ISEKI Report 2022

Contact about this ISEKI report

ISEKI & CO., LTD

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 June 2022

ISEKI Report 2022

見やすいユニバーサルデザイン
フォントを採 用しています。

Corporate Philosophy (Purpose)

ISEKI Group strives to contribute to the creation the prosperous and sustainable society through“providing innovative products and higher quality of services to the customers”

Long-term Vision

To be a Solution Provider for Agriculture & LandscapeSupporting a farming industry full of dreams and beautiful landscapes andcreating a future of sustainable agriculture and landscape

Our Value

Seven Promises – To Contribute to the Creation of the Prosperous
and Sustainable Society –1

1. Spirit

Inheriting our company’s founding philosophy, we always carefully consider food, agriculture andlandscape and move forward with farmers.

2. Front runner
3. Quality
4. Solution
5. Innovation
6. Global
7. Future

As a front-runner, we produce innovative products and higher quality services.

ISEKI Report 2022

We will always make premium quality products with passion.
We constantly take action for solutions to customer issues.
We create innovations with cutting edge technologies and provide new value.

Spirit of ISEKI – Passion of founder –“I want to free farmers from exhausting labor”
Agriculture was hard work, done by hand and with thehelp of animal power. To change this, Kunisaburo Iseki, thefounder, realized laborsaving through mechanization andendeavored to further develop agriculture. “We produce
good machinery,” Kunisaburo Iseki, the founder, used tosay. He devoted himself to providing products that madecustomers happy. The founder’s passion has been inherited
in an unbroken line to this day 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 the shareholders;
and thereby we will fulfil our social mission.

With a global perspective, we work toward solutions to the world’s social issues.
Paving the way for tomorrow, open up the future of food, agriculture and landscape.

ISEKI Report 20222

Co nte nt s

Key Points of ISEKI Report 2022

Businessoverview

ISEKI Report 2022 presents our mid- to long-term strategies, measures, and initiatives for what kindof value we will create and how we will create and sustain that value for the solution of social issues
through business, as our long-term vision of being a “solution provider for agriculture and landscape.”
We hope that it will give our wide-ranging stakeholders, including shareholders and investors, a deeper
understanding of the value creation of the ISEKI Group.
ISEKI Report 2022

Key Point 1
ISEKI Report 2022

Key Point 2

ISEKI & CO., LTD.
[Development and design]

P7－10、
35－38

What kind of company is ISEKI?
Social issues that we have solved to date and the business activities of the ISEKI Group
Introduction (P5–10) / Business strategies (P31–44)

Key Point 3

P7－10、
31－34

Purchasing
andprocurement

The strengths that the ISEKI Group has cultivated to date and unique initiatives such as environmental
management
ISEKI Group’s strengths (P27–30) / Strategies of product development and intellectual property(P35–38) / Environmental initiatives (P39–44)

Introduction

Suppliers
Raw materials andproduction parts

Enhancement of brand value (building of trust)

History of solving social issues

5

ISEKI Group (Business activities)

7

ISEKI Group’s value creation aims

Efforts to improve satisfaction with products– Establishing trust with customers –47

Supply chain management– together with suppliers –49
50

Products for sale

Customers
Distributors
OEM partners

Communication map

This report presents both financial and non-financial information
to introduce initiatives for improvement of the corporate valueof ISEKI Group to a wide range of stakeholders including
shareholders and investors in an easy-to-understand manner.

ISEKI Group uses a variety of tools to communicate with its
stakeholders, sharing a range of information.
We will continue our efforts toward constructive dialogue
and the enhancement of information disclosure to ensure our
stakeholders’ understanding of ISEKI Group.

Covered period

Message from our President

11

Financial and capital strategies

17

Enhancement of employee engagement

Value creation process

19

Materiality

21

Human resources strategies– Maximizing ISEKI Group’s human resource capability –51

From January 2021 through December 2021.
The report also includes some information from and afterJanuary 2022.

Fostering corporate culture– My own henkaku (Change) –

55

Scope

Business strategies for value creation

Enhancement of corporate value by reinforcing corporate governanceMid-term Management Plan

23

ISEKI Group’s strengths

27

Domestic Market Strategies (Domestic Business Company)

31

Overseas Market Strategies (Overseas Business Company)

33

Product/Development Strategies (Development and Production Company)

35

Intellectual property strategies

37

ISEKI Group’s environmental management

39

Mid- to long-term environmental targets and results

40

Financial highlights

67

Response to climate change

41

Consolidated financial summary

68

Initiatives for the realization of a decarbonized society

44

Non-financial highlights

69

Foundation for sustainable growth

Messages from Outside Directors

57

Corporate governance

59

List of officers

61

Risk management

63

Compliance

65

Financial and non-financial data

Company profile / Shareholder information

Sustainability in ISEKI Group45

Stakeholder engagement

46

Company profile / Status of shares / Evaluation by third parties

70

ISEKI Group engages in business activities centered around thedevelopment, production, sales and services of agricultural machinery
as well as landscaping machinery.
Development and production: Development and design are primarily
conducted by ISEKI & CO., LTD., while the production-related companies
conduct production and parts processing.
Sales and services: Sales are conducted through the Group’s sales
subsidiaries in Japan and through its affiliated companies overseas.
The Group also conducts sales and service activities through local
distributors and OEM partners.

Editing policy

Communities <Co-existence with local communities>– Ties with local communities –ISEKI Report 2022

Direct sales[Sales and services][Production and parts processing]Our mid- to long-term strategies, measures, and materiality for achieving our long-term vision of being a“solution provider for agriculture and landscape”
Message from our President (P11–16) / Materiality (P21–22) / Mid-term Management Plan (P23–26)

Contents

3

ISEKI & CO., LTD.
andAssociatedcompanies

Sales
subsidiaries

Production-relatedcompanies

ISEKI Group’s vision

Uniquely “ISEKI” initiatives
ISEKI Report 2022

ISEKI
Group

As a general rule, this report covers the activities of ISEKI &Co., Ltd. and ISEKI Group’s associated companies in Japan andoverseas. Notes will be added in this report when the range ofactivities and/or data is limited in certain part hereof.

Referenced guidelines• International Integrated Reporting Council (IIRC): “TheInternational Integrated Reporting Framework”• Ministry of Economy, Trade and Industry “Guidance forCollaborative Value Creation”• GRI Standards• ISO26000• Ministry of the Environment, “Environmental Reporting
Guidelines 2018”• Ministry of the Environment, “Environmental Reporting
Handbook–Environmental Reporting Guidelines 2018”

Financial

Non-financial

ISEKI Report (compilation of key information)• Mid-term Management Plan
presentation materials• Quarterly financial summaries• Quarterly briefing presentationmaterials• Securities reports• Corporate Governance Report• Sustainability website (includes
ESG data)• Product information

Corporate website

About forecasts, plans, and targets
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
to changes in economic conditions and market trends.
*Amounts and numbers of shares are rounded down to theunit.

ISEKI Report 2022

4

Intro du c tio nHistory of solving social issues
We embarked on our journey with the philosophy of our founder,“free farmers from exhausting labor,” and have created social andeconomic value through “providing innovative products and higher
quality of services to the customers.”

1926 Iseki Farm Implement
Trading Co. was established.
1936 ISEKI & CO., LTD. was established.

1946 Matsuyama Factory was established.
1949 Kumamoto Factory was established.

1958 Began establishing sales subsidiaries.
Subsequently, sales subsidiaries established around Japan.
1961 Niigata Factory was established.
Listed its shares on the Tokyo Stock Exchange.
1969 Renamed Tokyo Branch as Tokyo Headquarters.
1971 Established N.V. ISEKI Europe S.A. in Brussels.
1972 Expanded Matsuyama Factory,
relocated Head Office toMatsuyama.
1977 Established Central Training
Center in Ibaraki Prefecture.
Commenced exporting tractors(OEM) to North America

2011 Established Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd. in Hubei
Province, China.
2012 Established PT. ISEKI INDONESIA.
2013 Established ISEKI Technical Training Center (ITTC).
Established ISEKI SALES (THAILAND) CO., Ltd. (current IST Farm MachineryCO., Ltd.)2014 Integrated the businesses of Iseki-Changzhou Mfg. Co., Ltd. and Dongfeng
Iseki Agricultural Machinery (Hubei) Co., Ltd. and established Dongfeng Iseki
Agricultural Machinery Co., Ltd.
Acquired French agents Yvan Beal S.A.S. and YB Holding S.A.S. (current
ISEKI France S.A.S.) and made them subsidiaries.
2015 Established Dream Agricultural Research Institute.
2016 Established Iseki Basic Engineering Training Center (IETC).
2017 Established ISEKI Global Training Center (IGTC).
2020 Made Thai distributor IST Farm Machinery Co., Ltd. a subsidiary.

2001 Separated the Production Section from the company
and established ISEKI-Matsuyama MFG, Co., Ltd.
and ISEKI-Kumamoto MFG, Co., Ltd.
2003 Established Iseki-Changzhou Mfg. Co., Ltd. in
Jiangsu Province, China.

1926

1945 to 1950s

1960 to 1970s

Main social issues
and needs• Post-war food production increase• Start of the high economic growth period• High economic growth period, decline in
agricultural work force due to concentrationof population in urban areas• Modernization of farming• Progress of globalization• Decline in agricultural workers,
advancement of aging society• Increasing interests in security and safety of food
• Improvement in food self-sufficiency rate
• Continued development in agriculture• Increase in size of farm business• Decline in agricultural workers, aging
population• Adding high value to farm produce

ISEKI Group’s solutions• Development and spread of agricultural
machinery, which supports food production
increase• Increase in size and diversification ofagricultural machinery• Establishment of integrated system for
automating rice farming• Development of machinery contributing tolaborsaving in and lowering cost of farming• Mechanization of vegetable farming• Development of riding mowers (lawnmowers) for Europe• Development of large machinery to contribute to improvementof productivity• Strengthening of intangible aspects such as farm businessproposals and support• Full-fledged roll-out of agricultural machinery in Asian countries• Realization of smart agriculture utilizing
latest technology and data
• Promotion of environmentally soundagriculture• Saving of labor and improvement of
productivity through automation ofagriculture• Contribution to industrialization andeconomic development of Japan
Our auto-threshing combine harvesters andrice transplanters were selected among thebest 100 innovations in post-war Japan.

• Improvement of profitability through laborsaving and lower costs• Diversification and higher profitability through expansion tovegetable farming, etc.
• Improvement of work efficiency in landscaping in countries
outside Japan

Creation of social value
Contribution to sustainable agriculture

1980 to 1990s

2000s

1960

1960

174

174

1986

hours

1978
Development of domestically-manufactured
large-sized tractors and riding rice transplanters

hours

1965

1965

141

141

hours

Efficiency and productivity were further improved as tractors
became larger and rice transplanters were made rideable.

1926

118

Began with fullyautomated rice hullers

hours

World’s first! “Auto-threshingcombine harvesters”
Enabled the process from rice reaping
to threshing to finish 16 times faster.

Work efficiency doubled throughthe uses of rotary-type planting
rods (two seedlings planted per
rotation), as compared with theprevious crank-type planting rods
(one seedling planted per rotation).

Present day and toward the future

230

awards by FY2021
Number of invention awards received(

Cumulative number of awards fromthe Japan Institute of Invention andInnovation (as of March 2022))

National Awards for Inventions: 19
Regional Awards for Inventions: 211
Of which, Honorable
Mention Awards: 38

1975

91

hours

1971

Two-wheel rice transplanters equippedwith backward-tilting seedling tanks
A broad range of users loved them and “Sanae”
became a synonym for rice transplanters.

Enhancement ofquality of life

2009

hours

We will contribute to town
development in Europe andenrichment of private lives
in North America and othercountries.

Industry’s first! Seven-row reaping
1980

1980

64

64

hours

hours
1990

44

hours

1990

44

We are promoting smart
agriculture that utilizes latest
technologies such as robot
technologies and information andcommunication technology (ICT).
We aim to realize highly efficientand productive farm business.

We will contribute to more
efficient food production andmore productive agriculture
through automation of agriculture
in ASEAN and other countries.

)

118

91

Smart agriculture

Contribution toagriculture of the world

which, 2 Honorable Mention( OfAwards
and 2 Special Awards )

hours
1975

Solutions for agriculture and landscapeSupporting a farming industry full of dreams andbeautiful landscapes and creating a future ofsustainable agriculture and landscapeTechnologies
Technologies
accumulated
accumulatedinin
association
association
with invention
with invention

(

1970

ISEKI & CO., LTD. was established.

1966

Development of rotary
planting rods for ricetransplanters

hours
1970

• Contribution to SDGs achievement• Further improvement of efficiency and productivity by making
machinery larger, smarter, and so on• Reduction of environmental burden• Improvement of productivity of agriculture in Asian countries

Productivity improvement of agriculture in Japan through automation and modernization–Time required for rice farming reduced to one-seventh
Direct labor
Directhours
laborperhours
10 acresper 10in acresrice farmingin rice farming(national(national
average）
average）

2030

2010 to 2020s

Developed the industry’s fastest combine
harvester capable of six-row reaping with amaximum working speed of 2.0m/s, as wellas the industry’s first combine harvester
capable of seven-row reaping.

Environmental
preservation

hours
2010

2010

2015

2015

25

25

24

24

hours

hours hours

2010

2010

We will contribute to therealization of a decarbonized
and recycling-oriented society.

hours

Source: Ministry of Agriculture, Forestry and Fisheries

1926

5

1926

ISEKI Report 2022

1950

1950

1960

1960

1970

1970

1980

1980

1990

1990

2000

2000

2020

2020
ISEKI Report 2022

6

Introduction

ISEKI Group
ISEKI Group engages in business activities centered around the development, production, sales and servicesof agricultural machinery for cultivation of rice, vegetables, etc. as well as landscaping machinery.

Japan: Main associated companies/sales subsidiaries

number of employees (consolidated)

Net sales [by product and by region]

5,371

Other agriculture-related businessNet sales

Development and manufacturing
1,669
department

Cultivating and mowing machinery

26.1 billion yen

Net sales

54.7 billion yen

34.6%

16.5%

Sales department

3,356

Other division346(As of December 31, 2021)

Implements, spare parts and repair fees

Net sales

ISEKI-Matsuyama MFG. Co., Ltd.
ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

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

Net sales
Planting machinery158.1 billion yen

Overseas net sales 40.7 billion yen

Net sales

Overseas net sales (%) 25.8%

North America
EuropeAsia
Other

11.3 billion yen

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

Domestic net sales 117.3 billion yen

Overseas net sales by region

Domestic net sales (%) 74.2%

15.1 billion yen
15.9 billion yen
9.1 billion yen
0.5 billion yen

7.1%

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

Harvesting and processing machinery

12.0%

Net sales

18.9 billion yen

Overview of products and services
We engage in a variety of businesses that include development, production and sale of and post-sales services for cultivating andmowing machinery such as tractors and riding lawn mowers, planting machinery such as rice transplanters and vegetable transplanters,
and harvesting and processing machinery such as combine harvesters for agricultural use by agricultural producers, hobby farmers, etc.
in Japan and other Asian countries, as well as for landscape developers, hobby farmers, general consumers, etc. in Europe and North
America. We also sell OEM products such as implements and parts.
Main sales region

Category

Description

Agricultural
machinery products

Developed and produced mainly by ISEKI Group (machinery for agriculture and landscaping)

Asia

North
Europe America

For agriculturaluse

For landscaping

Japan(*1, 2)[Strategic partners]
U.S.
AGCO Corporation of AGCO Group (*3) (AGCO)
India
Tractors and Farm Equipment Limited (TAFE) (business alliance)

Category

Production sites*1: Non-consolidated subsidiaries *2: Equity-method subsidiary *3: OEM customer

Main sales region

Description

Implements, spareparts and repair fees

For cultivating
and mowing

Tractors, riding lawn mowers,
tillers, multipurpose vehicles,
high-clearance multipurpose
vehicles, etc.

Tractors (for agricultural use)

High-clearance
multipurpose vehicles

Tillers

Other agriculturerelated business

Parts for repairing products of Japanese andforeign implements manufacturers, etc. (part ofthem are developed and produced by ISEKI Group)
Repair, maintenance, etc.

For planting

Tractor for overseas markets(for landscaping)

Rice transplanters, vegetabletransplanters, etc.

Combine harvesters, binders,
dryers, rice hullers, measuring
and sorting machinery ricegraders, etc.

Partof theregionMainly
parts

−

−

−

Facility construction (agricultural facilities, plantfactories), agricultural materials (fertilizers, etc.),coin rice milling business, rice cooking business,
etc.
Coin rice milling machine−

ISEKI-Niigata
MFG. Co., Ltd.
(Japan)ISEKI-Shigenobu
MFG. Co., Ltd.
(Japan)PT. ISEKI INDONESIA(Indonesia)

Dongfeng Iseki Agricultural
Machinery Xiangyang Factoryand Changzhou Factory(China)Main machine Tractors, riding lawn
Combine harvesters,
mowers, high-clearance
and carrot harvesting
types
multipurpose vehicles,machinery
produced
dryers, and diesel engines

Rice transplanters,
vegetable transplanters,
and rice hullers, binders

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

Tractors and riding lawn
mowersTractors, ricetransplanters, combine
harvesters, high-clearance
multipurpose vehicles, andvegetable transplanters

Main destination Japan, Asia, Europe, andfor shipment North America

Japan and Asia

Japan, Asia, Europe, andNorth America

North America, Asia, andEuropeAsia

Associatedcompanies(location)

ISEKI-Matsuyama
MFG. Co., Ltd.
(Japan)ISEKI-Kumamoto
MFG. Co., Ltd.
(Japan)Vegetable transplanters−
Auto-threshingcombine harvestersPartof theregionProduction sites/main machine types produced−

Rice transplanters

For harvestingand processing

Riding lawn mowers

North
Europe America

Repair and maintenance

Solution culture facility
Tractor for overseas markets(for light civil engineering)

Asia

Japan

Implements

ISEKI Report 2022

Sales subsidiaries

47.0 billion yen
29.8%

7

Associated companies

Rice hullers

Japanese radish
harvesting machinery−

Japan and Asia

ISEKI Report 2022

8

Intro du c tio n

ISEKI GroupWe conduct business in Japan, as well as overseas where priority is put on “Europe,” “North America,”and “Asia.”

Japan
Other
24.3 billion yen
21%

Cultivating
and mowing
machinery
23.9 billion yen
20%

Net sales
117.3
billion yen

Planting
machinery
9.0 billionyen
8%
Harvestingand processing
machinery
16.6 billion yen
14%

Implements,
parts, and repair
43.3 billion yen
37%

Through sales subsidiaries, we not only sell and provide
services related to agricultural machinery to customers but
also collect voices and needs of customers to reflect them inour product development and other activities.
Sales route

11 sales subsidiaries

We started business in the 1960s. Since then, the sales area
has expanded to cover the entire Europe.
We offer ISEKI-brand compact and high-performance
products in line with market needs mainly for landscapinguse.

EuropeImplements
and parts
3.8 billion yen
24%

Sales route (major agents)

Net sales
15.9
billion yen

Agricultural machinery products (for agricultural use)
As an integrated manufacturer specializing in agricultural machinery, we
have established an integrated system for automating farming of rice,
field crops, vegetables, etc. and we also have a broad range of productlineup including products for hobby farmers.

Implements, parts, and repair fees

Agricultural
machinery
products(mainly
cultivating
and mowing
machinery)12.0 billion
yen
76%

A greater emphasis has been placed on the maintenance system(readiness of parts and for repair) following the increase in size offarm business. We have placed a focus on ancillary services such as
implements, parts, and repair as a stable revenue base not too muchdependent on market trends and increased such services.

France: ISEKI France (consolidated subsidiary)
Germany: ISEKI Germany
U.K.: ISEKI UK & IRELAND

Agricultural machinery products (for landscaping)
We offer ISEKI-brand products, mainly compact tractors used forlandscaping, such as mowing lawns in parks and road cleaning, as wellas riding lawn mowers and tractors for agricultural use.

Other products
We purchase and sell electric- and gasoline-powered lawn-mowing
products which have a high synergy effect with our products.

Other
We handle construction of facilities such as agricultural facilities
and solar power-based plant factories, agricultural materials such as
fertilizers, food/kitchen-related products, etc.
Manned monitoring-based robot rice transplanters which promote highexpectations for further laborsaving

Riding lawn mowers used for maintenance, etc. of parks and fields

We sell rice farming-related and other machinery nurtured
through our business in Japan in each of the ASEAN, East
Asian (South Korea and Taiwan), and Chinese markets.

Asia
Implements
and parts
0.8 billion yen
9%

ASEAN market
In the ASEAN market where future growth is expected, we conduct sales
and services into neighboring countries with IST, which became ourconsolidated subsidiary, playing a central role.

Net sales
9.1
billion yen

Sales route

IST (consolidated subsidiary)
Agricultural
machinery
products
8.3 billion yen
91%

East Asia (South Korea and Taiwan)
In response to their increased needs for advanced technologies andlarge-scale agricultural machinery, we provide large-sized, highperformance rice-farming machinery, etc. that is in active use in Japanthrough local sales agents.

We supply Massey Ferguson-brand products on an OEM
basis through our business partnership with AGCO
Corporation, a major global manufacturer of agricultural
machinery.

North America
Implements
and parts
0.6 billion yen
4%

Sales route

U.S. and Canada: AGCO Corporation (OEM)Net sales
15.1
billion yen

Agricultural machinery products: Compact tractors
Agricultural
machinery
products(mainly
cultivating
and mowing
machinery)
14.4 billion
yen
96%

We sell our products, mainly sub-compact tractors for private users, inentire North America, including Canada.
We contribute to the improvement of quality of private lives throughlandscape, as our compact tractors equipped with a front loader,backhoe, mower deck, etc. are used for park management anddevelopment as well as hauling of such materials as feeds for horses.

Sales route

South Korea: Local sales agents
Taiwan: Local sales agents

Chinese market
We locally manufacture and sell tractors, rice transplanters, combine
harvesters, etc. which are adapted to operation in rice paddies. We
also sell agricultural machinery equipped with latest technologies andmanufactured in Japan.

Combine harvesters for South Korea

Tractors locally manufactured in China

Sales route

Used for hauling, etc. with a front loader

Used for mowing with a mower deck

Dongfeng Iseki (equity-method subsidiary)*Local net sales of Dongfeng Iseki are not included in our consolidated financial statements.

9

ISEKI Report 2022

ISEKI Report 2022

10

Message from our President

We strive to contribute to the creation the prosperous
and sustainable society through “providing innovative
products and higher quality of services to the customers”

Review of the fiscal year ended
December 31, 2021
Achievement of first-year targets of the Mid-termManagement Plan

“Toward the next 100 years...”

Shiro Tomiyasu

I would like to extend my prayers for the recovery of all
those who have suffered as a result of the COVID-19
pandemic and to pay my profound respects to thehealthcare workers and others who have been working
strenuously on the frontlines during this crisis. I would
also like to express my sincerest condolences to thevictims of the current situation in Ukraine and my hopesthat this situation will be resolved as soon as possible andthat peace and safety will be restored to daily life in that
region.
2021 was the first year of the new Mid-termManagement Plan, whose target year is 2025, the100th anniversary of ISEKI’s foundation. It was animportant year that marked our first step in building thefoundation of the next 100 years. The initiatives that we
implemented in line with the measures of the Mid-termManagement Plan included strengthening our responses
to changes in the structure of the agricultural industry,
such as enhancing our customer services in Japan, as wellas initiatives to strengthen our overseas sales, primarily
in our core markets of North America, Europe, and Asia.
As a result of these efforts, in contrast with the previous
fiscal year (ended December 2020), in which we recorded
a net loss due to significant impairment losses, both sales
and profit increased in the fiscal year ended December
31, 2021, and we recorded our highest profit result inrecent years. After we upgraded our earnings forecast

ISEKI Group’s value creation aims

ISEKI Group’s value cr eation aims

during the fiscal year, the results were almost in line withthe revised forecast. Moreover, we paid a dividend of 30
yen and achieved the first-year targets of the Mid-termManagement Plan.
By region, sales of tractors, rice transplanters, andimplements trended positively due to a recovery fromthe reactionary fallout from the consumption tax hikeand demand spurred by business continuity subsidies
and other factors. Maintenance revenue from parts andrepair fees, an area in which we are working on revenueexpenditure structural reform at our sales subsidiaries,
was also strong. Purchasing sentiment among farmers
cooled due to the fall in rice prices from autumn onward,
and cautious attitudes toward the purchase of combine
harvesters were observed, but Japan sales overall
exceeded the previous year’s result.
Overseas sales increased year on year in all regions.
Net sales were the highest on record. Sales of compact
tractors in North America and consumer products in
Europe performed well thanks to our efforts to identify
changes in lifestyles due to the pandemic. In Asia,
demand for agricultural machinery trended toward
recovery in Thailand, and sales at IST, which became aconsolidated subsidiary in December 2020, were alsosteady. In China, demand for agricultural machinery was
positive due to the food security policy of the Chinese
government, and sales of rice transplanters by Dongfeng
Iseki Agricultural Machinery Co., Ltd. remained as steadyas the previous fiscal year. In South Korea, strong salesof combine harvesters and other products continued
thanks to increasing demand for large, high-performance
agricultural machinery.

Representative Director, President & Executive Officer
ISEKI & CO., LTD.

Business results trends
Net sales■ Japan sales

Operating income / Operating margin■ Overseas sales■Operating income

155.9

Operating margin(Billion yen, %)(Billion yen, %)

149.8

149.3

158.1

2.0%

2.6%

1.8%
1.4%

78.7%

78.5%

77.6%

74.2%

3.1

4.1

2.7
2.0

21.3%
Dec.
2018

11

ISEKI Report 2022

21.5%
Dec.
2019

22.4%
Dec.
2020

25.8%
Dec.
2021

Dec.
2018

Dec.
2019

Dec.
2020

Dec.
2021

ISEKI Report 2022

12

Message from our President

ISEKI Group’s value creation aims

ISEKI Group’s value cr eation aims

Corporate Philosophy
Aiming to achieve an operating margin of 5% in
FY2025, which is the only numerical target set in the
Mid-term Management Plan, we set an initial target for
FY2021 for 2.3% and pursued initiatives to achieve thattarget. Despite the emergence of initially unforeseenchallenges and risks such as the adverse effects ofproduction delays due to supply chain disruptions andsoaring raw material prices, the operating margin of 2.6%
that we achieved was higher than expected, due in partto higher sales and income in Japan and overseas.
Although we made a good start in the first year of the
Mid-term Management Plan, the business environmenthas been changing drastically due to the global
COVID-19 pandemic, supply chain disruptions, difficulties
in procuring production parts, and soaring raw material
prices, and I believe that responding to such changes will
be a challenge for ISEKI Group. We will further acceleratehenkaku (Change), the keyword of the new Mid-termManagement Plan in the organization, and work on
our transformation to a lean and streamlined businessstructure.

