Financial Results for
the Fiscal Year Ended December 31, 2021
I S E K I & CO., LTD.
February 17, 2022

Index
1. Outline of Financial Results for the Fiscal Year
Ended December 31, 2021
2. Domestic and Overseas Markets
3. Performance Forecast for the Fiscal Year Ending
December 31, 2022
4. Progress of Mid-term Management Plan2

1. Outline of Financial Results for the
Fiscal Year Ended December 31, 2021

3

Key Points<Financial Results For the FY Ended Dec. 2021 >Increase in both sales & profits
Almost in line with the forecast
Domestic： Recovery from the reactionary decline after the consumption tax hike
Demand stimulated by government subsidies for agricultural business
continuity and a drop

Overseas： Overseas sales reached a record high
A shortage of shipping containers for North America & Europe
led to unfulfilled shipments and expansions of backorders

Profits： Increase in gross profit thanks to higher sales
However, soaring raw material prices put pressure on earnings<Forecast For the FY Ending Dec. 2022 >Increase in net sales & operating income
Year-end dividend:30 yen per share

Net Sales (Full-year)(JPY bn, %)155.9 149.8 149.3 158.1 166.5

Domestic

21.3%

22.4%

25.8%

28.5%

Overseas

FY2018/12 FY2019/12 FY2020/12 FY2021/12 FY2022/12

Forecast

Operating Income/Ratio (Full-year)(JPY bn, %)

6

2.0%

1.8%

1.4%

5
4
3

Net Sales ： Increase from the previous fiscal year, mainly due to overseas sales

2

Profits

1： Increase in gross profit due to higher sales due to our structural reforms andefforts to improve management efficiency, in spite of pressure on earnings
due to the sharp rise in raw material prices

21.5%

0

2.6%

4.1
3.1

2.8%

4.7

3
1
-

2.7

-

2.0

-

FY2018/12 FY2019/12 FY2020/12 FY2021/12 FY2022/12-

Forecast

4

Business Environment
FY Ended Dec. 2021

FY Ended Dec. 2020


Reactionary decline after consumption tax hike
Restraint on sales activities due to COVID-19

Domestic






North
AmericaRobust demand resulting from stay-at-home demand
Delays in delivery of parts led to a decrease in shipments(temporary factor)Increased demand due to lifestyle changes
A shortage of shipping containers led to unfulfilled shipments andexpansions of backorders.



Sales affected by the lockdown in the spring season,but showed recovery from the second half.

Robust demand for consumer products newly generated owing tolifestyle changes
Sales activities gradually returned to normal thanks to progress invaccination & reduction of the newly infected.
=> Professional market demand gradually recovered.

EuropeOverseas

Recovery from post-consumption tax hike reactionary decline
Impact of restraint on sales activities due to COVID-19 eased
compared to the previous year
Demand stimulated by government subsidies for agricultural business
continuity, and a reboundDecreased willingness to buy due to falling rice prices





China
Demand for agricultural machinery stimulated by government policies
to secure food and travel restrictions



China
Steady strong market due to continued government policies to secure
food & stabilize grain prices.



ASEAN (Thailand)- Drought affected farmers’ household income & agricultural machinery
demand.
- Rainfall has generally recovered since Sep.



ASEAN (Thailand)
Robust demand due to the government's measures & subsidies
to stimulate the market demandSouth Korea
Demand for large agricultural machinery continued



TaiwanA pullback effect with the withdrawal of subsidies

Asia

South Korea
Demand for large agricultural machinery continued



TaiwanIncreased demand due to subsidies for large agricultural machinery5Outline of Consolidated Business Performance(January 1, 2021 to December 31, 2021)(JPY bn, %)FY2018/12 FY2019/12

FY2020/12

FY2021/12

YoY
ChangeDiff.
(Target/Actual)*ActualActualActual%Actual%Net Sales

155.9

149.8

149.3

100.0

158.1

100.0

8.8

(0.8)

(Domestic)

122.8

117.7

115.9

77.6

117.3

74.2

1.4

(0.5)

(Overseas)

33.1

32.1

33.3

22.4

40.7

25.8

7.3

(0.3)

Operating Income

3.1

2.7

2.0

1.4

4.1

2.6

2.0

0.1

Ordinary Income

2.6

1.1

1.7

1.1

4.6

3.0

2.9

(0.0)

Profit (Loss) Attributableto Owners of Parent

1.0

0.7

(5.6)

-

3.1

2.0

8.8

(0.2)

US$

110.2

109.3

107.0

109.0

2.0

1.0

Euro

130.9

121.6

121.5

129.8

8.3

(0.2)

Average
Exchange
Rate (JPY)* Difference from the forecast announced on 12th November 2021

6

Domestic Sales
YoY
JPY1.4 billion(JPY bn)

Domestic sales increased due to a recover from the reactionary decline following theconsumption tax hike, and demand stimulated by government subsidies for agricultural business
continuity, etc.,
FY2018/12

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActualYoY Change

Diff.
(Target/Actual)*Main factors for changes(In comparison with the previous year)

25.3

22.8

23.9

1.0

0.1

Planting
Machinery

9.1

9.0

8.8

9.0

0.2

(0.2)

Harvesting &Processing
Machinery

19.9

18.5

16.8

16.6

(0.2)

(0.2)

Subtotal

56.5

53.0

48.6

49.6

1.0

(0.3)

Farming
Implements

20.2

20.0

20.4

22.0

1.5

0.2

■ Net Sales from Framing Implements, Spare Parts, Repair Fees

Spare Parts

14.8

15.0

15.6

15.3

(0.2)

