechnologicalcapabilities

Support capabilities
to offer farmbusiness
proposals

A high level of technologicalcapabilities and intellectual
properties backed by patents held

Manufacturing baseInnovation
based oncollaboration● Agricultural mechanization and productivity improvement indeveloping nations■ Creation of diverse human resources and provision of

rewarding workplaces■ Mutual sustainable growth and improvement ofcorporate value with suppliers■ Contribution to the development of a recycling-oriented society

For more details, please refer to p. 9 to p. 12.

■ Revitalization and development of local communities

Combination
Economic value

Production sites in Japan and overseas

Base for supporting to offer
farm business proposals

Social value(Value for stakeholders)(Value for ISEKI Group)

Domestic business, overseas business,development, and manufacturing

Dream Agricultural Research Institute■ Improvement of corporate value through sustainable growth■ Enhancement and development of trusting

relationships with stakeholders■ Improvement of corporate brandNetwork
Collaboration with partners,
research institutions,and universities in Japanand overseas

Development

Mid-term “To establish a firm position both in
Visiondomestic and world market”

Mid-term Management Plan
Numerical targets

Initiatives that support value creation

Diverse human resources thatenable ISEKI Group growthExperts specializing in the fields ofdevelopment, production, and sales
and services

Products and services
in response to diverse needs

Financial data

Human resources

Business activities of ISEKI Group

Contributing to the creation of aprosperous and sustainable society

Capital that supports ISEKI Group

Business development at ISEKI Group

Resolution of social issues and response to needs

190.0 billion yen
Overseas sales ratio ............................. 40%
Operating income .............................. 9.0 billion yen
ROE ..................................................... 8.0%
Dividend per share .............................. 50 yen

Financial capital
Source of business activities
and growth investments

Production

Sales andservices

Company information

Consolidated net sales ................

For more details, please refer to p. 13 to p. 24.

Corporate philosophy and governance

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ISEKI Report 2019

ISEKI Report 20198

Since its foundation in 1926, ISEKI Group has beendeveloping groundbreaking agricultural machinery
ahead of the rest of the world and has brought
innovation to agriculture and society. ISEKI’s high levelof technological capabilities is backed by patents wehold.
For more details, please refer to p. 10 (p. 24 for patents).

Strength02

Support capabilities to offer
farm business proposals

Strength

Innovation based on collaboration
We work together with partners in each field and eachregion in Japan and overseas to accelerate thedevelopment and provision of groundbreaking products
and services and global operations.
For more details, please refer to p. 12.

ISEKI Report 2019

Value creation of ISEKI Group“Iseki Farm Implement Trading Co.” wasestablished and a fully-automated ricehuller was produced as the first product.

1963

1966

Technology
collaboration with
Porsche-Diesel
Pioneered technology collaboration
with a foreign-made tractor in the
agricultural machinery industry.
Porsche’s superior design concept
was employed in our tractors formany years.

Development of world’s
first auto-threshingcombine harvesters
Enabled the process from reaping tothreshing to finish 16 times faster.
Popularity was achieved due to its highefficiency, small-size and light weight,
and reasonable price, with production
unable to satisfy the high demand.

Development of two-wheel ricetransplanters equipped withbackward-tilting seedling tanks
After much trial and error,
succeeded in developing
two-wheel rice transplanters
equipped with backwardtilting seedling tanks
that used a plastic
float. Birth of Sanae,
a synonym for ricetransplanters.

ISEKI’s agricultural machinery
contributing to significant
labor-saving and highly profitable agriculture

2009
Development of the industry’s fastest
auto-threshing combine harvesters
Developed theindustry’s fastest
combine harvester
capable of six-row
reaping with amaximum working
speed of 2.0m/s.
Also developed theindustry’s firstcombine harvester
capable ofseven-row
reaping.

2018
Development ofmannedmonitoring-based
robot tractors
Realized significant laborsaving in farming. This typeof agricultural machinery was
the first big step toward thefuture of agriculture.

9

Established with fullyautomated rice hullers

1971

Technologies supporting changes inJapanese agriculture that result fromlabor shortages due to a decline in andaging of the agricultural workforce, andthe introduction of large-scale farming

We offer comprehensive farm business proposals andsupport from both hard (agricultural machinery) andsoft (production management and advanced farmbusiness technologies) aspects, an initiative unique to an
integrated manufacturer specializing in agricultural
machinery. In addition, we are committed to developing
experts on a group-wide basis to further strengthen our
support capabilities to offer farm business proposals.
For more details, please refer to p. 11 (p. 16 for human resource development).

03

ISEKI agricultural machinery that
contributes to efficiency
improvement and laborsaving

1926

Business development at ISEKI GroupA high level of technologicalcapabilities
Creation of social value

01

With the philosophy of our founder, “free farmers from exhausting labor,” ISEKI Group has
consistently pursued efficiency and laborsaving advances in agriculture and have developed asignificant amount of revolutionary agricultural machinery and facilities with ISEKI’s unique
technologies that meet the changes and needs of agriculture and social issues.

Agricultural mechanization supported
post-war Japan’s food shortage andrapid economic growth

Creation of economic value

Strength01

A high level of technological capabilities

1978
Development of rideon rice transplanters

1986

Led the industry in developing
ride-on rice transplanters withproducers troubled bymanpower shortage and ISEKI
coming together. It became theJapanese rice transplanter
standard.

A rotary-type transplanting
rod that has changed the times

Initiatives that support value creation

Three strengths that support ISEKI Group’s value creation are “a high level of technological capabilities,”“support capabilities to offer farm business proposals,” and “innovation based on collaboration.” Throughbusiness activities that combine these strengths cultivated over the years, we will continue to generate
economic value as well as social value.

Strength

Developed a rotary-type transplanting rod that
could plant two seedlings per rotation fromthe conventional crank-type (one transplanting
rod per row). Work efficiency doubled.

1988
Birth of Naueru System for themechanization of vegetable farming
Developed our original“Naueru Pot Seedling”
vegetable seedling thatmainly used paper pots andnursery soil and the“Naueru PV101”
fully-automated vegetabletransplanter for planting
the seedlings.

2016

2015

Development of industry’s
first variable fertilizing ricetransplanter

Development ofindustry’s firstplant growth
diagnosis device
Measures the photosynthetic
abilities of plants andvisualizes the conditions ofplants invisible to the humaneye. Contributes to optimal
control and growing by
preventing disease.

2018
Development of industry’s firstwalking-type daikon radish harvester
Industry’s first harvester that
contributes to reducing the burdenof pulling up
daikon radishby hand.

Financial data

Three strengths that support ISEKI Group

MessageThree strengths

Groundbreaking rice transplanter that adjuststo the appropriate amount of fertilizer while
rice planting. Contributes to lower fertilizer
costs and reduced plant lodging.

Company information

Value creation of ISEKI Group

Introducing to theworld technologies
developed in Japanover the years

ISEKI Report 2019

10

02

ISEKI works to help producers attain agriculture full of dreams (i.e., profitable agriculture) byproviding wide-ranging farm business proposals and supports from both hard (agricultural
machinery) and soft (production management and advanced farm business technologies)
aspects, with the Dream Agricultural Research Institute acting as a strategic hub.

Dream Agricultural Research Institute
The Dream Agricultural Research Institute works on initiatives
for the research, verification, and dissemination of smart
agriculture that utilizes advanced technologies and advanced
farm business technologies by strengthening collaboration withnational and local governments, research institutions,
universities, JA, corporations, etc. We are reinforcing theGroup-wide development of human resources who canundertake comprehensive farm business proposals and support
that cover not only agricultural machinery but also production
management and advanced farm business technologies, andare working to further improve our support capabilities to offer
farm business proposals.

Strength

03

Message

Support capabilities to offer farmbusiness proposals

Innovation based on collaboration
ISEKI Group develops and provides innovative products and services in collaboration withnational and local governments, private-sector companies, research institutions, anduniversities, as part of its business activities. In addition, we are accelerating our global
expansion by exploring new markets through collaboration with leading strategic partners ineach region.

Value creation of ISEKI GroupStrengthThree strengths

Collaboration with national and local governments and private-sector companies
In addition, the Dream Agricultural Research Institute accepts
inspections by agriculture-related parties including producers,
sending out various types of information by making proposals
and holding seminars tailored to customer needs at the exhibition
hall and demonstration field.

Number of visitors for inspection

Approximately 8,500 (in total as of June 2019)

Initiatives to realize smart agriculture combining innovative technologies

ISEKI Group engages in various activities in collaboration with local
governments and private-sector companies. As one of these activities,
ISEKI Co., Ltd. and ISEKI Kanto Koshinetsu are participating in the“Smart Agriculture Inter-Business Cooperation Demonstration Project”
by Niigata City, and are working toward realizing smart agriculture
combining innovative technologies.

Business development at ISEKI Group

Value creation of ISEKI GroupFor more details, please refer to p. 16.

During the field visit of the G20 Niigata Agriculture Ministers’Meeting held in May 2019, guests were introduced to Japan’s
leading smart agriculture using smart agricultural machineryand agricultural ICT equipment, which Niigata City has beenworking on in partnership with various companies.
As part of the event, we introduced our variable fertilizing
rice transplanter with a straight-travel assisting function anddemonstrated manned monitoring-based robot tractors.

Initiatives that support value creation

Field visit of the G20 Niigata Agriculture Ministers’ Meeting

Collaboration with strategic partners

A wide variety of activities aimed at research, verification, and dissemination
With the aim of addressing various needs, the institution supports
customers’ farm management by providing methods and knowhow of using agricultural machinery for crop conversion on ricepaddies.

 esearch and verification concerning cultivation technologies inRcollaboration with local governments, research institutions,
universities, companies, etc.
Fostering the dissemination of smart agricultureUtilization of rice paddies (conversion into soybean, barley orvegetable farming)
Support aimed for obtaining GAP certification
Proposing cultivation technologies to entrants from otherindustries and new entrants
Support for cultivating regions’ traditional crops
Support for restoring deserted farmland and regional
revitalization in collaboration with local governments, etc.
Working on a project to support female farmers in Japan(“YUMEARU NOGYOJOSHI OEN” project)

In our overseas businesses, we ensure the market-in
approach in each overseas market throughcollaboration with major strategic partners, as well as
the existing community-based network in eachregion, and provide products that meet diverse
needs.

ISEKI Europe
ISEKI France
ISEKI Germany
ISEKI U.K.

Dongfeng Motor(China and theASEAN countries)

TAFE

AGCO

(North America andthroughout the world)(India)Mitsubishi Corporation(Thailand and neighboring
countries)

RUTAN(Indonesia)

Financial data

Exhibition hall

Joint development with research institutions and universities
ISEKI Group engages in joint research and development of agricultural
machinery through collaboration with testing research institutions,
universities, and national and local governments in order to speed up
technology development and improve efficiency.