ISEKI & CO., LTD.’s Purpose
We strive to contribute to the creation theprosperous and sustainable society through“providing innovative products and higher qualityof services to the customers”
Directions of market environment
Last year, amid the ongoing structural changes inagriculture in Japan, including the increase in largescale farming, utilization of cutting-edge technologies,
and crop diversification to dry-field crops and vegetable
farming, the Ministry of Agriculture, Forestry and Fisheries
announced the Strategy for Sustainable Food Systems,
MeaDRI. This strategy strikes a balance between the
improvement of production capabilities and sustainability
in the food, agriculture, forestry and fisheries industries
through innovation. To realize the strategy, various
measures are being implemented, including theacceleration of smart agricultural technologies, thepromotion of carbon neutrality, and the expansion oforganic farming. For example, agriculture robots andsmart agricultural machinery are becoming a mainstay forlarge, understaffed farms. They are attracting attention
as a tool for achieving zero CO2 emissions as well as for
greater efficiency of farm operations. ISEKI Group has ahuge role to play in this area, and we will work on it in aproactive manner.
Overseas, we will strengthen our cooperative
relationships with our strategic partners in each region,
particularly North America, Europe, and Asia, andexpand our business domains. In North America, evenwith the adverse effects of the COVID-19 pandemic,
the compact tractor market, one of ISEKI Group’s target

13

ISEKI Report 2022

markets, has been growing significantly due to changes
in lifestyle as more consumers relocate to more spacious
residential areas in the suburbs. We believe that thismarket will become stable over the medium to long term,albeit with some fluctuations along the way. As well as
strengthening our collaboration with our OEM partner,
we will also work to expand our product range andincrease sales. In Europe, where our business focuses on
the landscaping market, ISEKI Group has a long businesshistory of more than 50 years, and recognition of the
ISEKI brand is high. We will continue to pursue productdevelopment to meet the market needs, while also
seeking to elevate our position in the landscaping market
through research and development of electric products.
Asia, where wet rice farming is farmers’ main focus, isthe region with the most potential for expansion of the
agriculture market, with the growing global need toincrease food production. In ASEAN in particular, we will
strive to expand sales by rolling out the technology andexpertise we have developed in Japan, centered on IST
Farm Machinery, a consolidated subsidiary of the ISEKI
Group.
Corporate Philosophy
Based on these directions, last year, ISEKI Group
formulated the new Mid-term Management Plan witha target year of 2025, the 100th anniversary of ISEKI’s
foundation. ISEKI Group has inherited the company’s
founding spirit of “freeing farmers from exhaustinglabor” and has adopted ‘We strive to contribute to
the creation of the prosperous and sustainable society
through “providing innovative products and higher
quality of services to the customers”’ as its Corporate
Philosophy. This Mid-term Management Plan revised
the Corporate Philosophy, taking the Purpose of ISEKI
Group into account by adding “services,” which includes
information and know-how, as well as products, to theGroup’s offerings.
Long-term vision
As an interim target for fulfilling our Corporate Philosophy
while upholding the company’s founding spirit, ISEKI
Group has set its long-term vision of becoming “solution
provider for agriculture and landscape,” which indicatesour vision of what we aiming for and what we want tobecome. Farming safeguards food and land and realizes
prosperity for people and society. This long-term vision
is imbued with our aspirations to be a company that
supports such farming and farmers and that contributes
to the creation of new value.
Amid significant changes in the business environment,
ISEKI Group will use the knowledge and experience wehave cultivated over the years to solve social issues andfulfill social responsibilities, as well as contribute to theachievement of the SDGs.

Corporate Philosophy

We strive to contribute to the creation the prosperous
and sustainable society through “providing innovative
products and higher quality of services to the customers”[Long-term vision]
To be a solution provider for
agriculture and landscapeFounding philosophy
To free farmers from exhausting labor

Long-term vision

To be a solution provider for agriculture and landscape— Supporting a farming industry full of dreams and beautiful landscapes and creating a future of sustainable agriculture and landscape —SDGs to be realized by the ISEKI Group through its business

Farming
Food production

Agricultural machinery

Environmental
preservation

Toward the realization of a sustainable society
Supporting the enhancement of resilience in agriculture
Landscaping for comfortable villages and towns

Food
Survival

Landscape
Farmers

Environmental preservation for a recycling-oriented society

Foundation forlivingPeople and society

Important values
Keyword“Toward the next 100 years...”Seven promises of ISEKI Group (values)
1. Spirit
2. Front runner
3. Quality
4. Solution
5. Innovation
6. Global
7. Future

Inheriting our company’s founding philosophy, we always carefully consider food,agriculture and landscape and move forward with farmers.
As a front-runner, we produce innovative products and higher quality services.
We will always make premium quality products with passion.
We constantly take action for solutions to customer issues.
We create innovations with cutting edge technologies and provide new value.
With a global perspective, we work toward solutions to the world’s social issues.
Paving the way for tomorrow, open up the future of food, agriculture and landscape.

ISEKI Report 202214

With our aim to be a solution provider that creates newvalue, we will drive forward with our henkaku (Change),with our seven promises (values) in our hearts.
(

For information about the Mid-term Management Plan, please refer to p. 23.)

Basic strategy of Mid-term Management Plan
(1) Provision of the best solutions
In Japan, we will put even more efforts into our main
target market of large-scale products by responding tosmart agriculture that uses cutting-edge technologies,
approaching with both our tangible and intangible
capabilities. In terms of tangible capabilities, we launched
the NTA series of medium-size tractors equipped witha function to assist straight traveling, which helps toreduce operator labor and improve operational accuracy,
and the PRJ, a robot rice transplanter that uses highly
precise location information. With our “All Japan” seriesof highly functional and durable products for large-scale
farmers now complete, we will now work on expanding
both sales and market share. For the penetration andpromotion of environmentally sound agriculture, suchas organic farming, and the preparation of production
areas to accommodate those forms of farming, we will
strengthen our partnerships with local governments
and private-sector companies across Japan. We recently
concluded a partnership agreement with Nikaho City in
Akita Prefecture and three private-sector companies thataims to establish and promote environmentally soundsmart agriculture, with a focus on automatic weedingrobots. We will continue to roll out such initiatives going
forward.
In terms of intangible capabilities, we launched Amoni
last year, a web portal for farm business solutions thatgives agricultural producers direct access to informationon the farm business, cultivation and cutting-edge
technologies. We will support farm owners, helping themto solve their problems and take on the challenge of new
types of agriculture, and concentrate our efforts on theprovision of services in addition to products.
I feel quite certain that we now have the resources andsystems that will allow us to respond to the diverse needsof customers in both tangible and intangible areas and tocompete in the Japanese market.
(

For information about domestic market strategy, please refer to p. 31.)

While mechanization is becoming more widespreadin Asia, IST in Thailand, which became a consolidated
subsidiary of ISEKI Group in 2020 and whose business
operations have been led by ISEKI since then, has become
an additional driving force for the acceleration of ourbusiness expansion in the ASEAN market. In our growthengine markets, which include the Chinese market,
we will leverage the strengths we have cultivated inJapan to take the next leap in our growth. In the North
American and European markets, where demand remains
strong, we will further refine our collaborations with our

15

ISEKI Report 2022

Message from our President

business partners and promote the marketing of productswith enhanced decarbonization and environment
performance. In Europe in particular, we plan to launcha compact electric tractor (ride-on mower) on a limited
scale in 2022, with a view to mass production by 2024.
Through these initiatives, we will further enhance ourpresence in the market.
(

For details of overseas market strategy, please refer to p. 33.)

(2) Enhancement of corporate value by strengthening
profits and reinforcing corporate governanceIn the area of profitability, one of ISEKI Group’s major
challenges, we will strive to make improvements centeredon structural reforms and management efficiency
improvements. Specifically, with our basic approachof transforming into a lean and streamlined businessstructure that can constantly generate profit without
being affected by the fluctuation in sales, we will pursue
the selection and concentration of businesses andproducts, optimal allocation and sharing of resources,
and, in particular, the construction of an optimal
production system at our production sites in Japan andoverseas, as priority measures. Through this, we will
strive to revitalize the Group’s human resources andequipment and enhance productivity. ( For information
about product and development strategies, please refer to p. 35) In
addition to operational efficiency improvements, wewill strive for “business-creating henkaku (Change)”that fundamentally re-examines the way we do things
at each stage of development, production, sales, andservice. This includes making use of digital tools in sales,
thorough cost reductions in development through shareddesign and fewer models, and the optimal placement of
personnel across the entire Group.
Further, in terms of strengthening our ESG initiatives,
we have reviewed our materiality (priority issues) and are
moving our initiatives forward in line with the formulationof the new Mid-term Management Plan. In July 2021,
we established a Sustainability Committee, a progression
from the previous Corporate Social Responsibility
Committee, to further strengthen the involvementof management through supervision of the Board of
Directors regarding matters such as the realization of asustainable society, the enhancement of mid- to longterm corporate value, and the handling of environmental
and social issues. In this way, we are moving our response
to sustainability-related issues forward through ourbusiness activities.
Regarding the environment, we established a new
Green Innovation Promotion Office in May 2021,
creating a framework for the development andcommercialization of technological strategies to realize
zero CO2 emissions from our products, including
electrification and the use of hydrogen. In May 2022,
we formulated the Environmental Vision and reviewed

the Basic Environmental Policy and mid- to longterm environmental targets. We also announced ourendorsement of the TCFD Recommendations. Goingforward, we will conduct our information disclosures inline with the TCFD Recommendations.
For society, ISEKI Group strives to build strong
relationships of trust with stakeholders by engaging
in responsible dialogue with them. Amid increasing
importance of investment to “human capital”, underthemes of “Enhance employee engagement” and“HR transformation”, ISEKI Group will strive for the
maximization of HR capability of the Group towardachievement of the Mid-term Management Plan and therealization of the vision.
To strengthen governance, ISEKI Group establishedthe Nomination and Compensation Committee with two
Representative Directors and three Independent Outside
Directors (chaired by an Independent Outside Director) as
its members. This committee was convened eight times
in 2021. The Nomination and Compensation Committee
mainly deliberates on matters such as the nomination,
remuneration, and systems of Directors and Corporate
Officers, and succession plans for the Chief Executive
Officer (CEO), etc., submitting its recommendations
to the Board of Directors. In 2022, we introduced aperformance-based stock compensation system to makeit clear that compensation of management executives
shall be in conjunction with business results, including
medium- and long-term ones, and shareholders’ value,
making compensation function as a sound incentive. To
this end, we will pursue the revitalization of corporate
organization. Other initiatives we have pursued include
implementing evaluations of the effectiveness of theBoard of Directors to further improve its functions. In
light of the revision of the Corporate Governance Code,we are making efforts toward the further enhancementof initiatives such as the election of Independent Outside
Directors to account for at least one-third of Directors
and sustainability initiatives.

ISEKI Group’s value creation aims

ISEKI Group’s value cr eation aims

hand, with growing interest in food issues, including thestability of food supplies and the improvement of foodself-sufficiency, agriculture, which supports food supply,
and the landscaping business, which supports people’s
daily lives, are being recognized anew as essential
businesses. In supporting such businesses, ISEKI Groupwill continue to change and demonstrate its presence into
the future. I am proud of ISEKI Group as a company that
follows the founding spirit and stands closest to farmers.
As a front-runner, we will continue to produce innovative
products and services, based on our thoroughly marketoriented design philosophy. Our overseas sales have been
trending higher than the Mid-term Management Plan,
and we are currently building a framework for increased
production at PT. ISEKI Indonesia to respond to thissituation. In Japan, our initiatives for organic farming are
making progress, and we will continue to implement it
relentlessly.
Finally, we are witnessing rapid changes in ourbusiness environment in recent years, such as climatechange and other environmental issues and action on
digital transformation (DX). On the other hand, I alsofeel that the trend toward the new normal is driving
our henkaku (Change) even further. The aspiration of
our founder, “to free farmers from exhausting labor”
is something that must never be changed. To upholdthe company’s founding philosophy, each and every
employee of ISEKI Group will take ownership of their“own henkaku (Change).” We will always make henkaku(Change) happen ahead of the times. ISEKI Group will
strive to enhance our corporate value by leveraging
the full capabilities of the Group, so as to continue
demonstrating our presence as an indispensable company
in our 100th anniversary in 2025 and beyond.

( For information about initiatives regarding Environment, Society andCorporate Governance, please refer to p. 39, 46, and 59 respectively.)

By steadily implementing these two basic strategies,
we will aim for an operating margin of 5% in 2025 andstrive to enhance our corporate value.

Acceleration of henkaku (Change)
To remain an essential company

During the COVID-19 pandemic, our businessenvironment changed drastically, including supply chain
disruptions, difficulties in procuring production parts, andsoaring raw material prices. In addition, due to Russia’s
recent invasion of Ukraine, there is a concern about thepotential for greater impact on our business. On the other

ISEKI Report 2022

16

ISEKI Group’s value cr eation aims

Financial and capital strategies

financial structure to enhance our cash-flow creation capabilities.

Operating cash flows (100 million yen)Free cash flows (100 million yen)

Basic policy of financial strategy in the Midterm Management Plan

76

(19)
Dec.
2017

Within range of depreciation

Operating cash flow
billion yen(5-year cumulative)

Improvement of CCC
Reduction of inventory
Optimization of
non-current assets

17

ISEKI Report 2022

Thorough implementation ofcapital cost perspectives

Improvement ofasset efficiency

60

541
518

121

5.7

45

■ Interest-bearing liabilities (100 million yen)
D/E ratio (times)
1.11
1.01
1.00
0.94
0.93

5.9

5.9

663

697

693

693

Dec.
2017

Dec.
2018

Dec.
2019

Dec.
2020

621

498
5.4

(23)
Dec.
2018

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2017

Dec.
2018

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2021

Measures aimed at improvement of financial structure

Capital investment

Creation of
cash flows

537

6.2
34

Director & Corporate Officer in chargeof Finance, IT Planning, and Operation
Efficiency Improvement

Improvement of gross profit
Improvement of fixed cost ratio
Optimization, and selection andconcentration

534

33

Shuichi Jinno

Operating margin of 5% (2025)

96

recovering from a deficit due to a significant impairment
loss in the fiscal year ended December 31, 2020.
In addition to the increase in sales and profit, progress
was made in the reduction in inventories and fixed assets,
which resulted in operating cash flows and free cash flows(FCF) reaching record-high levels. The D/E ratio, which was
at 1.11 times in the previous fiscal year, improved to 0.93
times, due in part to the contraction of interest-bearing
debt.

Inventories (100 million yen)
Inventory turnover period (months)

142
105

In the Mid-term Management Plan, whose target year is2025, the 100th anniversary of ISEKI’s foundation, we will
strive to build a strong financial foundation by improving
our financial structure.
In addition to our basic strategy of improvement of
profitability through structural reforms and management
efficiency improvements, we will aim to create operating
cash flow of 60 billion yen cumulative over the five yearsof the Mid-term Management Plan by improving asset
efficiency. We will also strive to trim down our property,
plant and equipment and reduce interest-bearing liabilities,
with the aim of achieving ROE of 8% by 2025, the final
year of the Mid-term Management Plan.

Improvement ofoperating margin

In the fiscal year ended December 31, 2021, the first fiscal
year of the Mid-term Management Plan, both domestic
and overseas sales increased year on year. In particular,
overseas sales reached a record high, indicating an
acceleration of the trend of overseas business expansion.
In terms of earnings, despite negative factors such as
soaring raw material prices, gross profit increased andthe operating margin exceeded the forecast at 2.6%.
As a result, we recorded a net profit of 3.1 billion yen,

ISEKI Group’s value creation aims

While identifying changes in the business environment, we improve our

Review of the fiscal year ended December 31, 2021

Reduction of interestbearing liabilities
D/E ratio 0.8 times (2025)

Shareholder return
Aim for ROE of 8%
Continue stabledividend payment

Having made progress in fiscal year 2021, we will continue
our efforts to improve our financial structure while
responding to uncertainties such as soaring raw material
prices, supply chain disruptions, and exchange rate
fluctuations.

production facilities for the improvement of quality andprofitability, building systems for the increasing production
in anticipation of the expansion of overseas business, andIT investments that will lead to management efficiency
improvements.

Maximizing operating cash flow and optimizing inventories
Although we have made progress in the reduction of
inventories since the second half of 2020, exceeding theinitial plan, the inventory turnover period remained highat 5.4 months as of December 31, 2021, and further
reduction of inventory is necessary for the maximizationof operating cash flow. On the other hand, to prevent
production delays and loss of sales opportunities resulting
from supply chain disruptions and other causes, we believethat we also need to secure a certain level of inventories ofraw materials, parts and products that are expected to bein high demand. We will aim to achieve both the reductionof inventories and the stable provision of products bypromoting more precise inventory management that uses
the new administrative accounting system that is currently
being introduced.

Contraction of interest-bearing liabilities
One goal of the Mid-term Management Plan is to reduce
consolidated interest-bearing liabilities and to lower the D/
E ratio to 0.8 times in 2025 through the improvement of
profitability and asset efficiency and the maximization offree cash flows (FCF). To enable the company to respondflexibly to future uncertainties, ISEKI has concluded
commitment line contracts totaling 20 billion yen with
our major banks of account, thus ensuring ample fluidity
and stability of the funds needed for the operation of
our business. Currently, we raise funds mainly throughborrowings from financial institutions, but in the future,
we intend to diversify our fund-raising methods.

Selection and concentration of investment for growth
As well as improving the effective use of production
equipment within the Group through the optimizationof production systems, which is a priority measure of
the Mid-term Management Plan, we will work to trim
down property, plant and equipment by concentrating
on investments in priority domains, with decisions thatare based thoroughly on capital cost perspectives. We
have various plans for capital investment in fiscal 2022,
including the construction of a large-scale maintenancefacility to enhance our sales and service systems in Japan,

Strengthening of Group business administration systems
To achieve our management goals while responding toa management environment that is changing on a daily
basis, we believe that the strengthening of Group businessadministration systems is needed. We will strive to further
strengthen Group business administration systems throughadvances in profitability management in the separate
functions of development and manufacturing, domestic
business, and overseas business, and of profitability
management in the separate businesses such as tractors,
combine harvesters, and rice transplanters, using the newadministrative accounting system that is currently being
introduced.

Shareholder return policy
ISEKI considers stable dividend payments to shareholders
to be a key policy of the company. As a premise ofongoing business activities, we have adopted a basic policyof continuing stable dividend payments, after taking into
comprehensive consideration factors such as the profit
foundations, future business developments, and changes

in the management environment, while aiming to maintainand improve financial soundness. Going forward, we will
strive to meet shareholders’ expectations by achieving
sustainable growth and enhanced corporate value by
improving the financial structure and building firm financial
foundations.
ISEKI Report 2022

18

ISEKI Group’s value cr eation aims

Value Creation Process

Changes and challenges in Japan

Socialchangesand issues

Changes and challenges in the world● Decrease in number and aging of farmers

Environmental issues● Population growth● Stable production and supply of food● Decline in number of farmers due to economic development● Increase in size of farm business● Accelerated digitalization● Improved productivity

ISEKI Group’s capital

Other trends● Climate change● Natural disaster● Energy and resource issues● Reduction of environmental burden● Improved productivity

ISEKI Group’s value creation aims

ISEKI Group engages in business activities that are founded on its corporate philosophy and governanceand that leverage the capital supporting the Group as well as its unique strengths. In doing so, we provide
customers with products and services that meet a variety of needs, thereby creating social and economic value.
By addressing social changes and issues and reflecting them in the Mid-term Management Plans and materiality,
and continuing this cycle of value creation, we strive to solve social issues and contribute to the “creation of aprosperous society,” while achieving sustainable growth and enhancing corporate value of ISEKI Group.

Business activities of ISEKI Group● Rapid technological innovation● Spread of infection● Lifestyle change

Value provision

Diverse human resources that enable ISEKI
Group growthExperts specializing in the fields of development, production, and sales and services

Production and sales sites in Japan and overseas
Dream Agricultural Research InstituteP. 19−20
Center for Human development (IETC/ITTC/IGTC)

Mate
ria
lity

Manufacturing capital (sites)

2~2Plan P23~26
ent
em
ag
an
M

Patents held as well as high-leveltechnological capabilities andintellectual properties

P2
1

Intellectual capital

Mid
-te
rm

Development
andmanufacturingDomesticsales

Social and relationship capital (network)

Financial capital
Source of business activities andgrowth investments

reInitiatives aimed at reduction of environmental burden
Promotion of environmentally sound smart agricultureeOverseas sales

st

)P

Th

Natural capital

27
~3

0

Collaboration with partners, municipalities, research institutions, anduniversities in Japan and overseas

re

ng

ths

(s o u rc e o f it s c o m

iti
p et

ve

e

e
dg

Management Philosophy
and Corporate Governance

Solving social issues and enhancing corporate value through
19

ISEKI Report 2022

Provision of products and services in response to diverse needs

Human capitalSocial value
Value creation with stakeholders● Provision of products and services
contributing to solving social issues● Contribution to the formation of circularsociety in the global environment● Mutual sustainable growth andimprovement of corporate value with
suppliers● Revitalization and development of local
communities● Creation of diverse human resources andprovision of rewarding workplaces●Stable dividend payment

Creation of
an affluent society

Contribution to SDGs achievement

Economic valueEnterprise value of ISEKI Group● Improvement of corporate value
through sustainable growth● Accumulation of technology andexpertise● Establishment and reinforcement oftrust with stakeholders●Improvement of corporate brand●Investment for growth

Realization of ISEKI Group
long-term vision(2030)

Solution Provider for
Agriculture and Landscapecreation of social and economic value
ISEKI Report 2022

20

ISEKI Group’s value cr eation aims

Materiality

Materiality

Vision (2030)

Japan

Contribute to the realization of sustainable agriculture through thedissemination and promotion of agriculture that uses smart agricultural
machinery and data.

Asia

Contribute to the improvement of productivity through the mechanizationof agriculture by providing agricultural machinery to suit individual countries
and regions, leveraging the rice-growing technologies developed in Japan

North
America

Support the enhancement of private lives including hobby gardening
and farming through provision of small-sized tractors, etc.

Value creation through business

Improved agricultural productivity

Risks and opportunities

KPI

Status ofactivities

Larger scale of Japanese producers, diversification of crops
Dissemination of smart agriculture (data-using agriculture)
Partnerships with entities in other industries through DX

Development and dissemination oflarge-sized agricultural machineryand smart agricultural machinery
Co-creation of new farm businessthrough agricultural platform“Amoni”

P.31~32

Progress in mechanization of agriculture in ASEAN, India, andother regions where rice is the main crop
Dissemination of smart agriculture (data-using agriculture) in East Asia, etc.

A wider spread of our
products in the Asian region

New demand for electric/robotic products, etc.

Development and dissemination of
products with high environmental
performance such as electric products

New demand and needs
Generation of business and creation of new value throughinnovation

Number of invention proposals
related to advanced technologies
Customer satisfaction
Product development theme
Number of persons who received
training at ITTC, IETC, or IGTC

P.27~30
P.35~38

Occurrence of environmental issues, etc., changes in environmental laws
and regulations
Response to climate change
Natural disasters including typhoons and floods

Provision of environmentally-conscious products
Proposal for environmentally sound agriculture
Cost reduction through the introduction of facilities with highenvironmental efficiency

Reduction of CO2 emissions
Ratio of eco-products

P.39~44

Serious defects in products and services
Dependency on specific customers or suppliers
Soaring raw material prices, difficulty in procurement, and supply chain
disruptions
Reputational risk

Capturing customers and fans with secure, safe, and costeffective products and services

Enhanced satisfaction with
our products

Building trust with suppliers

Promotion of CSR procurement
Reinforcement of relationships
through continued implementation

Related SDGs

Risks

Supporting the enhancement of resilience inagricultureJapan

Improvementof financial
performance

Building of a
resilient management baseRealization of a decarbonized andrecycling-oriented society

Landscaping for comfortable villages andtowns

Contribute to the development of pleasant communities bysafeguarding beautiful landscapes and environments

North
America

Environmental preservation for a decarbonized
and recycling-oriented society

Enhancement of brand value(building of trust)

Make our presence felt by solving social issues, leading to development of therelationships of trust with stakeholders and mitigation and prevention of risks

Enhancement of employee
engagement

Support career development of employees through proper treatment of highly
motivated employees with various abilities and offering them opportunities toplay active roles
Work to maintain and promote health of each and every employee to enhance
engagement and realize sustained growth

Respond to changes in the business environment swiftly and accurately, andEnhancement of corporate value by maintain fair management
reinforcing corporate governance Strive to disclose necessary information promptly and accurately, and work tocreate a transparent company

Transformation to a lean andstreamlined business structure

Improve the financial structure and build strong financial foundations to support
sustainable growth and the enhancement of corporate value

Lowering of prices, rise of Indian, South Korean, and Chinesecompetitors

EuropeCommonContribute to the realization of a decarbonized and recycling-oriented society
through business activities that take the environment into consideration

Decline in the number of farms in Japan, advancing age of
farmers, and slowdown of demand due to an increase incontracting of farm work

Asia

Improvement of quality of life
EuropeOpportunities

Response to changes in policies of individual governments
Competition with other companies, changes in economic
conditions and the environment of agriculture
Climate change, reduction of environmental burden, natural
disasters, infectious diseases, etc.
Business alliances, joint ventures and strategic investment
with other companies

Stabilization of business through co-existence with local communities

ISEKI Group’s value creation aims

Materiality refers to the important issues that the ISEKI Group will address as a priority for the achievement of ISEKI Group’s aspirations and long-term vision. We have sorted out our materiality once again byaligning them with risks and opportunities identified through SWOT analysis, etc., as well as our visions
and management strategies, after discussions with external experts. We have set KPIs and formulated aplan for specific initiatives for each materiality item and promote efforts toward the accomplishment of
the plan. The Sustainability Committee manages the progress and reports to the Board of Directors.

P.33~34

P.47~50

Shortage of labor power, outflow of human resources
An impact of property and personal damage on our businessLabor issues (harassment, overtime work, etc.)

Retention and development of talented human resources,
improvement of ability to generate innovations
Improvement of motivation and productivity
Securing health and safety of employees

Implementation ofengagement surveys andscore increases

P.51~56

Risks in general
Risk of legal violation
Risks related to information security
Risks derived from international business and other risks

Stabilization of business activities
Promotion of awareness and understanding through information
disclosure, among others

Increase in ratio of holdingsof the Company’s stock (byindividuals and long-term
investors)

P.46,
P.57~66

Fluctuations in production caused by changes in economic conditions and the environment
Stock market trends, price decline in land and other fixed assets
Exchange rate fluctuations
A hike in interest rate, rise of an obligation to pay back loans early because financial
covenants are triggered

Building of an optimal production system capable of responding to changes
Improvement of management efficiency and sophistication of business
management
Capital investment in line with growth strategies
Diversification of procurement methods

Improvement of operating
marginImprovement of asset
efficiency

P.17~18

Materiality identification process

1

Identification of issues
In addition to identification of risks and opportunities through SWOT analysis, we identified issues to be addressedwith reference to ISO26000, the GRI Guidelines, and the United Nations Sustainable Development Goals (SDGs), etc.
to respond to the diverse needs and demands that are obtained through communication with our stakeholders. The
process identified issues to be addressed as a priority for the creation of social and economic value through businessactivities and issues to be addressed from the perspective of opportunities and risks in business activities, such asenvironmental changes, impediments to business activities, and burden on the global environment.
Rawmaterials

Procurement and Development and Sales and Use of
distribution
production
services products

Disposal of
products

Issues identified from the perspective of opportunities and risks in business activities

21

ISEKI Report 2022

STEP

2

Evaluation of materiality
The identified issues were evaluated by the Sustainability
Committee in terms of their “impact on society” and“impact on ISEKI Group,” while connecting them to our
vision and management strategies, and sorted out once
again after discussions with external experts.