(0.2)

43.3

Repair Fees

5.5

5.7

5.8

5.9

0.0

(0.1)

Subtotal

40.6

40.8

42.0

43.3

1.3

(0.1)

Total

97.1

93.8

90.6

93.0

2.3

(0.4)

Construction of Facilities

5.6

4.5

6.1

4.2

(1.8)

(0.2)

Others

19.9

19.3

19.1

20.1

1.0

0.2

122.8

117.7

115.9

117.3

1.4

(0.5)

Agricultural Machinery

27.4

Agricultural Machinery Related

Cultivating &Mowing
Machinery✔

Agricultural machinery & Framing Implements:
Increased due to a recover from the reactionary
decline from the consumption tax hike, anddemand stimulated by government subsidies
etc.,

✔

Framing Implements, Spare Parts, Repair Fees:
Continue growing strong(JPY bn)

Total

39.7

40.6

40.8

42.0

Comparedwith FY2017

Up 9%

FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12* Difference from the forecast announced on 12th November 2021

7

Overseas Sales
YoY
JPY7.3 billion

Overseas sales reached a record highNorth America & Europe: a shortage of shipping containers led to unfulfilled shipments &expansions of backorders
FY2018/12

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActual(JPY bn)

YoY
ChangeDiff.
(Target/Actual)*Main factors for changes(In comparison with the previous year)✔ North：America

Sales increased on the back of a robust market
for compact tractors driven by changes in lifestyle

North America

11.5

13.2

12.8

15.1

2.3

0.1

✔ Europe：

Sales increased due to strong demand,
especially for consumer products newly
generated by lifestyle changes

Europe

13.8

12.8

13.9

15.9

1.9

(0.2)

✔ Asia：Sales increased due to the consolidation of a
distributor in Thailand at the end of the previous
fiscal year and an increase in shipments ofproduction parts to China.

Asia

7.3

5.5

6.2

9.1

2.9

(0.2)

35.2

Others

0.4

0.5

0.3

0.5

0.1

0.0

Total Sales

33.1

32.1

33.3

40.7

7.3

(0.3)

(JPY bn)■ Trends in Overseas Sales

FY2017/12

40.7

33.1

32.1

33.3

FY2018/12

FY2019/12

FY2020/12

FY2021/12* Difference from the forecast announced on 12th November 2021

8

Operating Income
YoY
JPY2.0 billion

In addition to an increase in gross profit resulting form higher sales, operating income increased
due the absence of a loss on valuation of parts inventory recorded in the previous fiscal year
However, soaring raw material prices put pressure on earnings.
Diff.
(Target/Actual)*

158.1

8.8

(0.8)

43.4

46.8

3.3

29.1%

29.6%

0.5%

2.0
FY2020Dec

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActualNet Sales

155.9

149.8

149.3

Gross Profit

45.9

44.5

Gross Profit
Margin

29.5%

29.7%

(JPY bn, %)[Breakdown of YoY Change]

YoY
ChangeFY2018/12

SG&A
Expenses

42.7

41.7

41.3

42.6

1.3

Personnel
Expenses

25.3

24.6

25.1

25.2

0.1

Other
Expenses

17.4

17.0

16.2

17.4

1.1

Operating
Income

3.1

2.7

2.0

4.1

2.0

Increase in gross profit ：3.3

3.5 (0.9)

0.7 (1.3)
4.1

Increasedgross profit
due tohigherrevenue

Impact fromsoaring raw
materials
pricesIncreased
SG&A expenses
due to higher
revenue

FY2021
Dec

・Absence of loss on valuation of parts inventory included in the previous fiscal year

: 0.2

*Special factors

Specialfactors*・Decline in depreciation in line with posting an impairment loss in the previous fiscal year : 0.5[Effect of FOREX Fluctuations (JPY bn)]

0.1

Net Sales

Cost of
Sales

SG&A
Expenses

Operating
Income

0.6

(0.5)

(0.1)

(0.0)

* Difference from the forecast announced on 12th November 2021

9

Ordinary Income & Profit
Ordinary
income YoY
JPY2.9billion(JPY bn)

Operating Income

Ordinary Income: Increased due to favorable shifts in foreign exchange gain (loss) & decrease in share of loss ofentities accounted for using the equity method, as well as a temporary recording of non-operating income
Income Before Income Taxes: Increased due to an absence of an impairment loss on fixed assets recorded in theprevious fiscal year.
FY2018/12

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActual

3.1

2.7

2.0

4.1

YoY
Change2.0

Diff.
(Target/Actual)*0.1

Non-operating Income (YoY Change)

Foreign exchange gain (loss)

0.4

Decrease in share of loss of entities accounted
for using the equity method

0.1

Settlement received

0.4

Balance of Financial Income

(0.7)

(0.7)

(0.6)

(0.6)

0.0

Absence of gain on change in equity

Other Non-operating Income

0.2

(0.8)

0.3

1.1

0.8

Decrease in impairment loss

Ordinary Income

2.6

1.1

1.7

4.6

2.9

Extraordinary Income

0.1

0.5

0.6

0.0

(0.5)

Extraordinary Losses

(0.5)

(0.3)

(9.4)

(0.4)

9.0

Income Before Income
Taxes

2.2

1.3

(7.1)

4.3

11.4

Income Taxes - Deferred

(1.1)

(0.5)

1.4

(1.1)

(2.6)