Company information

External view

Products developed by joint research
Plant growth diagnosis device
The industry’s first plant growth diagnosis device jointly
researched and developed by Ehime University and ISEKI & Co.,
Ltd. By measuring and digitalizing the growth state of plants
without any contact, the device enables labor-saving and early
detection and prevention of crop diseases, contributing tostable cultivation.
Support aimed at obtaining GAP certification

11

ISEKI Report 2019

Research and verification in rice paddy cultivation

ISEKI Report 201912

Domestic businessBusiness development at ISEKI Group

Message

Domestic businessMessage from the General Division Manager of the Business Division

Social issues and needsA decline in and aging of the agricultural workforce(60% of the total are 65 years or older)Introduction of large-scale farming(increasing share of area used by farmers)
Agricultural land area (10,000 ha)
Area used by farmers (10,000 ha)
Share of area used by farmers (%)

Moving up to 80%
49.1

38.5
504

483

17.1

27.8

86
1995

134
2000

469

181

2005

459

221

2010

ISEKI Report 2019

Almost every farmer practices agriculture byusing data

2023

80% of the entire agricultural land area isutilized by farmers (as of the end of FY2013:
48.7%)

2023

40% reduction in rice production cost forfarmers compared with 2011 (production in
FY2011: ¥16,001/60kg)

2019

Accomplish export amount of ¥1 trillion ofagriculture, forestry and fisheries products/
foods (¥449.7 billion in 2012)

227

2015

Source: the “Survey on Community-based Farm Cooperatives”
and “Statistics on Cultivated Land and Planted Area,” publishedby the Ministry of Agriculture, Forestry and Fisheries

13

2025

452

Value creation of ISEKI Group

ISEKI Chugoku

ISEKI Tohoku
ISEKI Kanto Koshinetsu

ISEKI Kyushu

ISEKI Shikoku Nishioka Shokai

Ishikawa Shokai
ISEKI Kansai Chubu
Mie ISEKI Sales
Nara Iseki Sales

Building a stable revenue base
To strengthen profitability, we are overhauling our revenue andcost structure by expanding the sales of implements, parts,
second-hand machinery, repair fees, and other agricultural
machinery-related products in particular, and building a stable

The first Service Skills Contest

revenue base immune to market trends. In 2018,
representatives selected from sales companies across thecountry participated in the first Service Skills Contest with theobjective of further improving service capabilities.

Compete for accuracy, speed, and attention to details in tractor inspection
and maintenance

Establishment and improvement of large maintenance and service facilitiesR eforms across the agriculture, forestry, andfisheries industry and KPIs for realization ofsmart agriculture, forestry, and fisheries

50.3

Gunma ISEKI Sales
ISEKI Hokuriku

To cope with the introduction of large-scale farming, ISEKI
Group has been establishing and improving sales offices
centered on large maintenance and service facilities nationwide

as well as relocating personnel. By doing so, ISEKI Group has
been developing its sales and service systems into wider areas
to achieve greater efficiency.

Financial data

Director & Managing Corporate Officer,
General Division Manager of the Business
Division

ISEKI Hokkaido

Company information

Yukio Nawata,

Reorganization of sales company structure
Agriculture is a business rooted in local communities. As such, ISEKI
Group runs a wide-area sales network across the country.
In addition to improving management efficiency, we are building
a sales and service system that enhances our ability to addresschanges in the market environment and diversifying needs bymaking effective use of management resources held by our sales
companies. We reorganized our sales companies on January 1,
2019, to create ISEKI Kanto Koshinetsu and ISEKI Kansai Chubu.

Business development at ISEKI Group

Agriculture in Japan has been facing the rapid advancement of structural changes,
such as the introduction of large-scale farming due to the consolidation of farmland,
conversion into field crop and vegetable farming, the entrance of corporations into
the agricultural industry, the expansion of the market size due to the sixth sector
industrialization, etc., owing to the structural reform that aims to transform
agriculture into a growth industry. Meanwhile, the labor shortage in agricultural
fields due to the decline in and aging of the agricultural workforce is becoming
serious in farm management, raising a need to address these issues. Furthermore, insolving these issues, there are growing expectations for smart agriculture that aims
to further improve productivity by utilizing advanced technologies such as robotic
technology and ICT.
We are strengthening responses to changes in the market from both hard andsoft aspects, with a basic strategy of “strengthening responsiveness to drasticchanges in agriculture in Japan.”
In hard aspects, ISEKI Group has launched variable fertilizing rice transplanters andstraight-travel assisting rice transplanters to the market ahead of industry peers. We
have also linked our smart agricultural machinery with other companies’ farmbusiness management software and carried out trial sales of manned monitoringbased robot tractors. We will continue to quickly respond to the smart agricultural
machinery market. We will also further expand our lineup of low-priced simple
machinery and vegetable farming machinery to meet market needs.
In soft aspects, we are developing human resources who can respond to market
needs, mainly through the Dream Agricultural Research Institute and ISEKI Global
Training Center, both of which research and verify advanced farm businesstechnologies and support dissemination of the technologies to users. Toward a newera of agriculture, we will strengthen support capabilities to offer farm businessproposals that are the strengths of ISEKI Group.
We will continuously contribute to attaining customers’ farming full of dreams byproposing “laborsaving and highly-profitable agriculture” as the “Supporter for thefarming industry full of dreams.”

Developing sales and service systems into wider areas

Initiatives that support value creation

We will support new-age agriculture to attain a farming
industry full of dreams (i.e., profitable agriculture).

Source: “Future Investment Strategy 2018”

Ogaki Office, Gifu Branch, ISEKI Kansai Chubu

Okitama Chuo Office, ISEKI Tohoku

ISEKI Report 201914

Products tailored to a wide variety of needs

Human resource development

Products that support large-scale farming

We are committed to developing experts on a group-wide basis to further strengthen our support capabilities to offer farm business proposals.

HJ series combine harvesters(Yield combine model)

TimingTransplanting
cultivation

April
Beginning Middle

May
End

SowingGrowingseedling
stage

Beginning Middle

Transplanting
stage

June
End

Beginning Middle

Tillering stage

July
End

Beginning Middle

AugustEnd

Beginning Middle

SeptemberEnd

Beginning Middle

NEW!

October
Beginning Middle

End

Ripening stage Harvesting stage
Young panicle Booting stage
formation stage
Heading Grain-filling stage
Moisture value
stage
Leaf color
Protein content ratio
assessment
Harvesting efficiency
Topdressing
improvement
Drying/hulling
Reaping

Tilling rice paddies Soil puddling
Fertilizing Rice transplanting Water management, topdressing, weeding, pest control

ISEKI smart
agricultural
machineryEnd

GrowthNEW!
“Iroha” and “Appare”
diagnosis
Growth“PaddyWatch”and “Mimawari-kun”
management

Strengthening of technical service capabilities

Various training programs provided by the ISEKI Global
Training Center (technical services)

Value creation of ISEKI GroupALL JAPAN training (smart agriculture, use of large-sized machinery)Support Proposal Results Presentations (farm business proposals)

Development in communities in collaboration with national and local governments andprivate-sector companies (operation of branches of the Dream Agricultural Research Institute)

Smart agriculture based onrice cultivation calendar

Work

In addition, as a proposal for an
integrated system of smart
agriculture in the rice paddy
cultivation machinery system, westarted handling growth
management and diagnostic
products from our new ICT
partners (vegetalia, inc., SEKISUICHEMICAL CO., LTD., SkymatiX,
Inc., Kokusai Kogyo Co., Ltd.).

NP series rice transplanters(Variable fertilizing model with straight-travel assist)

Strengthening of farm business proposal capabilities

Business development at ISEKI Group

that can centrally manage information obtained from these
agricultural machines. We visualize information on agriculture
and support producers’ strategic farm management.

To save labor, reduce costs, and improve quality, we provide
smart agricultural machinery that uses advanced technologies
such as ICT and robot technology, and farm business software

TJW series tractors(Automatic steering ready model)

Message

Domestic business

ISEKI smart
agricultural
machinery

ISEKI has been working on initiatives for community-based research, development and verification as well as farm business proposal
and dissemination activities attuned to customers’ farm management based on the knowledge and technologies acquired throughvarious training programs at sales subsidiaries across Japan, in collaboration with local governments, research institutions, universities,
JA, corporations, producers, etc.

Initiatives concerning data-based wetland rice cultivation and management

ISEKI Co., Ltd and ISEKI Kanto Koshinetsu Co., Ltd. are participating in the “Smart Agriculture Inter-business Cooperation Demonstration
Project” at Niigata City that has received designation as a National Strategic Special Zone. Under the project, the participating corporations
are combining their respective innovative technologies and making efforts to achieve further laborsaving, lower costs and higher quality ofrice farming by consolidating and centrally managing
information obtained using ISEKI’s smart agricultural
machinery and participating corporations’ remotesensing systems (drones and artificial satellites) in thefarm business management software.

Initiatives that support value creation

Business development at ISEKI Group受賞
Received“2018 Development Award” of theJapanese Society of Agricultural Machineryand Food Engineers

Products tailored to the vegetable farming market
The vegetable farming market is expanding, and as a result,demand for vegetable farming machinery is increasing. We
seek to further expand sales of our core vegetable transplantersin particular, with our extensive lineup of the fully-automatedFully-automated vegetabletransplanter PVZ1

15

ISEKI Report 2019

受賞
Received“2017 Development Award” of theJapanese Society of Agricultural Machineryand Food Engineers

vegetable transplanter PVZ1, popular for its high efficiency, thehighly versatile walking-type semi-automated vegetabletransplanter PVH100/200 and riding-type two-row transplanter
PVHR200, and four-row transplanter PVHR4.

Riding-type semi-automated two-row transplanter PVHR200

Initiatives aimed at the mechanization of sesame
seed cultivation

The mechanization of sesame seed cultivation is difficult, which
has made the import percentage of sesame seeds high. In
response to this, ISEKI Co., Ltd and Mie ISEKI Sales Co., Ltd. areworking to mechanize sesame seed cultivation in collaboration
with the National Agriculture and Food Research Organization,
Mie Prefecture
Agricultural
Research Instituteand sesame seed
processors andmanufacturers to
support sesame
seed productionin Japan and fielddevelopment for
production of
sesame seeds.
* This initiative is undertaken with the support of the “special scheme project onvitalizing management entities of agriculture, forestry and fisheries” of the
Bio-oriented Technology Research Advancement Institution of the National
Agriculture and Food Research Organization.

 fforts to improve work efficiency and qualityEthrough an integrated system of smart agricultural
machinery

In partnership with Tottori Prefecture, Tottori University, andcorporations, we are taking part in an initiative to utilize smart
agricultural machinery for rice paddy cultivation managementin hilly and mountainous areas.

Company information

Daikon radish harvester VHD102-S

Financial data

Products that support small- and medium-sized farming
We are developing products tailored to a variety of needs forsmall- and medium-sized farming.
Conventional daikon radish harvesters were large andexpensive, which made it difficult for small and medium-sized
farmers to use. Against this backdrop, we released theindustry’s first walking-type daikon radish harvester. The
compact, easy-to-operate and low-price harvester is dedicatedto the most labor-intensive work in harvesting daikon radishes:pulling up daikon radishes and cutting their stems and leaves.

ISEKI Report 201916

Overseas businessBusiness development at ISEKI Group

Message

Overseas businessMessage from the General Division Manager, Overseas Business Division

We will further accelerate the development ofbusiness on a global scale to solve various issues
facing the global market.

In addition to the existing community network, we will strengthen collaboration with strategic partners.