STEP

3

Determination of materiality
The materiality to be addressed by
ISEKI Group were determined throughdeliberation by the Board of Directors.

Maximum
Impact on society

STEP

Great Impact on ISEKI Group

Maximum

ISEKI Report 2022

22

Business strategies f or value cr eatio n

Mid-term Management Plan (2021–2025)
Outline of Mid-term Management Plan
the provision of products, we will also place efforts into
services (information, know-how, etc.) and continue
our activities as the ISEKI that makes customers happy.
ISEKI Group has set as its long-term vision to be a“solution provider for agriculture and landscape” and has
established two basic strategies to achieve the vision: (1)provision of the best solutions, and (2) enhancement ofcorporate value by strengthening profits and reinforcing
corporate governance. Pursuing solutions to issues related
to agriculture and landscape by steadily implementing
measures in line with our basic strategies, we will aim to
be a solution provider that creates new value.

Business strategies for value creation“Toward the next 100 years...”

ISEKI Group has inherited the company’s founding
philosophy of “freeing farmers from exhausting labor”
in an unbroken line from then until today, and in 2025,
we will mark the 100th anniversary of the company’s
founding. To ensure that ISEKI Group remains farmers’
closest supporter over the next 100 years from 2026, we
will lay firm foundations and make a dramatic leap forwardin the five years of the Mid-term Management Plan.
ISEKI Group’s Corporate Philosophy is to strive tocontribute to the creation the prosperous and sustainable
society through “providing innovative products andhigher quality of services to the customers.” As well as

Fundamentals of Management
Founded in 1926

Business environment and issues
The business environment surrounding ISEKI Group isdiverse, including the impact of COVID-19, global foodissues, and climate change risks. It is also constantly
changing. The Japanese agriculture industry is witnessing
significant structural changes, such as the decline in thenumber of farms, the increase in large-scale farming,
crop diversification, and transition to smart farming.
Overseas, the movement toward electrification is also
accelerating due to various growing needs and, in Europe,
to heightened environmental awareness.

It is with an awareness of this environment that we
recognize (1) responses to changing demand and needs,(2) the improvement of financial structure and expansionof profits, (3) strengthening of ESG initiatives, and (4) the
realization of technological innovations as business issues,
and we will promote a variety of measures that aim to
make our long-term vision a reality.

2025 100th anniversary

2021

Integrated manufacturer specializing
in agricultural machinery
Mechanization and laborsaving ofagriculture
Establishing the standard ofJapanese agriculture

2030

Backcasting

Long-term vision (Vision)

Mid-term Management Plan (2021–2025)

To be a solution provider for
agriculture and landscapePositioning

Farming2025 100th anniversary
Building the foundation toward the next 100 years

Food production

Basic strategies

Agricultural machinery

Environmental
preservation

Food(1) Provision of the best solutions(2) Enhancement of corporate value by
strengthening profits and reinforcing corporate
governance

Survival

Landscape
Farmers

Foundation forlivingPeople and society

Crop diversification

Shift to advanced features
Shift to lower prices(diverse needs)

Lowering of prices

Intensification ofcompetition

From “with COVID-19” to “post COVID-19,” global food issues, climatechange risks
Change in business model (from products to services)
Growing environmental awareness (exhaust emissions, electric vehicles)
Growing demand for disclosure of non-financial information, SDGs
Responses to changes in laws and regulations, compliance

Basic strategies and directions of initiatives
Realization of technological innovations

Diverse environments ineach region

Strengthening of ESG initiatives

Decline in number of farms andincrease in large-scale farming[Founding philosophy] Freeing farmers from exhausting labor

Improvement of financial structure and expansion of profits

Overseas
Responses to changing demand and needs

Japan

Smartification, regulatory reform(WAGRI, open API, DX, etc.)[Corporate Philosophy] We strive to contribute to the creation the prosperous and sustainable society through “providing
innovative products and higher quality of services to the customers”

Business issues

Recognition of environment

Provision of the best solutions

Enhancement of corporate value by strengthening profits and reinforcing corporate governanceTransition from products only to services in addition to products

Transformation to a lean and streamlined businessstructure that can constantly generate profit

Focus on service provision
Selection and concentration

Business model transformation

Improvement of profitability

ESG

Resource concentration

Focus on service
provision

Toward an operating
margin of 5%

Pursuit of value tosociety and sustainability

Promotion centered on
information (DX)
Responses suited to the newnormalFurther expansion ofmaintenance revenue

Structural reforms throughestablishment of an optimal
production system
Improvement of management
efficiency from the perspectiveof group-wide optimization
Financial and capital strategies

Reinforcement of initiatives
and contribution to SDGs
through review of ESG
materiality

Product development andsales strategy integrating
domestic, overseas, anddevelopment and production

Business-specific perspectives
Introduction of an in-house company system

23

ISEKI Report 2022

without being affected by the fluctuation in sales

Visualization of
unprofitable businesses

Full use of human resources on aGroup-wide basis
Optimal placement of personnel

ISEKI Report 2022

24

Business strategies f or value cr eatio n

Progress status of Mid-term Management Plan
Progress of basic strategies
Japan: “All Japan series” is growing under the priority initiatives of “expansion of large-scale customers.” Under the “revenueexpenditure structural reform,” implements, parts and repair fees are performing well.
Overseas: Increased demand that captures changes in lifestyles in North America and Europe drove the overseas sales overall,resulting in record sales. Trended exceeding the Plan

North America
Support for AGCO brand strategy
development

Strong sales of models equipped with ISEKI engines

Asia
Build foundations based on the revamped
IST
Bring high-performance, large-scale
agricultural machinery to market

2022: Launched limited sales of a compact electric tractor(mower) (plans for mass production by 2024)

Exceeded Plan in first fiscal year (2021) after becoming a consolidated company. Strengthen thefoundation even further
Sales of large-scale combine harvesters for South Korea remain steadily. Tractors and ricetransplanters also rolled out

Establishment of Amoni, a web portal for farm business solutions
Development of online marketing activities such as virtual demonstrations
Introduction of i-Magazine, a support tool for centralized management of service information, atconsolidated sales subsidiaries in Japan.

Improvement of profitability

Financial and capital strategies
Creation of cash flows
Capital investment (within range ofdepreciation)
Reduction of interest-bearing liabilities
Shareholder return

Incidental services
Japan: Expansion of parts, repair fees, andimplements
Overseas: Establishment of parts and service
business

Performing well(43.3 billion yen: 109% compared with 2017)
Thailand: Enhanced IST’s dealer sales andservice support
Increase in parts sales, 107% comparedwith previous year

ISEKI Report 2022

406

Dec.
2018

408

Dec.
2019

420

Dec.
2020

(Results for fiscal year ended December 31, 2021)
Cash flows from operating activities of 14.200 billion yen due to increased profit andreduction in inventories, etc.
Capital investment (acquisition of non-current assets) 5.5 billion yen, depreciation 6.5 billion yen
Contraction of interest-bearing debt of 7.1 billion yen due to favorable FCF and other reasons.
D/E ratio 0.9 times
Resumption of dividends (30 yen per share)
Ratio of eco-product in domestic sales: 39.8% (2021: unit base)
Reduction in CO2 emissions from production activities: Reduced by 18.7% (Compared with
2013)
Revision and formulation of Mid -to Long-Term Environmental Targets Please refer to p. 40

Enhancement of brand value
Supply chain management

Revision of CSR procurement guidelines, implementation of CSR procurement questionnaire

Enhancement of engagement
Enhancement of employee engagement

Introduction of work-from-home system and region-restricted employee system
Enhancement of employee engagement through promotion of health and productivity management
Implementation of engagement surveys

Enhancement of corporate value
Strengthening of ESG Structure

Increase in the ratio of Outside Directors (1/3)
Introduction of performance-based stock compensation system
Establishment of new Sustainability Committee and Green Innovation Promotion Office

Progress of numerical targets

Implements, parts and repair fees in Japan(100 million yen)
397

Integration into company headquarters of production engineering department and outsourced
management work at manufacturing plants
Planned revision of category of in-house/outsourced production categories (from 2022),
rearrangement of production categories (from 2023)
Expansion of overseas production base (Extension of plant in Indonesia starts in 2022)
Expansion of production capacity
Shared services, centralized management of suppliers (centralized procurement), reduction in
fixed costs

Environmental preservation
Expansion of sales of environmentally-friendly
design (eco-products)
Promotion of environmental management(reduction of environmental footprint)

Operating margin

Dec.
2017

25

Environment

Enhanced line-up of smart agricultural machinery
2021: Rice transplanter equipped with straighttravel and turning assist functions started full-scale operation in the field.
Sales of eight-row class models with these specifications increased to 60% of total smart
agricultural machinery sales
2022: In addition to the compact model, 36HP, 50HP, and 60HP models of tractor equipped withstraight-travel assist function were newly launched (March)
Robot rice transplanter sales began (February)

Implements, parts and repair fees performing well
ISEKI Hokkaido’s Sorachi Chuo Service Workshop, ISEKI Group’s largest maintenance facility, wasnewly established

EuropeExpansion of electrification products

Progress

Structural reform and improvement ofmanagement efficiency
Establishment of an optimal production system

2021 Result (unit base): 112% compared to previous year
Centering on rice transplanters, sales in tractors and combine
harvesters also increased.

Revenue-expenditure structural reform
Improvement of operating margin of sales
subsidiaries
Promotion of establishment of large-scaleservice facility

Responses to DX and the new normal
Enhancement of service capabilities
Business model transformation

Priority measures

Society

Smart strategies
Smart agricultural machinery sales
increased

Progress

ESG

Domestic Business Company
Overseas Business Company

Selection and concentration

Expansion of large-scale customers“All Japan series” sales increased

Improvement of profitability: Ongoing response to emergence of issues and risks that exceed initial forecasts, such as
adverse impact on production of supply chain disruptions and soaring raw material prices
Effects expected to manifest from the second half of 2022

Governance

Priority measures(2) Enhancement of corporate value by strengthening profits and reinforcing corporate governanceBusiness strategies for value creation(1) Provision of the best solutions

433

109%
comparedwith 2017

1.6%

Dec.
2021

2016

2.5%

2017

2.0%

2018

5%

Improvementof gross profit Enhanced
marginmanagement
efficiency
Reduction of
fixed costs Structuralreform

5.0%

2.6%

1.8%

2019

2.8%

1.4%

2020

2021

2022
(Forecast)

2023

2024

2025

ISEKI Report 2022

26

Business strategies f or value cr eatio n

ISEKI Group’s strengths

Further reinforcement of these three strengths will bring asustainable growth of domestic and overseas businesses.
Intellectual
capitalSocial andrelationship capital

Human capital

Innovation based oncollaboration

Technologicalcapabilities
To develop breakthrough agricultural andlandscape machinery and create innovation asa leading company

Human resources development to enhance our strengths

Manufacturing
capitalIntellectual
capitalHuman capital

Development of experts through professional training
We have built a comprehensive human resources development scheme for “development,” “production,” and “sales andservices,” to produce reliable products and provide breakthrough products and services. ISEKI holds several technology
contests internally to improve the Group-wide technological capabilities and also works to upgrade the skills of individual
employees by encouraging them to obtain certified qualifications. We also conduct training for employees working
outside Japan actively to leverage our technological capabilities developed in Japan to roll out the global operations.
During the pandemic, we have continued to engage in human resources development by blending online training withclassroom training.

Development

Production

Sales and services

IETC

ITTC

IGTC

ISEKI Basic Engineering
Training Center

ISEKI TechnicalTraining Center

ISEKI Global
Training Center

Nurturing young designers

Nurturing leaders of production sites
in Japan and overseas

Nurturing sales and service staff inJapan and overseas

Number of trainees: 420 in 2021

Number of trainees: 113 in 2021

Number of trainees: 455 in 2021

Main training programs

Main training programs

Main training programs

Nurturing and training young engineers
Integrated rice cultivation systemtraining, etc.

Manufacturing leader development course
Skill tests, qualification certification
training courses, etc.

Product utilization and maintenancetechnology training
Qualification certification training

To develop and provide groundbreaking
products and services and pitch new value to thenew markets by collaborating with partners ineach field and region both in Japan and overseas

Technological capabilities

Human capital

ISEKI Group’s high technological capabilities
Number of patent application registrations
No. 2
per specialty field in Japan in 2020 (*)
No.

1Intellectual
capitalActivities to strengthen our IP related toadvanced technologies■ Percentage of invention proposals related
to advanced technologies

60%*Other special machinery field

Patent allowance rate (in all industries)

Business strategies for value creation

ISEKI Group’s strengths are “technological capabilities,” “support capabilities to offer farm businessproposals,” and “innovation based on collaboration.” ISEKI Group will continue to generate
economic and social value through the business activities that leverage these strengths cultivatedover 97 years as the source of its competitive edge.

39%

Number of invention awards received
National Awards for Inventions:Intellectual
capitalHuman capital

Manufacturing
capitalRegional Awards for Inventions:
The Japan Institute of Invention and Innovation

19
211(As of March 2022)

Support capabilities to offer
farm business proposals
To solve customer’s issues from both hard (agricultural
machinery) and soft (production management andadvanced farm business technologies) aspects

ISEKI Group’s proactive efforts to develop, launch andcommercialize new technologies are exemplified by
the high number of patent application registrations inJapan per specialty field, high patent allowance rates,
and awards received in recognition of the inventions.
Taking advantage of the technological capabilities
underpinned by the intellectual property, we try todifferentiate ourselves from peers.
Please refer to p. 37 for intellectual property strategies

27

ISEKI Report 2022

2021 Result

2025 Target

We will strive to strengthen our advanced
technological capabilities with the aim of achieving aratio of advanced technology-related proposals to allinvention proposals of 60% or more.
Human resources development utilizing educational facilities (IETC)•Training related to advanced technologies•Training related to agriculture as foundation
Collaboration with external experts (advanced technologies, etc.)•Collaboration with retired employees and external experts
Prevention of infringements of third parties’ advanced
technology-related intellectual property rights•Enhancement of IP research related to advanced technologies

ISEKI Report 2022

28

Business strategies f or value cr eatio n

ISEKI Group’s strengths

ISEKI Group established the Dream Agricultural
Research Institute (DARI) in 2015 to create new
agricultural value. DARI is engaged in research,demonstration, and promotion of smart agriculturethat utilizes advanced technologies and advanced farmbusiness technologies while strengthening collaboration
with the government, municipalities, research
institutions, universities, private businesses, Japan
Agricultural Cooperatives (JA), and farm producers.
DARI is also strongly promoting the provision of
information and farm business proposals to farm
producers and the cultivation of the Group’s humanresources.

Intellectual
capitalHuman capital

Diverse research, demonstration
experiments, and dissemination activities
To respond to diverse needs, DARI conducts researchand demonstration experiments of advanced farmbusiness technologies at its demonstration field. We
support producers’ farm management with farmbusiness proposals and support that leverage theoutcomes of these research and demonstration
activities, as well as the diverse knowledge andexperience that we have cultivated as an integrated
manufacturer specializing in agricultural machinery.
We also provide proposals and hold seminars in linewith customers’ needs at DARI’s exhibition hall anddemonstration field. However, these activities arebeing conducted online during the pandemic.
Online seminars conducted via the Amoni
web portal for farm business solutions(August 2021 – April 2022)

11 times

Development of experts
The Group strives to develop experts across the entire
Group, including in the use of large-scale machineryand advanced technologies, to further strengthen its
support capabilities to offer farm business proposals.
Increasing the number of specialists in sales companies
nationwide ensures that we can offer proposals andsupport that match the issues faced by farm producers.

The Dream Agricultural Research Institute located in Tsukubamirai City, Ibaraki Prefecture

We carry out demonstration experiments of smart
technology and environmentally sound agriculture in
actual fields in collaboration with the national
government and municipalities to develop and promotetechnologies. We also engage in creating new agricultural
technologies through innovation that combines
breakthrough technologies owned by other companies
and ISEKI’s agricultural machinery and solutions.

Partnership agreements in Japan(January 2021 – April 2022)

5

cases

“Technological capabilities” x “Support
capabilities to offer farm businessproposals” x “Innovation based oncollaboration”
Initiatives to realize “Environmentally sound smart
agriculture”
Agri Yamazaki Smart Agriculture Demonstration
Consortium is working on demonstration experimentof a system for the production of high-quality rice forexport using cutting-edge technologies. One of thetechnologies being demonstrated uses ISEKI’s yieldmonitoring combine harvester and manned
monitoring control robotic tractor to conductsimultaneous harvesting and plowing.
Demonstration experiment results
The labor-saving effects of variable fertilizing with a“smart fertilizer top dressing system” and“simultaneous harvesting and plowing technology*”using a robotic tractor were quantified in the Smart
Agriculture Acceleration Demonstration Project.

*In this demonstration, simultaneous harvesting and plowing technology was
separately monitored by staff to ensure that the test was conducted safely.

Overview of demonstration experiment

We will conduct online customer satisfaction surveys in
2022 to collect a range of feedback from our customers.
This feedback will be used to enhance and improve ourfarm business proposal and support capabilities.

In 2020 and 2021, demonstration experiments were conducted in Bando City, Ibaraki Prefecture, with the aim ofachieving both a reduction in fertilizer use and an increase in revenue in rice farming.

Social andrelationship capital

Collaboration with overseas strategic partners
In our global businessdevelopment, we are working
to expand our business evenfurther by enhancing andsupplementing our productline-up in individual markets
through OEM supply and othermeans in collaboration with
our strategic partners overseas.
In 2022, we will receive OEM supply of 27HP
compact tractors from TAFE, a partner company inIndia, and will start selling them in Thailand.

Joint development with research
institutions and universities

The smart fertilizer top dressing systemenables fertilizer quantities to becontrolled automatically according tocrop growth, which makes appropriate
fertilizing possible without waste.
Simultaneous harvesting and plowing
aim to improve work efficiency, savelabor, and enhance soil quality byplowing rice straw into the soil withunmanned operation of a robotic tractor
at the same time as the rice is harvested.

Research institutions
Universities

29

ISEKI Report 2022

9 themes
3 themes

ISEKI Group engages in joint development of productswith research institutions and universities toaccelerate and improve efficiency of technology
development. We pursue the creation of new value
through development of groundbreaking products.

1.00
0.80

Comparison of work hours between
simultaneous harvesting andplowing and conventional work

Reduced by 0.19h/10a

0.60
0.40
■ Manned tractor

0.20
0.00

Simultaneous harvesting Standard plowing +and plowing
harvesting■ Manned combine
harvester alone■ Unmanned tractor + manned
combine harvester

Summary of demonstration experiment results
Demonstrated technologies

2021 numerical targets

Target achievement status

1. Smart fertilizer
top dressing

Reduce top-dressing
fertilizer quantity by 10%
Increase yield by 10%

Top-dressing fertilizer quantity reduced by 19%
Yield increased by 4% (variety average)

Reduce labor costs by 20%
Reduce basal dressing by 10%
from FY2020

Labor costs reduced by 22%
Basal dressing reduced by 11.7% from FY2020*Estimated around 10% reduction would bepossible from soil survey

Joint development projects in FY2021

Partnership agreement for sustainable agriculture with Niigata City
(January 2022)

Human capital

Enhancement of customer satisfaction

Innovation based on collaboration
Collaboration with national and local
governments and private-sector companies

Intellectual
capital

Initiatives to leverage our strengths

Work hours (h/10a)Dream Agricultural Research Institute (DARI)Manufacturing
capitalBusiness strategies for value creation

Support capabilities to offer farm business proposals

2. Simultaneous
harvestingand plowing

Increase yield by 10% in combination
with smart top dressing

Increase yield by 12% in combination with smart
fertilizer top dressing (variety average)*Research by Ibaraki Bando Region Agricultural Improvement and Extension Center, from the 253rd Meeting of the Crop Science Society of Japan (CSSJ)ISEKI Report 2022

30

Business strategies f or value cr eatio n

Domestic Market Strategies (Domestic Business Company)
Priority measures ① Strengthening of initiatives for large-scale farmers

We will take on the challenge of realizing environmentally sound smart agriculture,aiming to realize a sustainable future for the Japanese farming industry full of dreams.
In 2021, although we were forced to impose restrictions on our sales activities following the spread of
COVID-19, such as voluntarily restraining visiting activities and placing certain conditions on exhibitions, etc.,
we delivered a wide variety of content through web-based demonstrations and “Amoni,” a farm businessportal, as part of our activities to provide information to customers.
Farming in Japan, which support “food,” is currently facing issues such as a decline in and aging of farmers,
and it cannot be sustained without accelerating efforts to improve efficiency and productivity.
Accordingly, aiming for sustainable farming in Japan, ISEKI Group has taken on the challenge of realizing
environmentally sound agriculture, which is integrated with smart agriculture. In response to the Government’s
declaration to aim for carbon neutrality in Japan, the Ministry of Agriculture, Forestry and Fisheries formulated
the Strategy for Sustainable Food Systems, MeaDRI, which strikes a balance between the improvement of
production capabilities and sustainability through innovations to establish a sustainable food system.
In line with the strategy, ISEKI Group will first work to expand areas of organic agriculture together withstartups that have interests in trying agricultural machinery, farm business technologies, and new solutions. In
addition, with the aim of reducing greenhouse gases, we strive to improve efficiency through the compilationof various types of information regarding farm business, such as reduction of fuels and fertilizers as well aslabor through highly sophisticated agriculture, which utilizes automatic steering functions of agricultural
machinery and GPS guidance systems, and field management and work recording which utilize farm businesssupport tool “agri-note.”
While the environment surrounding farming in Japan will continue to change drastically, ISEKI Group willcapture the changes in the environment appropriately and work to realize “agriculture full of dreams =profitable” together with producers who support Japan’s sustainable agriculture and landscape.

Yukio Nawata
Director & Senior Corporate Officer,
General Division Manager, Business
Division

Market characteristics and outlook
Urgent need for promoting agricultural machinery
which enables efficient work to maintain farming
areas while the number of farmers decreases• Progress in an increase in size of farm business• Diversification to cultivate not only rice but also
vegetables and crops (grains, soybeans, etc.)
Advancement in transition to the smart andenvironment-friendly agriculture, fishery andforestry industries• Social implementation of smart agriculture, which
utilizes the latest technologies• Promotion of the “Strategy for Sustainable Food
Systems, MeaDRI” which aims to realize zero-emissions
in the agriculture, fishery and forestry industries

Driving the domestic agricultural machinery market
as the frontrunner in agricultural machinery.
Ranked third among general agricultural machinery
manufacturers in Japan
Communicating with customers drawing on thenationwide sales network (11 sales subsidiaries)
Providing solutions to continuously support farmbusiness from not only a product (hard) aspect but
also a cultivation technology and farm business
management (soft) aspect

Key points and progress of the Mid-term Management Plan strategies

Performance graphThree priority measures

Domestic sales
Machine types to promote sales

Improvement ofsales and service
provision capabilities

Strengthening of
initiatives forlarge-scale farmers

ISEKI Report 2022

・“All Japan series”
・Smart agricultural machinery
・Vegetable farming machinery・Imported implements“Transformation”

Strengthening ofDX and smart
strategies

31

ISEKI Group’s position and strengths (advantages)of domestic
business

Acceleration ofrevenue-expenditure
structural reform

Improvement ofoperating margin

We have a variety of products to meet customers’ needs, with a priority placed on “large-sized products,” “smart agricultural
machinery,” “vegetable farming machinery” and “low-priced products.” Our focus is on highly functional and durable “AllJapan series” as large-sized products for large-scale farmers. “Sanae Japan” was launched as a rice transplanter in 2020,
adding up to a full portfolio that encompasses everything from tractors, combine harvesters, and rice transplanters, and theseries performed well in 2021, with 112% sales as compared with the previous year (on a unit basis). In 2022, we enhanced
our product lineup of smart agricultural machinery to include “manned monitoring-based robot rice transplanters” and“mid-sized tractors with functions to assist straight traveling” to meet needs such as reduction of work and covering theshortage of experienced workers. We will conduct demonstrations and test rides
across Japan to disseminate the products.
We are also working to promote tractor implements. For example, in Japan,
only the company has entered into an alliance agreement with German
implements manufacturer AMAZONE and is increasing sales of the imported
implements which enable efficient work. In addition, we are also focusing on thedevelopment of human resources in the sales and service fields, who have expert
knowledge of such large-sized smart agricultural machinery and imported
implements. Sales subsidiaries across Japan are working to develop experts who
have broad knowledge covering everything from operation to repair by holding“large-sized agricultural machinery training” and “imported implements training.” Manned monitoring-based robot rice transplanter

Business strategies for value creation

Message from the General Division Manager of the Business Division

Priority measures ② Strengthening of DX and smart strategies
We are currently disseminating and expanding smart agriculture. In doing so, we have faced challenges regarding initialinvestments for location-based services for products such as robot rice transplanters and robot tractors which require highly
precise location information. Therefore, ISEKI Group launched a location-based service for agricultural machinery which
utilizes electronic reference points and data measured by satellite stations owned by NTT DOCOMO and is made available foruse with a monthly fee of 3,300 yen. Customers can conclude a contract only for any month they need to use the service.
With this, the environment has been set up for customers to easily introduce robot agricultural machinery and highly precise
automatic steering systems.
“Amoni,” a farm business portal launched last year, provides various types of information such as growth prediction for rice
farming, in addition to demonstration videos of various machine types. This portal is participated and operated by not only
the company but also producers, implements
Highly precise location-based service
manufacturers, etc. and the number of participating
GNSS<Service overview>
manufacturers increased from an initial 37 to 41. We
will further enhance the contents to meet the wants
Smart agricultural
Electronic
and needs of producers. In addition, sales subsidiaries
machineryreference
will work to conduct smart sales activities utilizing
stations
RTK
i-Magazine (a digital support tool). This tool enables
them to search information such as product inventory,
DOCOMO’s
Agriculturalprepare quotations, view operation manuals and parts
own fixed stations
machinerylists, and create sales journals on site, leading to not
only provision of services with more focus on
Obtain observation information and location information, deliver correction information
customers’ point of view but also work style reforms.

Priority measures ③ Building of a reliable profit structure which is not too much dependent on sales of agricultural machinery■ Other ■ Implements, parts, and repair ■ Agricultural machinery products(100 million yen)

1,177

1,159

1,173

1,190

530

486

496

516

408

420

433

433

238

252

243

241

2019

2020

2021

2022
plan

2025
targetAs part of our revenue-expenditure structural reform, we areaccelerating structural reforms at sales subsidiaries through such
efforts as strengthening profit foundations which are not too muchdependent on the situation of demand for agricultural machinery andoptimization of site allocation centered around large-scale servicing
locations. Implements, parts and repair fees which we are working on
to strengthen the stable profit foundation performed well, and thus
our efforts are steadily bearing fruit. In addition, we reviewed ourdevelopment plans for large-scale servicing locations based on thearea (block), and are proceeding with the renovation and capital
investment with a focus on priority areas. In December 2021, threesites were integrated to establish the Sorachi Chuo Service Workshop
in the central area of Hokkaido where future growth is expected.

