Financial Results Briefing
for the Third Quarter
Fiscal Year Ending December 2017

ISEKI & CO., LTD.
Shirou Tomiyasu,
Director & Executive Vice President
November 15, 2017

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

Index
1.Overview of Financial Results for the Third Quarter
Fiscal Year Ending December, 2017
2.Recent Development in Domestic and Overseas
Markets
3.Performance Forecast for the Fiscal YearEnding December, 2017
4.Topix

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

2

1.Overview of Financial Results of the Third Quarter
Fiscal Year Ending December, 2017

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

Financial results Highlights
Situation of Jan.- Sep. (Y o Y change)

Sales subsidiaries
in Japan
Manufacturingsubsidiary
in Indonesia(PT ISEKI INDONESIA)

Equity method
affiliatein China

Net sales of agricultural machinery are on therecovery trend. Improvements in revenue-expenditure
structure have been continued.
 Net sales 102%, Contract basis 104%
 The effect of improvements in the revenue-expenditure structure in
direct dealers: Operating income + 1.0 billion yen

The company produced profitability. Its business
improved substantially.
 Improved profitability in Indonesian business : Operating income +0.8
billion yen(Consolidated basis including Indonesia business of the parent and plants in Japan)

The company returned to profitability. Profit or loss ofentities using equity method improved.
 Improvement in the share of profit or loss of entities using equity
method: Ordinary income + 1.0 billion yen(Dongfeng Iseki)
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20174

Overview of Consolidated Financial Results(JPY bn,%)

3Q of FY ended
Dec.16

3Q of FY ending
Dec.17yoy
ChangeActual％Actual％Net Sales

118.4

100.0

120.5

100.0

2.1

(Domestic)

91.9

77.6

94.3

78.3

2.4

(Overseas)

26.5

22.4

26.2

21.7

(0.3)

Operating Income

2.8

2.3

4.6

3.8

1.8

Ordinary Income

1.6

1.4

5.4

4.5

3.8

Profit attributable toowners of parent

0.7

0.6

3.3

2.8

2.6

Exchange

US$

109.6

112.0

2.4

rate

Euro

122.9

123.7

0.8

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20175

Breakdown of Domestic Sales(JPY bn,)

ActualActualCultivating &Mowing Machinery

21.3

22.5

1.2

Tractors

Planting Machinery

7.4

6.6

(0.8)

Rice trans planters ：(0.6)

Harvesting &Processing Machinery

14.3

13.9

(0.4)

Rice husker

Total

43.0

43.0

-

Farming Implements

14.9

15.5

0.6

Spare parts

10.9

11.2

0.3

Repair fees

3.9

4.1

0.2

29.7

30.8

1.1

Total

72.7

73.8

1.1

Construction of Facilities

4.3

5.6

1.3

Others

14.9

14.9

-

Total

91.9

94.3

2.4

Agricultural Machinery

3Q of FY ending
Dec.17

Agricultural Machinery Related

3Q of FY ended
Dec.16

Total

yoy
ChangeNote：1.1：(0.3)

Revenue of agricultural machinery are in line with the previous year.
Revenue of Farming implements, spare parts and repair fees keeps high level.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20176

Breakdown of Overseas Sales(JPY bn,)
3Q of FY ended
Dec.16

3Q of FY ending
Dec.17

ActualActualNorth America

9.4

6.0

(3.4)

Tractors ：(3.3)

Europe

7.5

8.5

1.0

Tractors ：0.5
Lawn mowers ：0.5

China

2.4

3.0

0.6

Rice trans planters ：0.9

ASEAN

2.5

3.3

0.8

Combine harvesters：1.1

Others

1.6

2.1

0.5

Tractors ：0.5

Product Sales Total

23.4

22.9

(0.5)

Parts & Others

3.1

3.3

0.2

Total

26.5

26.2

(0.3)

Overseas Sales incl.
Chinese Businesses

30.9

29.3

Ratio of overseas net sales

25.2%

23.7%

yoy
ChangeNote(1.6)※The subsidiary in France only
adopts the end of September as its
fiscal year end. (The results from
Oct. to Jun. are posted for the 3rdquarter.)

While revenue in other regions increased,
revenue in North America decreased due to partial changes to the business terms.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20177

Operating Income(JPY bn,%)
3Q of FY ended
Dec.16

3Q of FY ending
Dec.17

ActualActualNet Sales

118.4

120.5

2.1

Gross Profit

34.6

36.0

1.4

Gross Profit
Margin

29.2%

29.9%

0.7%

S.G&A.
Expenses

31.8

Personnel
expenses

18.6

Other
expenses

13.2

Operating
Income

31.4
18.4

0.8

yoy
Change

1.0

2.8

4.6

Operating
Income 1.8

3Q of FY
endingDec.17(0.4)

3Q of FY
ended
Dec.16(0.2)※① Improvements in the revenue-expenditure structure
in domestic direct dealers※①※②※② Improved revenue in the Indonesian business

2.8

13.0

4.6

(0.2)

1.8

【Effects of forex move(JPYbn,)】
Net sales

Cost of sales

S.G&A.
Expenses

Operating
Income

0.9

(0.5)