It is predicted that the world population will continue to increase, particularly indeveloping countries such as Asia and Africa, to reach 9.7 billion in 2050, and efficient
food production and supply is a pressing issue. I believe that the role that agricultural
machinery manufacturers play will become even more important.
With “expanding overseas business” as a basic strategy, ISEKI Group positions North
America, Europe, China, and ASEAN markets as the four pillars and will raise theoverseas sales ratio target for the Group, including equity-method affiliates, to 40%.
In the North American market, we will further expand sales through stronger
collaboration with our OEM partner AGCO Corporation and launching of productsthat meet customer needs. In the European market, in addition to strengthening
partnerships with existing sales agencies, we will focus on increasing sales andmarket share by centering our business development efforts on ISEKI France S.A.S.,
building the ISEKI brand and the product lineup, and reinforcing service and support
systems. In the Chinese market, we will work together with Dongfeng ISEKI
Agricultural Machinery Co., Ltd. to enhance product competitiveness by accurately
assessing market needs and to strengthen local procurement capabilities. In the Thai
market within ASEAN, we have been building the ISEKI brand through sales at IST
Farm Machinery Co., Ltd. since 2013. In 2016, ISEKI (THAILAND) Co., Ltd. wasestablished in an effort to further bolster our product sales and service capabilities
throughout the ASEAN region, developing a sales and service system as a result. In
India, the world’s largest tractor market, we will also further accelerate businessdevelopment by further strengthening collaborations with strategic partners, such as
signing a technical and business tie-up agreement with a major agricultural
machinery manufacturer.
By ensuring the market-in approach in each market, we also plan to develop andprovide products and services that take advantage of regional characteristics andenhance the development of human resources to support the effort.
We will step up our efforts to expand our overseas businesses and solve social
issues facing each region so that we can establish a firm position as an agricultural
machinery manufacturer in the global market.

Population in developing countries
Population in developed countries
Grain production volumeG lobal rice production volume
Asia accounts for about 85% of the total
production

2,956 million tons

1,945 million tons

7.44 billion people

8.38 billion people
Myanmar 3%

6.36 billion people
70.9
India
23%

51.7

61.9

Initiatives in each region
ASEAN
In the Southeast Asia region, while remarkable economic risehas been made in recent years, the agricultural workforce isdeclining following industrialization, and an increase in foodproduction has become a social issue.
IST Farm Machinery Co., Ltd., a sales subsidiary and joint
venture with Mitsubishi Corporation has been working on salesof products that meet the needs of customers who want toimprove agricultural productivity.
In addition, ISEKI (THAILAND) Co., Ltd., which was

Population in developing countries
Population in developed countries
Grain production volume1,945 million tons

7.44 billion people

6.36 billion people

Thailand 4%
Vietnam 6%

India
23%

51.7

61.9

Bangladesh 7%
11.9

12.5

12.8

2003-05

2015-172028

Source: “World Food Supply and Demand Trends and Projections in theMedium- and Long-Term” published by the Policy Research Institute, Ministryof Agriculture, Forestry and Fisheries

17

ISEKI Report 2019

Indonesia 7%

Business development at ISEKI Group(Thailand and neighboring
countries)

RUTAN(Indonesia)

Initiatives that support value creation

Mitsubishi Corporation

2,569 million tons
China
30%

AGCO
(North America andthroughout the world)(India)2,569 million tons
China
30%

(China and the ASEAN
countries)

TAFE

Social issues and needsF orecast for global population and foodsupply and demand

Dongfeng Motor

11.9

12.5

2003-05

2015-17established in 2016 as a local subsidiary, is engaged in thedevelopment, procurement, and sales of tractor implementsthat are suitable for the environment where they are used. A
parts center has also been established to build a system forproviding swift after-sales services. Going forward, ISEKI willfurther strengthen collaboration with strategic partners andpush forward with not only the business expansion in Thailand
but also strengthening initiatives for the neighboring countries
including Myanmar.

Financial data

Director & Executive Vice President,
General Division Manager,
Overseas Business Division

ISEKI Europe
ISEKI France
ISEKI Germany
ISEKI U.K.

Technical and business tie-up with India-based TAFE
2,956 million tons

In November 2018, having identified India, the world’s
largest tractor market, as an important market in our global
8.38 billion people
strategy, ISEKI Group concluded a technical and businesstie-up agreement with TAFE, India’s second-largest
70.9
agricultural machinery manufacturer. We will step up ourability to respond to market needs through TAFE’s sales of
ourproducts and mutual supply of products and parts.
12.8

Key points of the technical and business tie-up
Sales of ISEKI agricultural machinery through
TAFE’s sales network in India
Production and sales of medium-sized tractors in
the Indian subcontinent by TAFE with technicallicenses from ISEKI
Mutual supply of machinery and parts

Company information

Yoshiyuki Toyota,

Value creation of ISEKI GroupStrengthening of collaboration with strategic partners

2028

Source: “World Agricultural Supply and Demand Estimates”(March-08 Report) published by USDA

ISEKI Report 201918

Europe

Europe is an area in the world where particularly highenvironmental awareness is observed. To preserve the beautiful
landscape of Europe, our products have played active roles formany years in the field of landscaping, such as lawn mowing inparks as well as cleaning and snow removal on roads.
ISEKI Group’s operations in Europe date back to the 1960s.
ISEKI established N.V. ISEKI Europe S.A. in Belgium in 1971.
Since then, we have endeavored to expand sales of our
products and to spread and popularize the ISEKI brandthroughout Europe. We established ISEKI France S.A.S. in 2014as a core base in the European market. ISEKI France has set up
a parts depot center for the purpose of supplying parts
throughout Europe and has been stepping up after-sales
services. We will continue to further bolster partnerships
between ISEKI France and sales agencies in each country, andfocus on expanding sales and market share in the European
market.

Utilization of advanced technologies

Our products are used for agriculture and landscape maintenance in more than 100 countries and regions
around the world.

Tractors(for snow removal)

Value creation of ISEKI GroupWe provide rice transplanters equipped with advanced
technologies such as variable fertilizing function andstraight-travel assisting function to meet the growing needsof China, where large-scale farming is increasing.

Tractors(for street cleaning)Ride-on mowers

Tractors(for construction work,
conveyance, etc.)

Business development at ISEKI Group

China

China has a population of approximately 1.4 billion, and anincrease in food production is one of the challenges facing thecountry. In recent years, the scale of farming has become larger
on the back of the bigger scale of agricultural management
bodies and the consolidation of farmland, and there is anincreasing need for large-sized agricultural machinery andproducts equipped with advanced technologies.
As a foothold for business development in China, ISEKI
established an office for the production and sales of ricetransplanters and combine harvesters in Changzhou, Jiangsu
Province in 2003, and a joint venture with the Dongfeng Motor
Group in Hubei Province in 2011. The companies wereconsolidated and commenced its operation as Dongfeng ISEKI
Agricultural Machinery Co., Ltd. in 2014.
At Dongfeng ISEKI, a new factory was established in
Xiangyang, Hubei Province with an eye toward further businessexpansion. The factory is engaged in the manufacture of
products such as tractors, combine harvesters, and ricetransplanters that support large-scale farming. Going forward,
we will work together with Dongfeng ISEKI to expand ourbusiness operations in both production and sales.

Message

Overseas business

Tractors (for tilling, etc.)

Combine harvesters
Vegetable transplantersIntroduction of mowers into the market oflandscaping machinery for professional users
ISEKI has commenced delivering high-output front mowers
with high efficiency (SF200 series) for professional users in
the landscaping market. They have won high evaluations
from our customers.

Rice transplanters

Service and support activities

Initiatives that support value creation

Business development at ISEKI Group

Improvement of service systems
ISEKI Group is committed to strengthening service and support systems forproviding prompt after-sales services to customers through means such asbuilding the Parts Depot Center for European countries and the local subsidiary
ISEKI (THAILAND) Co., Ltd. for ASEAN countries.

New product operation inspection

 eceived the AGCO’s Partner ofR
the Year Award

operation inspections. In addition to investigating whether the purchased
products are operating without problems, we directly listen to opinions andrequests from our counterparties and customers with the aim of using them to

ISEKI received the AGCO’s Partner of the Year Award in June2018 in recognition of its product quality and performanceat a ceremony for commending excellent suppliers held by
AGCO.

develop better products.

Improvement of the ability of sales agencies to provide services
Company information

ISEKI provides tractors via the agricultural machinery
manufacturer AGCO Corporation which has a broad sales
network in the U.S., etc., on an OEM basis. The products havebeen well-received by a wide variety of users ranging fromgeneral consumers to professional customers. Going forward,
ISEKI intends to further strengthen the collaboration with
AGCO Corporation as a strategic partner, and provide highquality products not only in North America but also in Central
and South America.

Financial data

We visit customers who have purchased our new products and conduct productNorth America

ISEKI Group supports the improvement of the ability of sales agencies toprovide services by holding workshops locally regarding services and technicalworkshops at the ISEKI Global Training Center (IGTC) in Japan for the overseas
sales agencies.

19

ISEKI Report 2019

ISEKI Report 201920

Business development at ISEKI Group

Development and production

Message

Development and production
Message from the General Division Manager, Development & Production Division

Social issues and needs
Laborsaving and lower costs
Simple specifications andlow prices
High efficiency anddurability
Increase in the size of
agricultural machinery

21

ISEKI Report 2019 ield crop and vegetable
F
farming machinery
Utilization of advanced
technologies and application ofrobotic technologies
High quality
Environmental consideration

Value creation of ISEKI GroupProduct development to accelerate overseas expansion

Satisfaction

In our overseas operations, we are dedicated to developing
products that meet local needs, such as responding to lowprice needs in the compact tractor market for North America
and Europe and introducing products in the ASEAN region and
China using rice cultivation technology accumulated in Japan.
At the end of 2018, we also signed a technical and businesstie-up agreement with TAFE, the second largest agricultural
machinery manufacturer in India, which is the world’s largest
tractor market.

Business development at ISEKI Group

Starting point of manufacturing
ISEKI sets “satisfaction,” “safety,” “security” and“environment” as the starting point of manufacturing andpromotes research and development based on these points.

Global production system
SafetyManufacturing

Environment

Security

Research and development system

ISEKI Group seeks to build a global production system in order
to offer products in a timely manner to each market. PT. ISEKI
INDONESIA is a production base for strategic machinery for
North America, Europe, and the ASEAN region, and produces
tractors that meet low-price needs. The company is working tofurther expand its business operations by increasing production
capacity while stepping up efforts to improve profitability, suchas optimizing suppliers and improving site operations.
Dongfeng ISEKI Agricultural Machinery Co., Ltd. (Xiangyang
and Changzhou) produces rice transplanters, high-horsepower
tractors, combine harvesters, etc., as the export base for China
and the ASEAN region.

Initiatives that support value creation

Director & Senior Corporate Officer,
General Division Manager, Development& Production Division

To provide “products that satisfy customers,” through the development, production and sales of such products, ISEKI
Group has been enhancing its competitive edges in terms of the functionality, performance, quality, cost and serviceof our products and has been creating a variety of innovative products and value that contribute to efficiency andproductivity improvement in agriculture.
We are building a research and development system and a global production system to support suchmanufacturing.

The development, production and marketing departments
work together to demonstrate their overall capabilities andpromote research and development. ISEKI determines the
direction for the product strategy and research anddevelopment based on the needs and market trends in eachregion and carries out planning and proposals that promptly
meet the needs of domestic and overseas customers.
ISEKI collaborates with test and research institutions,
universities, etc., to promote joint research and developmentwith the aim of achieving swift and efficient technology
development.