Implements, parts and repair fees
(100 million yen)

397

406

408

420

433

2017

2018

2019

2020

2021

ISEKI Report 2022

32

Business strategies f or value cr eatio nOverseas Market Strategies (Overseas Business Company)
Priority measures ① North America strategy: “Increase share in the compact tractor market”

As a “solution provider for agriculture and landscape,” we will strive to further expand
our overseas business, to help solve social issues of various regions of the world.

Kazuya Tani
Director & Corporate Officer
General Division Manager,
Overseas Business DivisionMarketcharacteristics
and outlook

ISEKI Group’s
position andstrengths(advantages)

Global food issues, growing environmental awareness, and changes in lifestyles triggered by the COVID-19
pandemic. Under the modern social conditions where solutions for a wide variety of needs and issues aredemanded, we at ISEKI Group are committed to providing customers around the world with solutions for
agriculture and landscape.
In the North American market, the Company offered small-sized tractors to suburb-focused customers who
have increased in association with the COVID-19 pandemic and enjoy gardening and agriculture in theirprivate time. The tractors support the enrichment of the life of such customers through landscaping, andachieved record high sales in FY2021.
In the European market, where environmental awareness has been heightened remarkably, the Company’s
products mainly in the landscaping business, which are equipped with environment-friendly engines, havebeen helping the beautiful city landscape be clean and pleasant even further. We aim to continue providing
high-quality products with a low environmental burden including electric products.
In the Asian market, we are playing our part in realizing laborsaving in farming and an increase in foodproduction through the provision of our high-quality agricultural machinery developed through rice farmingin Japan. The Company will expand business not only in East Asia and the ASEAN region but also in India, theworld’s biggest tractor market, and, with regard to population growth in Asia and increasing food demandassociated therewith, we will provide solutions for food issues by promoting the automation of agriculture.
As a solution provider for agriculture and landscape, ISEKI Group aims to further expand overseas business
which encompasses everything from food production to gardening enjoyed in private time and city
landscaping by providing product lineups to meet a wide variety of needs and solve issues of customers acrossthe globe.
North America

EuropeAsia

Growth and solidification of thesmall-sized tractor market
Stable sales of mid-sized tractors
Shift to decarbonization

Use of our products for landscaping
businesses such as development offields and snow clearing work
Growing environmental awareness,
including Stage V exhaust
regulations, etc.
The consumers market maintaining
strong performance

Agriculture being an important
industry (Accounting for 80% of
rice production in the world)
Growing needs for agricultural
machinery in the ASEAN region
Continued demand for highperformance machinery in East
Asia

Core of AGCO Corporation’s
compact tractor business
Product development toward
decarbonization

A sense of presence of the ISEKI
brand with a history spanning over
50 yearsDevelopment of electric products
for professional use

Rice farming technologies
cultivated in Japan
Expansion of the ASEAN businessby IST in Thailand
Promotion of collaboration with
TAFE in India
Deployment of the latest
agricultural machinery in East Asia

Key points and progress of the Mid-term Management Plan strategies
Expansion of business domains through collaboration with each of regional
strategic partners and an increase in market share in existing regions

Overseas sales■ North America■ Europe■ AsiaStrengthening of the sales network in entire Europe through reconstruction
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ISEKI Report 2022

(100 million yen)

475
407

33

Total

333

113

97

60

66

129

139

132

128

151

188

2019

2020

2021

2022
plan

159

174

2025
targetIn North America, for more than 30 years since 1991, we have supplied products centered around compact tractors on an OEM basis
through our business partnership with a global agricultural machinery manufacturer, AGCO Corporation. On the back of the richlandscape in North America, ISEKI-brand tractors are used for a wide variety of purposes which include everything from hobby farmers’gardening and development and maintenance of fruit farms to snow clearing work and hauling of feeds for livestock and dirt. We
propose the desired vision of agricultural machinery which takes root in
people’s lives by supporting the enrichment of individuals’ lives.
Trends in North American compact tractor
In recent years, demand for compact tractors has been expanding inmarket and new housing starts
North America in association with changes in lifestyles due to the(thousand homes)
2,000
establishment of working-from-home practices and a focus placed on
U.S. new housing starts
236.9
suburbs. In 2021, the North American compact tractor market saw record■ North American compact tractor market (PTO 0-40HP)
215.8(thousand units)high sales of 240,000 units, and net sales of ISEKI Group in North America
1,500also hit a record high of 15.1 billion yen.
178.7
170.1
We will further strengthen the cooperative relationship with AGCO
145.1156.0
131.7
Corporation, and work to enhance our lineups of high-quality products to
123.5
1,000
114.2
104.4
meet local needs and improve services for each and every customer who
94.8 96.3
loves our products. We will contribute to the improvement of the quality
500
of private lives through landscape by continuing to strive for further
expansion of sales and share of our products in the market in which we2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Association of Equipment Manufacturers (AEM), United States Census Bureau (USCB)
are performing well.
■

Business strategies for value creation

Message from the General Division Manager, Overseas Business Division

■

■

■

Priority measures ② Europe strategy: “Increase presence in landscaping market”
In Europe, with a business history spanning over 50 years, ISEKI Group has contributed to the development of clean and pleasant towns
by providing, for example, tractors and riding mowers for landscaping businesses such as development of fields and snow clearing work.
In Europe, where high environmental awareness and a high level of product quality are required as exemplified by the fifth stage exhaust
regulations enforced in 2019 (EU Stage V), ISEKI’s products have received high marks from customers in terms of not only environmentfriendly engines but also functions that meet the needs of professional users.
EU has set out the “European Green Deal” as a sustainable growth strategy and announced toachieve substantially zero greenhouse gas emissions by 2050 as one of the major targets. Amongthe initiatives, the fact that they are considering prohibiting the sale of vehicles with internalcombustion engines within the EU in and after 2035 will lead to the expansion of the introductionof electric products and alternative fuels, and thus is expected to bring about significant structuralchanges to European industries and society. With an eye on these changes, the Company isplanning to commence mass production of electric products by 2024.
ISEKI Group will strive to further contribute to the landscaping business in Europe by
integrating the sales networks in the entire Europe to create a more robust system starting from
“TH5,” tractor equipped with an engine compliant with
2022 and continuing to provide high-quality products that meet the customers’ needs.
EU exhaust regulations (in Matterhorn, Switzerland)

Priority measures ③ Asia strategy: “Roll out rice farming-related machinery developed in Japan”
ISEKI Group manufactured and sold world’s first auto-threshing combine harvesters and rotary-type rice transplanters, and possesses
world-class technologies related to agricultural machinery for rice farming. On the back of population growth and increasing demand forfood in Asia, the Company is placing more focus on increasing sales further in the Asian region in order to fulfill our responsibility as afrontrunner in agricultural machinery for rice farming, drawing on our technologies.
In the ASEAN region where the population is growing remarkably, there are increasing needs for agricultural machinery to enable
more efficient work with the aim of improving the food self-sufficiency rate. IST in Thailand, which has become a consolidated subsidiaryof ISEKI Group in December 2020 and whose business operation has been led by ISEKI since then, has been an additional driving force toaccelerate the expansion of our ASEAN business, which includes the country and neighboring countries, and thereby contributing tosolving food-supply-and-demand issues through agricultural machinery.
In addition, in India, which is the world’s largest tractor market showing notable economic
Forecast for population andgrowth as is the case with ASEAN, we are promoting collaboration with TAFE, which ranks
grain supply and demandsecond in terms of domestic share, in broad areas including development, production, sales
and parts procurement. We will aim to heighten the presence of both companies in the Indian■ Population in developed countries
market and the world and promote business in a cooperative manner. In this way, further■ Population in developing countries (100 million people)
Grain demand volume (100 million tons)
automation of agriculture is expected to be achieved.
30.6
26.6
Meanwhile, in East Asia, the scale of farming is expanding through the concentration of
20.6
farmland on the back of the shrinking and aging of the farming population just like in Japan,
72.9
64.1
and therefore, we expect that demand for agricultural machinery stagnates over a medium to
72.9
54.6
long term, while demand for high-performance and highly-efficient products continue to acertain degree. In South Korea and Taiwan, we are selling the latest agricultural machinery
12.6
12.8
12.1
developed through rice farming in Japan, playing our part in promoting laborsaving in
2006-082018-202031
farming.
Prepared based on“Medium- to Long-term World Food Supply
ISEKI Group strives to promote sales and expand its share in broad regions in Asia by
and Demand Trend and Projection” (2022) by Policy ResearchInstitute, Ministry of Agriculture, Forestry and Fisheries
meeting various needs from all directions.

ISEKI Report 2022

34

Business strategies f or value cr eatio n

Product/Development Strategies (Development and Production Company)

We will enthusiastically manufacture products that will be selected, inconcerted efforts of development, manufacturing, and purchasing divisions.

Hajime Odagiri
Representative Director & SeniorCorporate Executive Officer,
General Division Manager,
Development & Production Division

Even as the market environment seems to be changing by the minute, we continue to carry on our founder’s passion of“freeing farmers from exhausting labor.” Our development and production divisions are working as one to develop
products that respond to social changes. Problems in the agricultural industry in Japan include the shortage of farmers
caused by the shrinking and aging of the farming population and the consequent expansion of the scale of farming. In
response, we will further strengthen our line-up of smart agricultural machinery that contributes to ultra-laborsaving andhigh-profit agriculture, as well as low-priced products for small-scale farms, and products that meet the needs of field
crops and vegetable farming markets. Overseas, we will aim to strengthen our competitiveness and expand our brandthrough the development of products that meet the respective needs of the North American, European, and Asian regions.
We will promote quality stabilization and cost reduction through strict implementation of development processes. We
will pursue structural reforms through the refinement of quality and costs starting from the planning phase bystrengthening collaboration between development, design, production technology and purchasing departments, theoptimal procurement based on central purchasing, the construction of optimal production systems that make effective useof the management resources of our Japanese and overseas production bases, and the review of in-house/external
production categories, which will be enabled by concentrating operations of production technology and outsourcing
management to the divisions. We will work to further strengthen our business structure for the enhancement of
profitability and quality.
Viewing the changes in the environment surrounding society as opportunities, we will continue to place efforts into
farm work safety measures, with the safety of our customers as our top priority. We will also actively engage, from bothdevelopment and production angles, in initiatives such as the development of high-end automated and robotic products,
the roll-out of global strategic machines that meet the diverse needs of individual regions, electrification of products aimed
at the realization of a decarbonized society, which has become a pressing issue, and the deliberation of use of newenergies.

Research and development system
ISEKI has built a research and development system that displays
collective power through collaboration among the planning,development, production, and sales departments. We determine thedirection for the product strategy and research and development
based on the needs and market trends in each region, and engage in
speedy research and development. We also collaborate with research
institutions and universities, conducting joint research and development
to improve the speed and efficiency of technology development.
We will make up for any lacking technologies and human resources
through human resources development and internal collaboration.
IETC, a specialized educational institution for design technologies,
holds seminars related to the latest technologies. In addition, the Green
Innovation Promotion Section was established within the Development& Production Division to promote research and development of electric
agricultural machinery or agricultural machinery which uses hydrogenas part of our efforts to respond to environmental issues including
future decarbonization. The Section has started building expertise,collecting information, and educating engineers.
❶Electrification

Research and development system
Advanced Technology Strategic Committee

Planning
departments

Educational
systems
IETC
ITTC
IGTC

Sales
departments

Sales
subsidiaries
Suppliers

Testing research
institutions
Universities
Joint research Corporations

Empirical research

Development andproduction
departments❷Automation, robotics, and data use

Using technologies cultivated throughcollaboration with experts, electric products,
and research, we will pursue the developmentof electric products for professionals in theEuropean landscaping market in response toenvironmental issues, home vegetable gardens,
and greenhouses. We will commence the limited
sale of electric lawn mowers in Europe in 2022.

Needs ofregions/
customers

Cooperation

Business strategies for value creation

Message from the General Division Manager, Development & Production Division

Targeting expansion of scale, while progressively
launching smart agricultural machinery forlaborsaving and farming that uses data, wewill pursue development aimed at the fullscale dissemination of completely automatedmachinery. We carry out demonstration
experiments in actual fields utilizing smart
technology in collaboration with the government
and municipalities to promote such machinery.

❸Hydrogen use

In response to environmental issues, we will
pursue the development and consideration ofagricultural machinery that uses hydrogen, withzero CO2 emissions. We became a member of
the Japan Hydrogen Association in 2021, andhave been exchanging information with energyrelated companies and other companies whichface similar issues and providing information to
design engineers.

Initiatives for optimal production system
Key points of the Mid-term Management Plan strategies

ISEKI Group’s initiatives in research and development

Product strategies that focus on farming regions,products, and growth markets
Response to large-scale farming
Response to brand expansion
Safety and environmental responses
Frontrunner development

Technological capabilities to create innovation
Intellectual property strategies
Development of specialized human resources in research anddevelopment and at production sites
Joint research and development with research institutions and universities
Brand power of combine harvester “JAPAN” and rice transplanter “Sanae”
Dream Agricultural Research Institute (latest technologies)

Research and development policy
We conduct research and development in linewith the four spirits as the engineer, upholding
the mission of “contributing to society throughagricultural machinery.”

Spirits as the engineer
Market ideas
Always being one step ahead of the competitors

Exert all technical potential
Be totally dedicated to product philosophy❶Domestic production system in JapanAt our Japanese manufacturing bases, in addition to making capital investments aimed at QCD* improvement, we willreorganize the system for development to manufacturing into
component and unit production bases and product assembly and shipment bases so that the system achieves optimal
efficiency. Moreover, in addition to reviewing the in-house/
external production categories, we will further strengthen ourcollaborations with Japanese and overseas suppliers and build
a stable supply chain in an effort to mitigate procurement risk.
Through these kinds of structural reforms, we will aim forthe further enhancement of quality and profitability.
*QCD: Quality, Cost, and Delivery<In-house production>

Product/development strategy under the Mid-term Management Plan (product development theme)
Increase in size of farm business
Diversification to field crops and vegetables
Leasing of agricultural machinerySocial changes and issues
Acceleration of smart agriculture
Stable food production and supply
Needs for low-priced products
Expansion of demand for landscaping
Creation of a decarbonized society Improved productivity

Expansion of agriculture in the ASEAN and East Asian regions
Lifestyle change<External production><Japanese suppliers>

Key safety components
Core technologies❷Global production system

PT. ISEKI INDONESIA is a production base for strategic machineryfor North America, Europe, and the ASEAN region, and produces
tractors that meet the high quality, low price needs by capitalizingon the expertise it has acquired locally over many years. Its
production volumes are back on the increasing trend after a
temporary slump due to the impact of the spread of COVID-19,
and totaled 15,680 units in 2021. With an eye on further
production increases, we will strive for the further expansion ofbusiness by making capital investments such as the addition of
new factory buildings and establishing systems for lowering costs
and increasing production through the optimization of suppliers.
Dongfeng Iseki produces high-performance large ricetransplanters, high-horsepower tractors, and combine harvesters
that are suited to local large-scale rice farming, which it supplies
to the local market in China and exports to the ASEAN region.
Production volume at PT.
ISEKI INDONESIA (units)<Overseas suppliers>
Further strengthen collaboration

15,68012,600

7,300

8,400

10,7609,700

with Japanese and overseas suppliers

Domestic strategy <Response to large-scale farming>

Overseas strategy <Response to brand expansion>

Strengthening of large to medium size, low price, smart agricultural
machinery and products for field crops and vegetable farming
Response to changes in agricultural style (contractor leasing)

Strengthening of products for European and North American markets, which are our strength
Strengthening of products for ASEAN
Penetration of brand in China and East Asia

Common strategy <Safety and environmental responses/Frontrunner development>
Promotion of environmentally-friendly design
Measures to prevent farming accidents

35

ISEKI Report 2022

Electrification/hydrogen use
Introduction of global strategic machines

Expansion of emission regulations-compliant engines produced in-house
Automation, robotics, use of agricultural ICT data, etc.

Streamlining of production system⇒ Mitigate procurement risk
2016

2017

2018

2019

2020

2021

Main line at PT. ISEKI INDONESIA

Improvement activities in development and manufacturing
Each manufacturing base has established a system for proposing improvements that target strengthening of safety, improvement ofquality, and reduction of man-hours and costs. These frameworks are highly active, with approximately 47,000 improvement proposals made in FY2021, resulting in cost reductions of approximately 320 million yen. Value engineering (VE) activities that allow for cost
cutting through improvements in product designing and manufacturing methods, parts procurement
methods, etc., are also conduct97
ed to manufacture products at a lower cost.

ISEKI Report 2022

36

Business strategies f or value cr eatio nIntellectual property strategies
Intellectual property system

The Group is engaged in the creation of core technologies for agricultural machinery and related products and the strategic acquisition of rights to and use of inventions and creations, which are intellectual outputs derived from the creation ofcore technologies, placing importance on intellectual property, and conducts business activities that lead to value creation.
Invention creation and patent strategies

ISEKI Group is strongly driving forward invention proposal activities
based on invention proposal themes that are set by consideringpromising technologies, market trends and needs, and incorporating opinions from the development and sales departments. We also
bring together engineers in charge of different products and carryout invention creation activities by systematically grasping agriculture as a whole to improve the quality and quantity of inventions
through the horizontal deployment of technology.
Taking into account the future social environment, technologicaltrends, and feasibility of the business, we examine the invention,and then acquire the property rights only for the highly viable ones
to protect our proprietary technology and enhance the competitiveness of product development.

Development departments
Promisingtechnologies

Sales departments

Gathering
opinions

Market trends
and needs

Invention
proposal
activities

Invention proposal
Social environment
Technical trends

Examination

Feasibilityof the project

North
America(1) In addition to strengthening our defense with our technological foundation and intellectual property through in-house useof intellectual property, we will expand our foundation by making further investments in frontrunner development, joint
development (introduction of other companies’ technology), and human resources development.
(2) Having firmed up this foundation, we will expand the establishment of IP rights for our proprietary technologies and ouroverseas intellectual property network to strengthen our competitive advantage.
(3) Further, we will leverage our proprietary intellectual property and intangible assets (drawings, know-how, and brands) togenerate profits and enhance corporate value by communicating information to stakeholders.
Conceptual diagram(3) Return to profit, Communicate information to stakeholders

Checking andmanaging
intellectual property
agreements

Outcomes of intellectual property activities: Proof of ISEKI Group’s high technological capabilities
Our proactive efforts to develop, launch and commercialize new technologies are exemplified by the high number of patentapplication registrations in Japan per specialty field, as well as high patent allowance rates. Taking advantage of the technologicalcapabilities underpinned by our intellectual property, we will strive in business activities that emphasize intellectual property.
Number of patent application registrations per specialty fieldYear
Statistics
Field(2) Protection of
proprietary technology●Strengthening of competitive advantage

37

ISEKI Report 2022

(1) In-house use(defense through technologicalproperties)

Systematic invention
creation activities

ASEAN

Use of intellectual property

foundation and intellectualIntellectual
property system

Incentives forinvention creation

China• Intellectual property education
To invigorate employees’ creativity, we provide
intellectual property education commensurate withyears of experience, including new recruit training. In
particular, we promote the enhancement of the creative
abilities of young engineers through the transmission of
invention creation know-how from veteran engineers toyoung engineers.
• Technological research presentations
In order to manufacture products that will be able tocontribute to the changing market environment in Japanand overseas, technological research presentations areheld to share the outcomes of research and development
and invention information and to provide opportunities
for discussion, including senior management, with theaim of raising the standard of the Group as a whole.

System overview

Patent application

EuropeHuman resources development [Intellectual property
education, transmission of creative skills]

Strict managementof intellectual
property

Establishment of overseas IP network●Promotion of advanced
technologies●Implementation of frontrunnerresearch●Implementation of joint
development●Introduction of external
technology

Example: Valuation of intellectual property
Based on our value calculation standards and in light of
conventional wisdom, we make a reasonable evaluationthat enables us to determine the value of a technology andcalculate the consideration for the transfer of rights andlicensing fees. Intellectual property information in Japanand overseas is digitized through an intellectual property
management system for the smooth and efficient management and implementation of intellectual property.

To invigorate intellectual property creation activities,
awards are presented to young engineers as an awareness-raising exercise. Awards are also presented to promote creation activities by sharing outstanding inventions
within the development departments. Through the creation of outstanding inventions, we will pursue the enhancement of ISEKI Group’s competitiveness.

Invention proposal themes

By building up a store of attractive designs and friendly pet names
as design rights and trademark rights, we strive to improve brandvalue through differentiation from competitors’ products and enhanced protection of product design.

●Acquisition of valid rights

Acquisition and management of intellectual property are
conducted in accordance with laws and regulations andcompany rules. Through this, we strive to protect trade
secrets and respect for intellectual property rights of othercompanies.

Invention awards scheme

Design and trademark strategies

The development departments, overseas departments work closelywith patent firms in each country to engage in invention creation
activities based on technological trends and needs in those countries.
We strive to prevent imitations of our products in various regions,
including emerging countries, and to prevent infringements of intellectual property rights of other companies by improving the accuracyof analysis of market trends and intellectual property status in eachcountry and striving to acquire and accumulate valid rights.

Intellectual property management

At ISEKI Group, the Intellectual Property Control Department manages intellectual property strictly, from creation
to establishment of rights and the waiver of those rights.
Incentives such as bonuses and awards are offered for thecreation of intellectual property through invention creation
activities.
When concluding intellectual property agreements, the Intellectual Property Control Department works closely with theLegal Section of the General Affairs Department to consider
the legal aspects, and checks and manage agreements.

●Promotion offoreign applications

Business strategies for value creation

Intellectual property policy

Rank2000 – 2006

2007 – 20142016 – 2017

2018

2019

2020

Number of laid-open
Number of patent application registrations per
applications per specialty field
specialty field
Agriculture andOther special machinery
fisheries
No. 1
No. 2
No. 1
No. 2

Patent allowance rateYear2004 – 201020112012 – 2017

2018

2019

2020

●Promotion of humanresources development

Patentallowancerate*

83.7% – 91.8%

91.8%

94.7% – 100.0%

96.4%

97.7%

98.7%

●Enhancement of corporate
value

Rank

No. 1

No. 2

No. 1

No. 2

No. 1

*Patent allowance rate = Number of allowed applications / (Number of allowed applications + Number of rejected applications + Numberof withdrawn and abandoned applications);
Number of withdrawn and abandoned applications = Number of applications withdrawn or abandoned after
notification of reasons for refusal

Number of invention
awards received(The Japan Institute ofInvention and Innovation)

National Awards
for Inventions:19

Regional Awards
for Inventions:211

Total:

230(As of March 2022)

ISEKI Report 2022

38

Business strategies f or value cr eatio n

ISEKI Group’s environmental management

Message from the Deputy Division Manager, Development & Production Division

Environment –Mid- to long-term environmental targets and results

Major activity results in promoting environmental management
FY2021 targets and result evaluation
TargetResultEvaluation

Mid-term environmental targets

We strive to contribute to the realization of a sustainable society.

Shingo Watanabe
Corporate Officer, Deputy Division
Manager, Development &Production Division, In charge ofEnvironmental Control Section

ISEKI Group has designated environmental protection that would enable the creationof a sustainable society as one of the business priorities, and practices environmental
management by setting the Environmental Vision and the Environmental Policy.
To practice environmental management across the Group, we have introduced
the environmental management system (EMS) at our manufacturing bases and nonmanufacturing bases, such as sales companies, both in Japan and abroad and built astructure to promote it under the Sustainability Committee chaired by the President.
Decarbonization efforts are accelerating on a global scale, and companies are also being
called on to step up their efforts. For its part, ISEKI Group has reviewed its CO2 reduction
targets, announcing that the entire Group would aim to achieve carbon neutrality by
2050, and raised its 2030 target to a 46% reduction at its global production sites. We willcontinue our efforts toward decarbonization with a sense of speed. In terms of productbased action, we are working to enhance the percentage of eco-product sales in Japan as
an indicator of the expansion of products that contribute to compliance with exhaust gas
regulations and the reduction of greenhouse gas emissions from agriculture and of thepromotion of eco-friendly design. Reducing the environmental footprint of the agricultural
sector is a priority issue to curb CO2 emissions by society as a whole and to create asustainable society. ISEKI Group will use its superior technological and service capabilities
to contribute to the resolution of social issues.

Environmental vision

Creation of alow-carbon
society

Scope 1 & 2
Reduction of CO2 emissions (per net sales)
Reduc tion of CO 2 emission during transpor tation(Compared with 2019)
Reduction of total material input (per net sales)

FY2013Standard
Manufacturing resources
Three
Development manufacturing Reduction of volume of water used (per net sales)of recycling- plants in Japan
Reduction of final volume of waste (per net sales)oriented society
Toxic chemical
Reduction of used volume of chemical substances
substances
subject to PRTR law (per net sales)
Eco-product Eco-product ratio in domestic sales

ISEKI Group promotes environmental activities that contribute to achieving harmony among nature, society andcorporations with the aim of creating a sustainable society.

(1) Maintain environmental management system and its functional applications(2) Promote dissemination of business activities and products and services to achieve carbon neutrality(3) Comply with environmental laws, regulations, and standards(4) Conduct environmental education and information disclosure

Progressmanagement,
evaluation
Information
sharing,horizontal
implementationof activities

Environmental management meetings at
individual ISEKI Group companies

The entire ISEKI Group is establishing an intragroup system for promoting environmental management. The Environmental PlanningGroup Meeting plays various roles, including revising reduction targets in line with ISEKI’s management plans and policies, sharing issues among the entire Group, and the horizontal implementation of measures. The Secretariat manages the progress of activity resultsin each office and reports regularly to the Sustainability Committee on matters such as issues that require management decisions.

Environmental Planning Group Meeting(1.6)%(14.0)%(8.8)%(16.4)%(25.4)%(18.0)%(36.1)%(46.5)%(51.0)%(58.6)%(61.2)%(65.0)%(28.5)%(34.1)%(37.0)%

39.0%

39.8%

50.0%

Backcasting

Reduction of CO2 emissions (Scope 1 & 2)

Mid- to long-term targets

26% reduction by FY2030

46% reduction by FY2030

Three manufacturing bases in Japan

Global production bases(Compared with FY2014)(Compared with FY2013)

Eco-product sales in Japan (%)
FY2030 Sales in Japan

50%

Environmental vision(Total)ReviseFurther improvement• Reduction of ISEKI Group’s CO2 emissions (Formulate Group-widetargets in FY2022)• Formulate reduction targets in collaboration with suppliers that
account for 70% of transaction amount (Scope 3)

FY2050
Toward the realizationof a carbon-neutral andsustainable society

Percentage of FY2025 sales in Japan
Revise65%*Global production bases: ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd., ISEKI-Shigenobu MFG. Co., Ltd., PT. ISEKI INDONESIA*In line with the revision of the covered production bases, targets were set based on FY2014 when the result of PT. ISEKI INDONESIA became available.