Profit (Loss) Attributable to
Owners of Parent

1.0

0.7

(5.6)

3.1

8.8

(0.0)

(0.0)

(0.2)

* Difference from the forecast announced on 12th November 2021

(0.6)
9.0

(Reference)
FY2020/12
ActualFY2021/12
ActualYoY
ChangeShare of profit (loss) ofentities accounted forusing the equity method(non-operating)(0.46)(0.32)

0.14

Gain (loss) on change
in equity (extraordinary)

0.65

－

(0.65)

Entities accounted for using the equity method
FY2020: 2 companies(Dongfeng Iseki, IST Farm Machinery)
FY2021 :1 company (Dongfeng Iseki)10Non-Consolidated Financial Results
Profit increased due to higher sales both in Japan and overseas
Profit: The Company recorded profit in the current fiscal year compared withthe loss in the previous fiscal year caused by an impairment loss

Ordinary income YoY¥2.2 billion

FY2018/12

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActualYoY
Change

93.1

90.0

79.2

91.7

12.5

Domestic

65.7

61.7

53.9

59.8

5.8

Overseas

37.4

28.2

25.2

31.9

6.6

Gross Profit

12.3

12.4

9.4

12.1

2.7

13.2%

13.8%

11.9%

13.3%

1.4%

SG&A Expenses

11.8

11.4

10.7

11.3

0.5

Operating
Income

0.5

0.9

(1.3)

0.8

2.2

Ordinary Income

2.4

2.2

(0.2)

3.8

4.0

Profit1.8

1.5(13.2)

2.9

16.6(JPY bn, %)Net Sales

Gross Profit
Margin[Breakdown of YoY Change]

＋2.7

(0.5)

0.8
(1.3)
FY2020/12

Gross profit
increased due
to higher sales

ISG&A
expenses
increased

FY2021/12

11

Balance Sheet
Cash & deposits increased due to decreases in accounts receivable – trade andinventories and an increase in accounts payable – trade
YoY ChangeInterest-bearing liabilities decreased due to an increase in net assets and a decreasein other current assets and non-current assets(単位：億円)As of Dec.
31, 2020

As of Dec
31, 2021

YoY
ChangeAs of Dec.
31, 2020

As of Dec
31, 2021

YoY
ChangeCash & Deposits

10.7

14.8

4.0

Accounts Payable - Trade

36.8

39.2

2.4

Accounts Receivable – Trade

21.7

21.5

(0.2)

Interest-bearing Liabilities

69.3

62.1

(7.1)

Inventories

51.8

49.8

(1.9)

(Loans Payable)

61.5

54.9

(6.6)

(Merchandise & Finished Goods)

43.8

41.5

(2.3)

Other Liabilities

18.7

19.6

0.8

Other Current Assets

5.5

4.8

(0.7)

(Deferred Tax Liabilities for Land
Revaluation)

4.0

4.0

0.0

Total Current Assets

89.9

91.1

1.1

125.0

121.1

(3.8)

Property, Plant and Equipment

86.2

84.9

(1.3)

Intangible Assets

1.9

2.2

0.3

62.4

66.5

4.1

Investments and Other Assets

9.1

9.3

0.1

(Retained Earnings)

14.4

17.6

3.1

Total Non-current Assets

97.4

96.5

(0.8)

(Revaluation Reserve for Land)

8.8

8.8

0.0

Total Assets

187.4

187.6

0.2

Total Liabilities and Net Assets

187.4

187.6

0.2

Total Liabilities
Net Assets

12Equity Ratio / Interest-bearing Liabilities / DividendInterest-bearing
liabilities, D/E ratio
Capital ratio
Dividend

D/E ratio improved to below 1.0 owing to a decrease interest-bearing liabilities
Year-end dividend to be resumed at 30 yen per share

１． interest-bearing liabilities & Equity
Balance of Interest-bearing Liabilities
69.7
69.3
69.3
6.3

8.4

7.7

２．Dividend(JPY bn)

62.1
7.2

63.4

60.8

61.5

54.9

FY2018/12

FY2019/12

FY2020/12

FY2021/12

D/E Ratio

1.0

1.0

1.1

0.9

Equity Ratio

33.4%

34.2%

32.4%

34.5%

interest-bearing
liabilities (JPY bn)

69.7

69.3

69.3

62.1

Net Assets (JPY bn)

68.9

69.2

62.4

66.5

Lease
Liabilities

Loans
PayableYear-end
Dividend(JPY)

FY2020/12
ActualFY2021/12
Plan

0

30

13

Capital Investment, Depreciation andResearch & Development Expenses
Made investment in growth, including development of sales offices andinvestment in improving productivity

Capitalinvestment

2. Depreciation, Research &Development Expenses

1. Capital investment (Actual)(JPY bn) 15.0

10.8
10.0

6.7

7.8

5.7

5.5

(JPY bn)

FY2020/12
ActualFY2021/12
ActualDepreciation

6.98

6.56

Research &development
expenses

1.50

1.27

5.0
0.0

2017/122018/122019/122020/122021/12*Property, plant and equipment and intangible assets after delivery(JPY bn)(Breakdown)

FY2021/12 Actual

Sales offices

2.4

New models, increasing productivity

1.2

Information technology

0.4

Other

1.5

Total

5.5

14

Cash Flows
Cash
Flows

Cash flows from operating activities were ¥14.2 billion due to positive contributions from accounts receivable– trade, inventories, and accounts payable – trade
Aim to generate ¥60 billion yen in cumulative cash flows from operating activities over the period of
the Mid-Term Management Plan (2021-2025)(単位：億円)FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12