Financial data

Osamu Hyodo,

We aim to accurately identify market changes and issues and leverage ourtechnological capabilities to create products that satisfy customers. At the sametime, with “strengthening profitability by optimizing development and production”
as one of our basic strategies, we carry out research and development andproduction activities that emphasize “profitability improvement,” “enhancement of
manufacturing systems,” and “intellectual property strategies.”
With regard to “profitability improvement,” we are stepping up efforts to improve
productivity through thorough streamlining, such as speedier development andlower costs in the R&D department through standardizing and unifying designs,
improving site operations in the production department, and improving indirect
operations. In addition, the Global Strategic Products Project Management
Department has been established to lead efforts to improve the profitability ofoverseas products. Furthermore, ISEKI Group as a whole will implement revenue
structure reforms.
In terms of “enhancement of manufacturing systems,” we focus on humanresource development that is indispensable for manufacturing. In addition to training
young designers and production site leaders in Japan and overseas, we holdtechnology research presentations every year to share R&D achievements andinvention information and improve skills on a group-wide basis. Furthermore, in
research and development, we quickly respond to a wide variety of needs bydetermining product strategy and R&D direction based on regional needs andmarket trends, and optimally investing human capital, manufacturing capital, andfinancial capital. Since our founding, we have been engaging in R&D activities withthe provision of products that satisfy customers as one of the values in our corporate
philosophy and with the motto of providing affordable products that customers canuse with satisfaction in a timely manner. In order to meet customer needs, we willcontinue to actively develop products that take into consideration energy-saving andlow-cost agriculture, safe work, and environmental conservation, based on ourthorough research.
In production, we have established a global production system that leverages thefeatures of each of the four factories in Japan and three overseas factories. In
particular, the Indonesian factory increased its production capacity to 15,000 units ayear in order to respond to the rapidly growing ASEAN market.
As for “intellectual property strategies,” we are developing products that lead tonew value creation. With the aim of further demonstrating the creativity andtechnological capabilities of ISEKI Group as a whole, we engage in education on
intellectual property and creation techniques and generate advanced technologies
and high-quality inventions.
Looking ahead to the 100th anniversary of ISEKI Group’s foundation in 2025 andbeyond, we will combine our technological strengths and implement a productstrategy that addresses structural changes in Japanese agriculture and the needs ofthe global market.

Research and development and production system that support manufacturing

Joint research in FY2018
Research institutions:

Universities:

17themes 2themes
Development of high-quality and low-cost products
ISEKI works to produce high-quality and low-cost products
based on manufacturing technologies cultivated over many
years.
A system for proposing improvements targeting quality
improvement, cost reduction and man-hour reduction has been
put in place under which active improvement activities are
conducted including 57,000 proposals made in FY2017. Value
engineering (VE) activities that allow for cost cutting throughimprovements in products designing and manufacturingmethods, parts procurement methods, etc., are also conducted
to manufacture products at a lower cost.

Company information

We will implement our product strategy that
addresses structural changes in Japanese
agriculture and needs of the global market.

ISEKI Report 201922

Development and production

MessageBusiness development at ISEKI GroupIntellectual property strategies that support innovation

patent network and enhancing the superiority of productdevelopment. In addition, we aim to swiftly acquire and accumulate effective rights overseas as we expand globally.

Analysis of technological trends

Establishment of strategic themes
Advanced technologies

Patent Gazette
Company
product
information

Clarification

Cooperation withpatent offices
in each country

Consensus
R&D direction
Identification of ourcore technologies

Value creation of ISEKI Group

Invention creation and patent strategy
Strategic themes are set by company-wide consensus based on
analysis results of technological trends. Through creation
activities based on the strategic themes, we are building a

Mutual study within the Group
Holding of technology research presentations
With the objective of developing products that contribute to
the changing market environment in Japan and overseas, ISEKI
holds “technology research presentations” annually as anopportunity to share and discuss the outcomes of research anddevelopment and invention information. The event took place
for the 29th time in 2019. We conducted repeated discussions
including the company’s executives with the aim of raising thelevel of such matters on a group-wide basis. In addition, ISEKI
Group invites external experts to present lectures on relevant
themes in the pursuit of technological studies and knowledge
improvement.

Business development at ISEKI GroupIn terms of the activities to create core technologies for agricultural machinery and related products and intellectual
outcomes such as the inventions and creations obtained through such activities, ISEKI works on business activities
that place importance on intellectual property, where rights in relation to such activities and intellectual outcomes are
strategically registered and utilized and thereby result in the value creation.

Products for large business
Integrated system of vegetable farming
Support for low-cost agriculture
Global response

Proof of ISEKI Group’s technological capabilities
Our proactive efforts to develop, launch and commercialize new technologies are exemplified by the high number of patent application
registrations in Japan per specialty field, awards received in recognition of the inventions, and high patent allowance rates. ISEKI endeavors
to differentiate its products from those of competitors by taking advantage of its “strengths” underpinned by intellectual property.

and more
Number of patent application registrations in Japan per specialty field

Verification of market demands and preferences
Clarification of design concepts

Development

Direction

Evolution of ISEKI features
Creation of appeal to spawn innovation
Creation of unprecedented appeal
Designs that give satisfaction in use

 ducation on intellectual property and transfer ofEcreation techniques
ISEKI Group proactively undertakes education on intellectual property
and creativity so as to invigorate creativity on a group-wide basis anddemonstrate its technological capabilities to the fullest extent. Levelspecific education on intellectual property according to the number ofyears of experience has enabled the creation of advanced technologies
and high-quality inventions. In addition, there are invention-creation
activities led by experienced engineers, which are aimed at improving
creativity and motivation of young engineers.
We have also set up training facilities, each specializing in“development” and “production,” to strengthen human resource
development.

Category
Specialty field

2007-2014

Number of laid-open patentapplications per specialty field
Agriculture andOther special
fisherymachinery

Rank

2016-2017

219

2018

Number of patent application
registrations per specialty field⃝ National Awards for Inventions
		

Other special machinery

No. 1

18

(including 2 special awards)⃝ Regional Awards for Inventions

No. 2

201

(including 35 special awards)

		

The Patent Administration Annual Report has previously published the number of laid-open patentapplications in Japan per specialty field (the results for the year before the previous one); however,starting from the 2017 edition, the results of the number of patent application registrations in Japanper specialty field for the previous year (2016) are being published.

(Cumulative total as of December 2018)

No. 2 in “all industries”

Patent allowance rate
Year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Patent allowance
rate (%)

84.6

83.7

90.4

89.3

85.8

88.5

91.8

91.8

94.7

97.0

99.2

97.5

100

98.1

96.4

Rank

Initiatives that support value creation

Products that induce stronger attachment with longer use

2000-2006

No. 1

No. 2

No. 1

Financial data

Procedure

Attractive products that match product properties

Year

No. 2

ISEKI Group publishes Intellectual Property Reports
Company information

Basic approach

strengthening product design protection and improving ourbrand value.

Number of awards received

No. 2 in the “other special machinery sector”

Design and trademark strategy
We accumulate attractive designs and easy-to-remember
product marketing names as design rights and trademark rights
to differentiate our products from those of other companies,(Main contents)
R&D Strategy
System for R&D, Education, and Intellectual Property
Situation of Intellectual Property / Awards and Recognition
Intellectual Property Strategy
Contribution of Intellectual Property to BusinessInformation on Legal Actions Related to Intellectual Property
Intellectual Property Reports can be found on our website.

http://www.iseki.co.jp/company/intellectual/

For more details, please refer to p. 29.

23

ISEKI Report 2019

ISEKI Report 201924

ISEKI Group’s stakeholders

Initiatives that support value creation

ISEKI Group’s stakeholders

Environment: ISEKI Group environmental management

ISEKI Group environmental management

Related SDGs
Message

Initiatives that support value creation

Stakeholder engagement

To contribute to society andlocal communities, we engage
in environmental conservation,
activities for community growthand development, and activities
for the development of thenext generation.
Examples) Tours of factories
and exhibition
halls (ISEKI Dream
Gallery), seminars,
events, social contribution activities,
volunteer activities

Local
community

Suppliers

To build fair and equitable relationships, we create opportunities for sharing of company information and mutual
improvement in cooperation with our suppliers so that they
can lead to mutual business development.
Examples) IR information meetings for vendors, dealer
meetings, superior company tours, audit andbusiness support for suppliers

Employees

Shareholders
and investors

To improve employee satisfaction, we seek to provide a safe
and secure workplace, sharecompany information, and offer
support for career development.
Examples) L abor management
council, internal IR
information meetingsfor employees, sales
subsidiary meetings,
house magazines,
information magazines, intranet, various
training sessions

We aim to bolster corporate governance in order to build
long-term trusting relationships with our shareholders andinvestors.
Examples) General shareholders’ meeting, quarterly briefing sessions, individual meetings, information
meetings for individual investors, facility tours

Seiji Senba,
Managing Corporate Officer,
Deputy Chief Operation Officer,
Development & Production Division,
Assigned to Environmental Control Section

Mid- and long-term targets
Reductions in CO2 emission
volumes in production
activities
2030:

Information disclosure in a timely and appropriate mannerWith regard to information disclosure, it is our basic policy toInitiatives for information disclosure

appropriately disclose information described in ISEKI Group
Code of Ethical Behavior and fulfill our social accountability. We
aim to promptly and accurately disclose information required
from inside or outside of the Group in recognition of theimportance of social accountability and thereby endeavor to
become a company with transparency.

Reports andinformation
magazines

To win fair evaluation from all our stakeholders, including
shareholders, investors, customers, suppliers, local
communities, and employees, and to ensure managementtransparency, we strive for fair, equitable, timely, andappropriate disclosure of management related information
based on the purpose and meaning of fair disclosure rules.

25

ISEKI Report 2019

Websites

26% reduction(compared with the FY2013 results)

Securities Reports
Business Reports
Corporate Governance Reports
ISEKI Reports
Intellectual Property Reports
Farm business information
magazines
Product brochures and productvideosHouse magazines, information
magazines, etc.
Timely Disclosure (TDnet)
Corporate websites
Farm business information site, etc.

Eco-productIncreasing the sales ratio in
Japan

37%
2030: 50% or more
2020:

Business development at ISEKI Group

Customers

In light of the increasingly severe environmental problems facing theworld in recent years, including climate change due to global warming
and frequent extreme weather events, the importance of addressing
such issues facing society has increased for companies.
Guided by its “Basic Environmental Policy” and “Environmental
Conduct Guidelines,” ISEKI Group has designated environmental
protection as one of its business priorities. It has been pursuing its
business activities in terms of provision of products and services andother corporate activities in such a way as to enable the creation of asustainable society.
In order to reduce our environmental burden, we have establishedan environmental management system (EMS) on a group-wide basis toset specific environmental targets for all business activities, ranging
from the early stage of product development and production to
product distribution and sales and services, while adopting the PlanDo-Check-Action (PDCA) cycle. We have set ourselves the goal of a
26% reduction in CO2 emission volumes by 2030 as a mid- and longterm environmental target. We are also proactively upgrading andmodifying facilities and carry out continuous MFCA* at our
manufacturing plants.
In product development, we are taking measures to provide
environmentally friendly products through the promotion ofenvironmentally friendly design and implementation of an “ecoproduct certification system.” In 2019, we set ourselves the mid- andlong-term environmental target of increasing our ratio of designatedeco-products to all sales in Japan to at least 50% by 2030. We also
aim to expand our range of products and services that contribute toresolution of issues facing society in the food and agricultural domains.
Likewise, through the “ISEKI Group Green Supply Guidelines,” weseek the understanding and cooperation of all of our transaction
partners in promoting environmental protection activities and reducing(harmful) chemical substance content in parts procured, so as to ensure
supplies of products that are more environmentally aware. This helps
reduce the environmental burden across the entire supply chain. We
are also taking measures to improve the recycling rate at our sales
subsidiaries, through the establishment of waste-product recycling
systems.
We will continue to work on environmental management on agroup-wide basis and contribute to the realization of a sustainable
society.