System for promoting environmental management

Sustainability Committee(26.0)%*Three factories in Japan: ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd.
*CO 2 emission during transportation is energy-generated CO 2 emission volume.
*The CO 2 emission factor changes every year based on the power source composition of the individual power companies.
Emission factors for each power company (Ministry of the Environment) were used as a reference.
*The historical results of environmental burden reduction by base are posted on the company’s website.

(per net sales)

Progressmanagement,
evaluation(2.2)%

Mid- to long-term environmental targets (2022-)

Basic Environmental Policy

Report(16.0)%

Analysis of failure to achieve target
Reduction of CO2 emissions
CO2 emissions from ISEKI-Matsuyama MFG. Co., Ltd., (Matsuyama, Ehime Prefecture), the main factory of ISEKI Group, increased
greatly, but production efficiency has improved as energy consumption intensity per net sales has been reduced from the previous year. Our analysis of the causes behind the failure to achieve the target was that emissions increased due to an increase in thepurchased electricity CO2 emission factor increased by about 40% from the previous year. Going forward, we will strive to reduce
CO2 emissions by pursuing the systematic introduction of non-fossil-fuel electricity and renewable energy with zero CO2 emissions.

ISEKI Group will aim for the creation of a carbon-neutral, sustainable society by 2050 by “providing innovative products andhigher quality of services to the customers.”[Overview] Sharing of Basic Environmental Policy and targets, progress ofenvironmental implementation plans, horizontal implementation of efforts
made in each region, and sharing of information related to environmental
laws and regulations, etc.
[Members] • Chairperson
Officer in charge of Production, Development & Production Division• Members
General Manager of Corporate Planning Dept., General Manager of General
Affairs Dept., General Manager of Sales Planning & Administrative Dept.,
General Manager of Corporate Business Control Dept. of Overseas Business
Division, General Manager of Tsukubamirai General Affairs Dept., Presidents ofGroup companies, Officer in charge of Environment Control, General Manager
of Administrative Dept. of Development & Production Division, General
Manager of Purchasing Dept., Manager of Environmental Control Section• Secretariat
Environmental Control Section, Administrative Department ofDevelopment & Production Division

FY2030targets

Business strategies for value creation

Environment –Assign Environment Control
Managers who promote
environmental control
activities in each office
Manufacturing bases• 6 bases in Japan and 3
bases overseas
EMS certificationacquisition rate: 100%
Non-manufacturing bases• 8 sales subsidiaries in JapanEMS certificationacquisition rate: 100%
• 9 other bases in Japan andoverseas
EMS certificationacquisition rate: 89%

Initiatives for preservation of biodiversity
Case study

Alleviation of a burden on soil and water byreducing the use of fertilizers“Eco Unemaze-kun” is a ridge-making tractor that enables fertilizing
and ridge-making to be conducted simultaneously. It was developed
based on the research outcomes of the National Agriculture and Food
Research Organization (NARO). This product is certified as a super-eco
product under ISEKI Group’s certification scheme.
According to the results of tests conducted by the National Agriculture and Food Research Organization (NARO), by stirring fertilizers
only in the root zone of the crop, the use of fertilizers can be reduced
by 30–50% compared with fertilizing the entire area. Even with thisreduction in the quantity of fertilizers used, yield can be maintained at
the same level as full fertilization. It is hoped that reducing the quantity of fertilizers used will alleviate the burden on soil and water, leading
to the preservation of biodiversity.

Partial fertilizing
Stirring
fertilizers
Applied toa required
section
only

Full fertilization
Fertilizers
applied tothe entire
area*ISEKI Group’s Biodiversity Guidelines and its approach are posted on the company’s website.

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Business strategies f or value cr eatio n

Response to climate change

Agriculture, which benefits from nature, is closely connected to climate change. Given its potential for a major
impact on the business activities of ISEKI Group, an
integrated manufacturer specializing in agricultural machinery, we have positioned taking measures for climatechange as one of our priority management issues andare engaged in environmental management.
Climate change-related risks and opportunities aremanaged centrally by the Sustainability Committee,
chaired by the Representative Director & President. The
Committee consists of the Directors in charge of sustainability and climate change, and the heads of thedepartments in charge of sustainability issues. The Committee meets four times a year in principle to examineand deliberate on various issues from the perspectiveof climate change-related risks and opportunities. The
results of deliberations at the Committee meetings
are reported to the Board of Directors, and importantmatters are deliberated and determined by the Boardof Directors. This framework enables the management
team to strengthen their involvement.
(Please refer to p. 45 for information about the Sustainability Committee)

temperatures. ISEKI Group will strive to mitigate the impacts of these risks by regularly reviewing our BCP, product lineup, and sales channels, etc. On the other hand,in order to respond to changes in natural environment,
demand is expected to grow for technology to replace
agricultural work with robotic agricultural machineryand autonomous work performed by AI, from the collection and analysis of weather data and growth data todecision-making based on that data, and solutions thatwill contribute to the construction of a sustainable agricultural production foundation. Our analysis is that suchdemand may present business development opportunities
for ISEKI Group.
Business strategies for value creation

machinery and farming methods toward decarbonization,
electrification of agricultural machinery, introductionof robotic agricultural machinery and smart agricultural
machinery for efficient farm work and optimization offertilizer, and increasing demand for farming solutions
that will help to reduce methane emissions from ricepaddies are also anticipated. Our analysis is that thesedevelopments may present business development opportunities for ISEKI Group.
Analysis of the 4°C scenarios revealed concerns about
a decline in demand for rice farming machinery, which
may have an impact on our business performance. Causes of this possible decline in demand include damage
to production and sales bases, including supply chains,resulting from typhoon and flood damage and a decline
in the area of land available for rice production and deterioration in rice quality due to increases in average

Governance*Main referenced external scenarios
1.5°C/2°C: IPCC AR6 SSP1-1.9, SSP1-2.6 (Climate policy scenario in which post-industrial temperature increase can be curbed to less than 1.5°C/2°C), IEA’s NZE scenario,
and APS scenario; 4°C: IPCC AR6 SSP3-7.0, SSP5-8.5 (Scenario in which no climate
policy is introduced due to regional conflicts and dependence on fossil fuels)

Strategy
In 2021, ISEKI Group conducted a trial analysis on climate change scenarios to identify and recognize theimpact of climate change on our business and to factor
it into our management decisions.
Based on the 1.5°C/2°C scenarios, which see society-wide transformation towards decarbonization andsuccess in curbing temperature rise, and the 4°C scenario, in which the prioritization of economic development
causes the continued aggravation of global warming
and its effects, we analyzed the entire value chain of
the agricultural machinery business, the core businessof ISEKI Group, both in Japan and overseas, and identified risks and opportunities as of 2050. Collection andanalysis of data were conducted across the whole ISEKI
Group (domestic sales, overseas sales, product planning,finance, procurement, quality, and environment-related

Management of risks and opportunities

departments). The Strategic Planning Section of the Corporate Planning Department played a central role in thiswork, led by the Director in charge of Climate Change
in the Sustainability Committee. Year 2030 is envisaged
in qualitative and quantitative evaluations.
Based on the analysis of the 1.5°C/2°C scenarios, weconcluded that our business may be affected by increases in operational costs due to tighter government regulations aimed at decarbonization, as well as increases inprocurement costs in line with progress in decarbonization. Loss of business opportunities due to an inability torespond to demand caused by decarbonization is another possible risk. ISEKI Group will strive to mitigate theimpacts of these risks by reducing energy consumption
and making use of renewable energies. On the other
hand, in order to respond to changes in agricultural

Risks and opportunities identified in the scenario analyses are categorized and assessed on two axes (fourquadrants), one for the magnitude of the financial
impact and the other for the degree of the potential ofthat financial impact. Climate change strategies must be
deliberated from both risk and opportunity perspectives.
For this reason, the Sustainability Committee has established a system for the categorization, assessment, andfollow-up of risks and opportunities. It will continue torevise that system, including confirming new risks in linewith environmental changes, on an annual basis. Management of risks that may affect business activities inthe short term is integrated under the Risk Management
Control Committee. In doing so, we strive to prevent
risks from materializing and to minimize losses, to contribute to smooth business operations, and to preserve

assets within our operational processes in accordancewith risk management regulations. (Please refer to p. 63 for
information about the Risk Management Control Committee)

ISEKI Group is working to offer environmentally-conscious products and solutions, while also striving to reduce
CO2 emissions from business activities so as to reduce
environmental burdens. Meeting bodies that discuss future
directions of product planning, development themes andother issues, such as the Product Development Strategy
Committee and the Advanced Technology Strategic Committee, evaluate and deliberate opportunities for climatechange-related products and solutions and incorporate
their results with certain importance in the development
planning with the approvals of the Directors’ Operation
Committee and the Board of Directors.

Scenario analysis, risks and opportunities, measures
1.5°C/2°C Scenario 4°C Scenario
Financial Potential Financial Potential
impactimpactTechnology Decline in competitiveness caused by delays in technological development Medium Medium Medium Medium

Transition risk

Risk
category

Decline in demand due to decline in sales caused by needs and social
Marketinfrastructure status

Physical risk

Large

Small

Increase in operation cost due to introduction of carbon tax and emissions
Medium Medium
trading scheme
Deterioration of reputation among shareholders and other stakeholders,
Reputation
Small Medium
divestment, or plummeting share price
PolicyTiming ofrisks andopportunities
Short term

MediumSmall

Short term

Small

Medium

Mid term

Small

Medium

Mid term

Small

MediumLong term

Direction of measures••

Research of carbon-free agriculture
R&D of agricultural machinery that supports agriculture
adapted to natural disasters and rising temperatures

Provision of increasingly detailed TCFD information
disclosures• Comprehensive understanding of greenhouse gas
emissions and stocktake of reduction plans•

Close monitoring of global material prices caused by climatechange and improvement of material input efficiency• Close monitoring of status of water resources
with respect to climate change• Understanding of detailed flood risks to production
and sales bases and supply chain• Formulation of BCP that encompasses supply
chain

Existing initiatives
Commercialization and sales ofautomatic steering system• R&D of electric tractor (joint projectwith Ehime University)

Acute

Production manufacturing costs increase, making it difficult to deliverproducts due to changes in supply chain caused by climate change
Suspension of product and service provision systems due to damage
suffered by the company/supply chain caused by severe typhoon andflood damage

Risks of decline in value of existing products
Increase in energy price caused by rise in temperature
Chronic Rebuilding of product sales channels in line with changes and reductionof farmable areas due to progression of climate change
Increase in demand for agricultural machinery that contributes to energy
conservation and greenhouse gas reduction
Products Increase in sales of products and services that accommodate changes in
the agricultural environment caused by climate change
andservices
Increase in demand for solutions that contribute to reducing greenhousegas emissions from farming soil

Small

MediumLarge

MediumLarge

MediumShort term

Medium
Small

Small
Large

Large
Small

MediumLargeLong termLong term

Small

Small

Small

Small

Long term

Rebuilding of product sales channels in line withchanges and reduction of farmable areas• Promotion of procurement of renewable electricity
and energy conservation

Large

Small

MediumSmall

Short term

•

•

•

Large

MediumLarge

MediumShort term

Medium Medium

Small

Medium

Mid term•

Research of carbon-free agriculture
R&D of agricultural machinery that supports agriculture adapted
to natural disasters and rising temperatures
Close monitoring of trends in subsidy schemes ofnational and local governments, deliberation ofsolutions that respond to farmers’ needs

Future initiatives•

Identification of climate change risks
and opportunities, scenario analysis• Understanding and disclosure ofgreenhouse gas emissions (Scope 1, 2 & 3)••

MarketOpportunities

Details•

R&D of agricultural machinery adapted tonatural disasters and rising temperatures

Regular revision of climate change risks andopportunities and reflection in management plans• Understanding of greenhouse gas emissions, including
sales bases, and revision of scope of reduction targets•

Reducing weight of parts using iron,
reducing processing waste• Recycling of cooling water, use of reclaimed
water (stormwater, etc.)• Understanding of detailed flood risk of theentire supply chain, including overseas bases• Formulation of BCP that encompasses global
supply chain
•

•

•

•

•
•

•

•

•

Understanding of input of material andwater resources
Formulation of BCP (offices, production
and sales sites in Japan)
Mapping of domestic suppliers,
formulation of diversification plan
Recognition as risks
Preparation of draft decarbonization
plan at each production site
Commercialization and sales ofautomatic steering system
R&D of electric tractor (joint projectwith Ehime University)
Collaborative projects with othercompanies and local governments forenvironmentally sound agriculture

Establishment of energy conservation targets
Setting targets for renewable energy ratio to energy consumption• Establishment of renewable energy power generation facilities• Detailed survey of long-term changes in farmable areas
•
•

•

•

•

R&D of agricultural machinery adapted tonatural disasters and rising temperatures
Formulation of business plans for environmentallysound agriculture as for-profit business
Demonstration of model cases, nationwide rollout of business

Potential: Large (short term: within 3 years); Medium (mid term: 3 to 5 years), Small (long term: 5 years or longer)

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Business strategies f or value cr eatio n

Response to climate change

Initiatives for the realization of a decarbonized society
Initiatives for environmentally-friendly design

ISEKI Group strives to contribute to the creation of acarbon-neutral and sustainable society by 2050 through“providing innovative products and higher quality ofservices to the customers.”
As a milestone towards the reduction of CO2 emissions
from business activities, we set a target of a 46%
reduction in CO2 emissions by 2030 compared with 2014at our global manufacturing bases. In November 2021, we
conducted a questionnaire survey on the decarbonization
efforts of all suppliers in Category 1 of Scope 3, which
has the largest volume of emissions in the entire value
chain. Based on the survey results, in April 2022, we
asked suppliers to establish their own voluntary reduction
targets. We formulate and promote reduction targets incollaboration with suppliers who account for 70% of thetransaction value.
In Category 11, which accounts for around 60% of theemissions, we will pursue the research and developmentof electrification of agricultural machinery, and agricultural
machinery that uses hydrogen. As an indicator ofefforts to solve climate change issues and to reduce
the environmental burden of agriculture through theenhancement of environmentally- friendly products andservices, we set a target of eco-product sales in Japan of
65% or more of total domestic net sales in 2025. We also
participate in decarbonization demonstration projects
in the agricultural industry in collaboration with local
governments and other partners. Such projects include
the promotion and expansion of environmentally soundagriculture. Through these projects, we will contributeto the creation of a sustainable society by reducing CO2
emissions by society as a whole.
(Please refer to p. 40 for information about eco-product sales in Japan andthe results of efforts to reduce our environmental burden in 2021. Past
results are posted on the company’s website.)

Eco-product certification system
The eco-product certification system is an in-housesystem that certifies products with high environmental
conformance that lead to solutions to climate change
issues and to the reduction of agriculture’s burden on
the environment. Certified products that clear ISEKIoriginal evaluation criteria in areas such as conservationof energy and labor, environmental burden reduction,
resource conservation, and consideration of biodiversity,
are granted environmental labels, which are conveyed tocustomers through product catalogs and user manuals inan easily noticeable format. Further, the environmental
label conforms to Type II stipulated under ISO14021 (selfdeclared type that does not need third-party certification).
*Trends in the number of certifications and details of the certification system are posted on
the company’s website.

Example of environmental label
Super-eco productXX environmental burden
reduced by YY% (compared
to ZZZ’s conventional model)

CO2 emissions from value chain
In addition to CO2 emissions from ISEKI Group, we are working to understand CO2 emissions from the entire value chain.
Going forward, we will strive to improve the accuracy of our calculations.

●Realized outstanding environmental
performance through notable functions●Environmental burden reductionof 10% or more in usage compared
to conventional models

Super-eco productProduct that has cleared
in-house standard

Examples of certified products
Tractor: GEAS NTA5 with straight-travel assist function
ISEKI’s GEAS NTA5 tractor
with straight-travel assist
function was granted “ecoproduct” certification. Withan emissions regulationscompliant engine, GPSlocation system, andcorrection of vehicle bodylean using gyro sensors, thistractor makes automatic
straight travel possible without steering control.
Maintaining straight travel in a large field requires expert
experience and skills, making the work tiring over large
surface areas. The straight-travel assist function eliminates
the need for steering control when going straight, which
improves comfort for the operator.
According to the Ministry of Agriculture, Forestry and
Fisheries’ Strategy for Sustainable Food Systems, MeaDRI,
automated driving technologies, which include straighttravel assist functions, not only enable anyone to carryout operations with high accuracy using highly precise
positional information, but also reduce inconsistencies andwaste in work, thus contributing to energy conservation.

Business strategies for value creation

Indicators and targets(Source: The Role of Smart Agriculture the Strategy for Sustainable Food Systems, MAFF)

Emissions from othercategories,

Scope 1
3%

excluding categories 8, 9, 10,
13, 14 and 15

Eco-productScope 2
4%

5%

Initiatives toward electrification of agricultural machinery

Category 1
32%

1.06
milliontons

We believe that the electrification of agricultural machinerywill grow into a major pillar for the realization of adecarbonized society. In anticipation of a decarbonizedera, ISEKI Group started joint research with Ehime
University in 2010 and announced a prototype electrictractor in 2012. After conducting further technical research
toward commercialization, in the autumn of 2022, wewill launch limited sales of the SXG216, an electric riding
mower powered by lithium-ion batteries instead of fossil
fuels, targeting the European landscaping market. We plan

Scope 393%

Category 11
56%

Total of Scope 1, 2 & 3

Emission volume from the entire value chain

Scope 1

Use of fossil fuels

30,000 tons

Scope 2

Use of purchased electricity and heat

40,000 tons

Scope 31.06 million tons

Other indirect emissions

990,000 tons

Category 1

Resource extraction of purchased products and services, and manufacturing

350,000 tons

Category 11

Use of sold products

590,000 tons

Other categories

Emissions from other categories, excluding categories 8, 9, 10, 13, 14 and 15

50,000 tons

Scope of calculations: Consolidated companies of ISEKI Group (including overseas sites)*These figures are calculated with reference to the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain of the Ministry of the Environment and Ministry of Economy, Trade and Industry.
*Category 11 includes future emissions based on the assumption that the products sold in the respective years will be used for their useful lives.
*Category 12 includes future emissions during the disposal of products sold in the respective years.
*Scope 3 emissions of overseas sites are calculated based on the emission intensity database for Japan.
*For details of emissions in each category, please refer to the company’s website.

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ISEKI Report 2022

to start full-scale sales of electric riding mowers, including
products for professional customers, in 2024.
Electric tractor prototype (2011)

Initiatives for the promotion and expansion of environmentally sound agriculture
Environmentally sound agriculture, which aims to reduce
the use of chemical fertilizers and agrochemicals, cancontribute to the realization of sustainable agriculture,including environmental preservation and food safety.
Smart agricultural machinery equipped with advanced
technologies has the potential to be an integral part ofthe promotion and expansion of environmentally soundagriculture, such as reducing the use of chemical fertilizers
with the use of sensors and data, without relying solely on
experience, and reducing the use of chemical pesticides
by saving labor for weeding work in rice paddies.
The reduction in the use of chemical fertilizers andagrochemicals derived from fossil fuels is also expected tobe effective in decarbonization. Through the promotionand expansion of sales of products equipped with variable
fertilizing systems, which control fertilizer quantity in realtime based on results of measurement by soil sensors,
ISEKI Group strives to contribute to the promotion andexpansion of environmentally-sound agriculture.
In collaboration with national and local governments
and private-sector companies, ISEKI Group provides smart
agricultural machinery and related technologies such as
farm business know-how, and engages in demonstration
projects of labor-saving and productivity-enhancing
technologies, to contribute to technological development
and advancement for the promotion and expansion ofenvironmentally sound agriculture.
(Please refer to p. 29 for information about innovation based on collaboration)

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Fo undation f or s ustainable gr ow th

Sustainability in ISEKI Group

Stakeholder engagement
Basic Policy (Fundamental concept)

Sustainability basic policy● ISEKI Group strives to build strong relationships of trust with stakeholders by engaging in constructive dialogue with them

In keeping with the philosophy of our founder, “free farmers from exhausting labor,” ISEKI Group sets forth its corporate philosophy
as “We strive to contribute to the creation the prosperous and sustainable society through ‘providing innovative products and higher
quality of services to the customers.”
We will strive for the realization of a sustainable society, “agriculture and landscape,” in cooperation with our stakeholders.

● Our basic policy in information disclosure is to “disclose information properly to fulfill social accountability” and “endeavorWith the aim of strengthening initiatives toward sustainability issues, the previous “Corporate Social Responsibility Committee” wasdissolved to form a new organization, the “Sustainability Committee” established on July 1, 2021 and chaired by the Representative
Director & President. The progress of initiatives related to each materiality is being managed by the Sustainability Committee. In principle, Committee meetings are held four times a year, examining and deliberating initiatives related to the sustainability of the Group asa whole, including responses to climate change, respect for human rights, from the perspective of risks and growth opportunities. In
addition, the results of deliberations at Committee meetings are reported to the Board of Directors and basic policies, materiality, andother important matters are deliberated and determined by the Board of Directors. This framework enables the management team tostrengthen its involvement.

to promptly disclose accurate information required from inside or outside of the Group in recognition of the importance ofsocial accountability and thereby become a company with transparency.”● To win fair evaluation from all our stakeholders, including shareholders, investors, customers, suppliers, local communities,
and employees, and to ensure management transparency, ISEKI Group strives for fair, equitable, timely, and appropriate
disclosure of management-related information keeping with the purpose and meaning of fair disclosure rules.
Major engagements with stakeholders
The opinions, etc. obtained through various dialogues are fed back to the Directors, management executives, and related
departments by way of reporting to the Board of Directors and other meeting bodies for the purpose of information sharing
and reflected in and used for improvement of business activities.
Stakeholder

Concept behind the engagement

Opportunities for dialogue

Customers

To provide high-quality and safe products and services thatsatisfy our customers, ISEKI Group will extend farm businessproposals and support, including cultivation techniques, as well
as explanation for the application and safe use of agricultural
machinery. We will also strive to understand the true needs ofcustomers through dialogue and use this dialogue to improve
product development.

Direct dialogue with sales and maintenance staff
User exchange meetings M
Visit M
Trainings, seminars
Exhibitions and demonstrations M
Proposal and support of farm business technologies
Market research

We will cooperate with our suppliers to create opportunities formutual improvement so that they can lead to mutual businessdevelopment including fair and equitable trade towards building a sustainable supply chain.

IR information meetings for vendors M
Dealer meetings M
Superior company tours M
Inspection and meeting with suppliers M
Business report meeting M
Annual general meeting of Ishokai M
Visits (Japan, overseas) M

We will engage in environmental conservation, activities forcommunity growth and development, and activities for the
nurturing of the next generation so as to enable co-existencewith the local communities.

Tours of factories and exhibition halls M
CSR activities such as cleaning activities
Exchange of views with local governments, etc. M
Participation in local events M

Employees

We will work on providing a secure and safe workplace, sharecompany information and support for career development towards creating an employee-friendly workplace and nurturing
human resources.

Internal IR information meetings M
Collective bargaining M
Labor management council M
Employee meetings M
Various training
Various commendation meets and contests M
Former employees’ meeting M

Shareholders
and investors

We will bolster corporate governance in order to build longterm trusting relationships with our shareholders and investors.
We will engage in constructive dialogue based on our disclosure policy.

General shareholders’ meeting M
Quarterly briefing sessions (four times a year) M
Individual meetings M
Information meetings for individual investors andshareholders M
Facility tours M

Direction

to sustainability of the Group as a wholefrom the perspective of risks and growth
opportunities[Matters to be Vision, direction of strategies, policies,
deliberated] indices, numerical targets, PDCA
[Members] ● Chairperson
President● Director in charge of Sustainability
Director in charge of Corporate Planning
Department● Director in charge of Climate Change
Director in charge of Development &Production Division● Members
Chairperson, Directors in charge, heads ofdepartments serving as secretariat to themeeting bodies related to the Committee,
and heads of the department and section
in charge of Sustainability● Secretariat
Corporate Planning Department andInvestor Relations Section

ReportProgressmanagement
andevaluation

Meeting bodies

Supervision/
direction

Report(resolution)

Sustainability Committee

Report(resolution)

Directors’ Operation Committee

Board of Directors[Overview] Examines and deliberates initiatives related● Customers
Product Development Strategy
Committee, Advanced Technology
Strategic Committee, and Quality
Improvement Committee● Employees
Human Resources Committee● Environment
Environmental Planning Group
Meeting● Governance and complianceManagement Supervisory
Committee and Risk Management
Control Committee● Activities in general
Public Relations Liaison Committee

To spread sustainability
To penetrate sustainability throughout ISEKI Group, the senior management sends messages to employees while awareness activities
through internal newsletters and study sessions are conducted. We focus on sharing the Group’s vision and philosophy with especiallythe young and middle-career employees. We will also strengthen the penetration of the concept to employees at sales and manufacturing departments so that each employee will be aware of sustainability in their daily work and get to their actions.

Suppliers

Local
community

Foundation for sustainable growth

System for promotion of sustainability

including direct interaction by the company’s executives.

M denotes involvement of company executives

Constructive dialogue with shareholders and investors

Case/SDGs study sessions
We held on-line SDGs study sessions and workshops for the wide rangeof employees including the young and mid-career employees as well assome managers, to deepen their understanding of how the businessesof ISEKI Group and SDGs are related to. In addition to learning about the
global landscape and social issues, the participants engaged in active discussions on “what ISEKI Group can do to achieve the SDGs” in the group
work activities. According to the survey conducted after the sessions,
90% of participants answered that they had a “good understanding or
understanding” of the nature and concept of the SDGs.
Comments
from theparticipants

We were able to acquire new ways of thinking, including the backcasting approach.
The concept that imagining the ideal vision of a company leads to achieving SDGs, from the point of view that“things go around and come around,” was new to me.
The group work with people from other departments with which I don’t have regular communication gave me agood opportunity to know of different points of view.

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Initiatives toward fulfilling dialogue
The dialogue with shareholders and investors is supervisedby the officers in charge of the various business administration departments (Investor Relations Section, Corporate
Planning Department, Financial Department, and General
Affairs Department) and the President, officers and business administration departments strive to actively engage
in constructive dialogue utilizing various opportunities suchas earnings briefings.
In order to improve the dialogue, persons in charge ofIR collaborate with various departments to enhance disclosure information such as disclosure materials, as well as
to promote cooperation and sharing of information withthem at the Public Relations Liaison Committee meetings
held every month. ISEKI Group has also set up pages
dedicated to shareholders and investors on its website andprovides disclosure information in an easy-to-understandmanner.
Going forward, we will implement constructive dialogue
to ensure sustainable growth and enhance corporate value, which are the concept of the Prime Market.