ActualActualActualActualActualYoY Change

3.3

7.6

10.5

9.6

14.2

4.5

Profit before income taxes

3.8

2.2

1.3

( 7.1)

4.3

11.4

Depreciation

7.0

6.7

6.8

6.9

6.5

（0.4）

Impairment loss

0.2

0.1

0.1

9.3

0.1

（9.1）

Decrease (increase) in trade receivables( 0.1)

1.8

3.5

(1.8)

0.4

2.2

Decrease (increase) in inventories

(3.8)

(0.2)

(0.7)

3.2

2.4

（0.8）

Increase (decrease) in trade payables

(1.9)

(1.0)

(1.8)

(0.8)

2.1

2.9

Cash flows from investing activities

(5.2)

(9.9)

(7.1)

(5.1)

（2.0）

3.1

Purchase of property, plant and equipment andintangible assets

(5.6)

(6.8)

(8.3)

(6.6)

（4.6）

1.9

Free Cash Flow

(1.9)

(2.3)

3.4

4.5

12.1

7.6

Cash flows from financing activities

(4.2)

1.9

(2.3)

(2.1)

（8.3）

（6.1）

Net increase (decrease) in cash and cash equivalents

(6.1)

(0.4)

0.9

2.3

4.0

1.6

Cash flows from operating activities152. Domestic and Overseas Markets

16

Domestic Agricultural Machinery Market Trends
Domestic
Agricultural
Machine Demand

Despite a boost in demand from government subsidies for agriculturalbusiness continuity, the pace of recovery was moderate due to the prolonged
impact of COVID-19 and the falling price of rice

■ Agricultural machinery demand (shipments in the industry)(9 principal machinery, moving annual total)(JPY bn)280

Oct. 2019
Consumption tax increase(JPY bn)

260
240
220
200
Mar.

Jun.

Sep.

2017

Dec.

Mar.

Jun.

Sep.

2018

Dec.

Mar.

Jun.

Sep.

2019

Dec.

Mar.

Jun.

Sep.

Dec.

2020

Mar.

Jun.

Sep.

Dec.

2021

*9 principal machinery: Tractors, combine harvesters, rice transplanters, tillers, drying machines, rice huskers, binders, harvesters, treatment
Source: Estimated by ISEKI from statistics provided by the Japan Agricultural Machinery Manufacturers Association

17

Domestic Agricultural Machinery Shipments and ISEKI’s Performance
ISEKI’s Sales
Performance

・Increased sales of large machinery offset decreased sales of small- andmedium-sized machinery・"All Japan Series," important large machinery that we focus on, performed well

YoY growth rate for 9 principal machinery categories (moving annual total)(％)

Jan.–Dec. 2020

Jan.–Dec. 2021

Sales of the All Japan series
・Tractors (TJW, TJV, TJX)

Industry(Amount ofshipment)

ISEKI(Salesamount)

81%
92%

108%
101%

・ Rice transplanters (PRJ8)・Combine harvesters (HJ)YoY growth rate

112％

(Based on the number of units)*ISEKI estimates*9 principal machinery: Tractors, combine harvesters, rice transplanters,
tillers, drying machines, rice huskers, binders, harvesters, treatment
18

ISEKI’s Performance (Key Products)

Mid-Term Management Plan:
Selection & Concentration

Large Agricultural Machinery Smart Agricultural Machinery With the rice transplanter included, ISEKI’s“All Japan” series of flagship models is
now complete
Sales of the products, especially those of
the new rice transplanter, All Japan series performance(number of units)
are robust About 60% of the 8-row
class rice transplanters
have straight-travelassisted specs

Percentage of 8-row classtransplanters with straight-travelassisted specs

About
60%

112％

2019

2020

2021

Combine harvesters
Rice transplanters
Tractors

2020

2021

Reduce greenhouse gas emissions as well
Introduction of automatic steering systems toagricultural machinery
Reduce fuel consumption by(compared with previous models)

13%

Source: “Strategy for Sustainable Food Systems, MeaDRI” and “Basis for Amount of Reduction fromCountermeasures in the Plan for Global Warming Countermeasures”

19Domestic Trends in Agricultural Administration■Budget for agriculture, forestry and fisheries: Budget for agricultural machineryand facilities remains almost unchanged from previous years<<Primary budget allowances for agricultural machinery and facilities>>
Classification*

Project name (outline)

BudgetInitial

Revised〇〇Smart agriculture comprehensive promotion measures as part of the Project forDevelopment and Demonstration of Technologies to Realize a Sustainable Food
Systems Strategy MeaDRI¥6.3 bn〇

Support for productivity improvement of agriculture, forestry, and fishery workers
who will lead the next generation (smart technology)¥10.0 bn〇

Power-up Project for Local Production Bases¥31.0 bn〇

Special Project for Strengthening Profitability of Livestock and Dairy Farming(Livestock Clusters)¥61.7 bn

〇
〇

〇

〇

Sustainable Production Enhancement Project¥1.0 bn

Boosting wheat and soybean profitability and productivity¥3.4 bn

Subsidy for comprehensive support for building strong agriculture¥12.6 bn〇〇

Comprehensive measures to promote a Sustainable Food Systems Strategy
MeaDRI¥3.3 bn〇〇

Subsidy for Supporting Efficient Use of Farmland, Paddy Field Renovation Project¥3.1 bn