Initiatives that support value creation

Examples) D irect dialogue with sales and maintenance staff, user exchange meetings, training, seminars,
exhibitions, demonstrations, proposal, and support of farm business technologies, market research

Value creation of ISEKI GroupWe strive to contribute to the realization of asustainable society.

Financial data

To provide high-quality and safe products and services that satisfy our customers, ISEKI Group extends
farm business proposals and support, including cultivation techniques, as well as support for the application and safe use of agricultural machinery. We also strive to understand the true needs of customers through dialogue and use this dialogue to improve product development.

Message from the officer in charge of the environment

Company information

ISEKI Group strives to build a strong relationship of trust with stakeholders through responsible and proactive
dialogue. Opinions and requests received through various dialogue will be compiled by departments in charge to bereported to the company’s executives through monthly Public Relations Liaison Committee meetings, etc., andappropriately reflected in our business activities.

* Abbreviation for Material Flow Cost Accounting, a management accounting model. In 2011, it became
the ISO14051 international environmental management standard. It includes methods and activities
that evaluate the economic value of “negative products” (waste products, etc.), and through the“visualization” process brings elements constituting waste to light. By reducing such waste, it achieves
the environmentally and economically beneficial goals of saving resources while cutting costs.

* The reports and information magazines, etc., are posted on the website (some ofthose materials are only available in Japanese).

ISEKI Report 201926

Initiatives that support value creation

Environment: Environmental management

Initiatives that support value creation

Governance: corporate governance

Basic Environmental Policy

Environmental Conduct Guidelines

ISEKI Group is committed to contributing to therealization of a sustainable society through businessactivities that aim to achieve harmony among nature,society and corporations.

❶ Development activities considering the environment

Governance for sustainable and sound growth

Recycling and reduction of noise, vibration, fuel consumption,
emission gas, and environmental stress substances

Energy-saving, resource-saving, and recycling❹ Distribution and logistics considering the environment

Improvement of transportation (packing material, more efficienttransportation, modal shift), disposal❺ Development of biodiversity

Products/services, business activities, supply chain❻ Environmental education and information disclosure
Environmental education to be offered to employees,
participation in social activities and information disclosure

System for promoting environmental management
ISEKI Group promotes environmental management on agroup-wide basis and works on environmental management
centered around a Plan-Do-Check-Action (PDCA) cycle byestablishing an intragroup system for promoting environmental
management.
The Directors’ Operation Committee chaired by the President
deliberates and decides upon action plans and targets for theenvironment based on the Basic Environmental Policy. The
Committee receives progress reports from the Environmental
Planning Group Meeting and gives advice on evaluation andimprovement measures. It reports on progress to the Directors’
Operation Committee, and upon receipt of the review resultsfrom the Committee, horizontally implements them at theoffices. Chief Managers and Environment Control Managers
who promote environmental control activities are put in placein each office to strengthen promotion activities forenvironmental management. Furthermore, EMS certification(ISO14001 and EA21) has been acquired at manufacturingbases in Japan and overseas and at non-production bases
including sales subsidiaries.
In 2017, ISEKI Group launched the Corporate Social
Responsibility Committee. It shares with Committee members
tasked with review and promotion activities alignment withbusiness plans and materiality evaluation with regard to results
and issues reported to the Environmental Planning Group
Meeting. In this way, ISEKI Group has put in place a mutually
supportive framework for resolution of issues.
In FY2018, the Environmental Planning Group Meeting held
four meetings, made reports/escalations to the Directors’
Operation Committee and the Public Relations Liaison
Committee four times, and made reports to the Corporate
Social Responsibility Committee twice.

Directors’ Operation Committee
Environmental Planning Group Meeting

As an integrated manufacturer specializing in agricultural
machinery, ISEKI Group has contributed to the modernizationof farming in Japan for more than 90 years since its founding.
Looking ahead, we consider it our social mission to contributeto agriculture in Japan and overseas. As a company with a highlevel of lasting public trust, we need to continue our sustainable
and sound growth to realize this mission.
Having designated establishment of internal group controls
as a priority management policy, the company has compiled abasic internal control policy and is establishing an internal
control system, with modifications made as and whennecessary. Under the leadership of the director in charge ofcompliance, we ensure continuous compliance training centeredon a cross-organizational compliance team, while remaining
committed to preventing misconduct and scandals fromoccurring by promoting awareness of compliance among eachof our employees.
At the same time, we believe it is important to maintain
good relations with stakeholders including shareholders,customers, suppliers, local communities and employees, torespond to severe change in the recent business environment
and ensure sustainable growth and improvement in corporate
value over the medium and long term. To further improvestandards of corporate governance, we have launched various
initiatives based on our Corporate Governance Code compiledin 2015.
One such exemplary initiative is the appointment of Outside
Directors. This measure was taken to further deepen the“visualization” of management from an external perspective. In
2016, we decided to switch to a system with two Outside
Directors, who bring an objective perspective to management
through their participation and are tasked with strengthening
the management supervisory functions and ensuringtransparency.
Another example is the compilation and announcement of
the Mid-term Management Plan. This move is designed to
improve standards of information disclosure relating tomanagement strategy and planning. With regard to the Midterm Management Plan from 2016 and its basic strategy, weare committed to fostering understanding of what thecompany aims to do, through quarterly briefing sessions forinvestors and at general shareholders’ meetings.
Still another is ensuring, at the behest of shareholders,greater transparency in the process of selection of candidates
for Directors. In 2018, we established a Nomination Advisory
Committee, chiefly compromising Independent Outside
Directors. As a consultative body to the Board of Directors, it
discusses Directors’ appointment and dismissal proposals that
go before the general shareholders’ meeting. Other core tasks
include the discussion of appointment and dismissal ofRepresentative Directors and reporting the results to the Boardof Directors.
Going forward, we plan to take further steps to develop our
corporate governance system to ensure sustainable growth,
including the consolidation and improvement of a system ofinternal controls.

Business development at ISEKI Group❸ Office activities considering the environment

Initiatives that support value creation

Prevention of (air, water, noise, and vibration) pollution, energysaving, resource-saving, and green procurement

Value creation of ISEKI Group❷ Environment-friendly manufacturing activities❶ Maintain environmental management system and its
functional applications❷ Reducing elements of our business activities andproducts which may be causing stress on theenvironment❸ Compliance with environmental laws, regulations,and standards❹ Environmental education and information disclosure

Environmental Management System

Message

Environmental management

Environmental Control Section

ISEKI Group as a whole

ISEKI-Matsuyama MFG.
ISEKI-Kumamoto MFG.
ISEKI-Niigata MFG.
ISEKI-Shigenobu MFG.
Dongfeng ISEKI (Xiangyang Factory)
Dongfeng ISEKI (Changzhou Factory)
P.T. ISEKI INDONESIA

Non-manufacturing bases
ISEKI Hokkaido
ISEKI Tohoku
ISEKI Kanto Koshinetsu
ISEKI Hokuriku
ISEKI Kansai Chubu

Gunma ISEKI Sales
Mie ISEKI Sales
ISEKI Chugoku
ISEKI Shikoku
ISEKI Kyushu

Tokyo Headquarters
Tobe Office
Tsukubamirai Office
ISEKI AGRIISEKI TLS
ISEKI Logistics

N.V. ISEKI EUROPE S.A.
ISEKI France S.A.S.
ISEKI (THAILAND) CO., LTD.
Financial data

Manufacturing bases

Akio Kikuchi,

Acquisition of environment-related certifications

Representative Director,
Chairman & Executive Officer

Acquisition of EMS certification at domestic
and overseas manufacturing bases<4 bases in Japan and 3 bases overseas>

7
Acquisition rate: 100%
Certified bases:

Company information

ISEKI Group has acquired EMS certification (ISO14001 and EA21) at manufacturing bases in Japan and overseas and non-manufacturingbases, including sales subsidiaries, and carries out environmental preservation activities in line with their respective business activities
and regional characteristics.
Acquisition of EMS certification
at non-manufacturing bases<Sales subsidiaries in Japan: 10>
Certified companies:
Acquisition rate:

10
100%

<Others: 9>8Acquisition rate: 89%
Certified bases:

For more details, please refer to our website.

27

ISEKI Report 2019

ISEKI Report 201928

Governance: corporate governance/risk management

Initiatives that support value creation

Appointment/dismissal of Directors and Corporate Auditors

Advice/Reporting

Nomination Advisory Committee
5 members(2 representative directors,
2 outside directors,
1 outside auditor)(Cooperation)

5 auditors(incl. 4 outside auditors)
Independent Public
Accounting firm

Audit

Audit

(Directors & appointed
Corporate Officers,
General Managers)

Management Supervisory Committee

Internal Control &Audit Department

Chairperson of the Board of Directors

11
Chairman

Number of Outside Directors

2
1 yearNumber of Corporate Auditors

5

Number of Outside Corporate Auditors

4

Number of Board of Directors meetings held* 18

Corporate Officers
Internal Audit

Associated companies, divisions & sections

Number of Directors

Term of office of Directors

President
Directors’ Operation Committee

Company with a Board of Auditors

Number of Independent Directors/Auditors

3

Meetings are held once or more per month to make decisions
on basic matters in relation to management as well as mattersset forth in laws, regulations and the articles of association.
Regarding the business execution, the corporate officers fulfill
their duties smoothly as the persons responsible for the various
operations. In addition, to manage businesses in a soundmanner, Directors’ Operation Committee meetings are held atleast twice a month in order to share the latest information anddiscuss and report on how the business should be operated,the existence of risks, and how to prevent and avoid them.

Board of Auditors

Corporate Auditors attend the Board of Directors andManagement Supervisory Committee meetings. They
independently formulate audit policy and audit the operations
and assets of our offices and subsidiaries in cooperation with
the Internal Audit Department and accounting auditors.
Moreover, they strictly check the important agenda at the
Directors’ Operation Committee meetings and the status ofoperation execution by Directors to monitor management
status and ensure the effectiveness of our corporate
governance.

Nomination Advisory Committee

In order to further strengthen corporate governancemechanisms, we established the Nomination Advisory
Committee in December 2018 as a consultative body to theBoard of Directors. The Committee discusses Directors’
appointment and dismissal proposals that go before thegeneral shareholders’ meeting as well as the selection anddismissal of Representative Directors. To be more independent,
objective, transparent and accountable, the Committee ischaired by an Independent Outside Director, and the majorityof Committee members are outside corporate officers.

29

ISEKI Report 2019

December 1, 2018

Composition

2 Representative Directors, 2 Independent Outside
Directors, and 1 Independent Outside Corporate
AuditorChairperson

Independent Outside Director

Main roles
and powers(1) Matters related to appointment/dismissal of
Directors (matters to be resolved at the generalshareholders’ meeting)(2) Matters related to appointment/dismissal ofRepresentative Directors(3) Matters related to succession plans for
Representative Directors(4) Compilation and modification of basic policy
and standards, etc. for the above deliberations

Evaluation of the effectiveness of the Board of Directors* Results between January 2018 and December 2018

Evaluation of the effectiveness of the Board of Directors

Board of Directors/ Directors’ Operation Committee

Date ofestablishment

Management Supervisory Committee

We hold the Management Supervisory Committee once amonth with the chairman of the Board of Directors as the head,
all the directors as members and all the auditors as observers tocheck if compliance is penetrated thoroughly into the Group, as
well as to check the measures and their status to establish andmaintain internal control system.