Conducting shareholder-centered generalshareholders’ meetings
ISEKI Group has built an environment where it is madeeasier for shareholders to attend general shareholders’meetings and conducts the meeting in a shareholder-focused manner. The convocation notice for the generalshareholders’ meetings is sent by mail three weeks prior tothe meeting date and the details are posted on the website before the convocation notices are sent. Moreover, inorder to improve the convenience for voting, electronic
exercise of voting rights over the Internet is made available
in addition to voting by mail.
Further, ISEKI Group visualizes its business reports,
posts topics, and introduces its initiatives with the aim of
deepening the understanding of ISEKI Group as much as
possible. In addition, by putting shareholders safety firstduring the spread of COVID-19, the 98th Ordinary General
Meeting of Shareholders was streamed via video.
Please refer to p. 70 for the status of shares held by typeof shareholder.
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Fo undation f or s ustainable gr ow th

Enhancement of brand value

Efforts to improve satisfaction with products – Establishing trust with customers –Basic Policy (Fundamental concept)● ISEKI Group works to provide consistent product quality assurance from product planning to sales and after-sales service

while reflecting the opinions from the market in product development and improvement so as to offer products developed
from the customers’ perspective in a timely manner.
● The Group takes all possible measures for quality control and makes prompt responses in good faith should any quality
related issues arise.

Human resources development
Early nurturing young designers
Young designers implement the integrated system for rice
farming by themselves for one year. We strive to develop
products from customers’ viewpoint, improving knowledge on not only farm work but also general agricultural
matters through farm work.

ISEKI Group-wide Skills Contest
We hold the Group-wide skills contest for the purposeof improving technologies and nurturing young humanresources in domestic and overseas manufacturing departments in order to strengthen abilities of manufacturing to
improve product quality.

Product development reflecting the voices of customers

Product
planning

Development
designPurchase andmanufacturing

Sales andservices

Development and optimization of quality at each step
Grasping the required quality
Incorporating into planning quality
Design quality and development of functions
Strengthen collaboration with Japanese and overseas suppliers

Customers

Feedback of voices of customers (opinions, requests, and emerging needs)

Sales preparation evaluation
Verification and evaluation of product quality
Evaluation of customer satisfaction
Quality assurance verification and evaluation (design review)

applications thereof, including image recognition tools
using DX and other new technologies, an exterior form
quality examination system with a 3D scanner, digitalization of know-how of skilled workers, and systematizationof work standards.

Early responses to quality defects
When an issue occurs in products requiring improvement
measures, ISEKI promptly performs inspections and repairsof the products giving the utmost priority to customers’safety.
When we launch a recall, we notify and report to theconcerned authorities*1, quickly contact relevant customers, and respond to component replacement. We makeefforts to draw attention of customers and provide theminformation, disclosing information on the website of ISEKI& CO., LTD.
We share information on quality deficiencies internally inorder to prevent the recurrence of the same deficiency.
Responses to and utilization of inquiries from
customers
Inquiries, opinions, comments and complaints from customers, such as on products, are accepted by phone andon the website, and the department in charge strives to
respond to them promptly in a sincere manner (targetof within one business day). The valuable opinions from
customers are fed back to the company’s executives andconcerned departments and are actively used for better
product development, sales, and service activities to increase customer satisfaction.
Further, for matters that receive a large number of inquiries, ISEKI Group works to disclose sufficient information
on its website so that customers can make best use of it.

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ISEKI Report 2022

Number of recalls by fiscal year*2

Number ofrecalls

2017

2018

2019

2020

2021

6

0

2

0

4

*1 Ministry of Land, Infrastructure, Transport and Tourism, Ministry of Agriculture,
Forestry and Fisheries, Ministry of Economy, Trade and Industry, etc.
*2 Number of recalls filed with the Ministry of Land, Infrastructure, Transport and Tourism

Please find the link below to access important notifications of recalls:

https://www.iseki.co.jp/news/
Contents of inquiries regarding products from customers (FY2021)(Total number of inquiries that came through the website: 415)
Other: 10%
Opinion andrequest: 1%
Document
request: 6%
Technical
details: 32%

Provision of products and services in consideration of the needs of customers and society
Preventing farming accidents
In recent years, a lot of accidents at the time of using
agricultural machinery have occurred, and, in 2021, thenumber of accidents of farm workers was 358*1 in Japan.
To ensure customers’ safety in farm work, ISEKI Group
works to develop products with enhanced security andsafety features. One of the challenges faced to ensure thesafety of farm work using tractors is erroneous operations
due to single-sided braking. To address this challenge,
ISEKI released a “single-sided braking alarm device” forsmall-sized tractors*2 in June 2020. In order to prevent accidents and enable customers to purchase secure and safe
products, the device sets off a sound alarm to warn thedriver that the brake pedals are not locked together when
he/she operates the accelerator pedal without interlocking
the right and left brake pedals. We also ran a campaign topromote the installation of the alarm device so as to build
awareness among more customers.
*1: According to statistics by the Ministry of Agriculture, Forestry and Fisheries*2: Models equipped with the alarm device: TQ13/15/17, TM150/170, 16/18, 165/185,
TC11/13Foundation for sustainable growth

Improvement of productivity and quality byintroducing production support equipment
ISEKI Group horizontally deployed conventional technologies such as the parts integration system and the assembly
direction management system that improve productivity.
In addition, the Group formulates capital investment
plans for production support and verifies practical

Flow of how voices of customers are reflected in product development

Safe and high-quality productProduct development and consistent quality
assurance system that reflect the voice of customers
ISEKI Group carries out consistent quality assurance activities by reviewing the design in every step from productplanning and development design to purchase, manufacturing, sales, and services with the aim of providing products that are safe and respond to the trust placed by thecustomers.
In product development, ISEKI Group grasps the requirement details based on the voice of customers (opinions, requests, and emerging needs) and utilizes that in “planning
quality” and elaborates on functions in “design quality,”
ultimately reflecting that in “purchase quality” and “product quality.” In each step, the Group carries out evaluationand verification of quality optimization from various aspects. ISEKI Group also gathers customer opinions throughservice activities to provide instructions on test operations
upon delivery and inquire on the conditions of the delivered products and has built a mechanism that feeds backthose opinions for development and improvement, reflecting those in developing safe, high-quality products.

The device sets off a soundalarm with a lamp lit to warn
the driver in the event of operating without interlocking theright and left brake pedals.

Service support for safer use
In the service support, ISEKI Group provides usage instructions before and after delivery through, for example,
test-driving, to ensure secure and safe use of purchased
products. As after-sales services, we provide maintenanceat each base and a pre-use inspection, etc., aiming at theoccurrence of no accidents for agricultural machinery. Also,with the aim of providing high-quality and quick technicalservices, we have expanded large-scale maintenance bases, including Hokkaido’s Sorachi Chuo Service Workshop,
which opened in December 2021.
In the COVID-19 pandemic, online training has been
provided to improve the technical abilities of maintenancepersonnel, in addition to existing group training. We will
boost the level of services through human resources development and education.

Product andparts-related: 51%

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Fo undation f or s ustainable gr ow th

Enhancement of brand value

Enhancement of brand value

Supply chain management – together with suppliers –Communities <Co-existence with local communities> – Ties with local communities –Basic Policy (Fundamental concept)

Basic Policy (Fundamental concept)● To achieve its social responsibility, together with its suppliers, across the entire supply chain, ISEKI Group’s basic policy is● The basic rule of ISEKI Group is “to actively contribute to local communities as a member responsible for society” and “tothat “the relationship with suppliers should be fair and equitable and it will not abuse its privileged position in the trade togive unfair and disadvantageous treatment to suppliers.”
CSR procurement policy● ISEKI Group aims to be a company trusted by society by working on CSR procurement together with its suppliers to give its
priority to environmentally- and socially-friendly material procurement and product and service provisions.

contribute to local society while affording respect for laws and regulations, practices and culture of the country when doing business overseas.” ISEKI Group works on contributing to society through its business activities aiming for the mid- tolong-term development of local communities.

Guidelines, and reviewed their contents, adding descriptions about conflict minerals and child labor. Together withthe revision of guidelines, questionnaire surveys were integrated and planned to be regularly implemented around
April or May every year.
For the guidelines, please refer to our website.

Promotion of CSR procurement and green procurement
For CSR Procurement, ISEKI Group carries out questionnaire surveys for suppliers according to the guidelines, and reconfirms contents and make improvement
proposals, etc. in relation to suppliers whom CSR risks are concerned for. For green
procurement, initiatives for environmental consideration for delivered components
and raw materials are surveyed through questionnaires. Suppliers superior in suchinitiatives are designated as Certified Green Suppliers. We continuously make improvement proposals to suppliers who have not been certified yet.
The distribution of the guidelines and the questionnaire surveys are implemented
on a regular basis. For new suppliers, the Group implements them as risk assessment at the time of conclusion of a basic transaction agreement. We strive to makethe initiatives deeper in the entire supply chain by, for example, distributing questionnaire results and sharing issues. They are also used for reviewing the questionnaires for the following fiscal year.
We create opportunities for mutual improvement with suppliers. Examples are:engagement through semiannual business report meetings and IR information
meetings for vendors, as well as holding superior company tours and workshops.
Initiatives for complying with the Act against Delayin Payment of Subcontract Proceeds, etc. to
Subcontractors and prevention of corruption
Checks and supervision have been established in each groupcompany, with checks, audits, and monitoring implemented
on a regular basis through periodic reporting to the Management Supervisory Committee. The Group provides continuous education and training concerning the Act against Delayin Payment of Subcontract Proceeds, etc. to Subcontractors(the “Subcontract Act”) to conduct proper transactions with
subcontractors. In FY2021, ISEKI was subject to no legal action under the Subcontract Act or due to corrupt practices.
Education in FY2021 (Total number of participants)
Participants in outside education on the Subcontract Act 2 times

16

Inside education on the Subcontract Act 5 times

113

Compliance education

90

3 times

Procurement measures in the COVID-19 pandemic
Business activities have been influenced by the spread of
COVID-19, including supply chain disruption. Even among
the suppliers of ISEKI Group, risks of delays in procurementof raw materials, production, and distribution have cometo the surface. In the Purchasing Department, personnel in

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ISEKI Report 2022

40% of agricultural workers are women and they play
important roles in farming and community activities.
To provide further support to the female farmers’ activities, ISEKI Group has participated in NOGYOJOSHI (female
farmers) project by the Ministry of Agriculture, Forestry
and Fishery (MAFF). We worked with female farmers todevelop agricultural machinery and hold seminars.

Response rate of CSR questionnaires (2021)

Presently, we have held online roundtable discussions
with over 100 participants as a new initiative for supporting “dream agriculture” by female farmers even in the
COVID-19 pandemic. We will support dream agriculture byfemale farmers in various ways.

\ Comments from the participants /Unanswered30%
Answered70%

Foundation for sustainable growth

CSR procurement guidelines
ISEKI Group has compiled guidelines that outline theGroup’s CSR concept and procurement policy in order tojointly promote, with its suppliers, procurement activities
that take social responsibility into account, as well as toseek their support and cooperation. In 2021, ISEKI Group
integrated CSR Procurement Guidelines and Green Supply

Dream Project to support female farmers toward the growth and development of communities and active participation by female farmers

Ratio of Certified Green Suppliers
81%

82%

84%

81%

Target value
85%

Total number of seminars on how to
operate agricultural machinery

41*including online roundtable discussions

Total number of participants in the project

2018

2019

2020

2021

2022

Educational agenda on the Subcontract Act and corruption prevention
Reaffirmation of what violates the Subcontract Act andcompliance with recurrence prevention measures
Explanation on the details of recurrence prevention measures; Ethical Hotline
Operational manual for compliance with the Subcontract
Act
Provisions of the Subcontract Act
Participation in an outside seminar on the Subcontract Act
Compliance education(Code of Ethical Behavior, Casebook of Scandals, etc.)
CSR education (CSR procurement guidelines, etc.)

charge of each overseas area grasps the situation of eachcountry and confirms operations of suppliers and freightsituations of transport operators twice a month. We havethereby made efforts to minimize the influences, intensively managing components that may have impacts on production to control delivery dates and progresses.

900● “As I was not confident in tractor inspection, it was very nice to learn it.”● “It is helpful to be able to participate in the online events while doing farm work.”● “I watched it in the greenhouse, and contents were excellent and informative.”

Communication toward the nurturing of the next generation

Activities for contribution to the local community and environment

ISEKI Group has proactively conducted activities toward
the nurturing of the next generation of local communities.
As an agricultural machinery manufacturer, we provide
opportunities to experience and learn, for example, “foodand agricultural education,” “manufacturing education,”and “experience and activity education.”
Sanae National Children’s Drawing Contest for elementary school children and kindergarteners has been held
every year since 1996 for the purpose of making theminterested in “food” and “agriculture.” In 2021, when the
26th Contest was held, we received excellent works fromapprox. 1,300 children nationwide. The total number of
entries from the 1st Contest is 31,000.

As a member of the local community, we have been proactively working on activities for contributing to the community and society, as well as the environment.
Matsuyama City, where ISEKI-Matsuyama MFG. Co.,
Ltd. is located, has promoted the “Matsuyama My Road”
project for the purpose of having people have an attachment to familiar local streets through cleanup activities.
There is a name board on which names of groups committed to the road protection activity are indicated.
In 2021, as recommended by local citizens, the name“ISEKI” was included on
the name board.

The name board

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Enhancement of employee engagement

Human resource strategies – Maximizing ISEKI Group’s human resource capability –Enhancement of employee engagement
Basic Policy (Fundamental concept)● ISEKI Group will work to enhance its engagement with employees in order to increase the retention of talented human

Masayuki Fukami,

Director & Senior Corporate Officer
In charge of Personnel, Corporate
Planning, and Investor Relations

ISEKI Group believes what contributes to the solution of various issues is people, and considers employees
essential for its sustainable growth and improvement of corporate value.
Amid the increasing importance of investment in “human capital”, under themes of “enhancement of
employee engagement” and “HR transformation,” ISEKI Group has been working to realize them toward theachievement of the vision set out in the Mid-term Management Plan.
To enhance employee engagement, the Group has been striving to strengthen its bond with employees byworking to create employee-friendly and attractive workplaces, and enhance human resources development
programs. Announcing ISEKI Group Health & Productivity Management Declaration in October 2021, the Groupwas recognized as a 2022 Certified Health & Productivity Management Outstanding Organization in March
2022. We will continue to promote initiatives for the health & productivity management to support employees
make full use of their abilities.
To transform human resources, the Group will direct its efforts toward the securement and development of
human resources to execute its business strategies, such as cutting-edge technologies and global talent. We
will also further work to promote diversity to press forward with the transformation of the corporate culture. In
order to drive forward with these initiatives, the Group will continuously grasp the engagement of employees,
and conduct sophisticated management of their competence and skills using the talent management system.
ISEKI Group will develop human resources who will play leadership roles toward its 100th anniversary offoundation in 2025 and the next 100 years through scientific human resource management.

Key points of the Mid-term Management Plan strategies
Enhancement of employee engagement

Transformation of human resources● Push ahead with the creation of employee-friendly● Secure and develop human resources necessary to exe-

and attractive workplaces.

● Promote the health & productivity management tomaximize employees’ performance.

cute business strategies.

● Aim to create workplaces where diverse human resources
can exercise their individual characteristics and abilities.

● Make best use of human resources in the entire Group
with flexible personnel changes.
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ISEKI Report 2022

resources and create employees who actively work for the company’s growth.

● The Group will place its focus on delivering a secure and safe work environment, providing career support, and developing
and utilizing diverse human resources. At the same time, it will conduct regular engagement survey to assess the status of
employee engagement.

Promotion system
Human Resources Committee
To consider ISEKI Group’s strategies concerning the development and utilization of human resources, the Human
Resources Committee has been in place, consisting of all
Directors and General Division Managers, Officer in chargeof Development and Production, Officer in charge of
Personnel, General Manager of Sales Planning & Administrative Department, General Manager of Administrative
Department of Development & Production Division, General Manager of Corporate Business Control Department ofOverseas Business Division, General Manager of Corporate
Planning Department, and General Manager of Personnel
Department.
Introduction of the talent management system
Objectives and targets of the introduction
To realize “optimal allocation of human resources,” a basic
strategy of the Mid-term Management Plan, the talentmanagement system was introduced in 2021, for the purpose of visualizing skills and abilities of employees, andformulating careful personnel strategies.
We analyze and utilize the talent management system

information which was previously managed with the HR
core system, and collect information from employees
through engagement surveys, questionnaires, and self-declarations, etc. on the system.
Engagement survey
As a result of the engagement survey conducted on thetalent management system, items that received relatively
high evaluations from employees were “motivation forwork,” “human relations at the workplace,” and “overtime
hours/easiness of taking paid leave.” On the other hand,“personnel evaluation system” and “salary/bonus system”
were evaluated lower than other items.
Future development
For the “optimal allocation of human resources” in theentire Group, the operation of talent management will be
expanded to manage human resources of the Group companies. Furthermore, a function to manage employees’skills on the system will be introduced.
In addition, the Group will newly introduce a 3 6 0-degree evaluation to increase fairness and satisfaction in the
personnel evaluation, and boost the level of executives.

Foundation for sustainable growth

ISEKI Group will maximize its
human resource capability
through the enhancement ofengagement and human resource
transformation.

Promotion of health & productivity management
ISEKI Group will strategically promote the health & productivity management from a managerial viewpoint, basedon the concept that productivity and creativity improveby further deepening employees’ health maintenance andmanagement, which will lead to sustainable corporate
growth.

the Health & Productivity Management (Personnel Department),” “ISEKI Labor Union,” and “ISEKI Health Insurance
Association.”With regard to issues that occurred at each office, weshare information at the central Safety and Health Committee held periodically, and use it for new measures.

Health & Productivity Management Declaration
In October 2021, ISEKI Group announced the Health &Productivity Management Declaration for the purpose of
improving employees’ mental and physical health, as well
as further revitalizing the organization with the enhancement of engagement.
We will realize employees’ well-being mainly according
to the health basic policy focusing on three kinds of health;“physical health,” “mental health,” and “living health.”

Acquisition of certification of health & productivity
management outstanding organization
Recognized for various pervious activities, ISEKI Group wascertified as a “2022 health & productivity management
outstanding organization (the large enterprise category)”in the “Certified Health & Productivity Management Outstanding Organization Recognition Program” implemented
by Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi in March 2022. We will strive to boost thelevel so as to establish further enhanced systems.

Promotion system for the health & productivity
management
ISEKI Group will establish the promotion system for thehealth & productivity management in which an Officer incharge of Personnel is responsible for the health & productivity management, and plan and draw up health promotion activities in mutual collaboration with a “Secretariat of

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Enhancement of employee engagement

Human resource strategies – Maximizing ISEKI Group’s human resource capability –ISEKI Group has reviewed systems in which precedents
were followed as needed, so as to flexibly respond to
employees’ diverse ways of working. The Group officiallyintroduced in January 2022 the telework system, which
was tentatively operated as measures against COVID-19,
and, at the same time, abolished the core time in the
flextime system. Like this, the Group has enhanced the systems to enable the employees to work flexibly depending
on individual lifestyles.
Meanwhile, the Group is working on promoting theenhancement of employees’ work-life balance so that they
can spend fulfilling days not only at work but also in theirprivate lives. As part of the effort, the Group is promoting
the utilization of annual paid leaves through a planned
leave system and a system for promoting the utilizationof paid leaves more than designated by laws. In order toencourage male employees to take childcare leaves, ISEKI
individually informs the employees of the system by attaching a document encouraging them to take a childcare
leave when it gives congratulatory money upon childbirth.

Promotion of diversity/Human resources development

Example of in-house systems● Flextime system● No overtime day● Childcare leave system, Short-hour working systemfor childcare(Encouraging male employees to take childcare leaves)● Caregiver leave system● Telework system
Utilization of paid leaves/childcare leaves
With the measures above, the number of days taken for
paid leaves/childcare leaves are increasing.
Number of annual paid leave days per employee (union members) on a non-consolidated basis
2017

2018

2019

2020

2021

9.6 days10.7 days

12.2 days

12.2 days

12.6 days

The number of male employees who took childcare leaves on a non-consolidated basis
2019

2020

2021

5

6

14

Occupational safety and health management “Thorough management of occupational safety and health”
Setting up “a healthy and safe workplace” as the code of
conduct, ISEKI Group manages occupational safety andhealth in a group-wide effort. It carries out safety andhealth activities reflecting the actual situations of eachcompany and office and implements safety checks at manufacturing subsidiaries to promote awareness-raising at the
Policies Concerning Safety“Safety takes precedence over everything”– promoting initiatives to achieve “zero”
industrial accidents –Implementation of risk assessment based onrisk-prediction activities

sites, thereby striving to reduce accident risks to achieve“zero industrial accidents.” The Group has established
ISEKI Safety Promotion Center as a place for experiencing
near-accidents and offers employees to have a simulated
experience of actual occupational accidents to improvesafety awareness.
Statistics of industrial accidents: severity rate (%)
2017

2018

2019

2020

2021

1.760

0.001

0.371

0.000

0.004

*Severity rate: Number of work days lost per 1,000 working hours*Scope: ISEKI & CO., LTD. and its three factories in Japan

Identifying risks and hazards in operations, taking risk reduction
measures, and thereby preventing accidents from occurring.

Provision of safety education

Thoroughly entrenching awareness of safety once again
through education provided at the Safety Promotion Center so
as to build a framework that prevents any industrial accidents.

Respect for human rights, Prohibition of discriminatory treatment
Basic Policy (Fundamental concept)

It is stipulated in the ISEKI Group Code of Ethical Behavior to “respect basic human rights and not engage in any act of discrimination or harassment on the grounds of nationality, race, creed, gender and disabilities.” The Code of Ethical Behavior
is distributed to all employees. The Group instructs them to, among other things, “always respect human rights of others by
periodically providing employees with education” and “pay extra attention to their speech and behavior so as not to commit
acts that ignore others’ human rights, such as harassment.”
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ISEKI Report 2022

Basic Policy (Fundamental concept)● ISEKI Group promotes diversity as one of its management strategies by employing diverse human resources.
● It supports career development of employees through proper treatment of highly motivated employees with various abilities and offering them opportunities to play active roles.
Utilization of human resources across ISEKI Group
ISEKI Group utilizes human resources across the Group,
using the strength of ISEKI Group having diverse humanresources including development, design, production,
sales, and services. We facilitate the exchange of humanresources beyond the boundaries of the group companies,
develop human resources with diverse abilities, and strive
to optimize the allocation of human resources across theGroup.
Diversity –utilization of diverse human resources
ISEKI Group is working on the promotion of diversity as
one of its management strategies by employing diverse
human resources. The Group supports the career development of employees through proper treatment of capableand highly motivated employees and offering them opportunities to play active roles, regardless of gender, nationality, and employment category, etc. in order to make thebest use of the abilities of diverse human resources as ahigher level of expertise is required due to the businessglobalization and technological innovation.
Goals based on the Corporate Governance CodeFemale employees: Accounting for 7% or more of
all managers by the end of 2025
Foreign nationals: The number of foreign national
managers will increase more than the present levelby the end of 2025
Mid-career employees: Accounting for 7% or moreof all managers by the end of 2025

Initiatives for promotion of active participation by
women
ISEKI Group works on the promotion of active participation by women as part of the utilization of diverse humanresources. In the action plan for the development of aworkplace environment that facilitates greater participation by women, ISEKI aims to achieve the ratio of womenamong the hires to 20% or more. As the ratio of female
employees in the superintendent class, who are manager
candidates, has been increasing, the Group will next work
to increase the ratio of female managers.
Action plan (target for 2026)
Achieve 20% or more in the ratio of newly hired female employees and actively recruit women with engineering background.
Achieve 7% or more in the ratio of female managers.
Achieve 12 days or more in the average number ofpaid leave days.

Employment of foreign nationals
Regardless of nationalities, employees are working in awide range of fields suitable for their own aptitude andintention, including development, production, and sales.
Mid-career employment
In order to secure the human resources necessary forcarrying out the business strategies, we will proactively

employ mid-career workers, improve their abilities, andpromote their appointment to managerial posts.
Target: Achieve 7% or more in the ratio of mid-career
managers.
Employment of people with disabilities
Irrespective of having or not having disabilities, ISEKI aims
to create a workplace where different kinds of people canfulfill their potential. In FY 2021, the actual rate of employees with disabilities was 2.29%, almost the same as
the statutory employment rate. We will work towards thecreation of job opportunities for them.
Employment of senior citizens
ISEKI actively promotes participation by senior citizens. It
has introduced a reemployment system for all employees
as a rule who wish to continue working after their retirement age of 60 till 65 years old in anticipation that it
would enable handing over of their experiences, skills, andknowledge.
The Group is also considering an employment system tosecure employment opportunities for employees after age
65.

Foundation for sustainable growth

Enhancement of work-life balance (work-life management)

VOICE
Successful female employee
After joining ISEKI, I had engaged in legal affairs related to the development and applications for trademark rights and design rights at an
office in Ehime Prefecture. I was transferred to Tokyo last year, andpresently have been in charge of the prior examination of contracts tobe concluded by each department, responses
to consultations on legal affairs, and general
meetings of shareholders, etc. I got married thisyear, and am struggling hard to balance workand private life. Using various systems offeredby the company to improve employees’ worklife balance, I will further improve my skills.

Marina Umezaki,
General Affairs Department, ISEKI & CO., LTD.

Voice of a male employee who took childcare leave
At the Technical Support Department, I am in charge of responses tomarkets and inquiries related to rice transplanters and vegetable farming machinery, as well as operations related to technical seminars. Last
year, in the wake of the birth of my second child, I took childcare leave.
When taking leave, I was worried about the impacts on the work
I was in charge of, and the work environment after I returned towork. However, with encouragement from my boss and co-workers’
understanding, I was able to take the leave for about two months anda half. During the childcare leave, I was busier
than with usual work, but able to enjoy themeaningful time, feeling my children’s growthclosely.
Going forward, I intend to make efforts toenhance a work-life balance in cooperation withmy wife.

Hirotaka Kusumoto,Technical Support Department, ISEKI & CO., LTD.

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Enhancement of employee engagement

Fostering corporate culture – My own henkaku (Change) –PromisePromise1

Spirit — Inheriting our company’s founding philosophy, we always carefully consider food, agriculture and landscape and move forward with farmers.
I support the introduction of imported implements

4

I help deliver to customers products that have been produced safely
I am in charge of the management of occupational health and safety at thefactory. In the spirit of “Solution,” I am engaged in improvements and solutions in responses to issues related to labor safety and workplace environment
raised by workers on the factory floor. Believing that it is our duty to give top
priority to the safety of our employees and to deliver safe and reliable products
to our customers, while always being aware of the points of change, I will
promote the development of a culture of safety.

Tetsuro Mori, Occupational Safety and Health Department. Joined the company in 2007
Promise5

My work involves development related to the electrical components of combine harvesters. Keeping “To create innovation” in my heart all the time, inthe short and medium term, I will engage in my work with a focus on performance, operability, maintenance of products, and, in the long term, on unmanned harvesting with combine harvesters and enhanced multifunctionality,with the aim of creating unprecedented new value.

Makoto Itayama, Combine Harvester Engineering Department. Joined the company

Yosuke Matsushima, Agri-Implements Department. Joined the company in 2019.

2

Front runner — As a front-runner, we produce innovative products and higher quality services.
I want to extend our history of business in Europe further

Innovation — We create innovations with cutting-edge technologies and provide new value.
I will create unprecedented value

I am in charge of a series of operations from order placement and purchase to
shipment of imported implements in general, as well as providing sales support
for the products of overseas manufacturers. Taking the company’s founding
philosophy of “freeing farmers from exhausting labor” to heart, I will work
hard to deliver products to customers quickly and reliably. Although there aresome drawbacks, such as disruption in logistics, I will engage carefully in mysales support work, such as confirming and coordinating delivery deadlines.