Emergency support for the establishment of a sustainable field crop production
system, and support for sweet resource crop production*Classification: “Initial” – FY2022 Initial Budget, “Revised” – FY2021 Revised Budget〇〇✓Accelerate the social
implementation of smart
agriculture✓Improve productivity✓Create production basesin production areas✓Reduce environmental
impact¥17.2 bn
20

Domestic Product Development(Key Products)

Mid-Term Management Plan:
Selection & Concentration

2021

Line-up expansion

Large
products

All Japan series completed

Low-priceproducts‣ Small tractor‣ Mid-sized tractor with low-pricespecs‣ Large tractor (additional specs)

Vegetable ‣ Vegetable transplanter
cropping (additional specs)
machinery ‣ Large vegetable harvester▼ Feb. Robot rice transplanter▼ Mar. Mid-sized tractor withstraight-travel assistanceMid-sized tractor with straight-travelassistance （36/50/60hp）

Human-monitored robot rice transplanter▼ Dec.

Low-price and specs added(two tractor models)▼ Dec.

Large-sixed tractor (TJV885) with low-price specs

Large-sized tractor with additional specs▼ Dec.

Vegetable transplanter,riding control machine▼ Jun.

New products for second half of2022 to be announced

Smartagricultural
machinery＜Main new products＞‣ Rice transplanters withstraight-travel & turningassistance‣ Small-sized tractors withstraight-travel assistance‣ Robot tractors (additional specs)

2022

Vegetable transplanter Riding control machine21Services Development

Mid-Term Management Plan:
Business Model Transformation

Agricultural Business Solutions Portal Site

ISEKI’s IoT, High-Precision, GNSS
Location Information Service

Portal site for agricultural producers that agriculture-related
manufacturers (41 companies*) participate in, where a wide
range of information on topics including agricultural
management, cultivation and advanced technology can beaccessed all at once, on top of information on the products
and technologies of the manufacturers.
*As of January 31, 2022
<Most-viewed content since the opening in July 2021>

In January 2022, ISEKI launched inexpensive <Highprecision GNSS Correction Service>. Users can sign acontract only for a month when they use it.

“Amoni”

・Demonstration, verification
・Weather forecast, rain radar
・Forecast for growth of wetland rice, cumulative temperature
forecast

Electronic
reference points✓Popular content useful for
spring work is available to allusers. ISEKI aims toincrease the number of users.
✓ISEKI is working to improve
content such as video
demonstrations and is
promoting mainly large
agricultural machinery evenamid the COVID-19
pandemic・Data obtained by using electronic reference points andsatellite positioning data from docomo reference stations
owned by NTT DOCOMO, INC.
<Outline of the service>

DOCOMO’s
fixed stations

Observation and location information acquisition,correction information distribution

Agricultural
machinery

For promotion of the spread ofrobot tractors and high-precision
automatic steering systems✓No upfront investment required✓¥3,300 per monthhttps://amoni.iseki.co.jp/(Users can sign a contract only for a month when theyuse it.)

ISEKI’s robot tractor and robot ricetransplanter22

Cooperation with Communities and Other Companies■ Promote smart agriculture and environment-friendly agriculture throughcollaboration with local governments and private companies✓Niigata City (Niigata Pref.) from Jan. 2022

✓Yamagata Design Co. Ltd.
(Yamagata Pref.) from Feb. 2022

Promotion of sustainable agriculture utilizing
advanced technology✓ Three-way collaboration with
Shimane Pref. and Hamada City
from Feb. 2022

Creating organic rice production areas forsustainable development

Urban development through establishment ofan environment-friendly agriculture model✓Tsukubamirai City (Ibaraki Pref.)from Mar. 2020

Promotion of agriculture utilizing advanced
technology✓Yukimai Design Co. Ltd. (Tokyo Pref.) from Jun.
2021

Concluded a business alliance with the aim of
popularization and development of organic agriculture
by utilizing automatic weed suppression robots✓ Kisarazu City (Chiba Pref.) from Mar. 2021
Promotion of agriculture utilizing advanced technology and organic
farming23

Market Trends (North America, Europe)
North America
1. Market Trends
Category (PTO HP)

Europe(1000 units, %)Jan. to Dec. cumulative
2019

2020

2021

YoY

40HP and lower(Compact tractors)

179

216

237

110%

40HP - 100HP(Utility tractors)

66

75

83

111%

100HP and above

22

22

28

125%

(Source: statistics provided by AEM)

2. Situation of AGCO (OEM partner)
Unit sales (Jan.-Dec. 2021)
 Compact tractors: YoY 109%

3. Shipments and Orders at ISEKI
Shipments and Orders(Jan.-Mar. 2022): Significant YoY increase(including order backlog from previous fiscal year)
・A shortage of containers for marine transportation led to unfulfilled shipments, etc.

1. Market Trends Robust demand for consumer goods continues owing tolifestyle changes
 As government restrictions to stem the transmission of
COVID-19 were eased in various countries, demand for
pro goods has recovered to the pre-pandemic level

2. Local Sales
Unit sales (Jan.-Dec. 2021)
 Local distributors: YoY 116%

3. Shipments and Orders at ISEKI
Shipments and Orders(Jan.-Mar. 2022): Significant YoY increase(including order backlog from previous fiscal year)
・A shortage of containers for marine transportation led to unfulfilled shipments, etc.

24Market Trends (Asia)
ThailandIndonesia, Myanmar

1. Market Trends

1. Market Trends

The market is firm due to government measures tostimulate demand and provide subsidies.