Outside Directors and Outside Auditors

Two Outside Directors are appointed to introduce external
perspectives into management, further strengthen the
supervisory function on business execution and further improve
the transparency. In addition, the Board of Auditors is set up
with five Corporate Auditors including four Outside Auditors toenhance and reinforce the auditing system and strengthen themonitoring of management.

Information disclosure with transparency

With the aim of ensuring information disclosure withtransparency, ISEKI has established a system for disclosing
material information to stakeholders in a timely and appropriatemanner in ways such as ensuring appropriate business
operations and sharing information by creating group-wide
management regulations and building a reporting system.

To further facilitate the roles of the Board of Directors, thecompany launched a self-appraisal and analysis program forindividual senior officers in 2017. The effectiveness evaluations
for FY2017 and FY2018 were done through a third-party
organization using methods for canvassing personalized
opinions, such as individual questionnaires and individualinterviews for all Directors and Corporate Auditors.
In FY2018, we obtained generally positive evaluations fromoutside officers’ feedback and monitoring, based on thequestionnaire answers, and were able to confirm the overall
effectiveness of the Board of Directors.

At the same time, opinions were also shared on further
strengthening the roles of the Board of Directors andinvigorating discussions, including narrowing down topics
to enrich discussion at the Board of Directors meetings andapproaches to nomination of corporate officers through theNomination Advisory Committee.
Looking ahead, we plan to respond by implementing the
PDCA cycle continuously based on this evaluation of theeffectiveness of the company’s Board of Directors, so as toensure prompt responses after ample discussion of issues andfurther strengthen the roles of the Board of Directors.

Financial data

(Business execution system)

Appointment/
Dismissal/Monitor

Organizational form

Corporate Auditors

Audit

11 directors(Incl. 2 outside directors)
5 corporate auditors(As of March 31, 2019)

Board of Auditors

Audit

Directors

Governance system: Key points

Appointment/
Dismissal

Nomination Advisory Committee

Risk management
Fundamental concept

Turning to risk management, ISEKI Group is committed to putting in place management standards, regulations andmonitoring and response mechanisms to pre-empt risk facing group operations and to minimize losses when a risk
event materializes. The Group risk management regulations defines factors potentially leading to physical, economic
and reputational losses and disadvantages as risks. We aim to prevent risk from materializing and minimize losses
when it does, ensuring smooth business operations, soundness of assets and maintenance of corporate credit.

Company information

Appointment/
Dismissal

Value creation of ISEKI Group

General shareholders’ meeting
Appointment/
Dismissal

Establishment of the Nomination Advisory Committee

Looking ahead, submission of proposals for the generalshareholders’ meetings relating to the appointment anddismissal of Directors, as well as the selection and dismissal ofRepresentative Directors, will be resolved at the Board of
Directors meetings following a report by the Nomination
Advisory Committee, which mainly comprises Independent
Outside Directors and serves as an consultative body to theBoard of Directors.

Business development at ISEKI Group

Corporate governance system

Policies and procedures

The nomination of candidates for Directors is subject tocomprehensive review in terms of ability, knowledge, andexperience in their specialist fields, as well as whether or notcandidates have a full understanding of the company’s businessand the ability to ensure rapid decision-making.
For the nomination of candidates for Corporate Auditors, weundertake an overall review in terms of their knowledge andexperience in finance, accounting, and their specialized fields,
as well as whether or not they have an understanding of thefull range of the company’s business.
Nomination of candidates for Outside Directors and Outside
Corporate Auditors is subject to comprehensive review in termsof conditions of independence laid down in the Companies Act
and the independence standards set by the Tokyo Stock
Exchange, as well as whether or not the candidate is able tostrengthen the monitoring function of the management teamthrough his or her wealth of past career knowledge andexperience. Based on the above policies, the results ofdeliberation and discussion by Representative Directors arepresented to a Board of Directors meeting attended by
Independent Outside Directors, and then a resolution is made.
However, in cases where it is deemed necessary to dismiss a
Director or Corporate Auditor due to significant damage tocorporate value they are recognized to have caused, aresolution is passed at a Board of Directors meeting attended
by Independent Outside Directors for a proposal for a generalshareholders’ meeting regarding the dismissal of such persons.

Initiatives that support value creation

Fundamental concept

The main purpose of our management system is to respond swiftly and accurately to changes in the management
environment and to maintain fair management. In addition, achieving stable growth and improvement in corporate
value over the medium and long term is our top priority of management. To maintain positive relations with our
stakeholders, including shareholders, customers, suppliers, local communities, and employees, we are endeavoring to
expand and improve our corporate governance. We acknowledge the importance of establishing an internal control
system that provides stakeholders with important information in a timely and appropriate manner and of reinforcing
corporate governance on a group-wide basis. Based on that recognition, we plan to establish administrative rules forgroup companies and a reporting structure to maintain fair business practices and share information.

Board ofDirectors

Message

Corporate governanceRisk management system
The Risk Management Control Committee under the Directors’
Operation Committee periodically identifies risks, re-evaluates
the extent of possible damage and frequency of occurrence of

the identified risks in individual business processes, and discusses countermeasures.

ISEKI Report 201930

Initiatives that support value creation

Governance: risk management/complianceBusiness and other risks

Fundamental concept❽ Government regulations on environmental issues,
etc., and occurrence of related difficulties❾ Risks derived from international businesses❿ Risks of legal violation⓫ Risks of natural disasters and accidents⓬ Business alliances, joint ventures and strategic
investment with other companies⓭ Debt

List of officers(As of March 26, 2019)

Yoshiyuki Toyoda

Director & Executive Vice
President

General Division Manager, Overseas Business Division
In charge of Overseas Business Division, deputy in charge of Products
Planning Department

Osamu Hyodo

Director & Senior Corporate
Officer

General Division Manager, Development & Production Division
In charge of Development & Production Division, Global Strategic
Products Project Management Department, and Purchasing Department,
deputy in charge of Matsuyama General Affairs Department

Shinji Arata

Director & Managing
Corporate Officer

Deputy Division Manager, Business Division (in charge of systems)
In charge of General Affairs Department, Matsuyama General Affairs
Department, Kumamoto General Affairs Department, Niigata General
Affairs Department, and Tsukubamirai General Affairs Department

Takafumi Kanayama

Director & Managing
Corporate Officer

In charge of Internal Control & Audit Department and Compliance

Yukio Nawata

Director & Managing
Corporate Officer

General Division Manager, Business Division
In charge of Business Division, Technical Support Department, ISEKI
Global Training Center (IGTC), AGRI – Business Solution Department,
and Tsukubamirai Of fice, deput y in charge of Produc t s Planning
Department

Masayuki Fukami

Director & Managing
Corporate Officer

In charge of Personnel Department
Deputy in charge of Corporate Planning Department, Investor Relations
Section, and Compliance

Shuichi Jinno

Director & Corporate Officer

In charge of IT Planning Department
Deputy in charge of Financial Department

Atsushi Iwasaki

Outside Director(Independent Director)

Shoji Tanaka

Outside Director(Independent Director)

31

Outside Corporate Auditor

Masato Machida

Corporate Auditor

Yasuhide Motokawa

Outside Corporate Auditor

Mami Taira

Outside Corporate Auditor(Independent Auditor)

ISEKI Report 2019

To prevent misconduct and scandals fromoccurring by promoting the penetration ofknowledge and the awareness of complianceamong each of the group members

Internal Control &Audit Department

Initiatives that support value creation

In charge of Corporate Planning Department, Investor Relations Section,
Financial Department

ComplianceDirector in charge anddeputy director in charge

Secretariat(Personnel Department)

Business Division
Sales Planning &Administrative Department

Business Division
Agri-plant
Department

Development &Production Division
Administrative Department

Overseas Business DivisionCorporate BusinessControl Department

Other
Personnel Department andother departments

Activity content
To carry out compliance-related training and educational activities systematically<Activities for penetration and education on compliance>• Distribution of the pamphlet “ISEKI Group Code of
Ethical Behavior”
The company has distributed the “ISEKI Group Code of EthicalBehavior” to all employees of the Group and works to ensure athorough understanding of this pamphlet, so as to ensure thatbusiness activities meet corporate ethical requirements.
• Issuance of “Compliance News”
As a means to provide information regarding compliance, thecompany issues the quarterly “Compliance News” bulletin toraise compliance awareness among employees. With a focus onpriority compliance initiatives, it contains information such as
messages from the management team and examples ofpractical measures undertaken by employees.

Financial data

Representative Director,
President & Executive Officer

Yoshiki Kawano

System for promoting compliancePurposeShirou Tomiyasu

Outside Corporate Auditor

educational system, and awareness activities. Management ofcompliance training and awareness activities at individual departments of group companies is carried out by the supervising
unit of the departments.
The internal control & audit department conducts compliance status checks and works to raise employees’ complianceawareness.

<Training activities>
The company carries out a wide range of education and training
programs concerning compliance themes in the day-to-day
conduct of business affairs, especially on points warranting
special attention.
• Incorporation into company-wide events andeducational training programs
Sales subsidiary president meetings, manager meetings,
executive training, newly-appointed manager training, newly-hired employee training

Company information

Representative Director,
Chairman & Executive Officer

Seigo Kimoto

To prevent misconduct and scandals from occurring by promoting the penetration of knowledge and the awareness ofcompliance among each of the Group members, the compliance team established as an intragroup organization promotes
compliance initiatives under the leadership of the Director in
charge of compliance.
The Personnel Department handles overall management ofcompliance activities across the whole ISEKI Group, and organizes companywide events, training sessions based on the

The Compliance team established as an intragroup organization promotes compliance under the leadership of the director in charge ofcompliance.

Directors

Corporate Auditors

System for promoting compliance

Value creation of ISEKI Group❶ Changes in economic conditions and the environment ofagriculture❷ Exchange rate fluctuations❸	A price hike of raw materials, difficulty in procurement, andconfusion in the supply chain❹ Dependency on specific customers or suppliers❺ Competition with other companies❻ Serious defects in products and services❼ Stock market fluctuations

In order to raise compliance-focused management to a higher level, ISEKI Group works to make the importance ofcompliance thoroughly understood and enforced by each and every employee with the aim of raising complianceawareness.

Business development at ISEKI Group

Latent risks and uncertainties which could affect ISEKI Group’s future financial performance are exemplified as below. We recognize thepossibility of the occurrence of such risks and uncertainties, and will strive to avoid their occurrence and take proper measures should
they occur.

Akio Kikuchi

MessageCompliance• Individual training programs
Sales subsidiary employee meetings of sales departments,
facility personnel training of facility departments, specialized
employee training of development departments

ISEKI Report 201932

Initiatives that support value creation

Governance: compliance

Financial and non-financial highlights

Financial data

MessageFinancial and non-financial highlights
Financial highlights
Net sales

Operating income(100 million yen)(100 million yen)

Profit attributable to owners of parent
Profit attributable to owners of parent (100 million yen)

1,452

1,584

1,531

1,560

Case study 2
To reaffirm the importance of compliance, a
training session was organized in the threeprefectures of Ehime, Kumamoto, and Niigata
for management-level staff in our
manufacturing companies in Japan (front-line
management and supervision) and workshopsof Development & Production Division.
Participants of the session held group
discussions, in addition to hearing compliancelectures. 97% of the participants said thatthey had a good or acceptable understandingof the content of the training program in aquestionnaire surveyed after the training
session.