PromiseSolution — We constantly take action for solutions to customer issues.

Foundation for sustainable growth

To realize ISEKI Group’s goals and vision, it is essential for each and every employee todemonstrate his or her strengths to maximize the Group’s capabilities. To this end, we
engage in initiatives that lead to awareness reform and action by employees, through thepenetration and sharing of those goals and vision.
To penetrate the Mid-term Management Plan, we currently hold roundtable discussions
with a small number of people at each workplace, mainly young and mid-ranking employees. In addition to exchanging opinions about the Mid-term Management Plan, each andevery employee is asked to understand the message implied in the keyword “Henkaku(Change) - Toward the next 100 years...” and to link their own work with the seven promises, which ISEKI Group values.

in 2018

Promise6

Global — With a global perspective, we work toward solutions to the world’s social issues.
I want to contribute to the realization of a sustainable society.

In its history of over 50 years, our business in Europe has established a solid position as a leader in the landscaping market in the area by building up
communications with European distributors. Although the ways in which wecommunicate are changing in this “new normal” era, I will continue to maintain close communication with our distributors, link potential needs to areas ofdevelopment, and provide innovative products and services.

I am engaged in development planning and sales promotion of products for
the European market. In Europe, amid the accelerating shift to carbon neutrality, demand for environmental considerations in the landscaping market isalso growing year by year, as are calls for electric products that will curb greenhouse gas emissions. To help build a sustainable society, which is a global social
issue, I will press forward myself in my daily work to provide electric productsthat accommodate customers’ needs and requests.

Manon Okabayashi, Europe Sales & Marketing Department, Overseas Business
Division. Joined the company in 2018

Hiroaki Suzuki, Europe Sales & Marketing Department, Overseas Business Division.
Joined the company in 2007

Promise3

Quality — We will always make premium quality products with passion.

ISEKI Report 2022

7

Future — Paving the way for tomorrow, open up the future of food, agriculture and landscape.

I listen to customers’ direct feedback

Recruitment and education that will connect to employees’ future

I work in the development of electric riding lawn mowers for the European
market. Going forward, I will conduct product testing in local markets andmarket evaluation of the products. As a designer, I believe that conducting
product tests myself and listening to customers’ feedback is crucial. With “Wewill always make premium quality products with passion” as my motto, I will
pursue the development of agricultural machinery while listening to customers’
direct feedback in local markets.

I am in charge of recruitment and education in the Personnel Department. My
work primarily involves recruitment interviews of university students and in-house
education, such as induction training for new hires. I aim to conduct recruitment
and education that will make people happy that they joined the company andthat the work here will help them advance their careers. Amid the further progression of our overseas expansion, diversity is taking on increasing importance.
To this end, we will recruit personnel who can demonstrate their abilities invarious fields and provide education that will support employees’ growth.

Ryutaro Masuda, Tractor Engineering Department. Joined the company in 2017
55

PromiseRie Yamaguchi, Personnel Department. Joined the company in 2020
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Enhancement of corporate value by reinforcing corporate governanceCorporate governance
Messages from Independent Outside Directors

Q1

Independent Outside Director
Chair of Board of Directors
Chair of Nomination andCompensation Committee

Q1

How do you evaluate the corporate
governance of ISEKI?

Last fiscal year, we amended the Directors’ remuneration system, which
had been a long outstanding issue of the company, and this fiscal year, I
hope to pursue the enhancement of corporate governance with “non-financial information” as our keyword. While there are a host of issues toaddress, such as environment, society, human resources, and intellectual
property, we will work on every issue from the perspective of how we
may demonstrate ISEKI Group’s originality, while keeping pace with trends
in society.

Q2

What do you think of your role as the Chairpersonof the Board of Directors?

As the Chairperson of the Board of Directors, I believe that agenda setting is important. With the aim of indicating major directions for corporate strategy and the like, which is the role of the Board of Directors, I
want to move the reform of the Board of Directors forward to promote
the enhancement of the company’s sustainable growth and mid- to longterm corporate value and the improvement of profitability and capitalefficiency. I plan to achieve this by making efforts to secure ample time
for deliberation.

Q3

What do you think are the key issues
for our sustainable growth?

Given the remarkable changes in the external environment of recent
times, it is important to respond to challenges with a sense of speed.
Instead of merely continuing down the same conventional paths, we needto accumulate many new ideas. For this reason, I believe that the mostimportant challenge for ISEKI’s sustainable growth is to nurture company
people who are able to maintain a constant awareness of stakeholders’gaze and keep their own gaze turned outward.

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ISEKI Report 2022

We have been actively working on initiatives to implement the individual
principles contained in the Corporate Governance Code. From this fiscal year,
the Board of Directors is chaired by an Outside Director, with Outside Directors
accounting for at least one-third of all Directors. In doing so, I believe that wehave established a system that enables us to further demonstrate a monitoring
function (monitoring and supervising functions) at the Board of Directors.
For the sustainable growth of the company and the enhancement of mid- tolong-term corporate value, this fiscal year, we will continue to work on deepening discussions to ensure the diversity of the Board of Directors, while working
to ensure its effectiveness.

Shoji Tanaka

Independent Outside Director
Member of Nomination andCompensation Committee
Foundation for sustainable growth

Atsushi Iwasaki

How do you evaluate the corporate
governance of ISEKI?

The company has transitioned to a system in which the Board of Directors ischaired by an Outside Director, with Outside Directors accounting for at least
one-third of all Directors. With this transition, I believe that we can expect theBoard of Directors to become more sophisticated and corporate governance tobe strengthened. Currently, improvements to the systems for providing information to Outside Directors and access to information by Outside Directors arealso underway, so I believe that we will be able to make progress in the realization of governance systems that are able to respond quickly to changing social
situations.

Kazuo Nakayama

Independent Outside Director
Member of Nomination andCompensation Committee

The company has been striving to revitalize the Board of Directors to comply with
the Corporate Governance Code and enhance its corporate value through dialogue
with shareholders and appropriate cooperation with stakeholders. In response to
the results of the evaluation of the Board of Directors, the Board has established asystem in which Directors set their own deadlines and actively manage the progress of their assignments, revised the composition of the Board, and formulated
management plans for the achievement of mid- to long-term corporate strategies. I
highly commend these outcomes. As a listed company on the Prime Market, we aremaking further efforts toward sustainability management.

Mami Taira

Outside Audit & Supervisory
Board Member(Independent Officer)

ISEKI Report 2022

58

Fo undation f or s ustainable gr ow th

Enhancement of corporate value by reinforcing corporate governanceCorporate governanceFundamental concept in corporate governance

ISEKI has established the Nomination and Compensation
Committee comprised of two Representative Directors
and three Independent Outside Directors as a consultative
body of the Board of Directors regarding compensation of
Directors and Corporate Officers, in addition toGeneral shareholders’ meeting
Appointment/Dismissal

Appointment/Dismissal

Audit & Supervisory Board

Board of Directors
Audit

Audit & Supervisory Board Members

Audit

9 directors(Incl. 3 outside directors)
5 Audit & Supervisory
Board Members

Appointment/Dismissal/Monitor

Advice/Reporting

Nomination and Compensation Committee
5 members(2 representative directors,
3 outside directors)

Nomination and Compensation Committee

5 Audit & Supervisory Board Members(incl 4 outside Audit & Supervisory
Board Members)(Cooperation)

Directors

Independent Public Accounting firm

Audit

Audit

President
Directors’ Operation Committee

Internal Audit Department(All Corporate Officers, appointed Deputy
Division Manager of each division, etc.)

Corporate Officers
Internal Audit

Associated companies, divisions & sections

To further facilitate the roles of the Board of Directors,
ISEKI has implemented an appraisal and analysis programfor individual senior officers since 2017. The appraisal wasdone through a third-party organization, using methods

for canvassing personalized opinions with individual questionnaires and individual interviews for all Directors andCorporate Auditors.

Overview of evaluation

Initiatives toward improvement of effectiveness

Methodology of Interview

Individual interview to target audience by a third-party
organization
Main items for appraisal• Members and operation of Board of Directors meetings• Support system for Directors and Audit & Supervisory
Board Members• Training• Dialogue with shareholders• Own efforts
Efforts for analysis of results and solution of issues• Analysis of the results of questionnaires and interviews
at a third-party organization• Debriefing sessions organized by a third-party organization• Development and implementation of the action plan for
identified issues toward a solution

FY2019● Issues

Devising ways to have more strategic discussions at theBoard of Directors meetings
Improvement of objectivity and transparency of the
Directors’ compensation system and decision process ofcompensation● Initiatives toward a solution
Holding free discussion on selected themes after the
Board of Directors meetings
Main themes selected for discussion• Overall framework of the new Mid-term Management
Plan• Aggregate result of the opinions of young employees,
and report of the analysis of training sessions for officers and executives
FY2020● Issues

Following through the progress of the Management Plan
Formulation and operation of succession planning of the
Chief Executive Officer (CEO), etc.
● Initiatives toward a solution
The Board of Directors traces priority measures in the
Mid-term Management Plan.
Formulation of succession planning for President
FY2021● Issues

Following through the progress of the Management Plan
Supervision of investment plans for human capital andintellectual properties to be consistent with the management strategies● Initiatives toward a solution
To be implemented in FY2022
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ISEKI Report 2022

December 1, 2018(the Nomination Advisory Committee was reorganized into theNomination and Compensation Committee as of March 25, 2020)

Members Two Representative Directors and three Independent Outside Directors
Chairperson Independent Outside Director
Roles(1) Appointment and dismissal of Directors (general shareholders’ meeting proposal)

The Committee was held eight times in the Fiscal Year
Ended December 31, 2021. It has mainly discussed theitems shown below and submitted recommendations to
the Board of Directors.

● Criteria for appointment of Directors● Criteria for selection of Representative Directors● Criteria for dismissal of Directors and those for removal ofRepresentative Directors● Criteria for judgement of independence of Outside Direc-(3) Selection and removal of Representative Directors

tors(4) Representative Director successor plan

Toward the improvement of the effectiveness of the Board of Directors

Target audience
All Directors Audit & Supervisory Board Members
Methodology of Questionnaire
Anonymous survey

Established(2) Appointment and dismissal of Corporate Officers
Management Supervisory Committee

nominations such as proposals of agenda items of general shareholders’ meetings regarding appointment anddismissal of Directors; selection and removal of Corporate
Officers; and appointment and dismissal of Representative Directors.

(5) Amount of compensation for Directors and Corporate Officers● Policy for determining the individual compensation etc. of(6) Composition and decision process of compensation for Directors
and Corporate Officers● Nomination of candidates for Directors and selection of(7) Establishment and change of basic policy and criteria fordeliberation of each of the above items.

● Succession planning of the Chief Executive Officer (CEO), etc.
● Revision of the Directors’ compensation system● Skill matrix of Directors(8) Other matters recognized by the Board of Directors as necessary inassociation with each of the above items.

Directors

Representative Directors

Revision of the Directors’ compensation system
The compensation for Directors of the Company consistedof fixed compensation, bonus, and stock-based compensation type stock options. In FY2022, we reviewed the fixedcompensation and the bonus to change them to basic
compensation (money) and performance-linked evaluation compensation (money). We also decided to abolishFoundation for sustainable growthAppointment/Dismissal(Business execution system)

ISEKI Group has operated its management systemwith the purpose of swiftly and accurately responding to changes in the management environment
and maintaining fair management. In addition,achieving stable growth and improvement in corporate value over the medium to long term is the
top priority of our management. In order to maintain a positive relationship with our stakeholders
such as shareholders, customers, suppliers, local
communities, and employees, we have endeavored
to expand and improve our corporate governance.
We acknowledge the importance of establishingan internal system that provides stakeholders with
important information in a timely and appropriatemanner and reinforcing corporate governance ona group-wide basis. Based on that recognition,
we have established administrative rules for groupcompanies and a reporting structure to maintain
fair business practices and share information.

Nomination and Compensation Committee

the compensation plan involving stock-based compensation type stock options and introduce a new performance-linked stock-based compensation using trust.
The overview of the Directors’ compensation system after the revision is as follows.

Basic Policy

Toward the realization of ISEKI’s goals/basic business philosophy of contributing to the creation of the prosperous and sustainable society through providing innovative products and higher quality of services to the customers, the management executives are responsible for “transforming” ISEKI Group, leading it to sustainable growth, and striving to improve its corporate
value in the medium- and long-term. To fulfill such responsibilities, the basic policy of our Directors’ compensation is “to adopt
a system which can make the compensation function as a sound incentive, making it clear that compensation of management
executives shall be linked to business results including shareholders’ value and medium- and long-term results.”
Overview of compensationofCompensation Method
provision
Basic
compensation
Performancelinked
evaluationcompensation

Percentage in total compensation(rough estimate)(Internal) Directors Outside Directors

Details

Money

60%

100%

Monthly pay an amount decided in consideration of job responsibility, etc. of each
Director.

Money

30%

−

Annually pay an amount decided according to a level of performance indicator foreach business year, as well as a degree of achievement of indices/targets, etc. set inadvance for individual Directors based on management issues.

−Compensation based on a stock delivery trust system
Deliver shares of the Company, in principle, upon Director’s retirement according
to the number of points awarded to each Director each business year, based on theshare delivery rules provided by the Board of Directors.
A certain ratio of shares of the Company are sold in cash and provided as money.

PerformanceShareslinked stockof the
basedcompensation Company

10%

The level of total compensation is determined in consideration of levels in the industry or other similar-sized companies.
A total amount of the basic compensation and the performance-linked evaluation compensation shall be within the range resolved at the 98th Ordinary General Meeting of Shareholders held on
March 30, 2022 (no more than 360 million yen per year).
The upper limit of the amount of the performance-linked stock-based compensation shall be within the range resolved at the 98th Ordinary General Meeting of Shareholders held on March 30, 2022
(148 million yen, maximum amount of total cash to be contributed by the Company as the fund to acquire shares of the Company necessary to deliver to Directors (excluding Outside Directors) during
the coverage period of four years from the business year ending December 31, 2022 to the business year ending December 31, 2025).

The compensation for individual Directors shall be finalized and resolved at a Board of Directors meeting based on reports
from the Nomination and Compensation Committee after deliberation. The Committee is mainly composed of Independent
Outside Directors. When details of compensation, etc. for individual Directors are determined, the Nomination and Compensation Committee considers multiple matters including consistency with the decision policy. Therefore, the Board of Directors
basically respects the report and deems that the details are consistent with the decision policy.
Audit & Supervisory Board Members’ compensation system (Reference)
The upper limit of Audit & Supervisory Board Members’ compensation was resolved to be no more than 8 million yen per month at the 85th Ordinary General
Meeting of Shareholders held on June 26, 2009. The compensation for individual Audit & Supervisory Board Members is determined through discussion Audit &Supervisory Board Members.
ISEKI Report 2022

60

Fo undation f or s ustainable gr ow th

Enhancement of corporate value by reinforcing corporate governance

List of officers
As of March 31, 2022

Directors

Audit & Supervisory Board Members
OutsideOutsideShiro Tomiyasu

Hajime Odagiri

Yukio Nawata

Seigo Kimoto

Masato Machida

Yasuhide Motokawa

Representative Director,
President & Executive
Officer

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

Director & Senior Corporate
Officer
General Division Manager,
Business Division

Full-time Audit & Supervisory
Board Member

Full-time Audit & Supervisory
Board Member

Full-time Audit & Supervisory
Board Member

Brief career history, positions and responsibilities at the Company
Apr. 1987 Joined ISEKI & CO., LTD.
Nov. 2008 General Manager, Vegetable Machinery Engineering Department of the Company
Dec. 2010 Senior General Manager, Agri-Implements Department of the Company
Jun. 2014 President, Iseki-Changzhou Mfg. Co., Ltd. Sales Branch OfficeJan. 2016 Corporate Officer and Deputy Division Manager, Business
Division of the Company
Mar. 2016 Representative Director & President, ISEKI Hokkaido Co., Ltd.
Jul. 2018 Chairman & President, Dongfeng Iseki Agricultural Machinery Co., Ltd.
Jan. 2019 Senior Corporate Officer of the Company
Jan. 2020 General Division Manager, Development & Production
Division of the Company (to present)
Mar. 2020 Director & Senior Corporate Officer of the Company
Mar. 2022 Representative Director & Senior Corporate Executive Officerof the Company (to present)

Brief career history, positions and responsibilities at the Company
Sep. 1984 Joined ISEKI & CO., LTD.
Dec. 2007 General Manager, Regional Sales Department of the Company
Jul. 2008 Director and General Manager, Sales Promotion Department,
Iseki-Tohoku Co., Ltd.
Jul. 2010 General Manager, Sales Planning Department of the Company
Jan. 2015 Representative Director & President, ISEKI-Kanto Co., Ltd.
Jul. 2015 Corporate Officer of the Company
Jan. 2018 Senior Corporate Officer of the Company
General Division Manager, Business Division of the Company(to present)
Mar. 2018 Director & Senior Corporate Officer of the Company (topresent)

Brief career history, positions and responsibilities at the Company
Oct. 2007 Executive Officer, General Manager, Asset Management
Business Planning Department, Chuo Mitsui Asset Trust andBanking Company, Limited
Apr. 2012 Corporate Advisor, Sumitomo Mitsui Trust Asset Management Co., Ltd.
Jun. 2013 Full-time Audit & Supervisory Board Member of the Company(to present)

Brief career history, positions and responsibilities at the Company
Apr. 1977 Joined ISEKI & CO., LTD.
Dec. 2011 General Manager, Office Automation Department of theCompany
Apr. 2014 General Manager, Corporate Planning Department of theCompany
Oct. 2014 General Manager, Cost Structure Reform Department of theCompany
Apr. 2015 General Manager, Advanced Technologies Promotion Department of the Company
Mar. 2016 General Manager, Development Planning & Solution Department of the Company
Nov. 2016 General Manager, Indonesia Project Promotion Departmentof the Company
Mar. 2017 Full-time Audit & Supervisory Board Member of the Company(to present)

Brief career history, positions and responsibilities at the Company
Aug. 2006 Manager, Shinjuku branch, The Iyo Bank, Ltd.
Oct. 2014 President & CEO, Iyogin Business Service, Ltd.
Mar. 2019 Full-time Audit & Supervisory Board Member of the Company(to present)

OutsideOutside Independent

Masayuki Fukami

Shuichi Jinno

Kazuya Tani

Yukito Shiraishi

Mami Taira

Director & SeniorCorporate Officer
In charge of Personnel,
Corporate Planning, andInvestor Relations of theCompany

Director & Corporate
Officer
In charge of Finance,
IT Planning, Operation
Efficiency Improvement

Director & Corporate
Officer
General Division Manager,
Overseas Business Division

Full-time Audit & Supervisory
Board Member

Brief career history, positions and responsibilities at the Company
Apr. 1992 Joined ISEKI & CO., LTD.
Apr. 2009 Representative Director & President, N.V. ISEKI EUROPE S.A.
Jan. 2015 Representative Director & President, ISEKI France S.A.S.
Oct. 2017 General Manager, Overseas Business Control Department
and General Manager, Europe Sales & Marketing Departmentof the Company
Jan. 2020 Corporate Officer of the Company
General Division Manager, Overseas Business Division of theCompany (to present)
Mar. 2020 Director & Corporate Officer of the Company (to present)

Brief career history, positions and responsibilities at the Company
Apr. 1984 Joined The Norinchukin Bank
Jun. 2007 Deputy General Manager, Secretariat, The Norinchukin Bank
Jul. 2010 General Manager, Office of the Corporate Auditors, The
Norinchukin Bank
Jul. 2013 Seconded from The Norinchukin Bank (to Central Union ofAgricultural Co-operatives)
Apr. 2015 Resigned from The Norinchukin Bank
Apr. 2015 Managing Director, Nochu Business Support, Co., Ltd.
Jun. 2020 Representative Director and Managing Director, Nochu
Business Support, Co., Ltd.
Mar. 2021 Full-time Audit & Supervisory Board Member of the Company(to present)

Audit & Supervisory Board
Member[Significant
concurrent positions]Certified public accountant, Certified
tax accountant, Outside Director &Audit and Supervisory Committee
Member, Suzuden Corporationand External Director and Audit &Supervisory Committee Member,
FOOD & LIFE COMPANIES LTD.

Brief career history, positions and responsibilities at the Company
Apr. 1985 Joined ISEKI & CO., LTD.
Apr. 2008 General Manager, Office Automation Department of theCompany
Dec. 2011 General Manager, Public & Investor Relations Section of theCompany
Oct. 2013 General Manager, Personnel Department of the Company
Jun. 2015 Director & Corporate Officer of the Company (to present)
In charge of Personnel Department of the Company
In charge of Compliance of the Company
Mar. 2016 In charge of Office Automation Department of the Company
Dec. 2018 In charge of IT Planning Department of the Company
Jan. 2022 In charge of Finance, IT Planning, Operation Efficiency
Improvement of the Company (to present)

Outside Independent

Outside Independent

Outside Independent

Atsushi Iwasaki

Shoji Tanaka

Kazuo Nakayama

Director

Director[Significant
concurrent position]
Attorney

Director[Significant
concurrent positions]–[Significant
concurrent positions]Certified public accountant,
Outside Director, NH Foods
Ltd. and Outside Director,
OLYMPUS CORPORATION
Brief career history, positions and responsibilities at the Company
Nov. 1990 Joined Century Audit Corporation (currently Ernst & Young
ShinNihon LLC)
Mar. 1991 Registered as a certified public accountant
Mar. 1997 Registered as a real estate appraiser
Aug. 2005 Retired from Shin Nihon & Co. (currently Ernst & Young
ShinNihon LLC)
Sep. 2005 President, Iwasaki Certified Public Accountant Office (topresent)
Jun. 2013 Director of the Company (to present)
Jun. 2015 Outside Audit & Supervisory Board Member, NH Foods Ltd.
Jun. 2016 Outside Audit & Supervisory Board Member, OLYMPUS
CORPORATION
Jun. 2019 Outside Director, NH Foods Ltd. (to present)
Outside Director, OLYMPUS CORPORATION (to present)

Brief career history, positions and responsibilities at the Company
Mar. 2000 Graduated from the Legal Training and Research Institute,
Supreme Court of Japan
Apr. 2000 Registered as an attorney (Joined Tokyo Bar Association)
Joined Ginzadori Law OfficeJun. 2010 Audit & Supervisory Board Member of the Company
Mar. 2016 Director of the Company (to present)
Mar. 2018 Representative, Chuo-dori Law Office (to present)

Brief career history, positions and responsibilities at the Company
Apr. 1980 Joined MITSUI & CO., LTD.
Apr. 2006 General Manager of Planning & Administrative Division,
Infrastructure Projects Business Unit, MITSUI & CO., LTD.
Jun. 2008 Chief Administrative Officer of Asia Pacific Business Unit, MITSUI &CO., LTD. and SVP, Mitsui & Co. (Asia Pacific) Pte. Ltd. (in Singapore)
Apr. 2012 Managing Officer, Chief Operating Officer of Food Resources
Business Unit, MITSUI & CO., LTD.
Apr. 2014 Executive Managing Officer; Chief Operating Officer of Food
Resources Business Unit, MITSUI & CO., LTD.
Jun. 2015 Representative Director, and Executive Vice President, JA
MITSUI LEASING, LTD.
Jun. 2020 Advisor, JA MITSUI LEASING, LTD.
Jan. 2021 Resigned from JA MITSUI LEASING, LTD.
Mar. 2021 Director of the Company (to present)

Brief career history, positions and responsibilities at the Company
Oct. 1987 Joined Tohmatsu Awoki & Sanwa
Oct. 1990 Joined Hayakawa Yoshio Tax Accountant Office
Sep. 1991 Registered as a certified public accountant
Apr. 1992 Registered as a certified tax accountant
Oct. 2002 Appointed partner of Hayakawa & Taira Tax Corporation (to present)
May 2011 Outside Corporate Auditor, AEON MALL Co., Ltd.
May 2014 Outside Director, AEON MALL Co., Ltd.
Jun. 2014 Outside Corporate Auditor, Suzuden Corporation
Mar. 2016 Audit & Supervisory Board Member of the Company (to present)
Jun. 2016 Outside Director & Audit and Supervisory Committee
Member, Suzuden Corporation (to present)
Dec. 2020 External Director and Audit & Supervisory Committee
Member, FOOD & LIFE COMPANIES LTD. (to present)

Skill matrix of Directors
Name

Title

Corporate
management/
Management
strategy

Finance

Sales/Marketing

Overseasbusinesses

Development Compliance/
ESG/
andLegal affairs/
Sustainability
manufacturing
Audit

Personnel

IT/Data

Representative

Shiro Tomiyasu Director, President

Directors

Brief career history, positions and responsibilities at the Company
Apr. 1985 Joined ISEKI & CO., LTD.
Dec. 2004 General Manager, Kanto Sales Department of the Company
Dec. 2011 Representative Director & President, ISEKI Kyushu Co., Ltd.
Jul. 2015 Corporate Officer of the Company
Jan. 2019 Senior Corporate Officer of the Company
Mar. 2019 Director & Senior Corporate Officer of the Company (topresent)
Apr. 2019 In charge of Personnel Department of the Company
Jan. 2022 In charge of Personnel, Corporate Planning, and Investor
Relations of the Company (to present)

Foundation for sustainable growth

Brief career history, positions and responsibilities at the Company
Apr. 2011 Managing Executive Officer, Mizuho Bank, Ltd
Jun. 2015 Advisor, Chuo Fudosan Co., Ltd.
Jan. 2016 Advisor of the Company
Mar. 2016 Director & Senior Corporate Executive Officer of the Company
Assistant to President of the Company
Responsible for Corporate Planning Department of the Company
Responsible for Public & Investor Relations Section of theCompany
Responsible for Personnel Department of the Company
In charge of Financial Department of the Company
Jan. 2017 Director & Vice President Executive Officer of the Company
In charge of Corporate Planning Department and Public &Investor Relations Section of the Company
Mar. 2019 Representative Director, President & Executive Officer of theCompany (to present)& Executive Officer
Representative Director
Hajime Odagiri & Senior Corporate
Executive Officer
Director & Senior
Yukio Nawata Corporate Officer
Masayuki
Director & SeniorCorporate Officer
Fukami
Director &Shuichi Jinno Corporate Officer
Director &Kazuya Tani Corporate Officer

AtsushiIwasakiShoji Tanaka
Kazuo
Nakayama

Director
Director
Director*The table above does not represent all types of knowledge held by each officer.

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ISEKI Report 2022

ISEKI Report 2022

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Fo undation f or s ustainable gr ow th

Enhancement of corporate value by reinforcing corporate governanceRisk management
Typical risks and mitigation measures● ISEKI Group is committed to putting in place management standards; regulations and monitoring; and response mechanisms to pre-empt risks facing group operations and to minimize losses when a risk event materializes.
● Our risk management regulations define factors potentially leading to physical, economic and reputational losses anddisadvantages as risks. The aim of our risk management is to prevent risks from materializing and minimize losses, and tocontribute to smooth business operations, soundness of assets and maintenance of corporate credit.