<Indonesia> Government tenders for tractors in 2021 remain
almost unchanged from2020<Myanmar> Sales activities of sales outlets were affected bya chaotic domestic situation due to the coupd'état2. Situation of Local Distributor, IST Farm Machinery
Number of Units Sold (Jan.-Dec. 2021)
 ASEAN Strategy Tractor: YoY 107%
3. Shipments and Orders at ISEKI
Shipments and Orders(Jan.-Mar. 2022):
Significant YoY increase

2. Orders at ISEKI (Jan.- Mar. 2022)<Indonesia> Orders in the first half are expected to remain
almost unchanged YoY<Myanmar> Sales activities stagnated as the chaos due tothe coup d'état became prolonged

3. PT. ISEKI Indonesia (Manufacturing Subsidiary)(Units, JPY bn)

2020 Actual

2021 Actual2022 Plan

Production volume

10,76015,68017,170Operating income

0.3

0.3

0.3
25

Market Trends (Asia)
South Korea, Taiwan

China
1. Market Trends

1. Market Trends

Trends in the Chinese Agricultural Machinery Market by Product Type(YoY Change in Units, %)Jan.-Dec. 2019

Jan.-Dec.
2020

Jan.-Dec.
2021

Rice transplanters (riding)

109%

128%

126%

Combine harvesters (allpurpose, auto-threshing)

83%

110%

118%

Tractors (medium- to largesized)

125%

136%

105%

Source: China Association of Agricultural Machinery Manufacturers

2. National Government Subsidy
2016

23.7

2017

18.6

2018

18.6

2019

18.0

2020

17.0

(RMB bn)
2021

2022

19.0

Not
announced

3. Dongfeng Iseki (Unit Sales, Jan.-Dec. 2021)
 Rice transplanters (riding): YoY 92%
 Tractors, combine harvesters: YoY 128%

<South Korea> In line with moves toward large-scale
farming, demand for large-sized, highperformance agricultural machineryheightened amidst a declining and aging
farming population<Taiwan>Demand for tractors and combine
harvesters significantly decreased due toa pullback effect with the withdrawal ofsubsidies

2. Shipments and Orders at ISEKI (Jan.-Mar. 2022)<South Korea> Same level YoY mainly due to new largesized and highly efficient rice transplanters<Taiwan>

Shipments decreased YoY. Expectations
for rice transplanters and vegetabletransplanters26

3. Performance Forecast for the Fiscal YearEnding December 31, 2022

27

Assumptions for Consolidated Performance Forecast<Predictions on the business environment>
 Although the impact of COVID-19 remains both in Japan andoverseas, we assume that the the Omicron variant will be undercontrol by the end of the first half of the year, and that social andeconomic activities will gradually recover.
 Despite the impact on the sales of ISEKI Groups will be limited,
the risks of supply chain disruptions and delay in production willcontinue.
28

Forecast of Consolidated Financial Results for the Fiscal Year Ending
December 31, 2022
Consolidated
Financial Results
Forecasts

Increase both in net sales & operating income
Year-end Divided: 30 yen per share
FY2018/12

FY2019/12

ActualActualActual%Actual%Forecast

%

155.9

149.8

149.3

100.0

158.1

100.0

166.5

100.0

8.3

(Domestic)

122.8

117.7

115.9

77.6

117.3

74.2

119.0

71.5

1.6

(Overseas)

33.1

32.1

33.3

22.4

40.7

25.8

47.5

28.5

6.7

Operating Income

3.1

2.7

2.0

1.4

4.1

2.6

4.7

2.8

0.5

Ordinary Income

2.6

1.1

1.7

1.1

4.6

3.0

4.6

2.8

（0.0）

Profit Attributable to
Owners of Parent

1.0

0.7

（5.6）

－

3.1

2.0

3.1

1.9

（0.0）

(単位：億円)(JPY
bn)

Net Sales

Average
Exchange Rate(JPY)

FY2020/12

FY2021/12

FY2022/12

YoY
Change

US$

110.2

109.3

107.0

109.0

110.0

1.0

Euro

130.9

121.6

121.5

129.8

130.0

0.2

30

30

0

30

30

0

Year-end Dividend (JPY)29

Domestic Sales Forecast
In addition to stable revenue from spare parts & repair fees, sales are expected to increase due to our strengthened sales
promotion of large-sized machinery & smart farming machinery that respond to the structural changes in agriculture aswell as after-sales services & support

Domestic
Sales

FY2018/12 FY2019/12 FY2020/12 FY2021/12 FY2022/12
ActualActualActualActualForecast

YoY
ChangeAgricultural Machinery

56.5

53.0

48.6

49.6

51.6

1.9

Faming Implements

20.2

20.0

20.4

22.0

21.4

（0.6）

Spare Parts

14.8

15.0

15.6

15.3

15.7

0.3

Repair Fees

5.5

5.7

5.8

5.9

6.2

0.2

40.6

40.8

42.0

43.3

43.3

（0.0）

97.1

93.8

90.6

93.0

94.9

1.8

Construction of Facilities

5.6

4.5

6.1

4.2

4.4

0.1

Others

19.9

19.3

19.1

20.1

19.7

（0.4）

122.8

117.7

115.9

117.3

119.0

1.6

Agricultural Machinery Related(JPY bn)

Subtotal
Total

Total

30

Overseas Sales Forecast
Overseas
Sales

Sales increased owing to a growing market demand driven by lifestyle changes inNorth America & Europe
FY2018/12