124.2940

Case study 1
To ensure rigorous compliance, measures to prevent scandals are discussed and shared on a group-wide basis at Groupmanager meetings. In 2018, the emphasis was on ensuring a full understanding of the work style reform laws that came into
effect in April 2019, to avoid violation.
Training was also carried out at individual Group companies to ensure all employees fully understood compliance matters.

Value creation of ISEKI Group

Profit (loss) per share (yen)Training: Case studies

32

28

25

48.29

38.01

11

9

0

0

0

(15)

Business development at ISEKI Group5(64.89)
Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Total assets / Net assets(100 million yen)

2,011

Total assets

2,033

Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Capital investment
Net assets

2,013(Fiscal year ended December 31, 2018)(100 million yen)Overseas sales ratio

105

2,012

66

Channels for reporting
ChannelStaff workplace

33

Method ofconsultation

Consultation and reporting to a line manager
within specific staff hierarchies

Personnel
Department
channelPersonnel Department

Telephone, e-mail,regular mailExternal
channel(External)
Law office of thecompany’s consultant
lawyerRegular mail

ISEKI Report 2019

(Cases)

681

671

709

Dividend per share689

30 yen17

ROE (return on equity)

1.6%
Dec.
2015

8

7

Dec.
2016

Dec.
2017

Dec.
2015

Dec.
2018

Dec.
2016

Dec.
2017

Dec.
2018

5

Review of performance for the year ended December 2018
FY2015FY2016FY2017FY2018

Breakdown of sales(100 million yen)
Results for
FY2017

Initiatives for fair trade
ISEKI works to prevent the recurrence of any event that would
result in a cease and desist order, etc., under the AntiMonopoly Act by steadily implementing measures therefor
which have been formulated in response to the receipt of suchorders, etc., in relation to facility construction.

Initiatives for protecting personal information
The Privacy Policy concerning the handling of personal
information is formulated and internal regulations concerning
the management of personal information are created andmaintained. ISEKI Group works to appropriately protect
personal information by carrying out activities for even further
awareness and education on such protection for employees.

Agricultural machinery
Farming implements
Spare parts
Repair fees
Total agricultural machinery related
Construction of facilities
OthersTotal domestic sales
North America
EuropeChina
ASEAN
Other areas
Total product sales
OthersTotal overseas sales
Total sales

571
197
147
54
969
66
196
1,231
91
107
38
48
27
311
42
353
1,584

Results for
YoY change
FY2018

566
202
148
56
972
57
199
1,228
108
109
10
39
18
284
48
332
1,560

(5)
+5
+1
+2
+3
(9)
+3
(3)
+17
+2
(28)
(9)
(9)
(27)
+6
(21)
(24)

Financial data

ISEKI Group has set up a group-wide whistle-blower system(Ethical Hotline) for the use of all employees, retirees andsuppliers. The aim is to establish an open corporate culture andenable pre-emptive detection of problems within the company.
In the system, telephones, e-mail, and other communication
methods may be used in the event of detection of conduct inviolation of laws and regulations, the company Code of EthicalBehavior or the company regulations on employment, or otherrules. To protect the human rights of whistle-blowers and keepthem anonymous, the system makes available three convenientchannels of communication: the staff workplace organization,
the Personnel Department and an external channel involving an
outside law office.
In FY2018, the system handled 17 cases of consultation andwhistle-blower reports.

Number of whistle-blowing cases<Domestic sales (¥122.8 billion)>

Despite a slight increase in overall sales of agricultural machinery year on
year due to an increase in sales of the newly released rice transplanters andimplements, revenue from domestic sales was down year on year by ¥300
million, due partly to a reduction in facility-construction projects.

<Overseas sales (¥33.2 billion)>

Overseas sales were down ¥2,100 million overall year on year. Despite
increased revenue in North America following the tapering off of thenegative impact of the previous year’s changes in business terms (with an
OEM partner) and a buoyant performance in Europe by local marketing
units on the back of newly introduced products, revenue fell in the growthengines of China and ASEAN on lower shipments of semi-finished ricetransplanters to China, where the market has cooled, and on reduced
shipments of tractors to ASEAN, due to inventory adjustment in local
markets amid intensified competition in the Thai market.

Company information

Establishment of whistle-blower system (Ethical Hotline)

23.2%

75

74

Initiatives that support value creation(including equity-method affiliates in China)<Operating income (¥3.2 billion)>

Operating income was down ¥800 million year on year, due partly to anincrease in selling, general and administrative expenses, despite the partial
offsetting of revenue falls by improvements in the revenue-expenditure
structure at direct dealers in Japan and improved revenue at the Indonesianbusiness.

<Profit attributable to owners of parent (¥1.1 billion)>

Profit attributable to owners of parent declined ¥1,700 million year on
year, due to deterioration in share of profit or loss of entities using equity
method and in foreign exchange gains or losses.

ISEKI Report 201934

Financial and non-financial highlights

Financial data

Financial data

Consolidated Balance Sheets

Message

Consolidated Balance Sheets(Millions of yen)Non-financial highlights

As of December 31, 2017

Acquisition of environment-related certifications

Volume of energy-generated CO2 emissions, sales
ratio, and per-production volume in factories

Number and ratio of certified eco-products

Acquisition rate of environmental
management system (EMS) certification

We are working to reduce CO2 emission volumes
in our business activities as part of corporate
activities to make possible a sustainable society.
Volume of CO2 emissions in factories in Japan (t-CO2)
Volume of CO2 emissions in overseas factories (t-CO2)
Sales in Japan (t-CO2/100 million yen)Overseas production volume (t-CO2/100 million yen)

31,10032,50033,800AssetsCurrent assets
Cash and deposits

7,981

7,475

Notes and accounts receivable – trade25,11323,327

Merchandise and finished goods

45,41046,495Work in process

6,728

6,046

Raw materials and supplies

1,267

1,177

Deferred tax assets

1,233

1,057

Other

4,076

7,320

(60)

(51)

91,751

92,849Buildings and structures, net

24,34325,378

Machinery, equipment and vehicles, net

9,898

9,257

Tools, furniture and fixtures, net

2,634

2,854

Land

50,77350,873600

Leased assets, net

6,398

6,001

400

Construction in progress

1,514

2,446

200

Other, net

30

29

95,592

96,842

1,025

1,082

7,146

5,817

Long-term loans receivable

42

33

Deferred tax assets

557

912

Net defined benefit asset

773

587

Other

4,616

3,270

Allowance for doubtful accounts

(158)

(146)

Total investments and other assets

12,978

10,474

109,596

108,398

201,348201,248

The company is promoting the provision ofenvironmentally-friendly products throughimplementation of the “eco-product certification
system” based on independently developed
evaluation standards. Such products accounted for
32.6% of sales in Japan in FY2018.
Number of certified eco-products (items)

ISEKI Group has acquired EMS certification at
manufacturing bases in Japan and overseas andnon-manufacturing bases, including sales
subsidiaries, and carries out environmental
preservation activities in line with their respective
business activities and regional characteristics.

32.6

Ratio (sales ratio in Japan) (%)

Domestic and overseas
manufacturing bases

28.7
30,800
20.1
51

12.7

48

48

47

27

25

22

25

6

Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Dec.
2015

7/7

29
21

17

bases

100

%

Non-manufacturing bases

18/19 bases 95%
Dec.
2016

Dec.
2017

Allowance for doubtful accounts

Dec.
2018

Total current assets

Value creation of ISEKI Group

Eco-products

Business development at ISEKI GroupCO2 emission volume

As of December 31, 2018

Non-current assets

Human resource development

Totals of patent and design rights

Overseas patents/Utility modelrights/Overseas design rights

Number of trainees at specialized training facilities

The company has over 2,700 patents, thanks to its
acquisition and accumulation of validated claims,
and is also increasing its total of design rights
every year.

(Cases)3,000

Total of patents in Japan
Total of design rights in Japan

We actively submit applications, using theintellectual property regimes in Europe, North
America, and Asia. The number of patents held by
ISEKI Group is increasing annually.
(Cases)800

ISEKI Group works to realize manufacturing thatis trusted by customers and the provision of
innovative products and services throughspecialized training programs in the three fields:“development,” “production” and “sales andservices.”

Total of overseas patents and utility model rights
Overseas design rights(FY2018)

1,625

2,000

1,000

0

Mar.
2016

Mar.
2017

Mar.
2018

Mar.
2019

0

Mar.
2016

Mar.
2017

Mar.
2018

Property, plant and equipment

Total property, plant and equipment

Jun.
2019

Intangible assets

Initiatives that support value creation

Patents held (overseas)

Financial data

Patents held (in Japan)

Promotion of active participation by females
Rates of return to work following childcare leave
As part of measures to create workplaceenvironments easy to balance work and childcare,
we have established various work-life balance
support mechanisms including childcare leave.
(%)

90

100

100

100

Outside Directors and Outside Corporate Auditors

Whistle-blower system

Number of Outside Directors andOutside Corporate Auditors

Number of whistle-blowing cases

By appointing Outside Directors, we will further
strengthen supervision of business executionthat leads to greater transparency ofmanagement, and reinforce the Corporate
Auditor system to strengthen the supervision ofmanagement functions.

Outside Directors


2/11 persons

Investment securities

ISEKI Group has set up a group-wide whistleblower system in order to establish an open
corporate culture.
(Cases)1787Outside Corporate Auditors
persons

5

4/5

Dec.
2015

35

ISEKI Report 2019

Dec.
2016

Dec.
2017

Dec.
2018

Of which, Independent Directors/Auditors
persons3

Total non-current assets
Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Total assets

ISEKI Report 2019

Company information

Investments and other assets

36

Financial data

Consolidated Balance Sheets

Financial data

Consolidated Statements of Income

23,80314,14015,933

Short-term loans payable

27,216

31,475Current portion of long-term loans payable

8,004

11,401

Lease obligations

2,194

2,337

Accrued consumption taxes

989

434

Income taxes payable

894

368

Deferred tax liabilities

1

2

4,611

4,240

Provision for bonuses

446

482

Provision for loss on construction contracts

391

—

Other

4,220

5,117

Total current liabilities

89,644

95,595Long-term loans payable

24,354

20,571

Lease obligations

4,566

4,009

476

115

5,780

5,780

Non-current liabilities

Deferred tax liabilities
Deferred tax liabilities for land revaluation

122

132

Net defined benefit liability

3,312

4,063

Asset retirement obligations

315

322

Other

1,859

1,696

Total non-current liabilities

40,787

36,692

130,432

132,288

Capital stock

23,344

23,344

Capital surplus

13,453

13,452Retained earnings

16,51916,932

(986)

(983)

52,33052,746

1,818

418

(16)

(0)

Revaluation reserve for land

12,67012,670Foreign currency translation adjustment

1,115

864

Remeasurements of defined benefit plans

1,244

501

Total accumulated other comprehensive income

16,833

14,45480

78

Non-controlling interests

1,671

1,681

Total net assets

70,916

68,959201,348201,248

Provision for directors’ retirement benefits

Total liabilities
Net assets
Shareholders’ equity

Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Subscription rights to shares