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

Risk management system

1

Changes in economic conditions
and the environment ofagriculture

2

Exchange rate fluctuations

3

A price hike of raw materials,
difficulty in procurement, andconfusion in the supply chain

4

Dependency on specificcustomers or suppliers

and unexpected increase in prices or a prolonged tightening of supplies may harm ourbusiness performance.
● In shipment and transportation of products, the shipment may be delayed due to a shortageof shipping containers and trucks, and other factors.
● Any change of business policy, business depression or bankruptcy of our specific customers
or suppliers may harm our financial performance.

5

Competition with othercompanies

ture” and incompliance with the changes in business environment associated with numerous
needs and hike in environmental awareness in overseas markets may harm our performance.

6

Serious defects in products andservices

7

Stock market fluctuation, Priceand land price may adversely affect the business performance and financial position.
decline in land and other fixed ● Decline in profitability associated with significant deterioration of business environment, or
impairment loss caused by market price decline may adversely affect the business perforassets

8● Cost burdens in case of escalated public regulations of environmental issues or market
Government regulations on
demand as well as corrective measures undertaken upon the occurrence of troubles, lawsuits
environmental issues, etc., andoccurrence of related difficulties and others may deteriorate the financial performance.

● Reduce environmental burden in production activities

due to changes in international relationships between, for example, U.S. and China, andconflicts in Eastern Europe, in addition to unexpected changes in each country’s tax/legal
Risks derived from international systems and trade policies. Accordingly, troubles in product supply to customers which arecaused by such restrictions may have impacts on the Group’s business performance, etc.
business● Difficulties in securing human resources, immature level of technologies and unstable labor-management relationships may primarily hinder the business development of ISEKI Group
mainly in the Asian region.
● If any of executives or employees of ISEKI Group should conduct any acts that violate laws
and regulations, its business activities may be impeded and the financial performance may
deteriorate.
Risk of legal violation

systems, export regulations, and employment situation,etc., and share such information with concerned parties● Review operation forms and supply chains

The Risk Management Control Committee under the Directors’ Operation Committee periodically identifies and evaluatesrisks, reevaluates magnitude of damage and frequency of occurrence, and examines countermeasures, in accordance with therisk management regulations to minimize the risk of causing damage or disadvantage to ISEKI Group under the supervision of
Corporate Planning Department.

ReportDirection

Report[Overview]
Promote the risk management across the company, and collectand share information necessary for the risk management
Information sharing[Matters to be deliberated]
Identify, analyze, and evaluate risks, and consider measures against themDiscussion ofReport the results to the Directors’ Operation Committee
countermeasures[Members]• Chairperson
Director in charge of Corporate Planning• Members
Chairperson, General Manager of Corporate Planning Dept.,
General Manager of Financial Dept., General Manager of
Personnel Dept., General Manager of General Affairs Dept.,
General Manager of IT Planning Dept., General Manager of
Identification of risks
Internal Audit Dept., General Manager of Sales Planning &Administrative Dept., General Manager of Administrative Dept.
Evaluation ofof Development & Production Division, and General Manager of
responses
to risks
Corporate Business Control Dept. of Overseas Business Division• Secretariat
Corporate Planning Department

Each division/Relevant meeting bodySupervision

Risk Management Control Committee

Directors’ Operation Committee

Board of Directors

Risk management system diagram

Risk items

Large

4 12

1

2

3

8

9 11 13

Risk of natural disasters,

11 unexpected accidents, spread of

1

3

8 11

5

6

9

other companies

13 Debtof human resources,
14 Ensuring
shortage of human resources

6

15 Information security
Small

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ISEKI Report 2022High

diseases at major sites at home and abroad may harm the financial performance of ISEKI
Group.

16 Climate change
Low

Frequency

High

Countermeasures for major risks● Build sales network and formulate strategies while
anticipating changes in market trends● Pay in Japanese yen to settle a half of the export transactions and in foreign currencies to settle another half,or buying forward contracts● Increase the ratio of local procurement in overseas
production● Use multiple suppliers in both procurement and shipment, and ensure multiple transportation means, etc.
● Consider price revision● Sustain sound partnership with customers and suppliers● Procure raw materials and parts from multiple suppliers● Develop products with high functionality and in compli-

ance with smart agriculture, and reduce price following
the decreased demand for agricultural materials● Strengthen product competitiveness including after-sales service● Establish the system of quality control and quality
guarantee● Implement product development, manufacturing, and after-sales service in compliance with defined internal processes● Carry product liability insurance● Reassess the significance of cross-holding of shares
to consider selling those shares whose significance isreducedand entire business activities● Collect and analyze information on each country’s tax● Establish the ISEKI Group Code of Ethical Behavior
based on legal compliance and ethics● Prepare an internal control system● Ensure legal compliance and the code of ethical behavior
in the entire ISEKI Group● Carry various insurance against fire, wind and flood
damage● Establish and implement business continuity plans● Restrict business travels and review working styles tostop the spread of novel coronavirus infections● A conflict of interest to occur between the parties concerned in business alliances or joint ventures due to financial position or other reasons may hinder the maintenance of the alliances.

may not be obtained in the integration of business; technologies; products and humanresources, or more-than-expected time and expenses may be required.
● Should any of covenants of outstanding syndicated loan and commitment line contracts withfinancial institutions be triggered, ISEKI Group could face obligation to pay back some or allof these loans early, which could adversely impact its financial position.
● A hike in interest rate may harm the financial performance.

● If employees leave their jobs, or human resources necessary for business cannot be ensured

DamageFrequency● Natural disasters such as earthquakes, typhoons, floods, unexpected accidents, or infectious

12 and strategic investment with ● With regard to strategic investment including acquisitions, the expected results and/or effects

10 13 14 15

16

Low

10

infectious disease, etc.

7

Small

may harm its financial performance.

● In global business activities, supply chains and production/sales activities may be restrained

Business alliances, joint ventures

Damage● Competition with other companies associated with “social implementation of smart agricul-

mance and financial position of ISEKI Group.

ISEKI manages risks by dividing by cause, either external factors or internal factors, and then classifying by the magnitude of damage
when risks become obvious and the potential frequency of occurrence. Note that the risk mapping chart indicates the maximum risks.

Large● As we procure raw materials and parts from numerous suppliers, situations such as sudden● Impairment loss, loss on valuation or loss on sale associated with significant decline in stock

Risk Mapping

Risks caused by internal factorsof agricultural machinery market, such as aging of agricultural workforce; a decreasing number of farmhouseholds due to labor shortage; any change in agricultural policy; and influence of price volatilityof agricultural products which are easily affected by weather conditions on purchasing sentiment offarmers, may harm our financial performance through reduced demand for agricultural machinery.
● Appreciation of Japanese yen may decrease our price competitiveness.
● Preparation of consolidated financial statements based on financial statements of our foreignsubsidiaries which are prepared in local currencies and then converted to Japanese yen may
expose us to a fluctuation risk of foreign exchange.

● Serious defects in products and services, or erosion of trust for ISEKI Group and its products

9

Risks caused by external factors

Content of typical risks● Sluggishness of domestic and/or overseas economic conditions, in addition to characteristic structure

Foundation for sustainable growth

Basic Policy (Fundamental concept)

or developed as scheduled, the Group’s competitiveness may decrease in the long term,
which may have negative effects on its business performance.

● Continuously implement various measures utilizing the Web● Foster mutual trust and ensure mutual benefits● Review contract conditions from a comprehensive
viewpoint● Combine with various loan conditions such as fixedinterest rates● Sustain sound partnership with financial institutions● Strengthen initiatives for enhancement of employee engagement● Employ and develop human resources with excellent knowl-edge, abilities, and experience, regardless of nationality andgender.
● Establish in-house training centers (IETC, ITTC, IGTC) to strengthen “human resources development” in the fields of development,
production, sales, and service, etc. by improving training.

● Information leakage or system halt/breakage, etc. caused by illegal access or computer virus● In information management, have handling regulations● In agriculture, which is the Group’s business foundation, changes in supply and demand arising● Mitigate the impacts by utilizing renewable energy, andinfection through cyberattack may deteriorate the Group’s credibility and have negative
impacts on its business performance and financial position.

from changes in system of crops and a reduction in agricultural land may have significant impacts
on the Group’s entire business activities including product lineup and sales volume, and without
appropriate countermeasures, may deteriorate its business performance and financial position.

in place, implement countermeasures for computerviruses, and enhance security measures by using a data
center and cloud service
reducing energy consumption● Mitigate the impacts by continuously reviewing BCP,
product lineup, and sales channels, etc.

ISEKI Report 2022

64

Fo undation f or s ustainable gr ow th

Enhancement of corporate value by reinforcing corporate governanceCompliance
Basic Policy (Fundamental concept)● ISEKI Group will ensure thorough compliance of each employee to promote healthy and transparent management.

Examples of initiatives undertaken
ISEKI Group is implementing various group-wide education and awareness-raising activities to ensure compliance.
Compliance training for newly-hired employees

To prevent misconduct and scandals from occurring by ensuring thorough compliance and raising awareness among
each of the ISEKI Group members, the Group has built acompliance team structure organized cross-functionally
under the leadership of the Director in charge of Compliance. The Personnel Department handles the overall management of compliance activities across the whole ISEKI
Group, and the supervising unit of individual departments

handles the overall management of compliance education
and awareness activities at the departments.
Compliance activities are reported to all Directors andAudit & Supervisory Board Members at the Management
Supervisory Committee meetings held every month. In
addition, Internal Audit Department audits the state ofcompliance activities and reports the results to the Management Supervisory Committee.

ComplianceDirector in charge anddeputy director in charge

Management Supervisory
Committee
Internal Audit
Department

Secretariat(Personnel Department)

Business Division
Sales Planning &Administrative Department

Business Division
Agri-plant
Department

Sales companies

Development &Production Division
Administrative Department

Overseas Business DivisionCorporate BusinessControl Department

Manufacturing bases

Overseas offices,
sales companies

General administration
departments
Personnel Department andother departments

Activities for enlightenment< Activities for penetration and education oncompliance>● Ensuring of thorough understanding of the “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.

● Awareness-raising by issuing “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 of practical measures undertaken by employees.

65

ISEKI Report 2022

Harassment training and establishment of consultation system

In response to the enforcement of the so-called Anti-Power Harassment Law in June 2020, we provide harassment
training to all officers and managers across ISEKI Group. The Group has also set up a harassment help desk at each groupcompany to put in place a system to provide consultation across the Group.
Renewal of whistle-blower system (Ethical Hotline)
ISEKI Group has set up a group-wide whistle-blower system (Ethical Hotline) for the use of all employees, retirees
and suppliers. The aim is to establish an open corporate
culture, enable pre-emptive detection of problems within the company, and prevent scandals from occurring. In
October 2021, the system was modified to make it moreuser-friendly and effective. Especially for hotlines, a new
third-party help desk independent from management
executives was set up, in light of purposes required by the
Corporate Governance Code. Furthermore, the third-party
help desk is available for whistle-blower reports in Thaiand Indonesian, in addition to English and Chinese. In
FY2021, the system handled 23 cases in total before andafter the system modification. All cases were appropriately
responded, and their summaries have been shared among0
the Management Supervisory Committee.
Number of whistle-blowing cases(cases)

Education and awareness-raising
To raise awareness of each individual employee, ISEKI Group is
implementing various training programs and awareness-raising
activities for employees in a planned way.

ISEKI Group provides compliance training to all newly-hired employees across the Group every year. We are working onawareness-building among employees that compliance means not only compliance with laws and regulations but also behaving in compliance with ISEKI Group’s management philosophy.

23

17

Training activities
The company carries out a wide range of education and training programs concerning compliance themes in the day-today conduct of business affairs, especially on points warranting
special attention.

88
6● Incorporation into company-wide events andeducational training programs• Sales subsidiary president meetings• manager meetings• executive training• newly-appointed manager training• newly-hired employee training● Individual training programs• Sales subsidiary employee meetings of sales departments• facility personnel training of facility departments• specialized employee training of development departments

2017

2018

2019

2020

2021

Initiatives for fair trade and prevention of corruption
With the “Code of Ethical Behavior” formulated, ISEKI
Group has thoroughly ensured that all employees of theGroup appropriately execute operations. In recent years,
with the expansion and diversification of its overseas
business, ISEKI Group has been working to establish compliance systems and enhance internal control at overseas
group companies. In 2021, the Group developed rules forpreventing bribery involving foreign public officers, etc.,
and strove to ensure thorough compliance with them,
mainly at each overseas base.
In relation to adequate provision of information such aslabeling methods regarding products and service, and fairtransactions at sales subsidiaries in Japan, ISEKI Group has
established and operated “Sales Administrative Rules.”In light of experience of receiving a cease and desist order under the Anti-Monopoly Act in relation to facility construction, the Group formulated conduct guidelines andcompliance manual focused on the Anti-Monopoly Act in2015 to inculcate the awareness of compliance across theGroup.

Foundation for sustainable growthCompliance system

Initiatives for protecting personal information
Recognizing the importance of protecting personal
information in an advanced information-communicationsociety, ISEKI Group has established and published the“Personal Information Protection Policy.” In accordancewith the Personal Information Handling Regulations, theGroup has had in place internal systems concerning theprotection of personal information, making efforts forappropriate management of personal information bytaking measures for the safe management and conducting
educational activities for employees. Going forward,
aware of the importance of the protection of personal
information, we will work to strengthen the protection of
personal information both in Japan and abroad.
Information security
ISEKI Group has striven for the maintenance and management of information security by establishing regulations forthe handling of electronic information and setting up the“Electronic Information Security Management Committee”
led by an Officer in charge of IT Planning. The Group has
also worked to improve information literacy among employees by providing training for the handling of internal information as part of education for newly-hired employees.
To mitigate information security risks, the Group enhanced the management system of information security,
including revision of internal regulations and enhancementof monitoring of communication situation and log information, etc.
ISEKI Report 2022

66

Finan cial an d no n -finan cial dat a

Consolidated financial summary

Net sales

Dec. 2017

Dec. 2018

Dec. 2019

Results of Operations
Domestic sales
Overseas sales
Net sales
Gross profit
Operating income
Ordinary income
Profit (loss) attributable to owners of parent

123,136
35,245
158,382
46,206
3,953
4,250
2,807

122,81233,143
155,955
45,945
3,179
2,629
1,090

117,717
32,181
149,899
44,507
2,745
1,108
723

115,907
33,397
149,304
43,476
2,084
1,702(5,641)

117,396
40,795
158,192
46,841
4,147
4,687
3,196

Financial Position (at the end of the fiscal year)
Cash and deposits
Notes and accounts receivable – trade
Inventories
Other
Total current assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total non-current assets
Total assets
Notes and accounts payable – trade
Short-term loans payable (including current portion of long-term loans payable)
Other
Total current liabilities
Long-term loans payable
Net defined benefit liability
Deferred tax liabilities for land revaluation
Other
Total non-current liabilities
Total liabilities
Shareholders’ equity
Accumulated other comprehensive income
Subscription rights to shares and non-controlling interests
Total net assets
Total liabilities and net assets

7,981
25,11353,406
5,249
91,751
95,592
1,025
12,978109,596
201,348
40,67335,22013,75089,64424,354
3,312
5,780
7,339
40,787130,432
52,33016,833
1,752
70,916201,348

7,475
23,32753,7197,269
91,791
96,842
1,082
11,440109,365
201,156
39,73642,877
12,97995,593
20,571
4,063
5,780
6,188
36,603
132,197
52,746
14,454
1,759
68,959201,156

8,404
19,67554,1794,900
87,15998,346
1,288
10,717110,352
197,51137,75239,351
12,63089,735
21,525
3,059
5,759
8,180
38,524
128,259
52,84014,641
1,770
69,252
197,511

10,787
21,78051,847
5,564
89,97986,2871,967
9,193
97,449187,428
36,872
37,46011,814
86,147
24,114
3,144
4,097
7,504
38,861125,00950,346
10,3101,762
62,419187,428

14,85021,53749,871
4,843
91,10384,962
2,290
9,328
96,581
187,684
39,27930,21011,852
81,342
24,728
2,912
4,097
8,042
39,780121,123
53,567
11,201
1,792
66,561
187,684

Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Free cash flows
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents

3,308(5,273)(1,965)(4,294)(6,113)

7,616(9,944)(2,327)
1,970
(408)

10,509(7,104)
3,404(2,396)981

9,694(5,167)
4,526(2,179)2,383

14,233(2,039)12,194(8,338)
4,048

Information Per Share (Yen)Net assets
Profit (loss)
Cash dividends

3,061.8
124.2
30.0

2,974.7
48.2
30.0

2,987.1
32.0
30.0

2,683.1(249.5)–2,864.4
141.4
30.0

34.4
4.2
1.4
99.3
0.94

33.4
1.6
0.5
101.0
1.01

34.2
1.1
0.4
104.8
1.00

32.4
(8.8)
(3.0)
104.9
1.11

34.5
5.1
1.7
84.4
0.93

Operating income / Operating margin

Net sales came to 158.1 billion yen, up 8.8 billion yen year on year.
[Japan] Sales increased due to a recovery from the reactionary fallout
from the consumption tax hike and demands spurred by business
continuity subsidies and other factors.
[Overseas] Sales increased in every region, with North America
posting higher sales on the back of the strong compact tractor
market, Europe growing mainly in products for consumers, and Asia
increasing due to the consolidation of a Thai distributor as a consolidated subsidiary at the end of 2020.
Japan net sales (100 million yen)

1,583

1,559

352

331

1,231

1,228

Dec. 2017

Dec. 2018

1,498

1,493

1,581

321

333

407

1,177

1,159

1,173

Dec. 2019

Dec. 2020

Dec. 2021

Ordinary income came to 4.6 billion yen, up 2.9 billion yen year on year due
to a favorable turnaround in foreign exchange losses (gains), a decrease inloss of entities using equity method, and recording of a settlement income.
Profit (loss) attributable to owners of parent increased by 8.8 billion yen
year on year to 3.1 billion yen due to a decrease in impairment loss on
non-current assets recorded in the previous fiscal year, etc.
Ordinary income (100 million yen)
Profit attributable to owners of parent (100 million yen)
ROE

28

2.6%
2.0%

39

1.8%

1.1%

31
17

11 7

41
1.4%

31

27
20

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Dec. 2021

Total assets / Net assets / Equity ratio
Total assets increased by 0.2 billion yen year on year to 187.6 billion
yen, due to an increase in cash and deposits resulting from increased
sales and a decrease in inventories, etc. Net assets came to 66.5
billion yen, up 4.1 billion yen year on year due to an increase inretained earnings.

2,013

2,011

Net assets (100 million yen)

1,975

46

26
10

Operating margin

2.5%

Total assets (100 million yen)

5.1%

4.2%
1.6%

Operating income (100 million yen)Overseas net sales (100 million yen)

Ordinary income / Profit attributable to owners of parent / ROE

42

Operating income increased by 2.0 billion yen year on year to 4.1
billion yen, due to an increase in gross profit from higher sales andthe absence of a loss on valuation of parts inventory recorded in theprevious fiscal year. Operating margin improved by 1.2% year on
year to 2.6%.

34.4%

33.4%

34.2%

709

689

692

Dec. 2017

Dec. 2018

Dec. 2019

Equity ratio

1,876

1,874

32.4%

34.5%

624

665

Dec. 2020

Dec. 2021

−8.8%
−56
Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Dec. 2021

Cash Flows

Interest-bearing debt / D/E ratio

In the cash flows from operating activities, proceeds increased by 4.5 billion
yen year on year due to the increase in net sales and the inventory reduction.
In the cash flows from investing activities, purchase decreased by 3.1 billion
yen year on year due to the reduction in capital investment. As a result, inthe free cash flows, proceeds increased by 7.6 billion yen year on year. In the
cash flows from financing activities, cash outflow increased by 6.1 billion yen
year on year due to the repayments of borrowings, etc.

33

19

−19
−52

121

595

−23

−21

−23

−42
−71
Dec. 2018

Dec. 2019

0.93
697
63

693
84

693
77

634

608

615

621
72
549

−20

Dec. 2021

1 ROE (Return on equity) = Profit/(Equity at the beginning of the fiscal year + Equity at the end of the fiscal year)/2−83
Dec. 2020

Management Indicators
Equity ratio (%)
ROE (%)ROA (%)CCC (days)
D/E ratio (times)

Dec. 2020

Note

−51

−99
Dec. 2017

D/E ratio (times)

1.00

0.94
663
67

45

34

Lease obligations (100 million yen)

1.01

142

96

76

Loans (100 million yen)

1.11

Cash flows from operating activities (100 million yen)
Cash flows from investing activities (100 million yen)
Cash flows from financing activities (100 million yen)Free cash flows (100 million yen)

105

Interest-bearing debt decreased by 7.1 billion yen year on year to62.1 billion yen due to a progress in reducing short-term loans
payable.
D/E ratio, which shows the soundness of finance, was at 0.93 times
due to the reduction of interest-bearing debt and the increase in net
assets.

(Millions of yen)

Financial and non-financial data

Financial highlights (FY2021)

Dec. 2021

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Dec. 2021

2 ROA (Return on assets) = Profit/Total assets
3 CCC (Cash conversion cycle) = Days sales outstanding + Days of inventory outstanding − Days payable outstanding
4 D/E ratio = Interest-bearing liabilities/Net assets

67

ISEKI Report 2022

ISEKI Report 2022

68

Co mpany p rofile / S hare hold e r info rmatio n

Finan cial an d no n -finan cial dat a

Company profile

Non-financial highlights (FY2021)
Volume of energy-generated CO2 emissions in factories *1 Environment
We are working to reduce CO2 emission volumes in our production activities as partof corporate activities to enable a sustainable society. In 2021, due to an increase in
the CO2 emission factor for domestic electricity, the emission volume increased.

Number of Directors and Audit & Supervisory Board Members/Ratio of Outside Directors

Governance

In March 2022, we appointed at least one-third of Outside Directors within all
Directors to enhance corporate governance. We are working on further enhancement of transparency and objectivity of management.

Volume of CO2 emissions in factories in Japan (t-CO2)
Number of Outside Audit& Supervisory Board Members
Number of Outside Directors
Ratio of Outside Directors

Sales in Japan (t-CO2/100 million yen)Overseas production volume (t-CO2/100 million yen)

42,90041,20059

37,10037,30065

63

32,200
61
43

33
21

22

2017

2018

2019

2020

Number of Audit & Supervisory Board Members
Number of Directors

30%

Status of shares
18%

18%

9

9

9

7

6

2
1

2
1

2
1

3
1

3
1

18%

2021

*Japan: Three factories (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd.)
Overseas: PT. ISEKI INDONESA, Dongfeng Iseki Agricultural Machinery Co., Ltd. (Changzhou Factory and
Xiangyang Factory)*The CO2 emission factor for domestic electricity is revised every year based on values published by the
Ministry of the Environment.
*The results for 2017 to 2020 have been corrected due to an error in calculation.

4

4

4

4

4

2017

2018

2019

2020

2021

Major shareholders (top 10)

Technological capabilities

We actively submit applications using the intellectual property regimes of various
countries to lead to differentiation of products in the overseas market.

● Overseas *2
Total of patents and utility model rights (cases)

Total of design rights (cases)

Total of design rights (cases)

1,000

3,000

6310
69,000,000 shares
22,610,948 shares (excluding treasury stock of 374,045 shares)
100 shares
18,972
Share price trends

Name of major shareholder

Patents, utility model rights and design rights held

Total of patents (cases)

As of December 31, 2021

Company code:
Total number of authorized shares
Shares issued and outstanding
Number of shares per trading unit
Number of shareholders

34● Japan

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: 5,371 (Development and Production Section: 1,669; Sales Section: 3,356; and Other Sections: 346)
Non-Consolidated: 738

33%

72

The company has over approximately 2,300 patents, thanks to its acquisition and accumulation of validated claims, and it also holds more than approximately 500 design rights.

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

As of December 31, 2021

2,000

Number of shares held (shares) Shareholding ratio (%)

(yen)

3,050

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,344,900

10.37

Mizuho Bank, Ltd

1,070,800

4.73

The Norinchukin Bank

868,785

3.84

Iseki kabushiki hoyukai (Company’s Stockholding Co-op.)

851,309

3.76

Sumitomo Mitsui Trust Bank, Limited

800,000

3.53

Custody Bank of Japan, Ltd. (Trust Account)732,800

3.24

Iseki eigyo-hansya group syain mochikabukai (Business-selling Group Holdings)

598,500

2.64

The Iyo Bank, Ltd.

580,042

2.56

High Low

High Low

High Low

High Low

Sompo Japan Insurance Inc.

434,500

1.92

2018

2019

2020

2021

The Kyoei Fire and Marine Insurance Company, Limited

352,700

1.55

1,772
1,401

1,865
1,319

1,287
855

(Note) The Company holds 374,045 shares of treasury stock but is excluded from the above major shareholders.
Shareholding ratios are calculated after the deduction of treasury stock.

500
1,000

Mar. 2018

Mar. 2019

Mar. 2020

Mar. 2021

0Dec. 2017

Dec. 2018

Dec. 2019

Jun. 2020

Mar. 2021

Number of shares held (shares)

Shareholding ratio (%)

Individual shareholders and other

8,613,610

38.09

Financial institutions

8,361,612

36.98

Rates of return to work following childcare leave non-consolidated Human resources

Retention rate in three years from joining non-consolidated Human resources

Other Japanese companies

3,438,009

15.21

As part of measures to create workplace environments easy to balance work and childcare,
we have established various work-life balance support mechanisms including childcare leave.
One hundred percent of the employees who took childcare leave returned to work.

The retention rate of college graduates three years from joining is at a high levelof above approximately 90%.

Foreign companies and individuals

1,682,044

7.44

Securities companies

515,673

2.28

Return rate (%)

100

Securities
companies
2.28%

and individuals
7.44%
Other Japanesecompanies
15.21%

Shareholding
ratio

Individual
shareholders
and other
38.09%

Financial
institutions
36.98%

Retention rate (%)

100

100

100

100
88.5

88.5

92.3

94.1

92.3

Company profile / Shareholder information

Mar. 2017

Breakdown

Financial and non-financial data

Status of distribution of shares held by type of shareholder
Shares issued and outstanding: 22,610,948 shares (excluding treasury stock of 374,045 shares) Foreign companies

0

1,686

Evaluation by third parties
DBJ Environmental Rating – highest rating 16 times in a row
In April 2022, ISEKI received the highest rating as one of the “Companies doing environment-friendly
business activities progressively,” 16 times in a row, by the Development Bank of Japan Inc., in receiving loans under the DBJ Environmentally Rated Loan Program.
Points that are highly evaluated in the rating for this year
ISEKI is establishing company’s entire environmental management.

2017

2018

2019

2020

2021

Joined in
2015

Joined in
2016

Joined in2017*1 The value is different from the past report, because of the review of electricity emission factor.
*2 The tabulation period for some overseas patents, utility model rights, and design rights is different, and therefore the year and month of results vary.

69

ISEKI Report 2022

Joined in
2018

Joined in
2019

ISEKI is putting contribution to the environment through in-house solutions into practice.
ISEKI is promoting efforts to realize sustainable agriculture.

ISEKI Report 202270