FY2019/12

FY2020/12

FY2021/12

FY2022/12

ActualActualActualActualForecast(JPY bn)

YoY
ChangeNorth America

11.5

13.2

12.8

15.1

18.8

3.6

Europe

13.8

12.8

13.9

15.9

17.4

1.4

Asia

7.3

5.5

6.2

9.1

10.8

1.6

Others

0.4

0.5

0.3

0.5

0.5

0.0

Total Sales

33.1

32.1

33.3

40.7

47.5

6.7

31

Main Factors for Changes in Operating Profit Forecast
YoY
JPY 5.0billion

Increase in gross profit due to higher sales due to our structural reforms and efforts to improve
management efficiency, in spite of pressure on earnings due to the sharp rise in raw material prices
FY2020/ 12(JPY bn, %)Operating
IncomeActual2.0

FY2021/ 12
％

1.4

1.4

4.1

Actual4.1(2.0)

FY2022/ 12
Forecast

％

2.6

1.4

4.7

YoY Change
％

2.8

Diff.

％

0.5

0.2

(0.3)

 Net Sales(YoY change)

4.7• Domestic ： 1.6• Overseas ： 6.7

FY2021
ActualExchange
Rate
(JPY)

US＄ ：109.0
Euro ：129.8

Increased grossprofit due tohigher revenue

Impact fromsoaring raw
materials prices

Measures forthe soaring raw
materials prices
etcOperating Income 0.5

Others(Increased
SG&A, etc.)

FY2022
Forecast
US＄ ：110.0
Euro ：130.0

32

4. Progress of Mid-term Management Plan

33

Corporate Philosophy(Corporate Philosophy)
We strive to contribute to the creation the prosperous andsustainable society through "providing innovative products
and higher quality of services to the customers"(Long-Term Vision)

To be solution provider for"Agriculture and landscape”~Founding Philosophy~
To free farmers from exhausting labor34

Long-Term Vision(Long-term Vision)
To be solution provider for "Agriculture and landscape”

Supporting “the farming full of dreams” and “beautiful landscapes, Creating the sustainable
future of “Agriculture and Landscape”
FarmingFood
production

Agricultural
machinery

Environmental
preservation

Landscapes

Food

Survival

Farmers

SDGs to be realized by the ISEKI Groupthrough its businessToward realization of a sustainable society✔ Supporting resilient agriculture✔ Landscaping for livable villages and towns✔ Environmental conservation for arecycling-oriented society

Foundation
for living

People & Society
35Basic Strategies(Positioning of the plan)
ISEKI’s 100th anniversary in 2025―laying the foundations for the next 100 years(Basic strategies)

1

2

Providing the best solutions
・We will focus on providing not only products but also services fromtangible to intangible.

Increasing corporate value by strengthening
profitability and governance・We will make profitable corporate structure that can surely raise profits
beyond sales ups and downs(Targets)
Customers

Employees,
shareholders,
suppliers

36

Points of the Basic Strategies■Direction of the basic strategies and initiatives
Providing the best solutions

Increase corporate value by strengthening
earnings and governance

Focus on providing services in addition to
products in a transition from products to services.

Transformation to a muscular structurethat can reliably generate earnings
without being affected by sales

Selection &concentration

Business modeltransformation

Improvingprofitability

ESG

Resource
concentration

Focus on service
provision

Toward an operating
margin of 5%

Meaning of our existence
Pursuit of sustainability• Product development andsales strategy integrating
domestic, overseas, anddevelopment & production• Promotion based on
information (digitaltransformation)• Adapt to the new normal• Structural reform through theestablishment of an optimal
production system• Improve management
efficiency from the perspectiveof group-wide optimization• Strengthen initiatives byreviewing ESG materiality
and contribute to the
SDGs• Further increase revenue
from maintenance• Perspective according to business• Introduction of an in-housecompany system

Visualization of
unprofitable businesses• Financial and capital strategies• Full utilization of personnel throughout the group⇒ Optimal allocation of personnel

37

Progress of Mid-Term Management Plan (Summary)Operating Income Margin
5.0%

5%

Improvementof gross
profit margin
Reductionof fixed
costs

1.6%

2.5%

2.0%

1.8%

5.0%

Improvementof management
efficiency

Structuralreform
1.4%

2.6％

2.8％

0.0%
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

(Forecast)

Providing the best solutions

Domestic: Despite the impact of demand fluctuations, measures were implemented almost as planned.
Overseas: Demand increased significantly and exceeded the plan.

Strengthening profitability andgovernanceImproved profitability: Occurrence of issues and risks that were not initially anticipated.
Production impacted by supply chain disruptions, soaring raw material prices, etc.
⇒ Effects of the measures for soaring raw material prices are expected to be visible from the second half of
2022

38

Progress of Mid-Term Management Plan
1. Providing the Best Solutions <<Selection & Concentration / Domestic>>
Important measures

Progress✓Expand large-scale customers
・Increase sales of the All Japan series

・2021 results (units sold basis): 112% YoY
Growth mainly of rice transplanters, but also in tractors and combine
harvesters✓Smart strategy

・Expanded the lineup of smart agricultural machinery

・Increase sales of smart agricultural
machinery

2021: Rice transplanters with straight-travel and turning assistance began
operation for commercial use.
Ratio of such products among 8-row class products sold rose to 60%
2022: Launched 36, 50, and 60 hp tractors with straight-line travel assistance,
following small-sized models (Mar.)
Began selling robot rice transplanters (Feb.)✓Reform of revenue & cost structure
・Increase operating income margin of sales
companies

・Revenue from work equipment, spare parts, andrepairs remained steady.