Total liabilities and net assets

37

ISEKI Report 2019

155,955
110,00945,945806
3,454
17,627
2,685
654
321
28
2,074
14,60042,252
3,953

908
3,437
17,650
2,801
765
333
31
2,072
14,76442,765
3,179

139
164
132
356
83
170
—
90
479
1,617

133
145
—
—
47
171
499
138
751
1,887

593
93
—
219
414
1,320
4,250

669
88
151
1,083
445
2,438
2,629

36
0
457
—
493

79
52
—
16
148

189
258
30
427
—
905
3,838
1,194
(200)
993
2,844
37
2,807

252
133
160
—
1
548
2,229
756
346
1,102
1,126
35
1,090

ISEKI Report 2019

Value creation of ISEKI Group

26,532

Electronically recorded obligations – operating

158,382
112,175
46,206

Business development at ISEKI Group

Notes and accounts payable – trade

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expense
Packing and transportation expenses
Directors’ compensations, salaries and allowances
Bonuses
Retirement benefit expenses
Provision for bonuses
Provision for directors’ retirement benefits
Depreciation
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Subsidy income
Subsidies received
Rent income
Technical support fee
Gain on sales of scraps
Other
Total non-operating income
Non-operating expenses
Interest expenses
Sales discounts
Foreign exchange losses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Gain on step acquisitions
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Penalty
Other
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Fiscal year ended
December 31, 2018

Initiatives that support value creation

Current liabilities

Fiscal year ended
December 31, 2017

Financial data

As of December 31, 2018

Liabilities

Accrued expenses(Millions of yen)Company information

As of December 31, 2017

Message

Consolidated Statements of Income(Millions of yen)38

Consolidated Statement of Cash Flows

Company information

Consolidated Statement of Cash Flows

Company information

Corporate information

MessageFinancial data

(Millions of yen)

39

ISEKI Report 2019

172
—
(16)
1,807
(297)
(1,028)(1,340)
9,521
269
(665)
373
—
—
(427)
(1,455)
7,616(5,646)
390
(0)
0
11
(158)
130
(5,273)(6,849)
438
(940)
77
(2,783)98
15(9,944)

2,582
5,058
(9,384)420(2,618)
(7)
(341)
(3)
0
(4,294)146(6,113)
13,909
7,795

4,313
8,122
(8,506)979(2,254)
(0)
(678)
(4)
0
1,970
(51)
(408)
7,795
7,387

Value creation of ISEKI Group

152
427
—
(142)
(3,805)(1,900)
860
5,071
312
(593)
440
(545)
(315)
—
(1,061)
3,308

ISEKI & CO., LTD.
700 Umaki-cho, Matsuyama-shi, Ehime-ken, 799-2692 JAPAN
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPAN
August 1926
23,344 million yen
Consolidated: 5,650 (Development and Production Section: 1,800; Sales Section: 3,460; and Other Sections: 390)
Non-Consolidated: 729
ISEKI Group develops its business activities centered around the development, production and sales of agricultural
machinery related to rice farming, vegetable farming, etc. ISEKI and its associated companies that engage in
agriculture-related businesses are associated with one of the following three sections: “Development andProduction Section,” “Sales Section” and “Other Sections.”⃝ Development and Production Section⃝ Sales Section
T h e d e v e l o p m e nt a n d d e s i g n o f a g r i c u l t u ra l
In Japan, ISEKI Group conducts sales activities mainly
machinery are mainly conducted by ISEKI & Co., Ltd.,through its sales subsidiaries across the country.
while the production of agricultural machinery andIn overseas countries, ISEKI Group conducts sales
parts processing related thereto are conducted by
activities through its associated companies, local sales
associated companies.
agencies, etc.

Business development at ISEKI Group

2,229
6,727
133
2
—
752
(52)
(278)
669
41

Company name:Head office:Tokyo headquarters:
Foundation:
Paid-in capital:
Number of
employees:
Details of
business:

Status of shares
Total number of authorized shares
Shares issued and outstanding
Number of shares per trading unit
Number of shareholders

69,000,000 shares
22,589,994 shares (excluding treasury stock 394,999 shares)
100 shares
19,945Major shareholders (top 10)
Name of major shareholder

Number of shares held
(shares)Mizuho Bank, Ltd
Japan Trustee Services Bank, Ltd. (Trust Account)
The Norinchukin Bank
Sumitomo Mitsui Trust Bank, Limited
The Master Trust Bank of Japan, Ltd. (Trust Account)
Iseki kabushiki hoyukai (Company’s Stockholding Co-op.)
The Iyo Bank, Ltd.
Iseki eigyo-hansya group syain mochikabukai(Business-selling Group Holdings)
Sompo Japan Nipponkoa Insurance Inc.
Japan Trustee Services Bank, Ltd. (Trust Account 5)

Shareholding ratio(%)

1,070,800
985,000
868,785
800,000
774,300
638,223580,042

4.74
4.36
3.84
3.54
3.42
2.82
2.56

460,500

2.03

434,500
391,300

1.92
1.73

Initiatives that support value creation

3,838
7,005
258
—
(813)
(1,195)
(0)
(303)
593
95

Company profile(Note) Treasury stock
A total of 394,999 shares of treasury shares are excluded from the above list of major shareholders. Shareholding ratios are calculated after the deduction oftreasury shares.

Number of shares held by type of shareholder (reference)

Financial data

Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Loss on disaster
Subsidy income
Increase (decrease) in net defined benefit liability
Loss (gain) on sales of investment securities
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
and intangible assets
Surcharges
Penalty
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Proceeds from subsidy income
Payments for loss on disaster
Surcharges paid
Penalty paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Decrease (increase) in loans receivable
Decrease (increase) in time deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from sales and leasebacks
Repayments of lease obligations
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Fiscal year ended
December 31, 2018

Shares issued and outstanding / 22,589,994 shares (excluding treasury shares 394,999 shares)
Number of shares held
(shares)

Individual shareholders and other
Financial institutions
Other Japanese companies
Foreign companies and individuals
Securities companies

7,954,522
8,333,312
3,864,674
2,200,731
236,755

Shareholding ratio
(%)

35.21
36.89
17.11
9.74
1.05

Evaluation by third parties

Company information

Fiscal year ended
December 31, 2017

DBJ Environmental Rating – highest rating 13 times in a row –In April 2019, ISEKI received the highest rating as one of the “Companies doing environment-friendly business activities progressively,”
13 times in a row, by the Development Bank of Japan Inc., in receiving loans under the DBJ Environmentally Rated Loan Program.
Points that arehighly evaluatedin the rating forthis year❶ T hat ISEKI discloses the business-activity-based value creation process whilestaying in line with trends in information disclosure.
❷ That ISEKI is committed to more sophisticated initiatives to establish sustainablesupply chains❸ T hat ISEKI continues support for agricultural workers in Japan and overseas
through the provision of new solutions
ISEKI Report 201940

Company information

Company information

Offices in Japan and overseas
Major offices in Japan
Sales subsidiaries

Kansai Office (IMPL)

Niigata Office

Head Office(Matsuyama Office)Kansai OfficeTobe (IMPL)
OfficeTsukubamirai Office
Ibaraki Center
Niigata Office

Head Office
Kumamoto
Office(Matsuyama Office)Tobe Office

Tsukubamirai Office
Ibaraki CenterTokyo Headquarters

Kumamoto Office
Tokyo Headquarters

Major overseas offices and business partners

Dongfeng ISEKI Agricultural
Machinery Co., Ltd. (China) (*1,2)(Xiangyang, Hubei Province andChangzhou,
Jiangsu
Province)
Dongfeng
ISEKI
Agricultural

ISEKI Hokkaido Co., Ltd.
ISEKI Tohoku Co., Ltd.
Sales
ISEKI subsidiaries
Kanto Koshinetsu Co., Ltd.
Gunma
ISEKI Sales
ISEKI
Hokkaido
Co., Co.,
Ltd. Ltd.
ISEKITohoku
Hokuriku
Co.,
ISEKI
Co.,
Ltd.Ltd.

ISEKI Kansai Chubu Co., Ltd.
Mie ISEKI Sales Co., Ltd.
ISEKI Chugoku Co., Ltd.
ISEKIKansai
ShikokuCo., Ltd.
ISEKI
Chubu
Co., Ltd.
ISEKI
KyushuMie
ISEKI
SalesCo.,
Co.,Ltd.
Ltd.

ISEKI Kanto Koshinetsu Co., Ltd.
Gunma ISEKI Sales Co., Ltd.
Associated
ISEKI Hokuriku companies
Co., Ltd.

ISEKI Chugoku Co., Ltd.
ISEKI Shikoku Co., Ltd.
ISEKI Kyushu Co., Ltd.

ISEKI-Matsuyama MFG. Co., Ltd.
ISEKI-Kumamoto MFG. Co., Ltd.
Associated
ISEKI-Niigata companies
MFG. Co., Ltd.
ISEKI-Shigenobu
Co., Ltd.
Ltd.
ISEKI-Matsuyama MFG.
MFG. Co.,

ISEKI Matsuyama Factory K.K.
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKIMatsuyama
TLS Co., Ltd.
ISEKI
Factory K.K.
Kita-Nihon
Shodo
ISEKI
AGRI Co.,
Ltd.K.K.

ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.

AGCO Group (*3)
MASSEY FERGUSON(Atlanta and Heston, U.S.)

Machinery Co., Ltd. (China) (*1,2)(Xiangyang, Hubei Province andChangzhou, Jiangsu Province)

N.V. ISEKI EUROPE S.A. (Belgium) (*1)
ISEKI France S.A.S. (France)
Iseki-Maschinen GmbH Deutschland (Germany) (*1)
PREMIUM
TURF-CARE(U.K.) (*1)
(*1)
N.V.
ISEKI EUROPE
S.A. LTD.
(Belgium)

PT. ISEKI INDONESIA (*2)
(Indonesia)*2: Joint ventures

AGCO Group (*3)
MASSEY FERGUSON(Atlanta and Heston, U.S.)

PT. ISEKI INDONESIA (*2)
IST Farm Machinery (Thailand) (*1,2)(Indonesia)
ISEKI (THAILAND) CO., LTD. (Thailand)

ISEKI France S.A.S. (France)
Iseki-Maschinen GmbH Deutschland (Germany) (*1)
PREMIUM TURF-CARE LTD. (U.K.) (*1)
*1: Non-consolidated subsidiaries

ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

*3: OEMIST Farm Machinery (Thailand) (*1,2)
ISEKI (THAILAND) CO., LTD. (Thailand)(As of January 1, 2019)

Major products
Cultivating and mowing machinery

Planting machinery

Harvesting and processing machinery

Tractors, tillers, high-clearance
multipurpose vehicles
and mowers

Rice transplanters andvegetable transplanters

Combine harvesters, binders,
harvesters, rice hullers, dryers, ricegraders and vegetable harvestingand processing machinery

Implements, spareparts and repair fees

Net sales composition ratio by product(Fiscal year ended December 31, 2018)

Net sales
156.0
billion yen

In-ridge partial fertilizer (implements)

Tractors

Rice transplanters
Combine harvesters

Other agriculture-related business

Cultivating and mowing machinery

Agricultural facilities and materials

Planting machinery

53.3 billion yen (34.2%)
11.1 billion yen (7.1%)
Harvesting and processing machinery

20.6 billion yen (13.2%)
Implements, spare parts and repair fees

43.4 billion yen (27.8%)
Other agriculture-related businessMowers41

ISEKI Report 2019

Vegetable transplanters

Rice hullers

Hydroponics facilities

27.6 billion yen (17.7%)