・Promote the development of large-scale
bases

Large, 1,360 m2 maintenance plant for・Established "ISEKI Hokkaido Sorachi Chuo Sales
large-sized agricultural machinery
Office,” one of the Group’s largest maintenance factories

39

Progress of Mid-Term Management Plan
1. Providing the Best Solutions <<Selection & Concentration / Overseas>>
Important measures✓North America
・Support development of AGCO’s
brand strategy

Progress
Improved environmental
performance byinstalling ISEKI’s
in-house engines

・Strong sales of models equipped with ISEKI’s engines✓Europe・Enhance products throughelectrification

・2022: Limited sales of small-sized electric tractors (mowers)(mass production is scheduled to start by 2024)✓Asia
・Build a foundation with IST as thestarting point

・The plan was not achieved in the first year of consolidation. The
foundation will be further strengthened.

・Launch large-sized, high-performance ・In South Korea, sales of large combine harvesters are robust. Salesof tractors and rice transplanters are also provided.
agricultural machinery40

Progress of Mid-Term Management Plan
1. Providing the Best Solutions <<Business Model Transformation>>
Important measures

Progress✓Digital transformation,
responding to the new normal
・Improve service capability

・Opened Agricultural Business Solutions Portal Site “Amoni”
・Virtual demonstrations
・Introduced “i-Magazine,” a support tool for centralized service
information management✓Ancillary services
・Domestic: Expand parts, repair fees,
and farming implements

・Steady growth(¥43.3 billion: 109% comparedwith 2017）

・Overseas: Establish parts and service
business・Thailand: Strengthened dealer sales and service support through IST⇒Parts sales increased 107% YoY
41

Progress of Mid-Term Management Plan
2. Strengthen profitability and governance to increase corporate value <<Improve profitability>>
Important measures

Progress✓Structural reforms & improvement ofmanagement efficiency
・Create the optimal production system

・Consolidated production engineering departments and subcontracting management
operations of manufacturing plants at headquarters
・Reviewed domestic/external production classification (from 2022) / plan to reorganize
production classification (from 2023)
・Expanded overseas production bases (started expanding the Indonesia plant in 2022) ⇒Expanded production capacity

・Improve business and management efficiency

・Implemented shared services and centralized management of suppliers (centralizedpurchasing), reduced fixed costs✓Financial & capital strategy
・Generate cash flows

・Operating CF of ¥14.2 billion / 5-year cumulative target of ¥60.0 billion through increased
revenue and inventory reduction

・Capital investment (within the scope of
depreciation)

・Capital investment (acquisition of fixed assets): ¥5.5 billion, depreciation: ¥6.5 billion

・Reduce interest-bearing liabilities

・Interest-bearing liabilities decreased ¥7.1 billion due to favorable FCF, etc. D/E ratio of 0.9
times

・Shareholder returns

・Plan to resume dividend payment (¥30 per share)42

Progress of Mid-Term Management Plan
2. Strengthen profitability and governance to increase corporate value <<ESG>>
Important measures

Progress✓Environment (E): Conservation

・Reviewing the medium- to long-term environmental targets; new target are to beannounced in 2022

・Increase sales of environment-friendly designs(eco products)

・Ratio of eco-products in domestic sales: 39.8% (2021: units sold basis)

・Promote environmental management (reduce
environmental impact)・Reduced CO₂ emissions in production activities by 18.7% (compared to 2013)✓Society (S): Improve brand value・Supply chain management

・Revised the CSR procurement guidelines, conducted a CSR procurement survey✓Society (S): Enhance engagement
・Enhance employee engagement

・Introduced a telecommuting system and regional limited employee system
・Enhanced engagement by promoting health management✓Corporate governance (G)：Increase corporate value
・Strengthen ESG framework

・Increased the ratio of Outside Directors (aiming for 1/3)
*Subject to approval at the Ordinary General Meeting of Shareholders scheduled for March 2022

・Introduced a performance-linked stock compensation plan・Established the Sustainability Committee and the Green Innovation Promotion Section

43

Progress of Mid-Term Management Plan<<Ratio of Outside Directors in the New Board of Directors>><<New Representative Director>>

Hajime Odagiri
3 Outside Directors

6 Inside Directors
Ratio of Outside
Directors

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

1/3<<Introduced a performance-linked stock compensation plan>>⇒Rejuvenate the Company
through a generationalchange and strengthen the
management structure✓Composed of basic remuneration, performance-linked andevaluation remuneration, and performance-linked stock-based
remuneration⇒Clarify the link between the remuneration of management and businessperformance, including over the medium and long term, andshareholder value, and make the remuneration system function as asound incentive.
Subject to approval at the Ordinary General Meeting of Shareholders scheduled for March 30, 2022

44

Notes on the Future Forecast• The objective of this presentation document is to provide information and never intends to induce any action.
• The document was created by ISEKI with currently available information and it involves potential risks anduncertainties. The forecast may not be consistent with actual results depending on fluctuation of the economic
situation and market trends.
• In using this information, investors are expected to depend on their own judgment. ISEKI is not liable for any
losses incurred by investment decision made utilizing the business forecast or targets given in this document.

ISEKI Group joins the nationwide action called “COOL CHOICE”
run by the Ministry of the Environment Government of Japan,
which promotes to make ”smart choices” for the global warming.
As a proposal of “smart choices”, we develop and deliverenvironmental-friendly products like “eco products”.

45