(0.2)

0.2

Improvements in revenue-expenditure structure in Japanand improvements in performance of Indonesian business contributed
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20178

Effect of improvement in revenue-expenditure
structure of domestic direct dealers[Trend of sales of farming implements/ spare parts/
repair fees] (3Q cumulative)(JPY bn)

3Q of FY
ended
Sep.15

2Q of FY
ended
Sep.16

3Q of FY
ended
Sep. 17YoY
FY ended
Sep. 16

Changefrom

Farming
implements

13.8

14.9

15.5

0.6

1.7

Spare parts

10.5

10.9

11.2

0.3

0.7

Repair fees

3.6

3.9

4.1

0.2

0.5

Total

27.9

29.7

30.8

1.1

2.9

Changes in agricultural
structure Large-scale farming Crop conversion

 Increased revenue from farming implements, spare partsand repair fees Development of sales bases mainly by major
maintenance facilities, efficient personnel reallocation

Building up revenue-expenditure structure that is less affected bymarket trend
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 20179

Ordinary Income and Net Income(JPY bn,)
3Q of FY ended
Dec.16

3Q of FY ending
Dec.17

ActualActualOperating Income

2.8

4.6

1.8

Balance of Financial Income

(0.5)

(0.5)

-

Other Non-operating Income

(0.7)

1.3

2.0

Ordinary Income

1.6

5.4

3.8

Extraordinary Income

1.2

0.1

(1.1)

Extraordinary Income

Extraordinary Losses

(1.3)

(0.6)

0.7

Decrease in gain on sales ofinvestment securities(1.1)

Income before
Income Taxes

1.5

4.9

3.4

Decrease in loss on disaster

1.1

Taxes, Deferred Taxes

(0.8)

(1.6)

(0.8)

Penalty(0.4)

Profit attributable toowners of parent

0.7

3.3

2.6

yoy
ChangeNon-operating Income
Favorable turn in foreignexchange gains / losses

0.7

Upturn in the share of profit orloss of entities using equity
method1.0

Improvement in the share of profit or loss of entities using equity method(Dongfeng ISEKI)
and favorable turn in foreign exchange gains/losses
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201710

Balance Sheet(JPY bn,)

As of
Sep.16

As of
Sep.17

yoy
chang
e

As of
Sep.16

As of
Sep.17

yoy
chang
e

Cash & Deposits

14.5

8.5

(6.0)

Accounts Payables

40.2

46.4

6.2

Accounts
Receivables

33.6

36.8

3.2

Interest Bearing
Liabilities

78.2

74.2

(4.0)

Inventories

47.2

55.3

8.1

（loans payable）

69.7

67.1

(2.6)

（Merchandise and finishedgoods）

40.0

47.6

7.6

Other Liabilities

24.1

23.8

(0.3)

Other Current Assets

3.8

4.8

1.0

142.5

144.4

1.9

Total Current Assets

99.1

105.4

6.3

Net Assets

Non-current Assets

97.8

96.2

(1.6)

65.8

70.5

4.7

Investments and otherassets

11.4

13.3

1.9

(Retained earnings)

13.9

17.0

3.1

(Investment securities)

5.2

6.6

1.4

(Valuation difference on
available-for-sale securities)

0.5

1.5

1.0

Total Non-current
Assets

109.2

109.5

0.3

(Foreign currencytranslation adjustment)

0.3

1.0

0.7

Total Assets

208.3

214.9

6.6

Total Liabilities and Net
Assets

208.3

214.9

6.6

Total Liabilities

Inventories increased due to pre-production before the introduction of new emission
regulation in Japan and due to rise in inventories in North America
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201711

Interest Bearing Liabilities & Equity Ratio
Equity Ratio (%)

Balance of Interest Bearing Liabilities (JPY bn)

Sep.2013

Sep.2014

Sep.2015

Sep.2016

Dec.2016

Sep.2017

loan payable, corporate bond

46.9

46.2

63.1

69.7

61.4

67.1

Lease obligations

6.7

8.0

9.2

8.5

8.1

7.1

Total

53.6

54.2

72.3

78.2

69.5

74.2

D/E Ratio

0.81

0.79

1.05

1.19

1.04

1.05

Although our investment in growth will be continued,
D/E ratio will be below 1.0 at the end of the fiscal year
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201712

2.Recent Development in Domestic
and Overseas Markets

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

Trend of Domestic Market
Agricultural machinery demand [Industry shipment](9 principal machinery, moving annual total)

4th emission gas regulation

3rd emission gas regulation
400▼102-177PS ▼76-102PS ▼50-76PS(13/Nov.)(14/Apr.)(14/Nov.)▼26-50PS(15/Sep.)

76-177PS ▼(17/Sep.)

350

300

◆Last-minute demand-Emission gas
regulation-Consumption tax hike

250

200

◆Reactionary decline fromlast-minute demand

Mar.

Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep.
2013
2014
2015
2016
2017
動年計290 72300 28320 53339 72 368 6 352 26319 41293 12248 68247 06 242 7 245 18243 81243 63242 64251 47246 95253 23251 11

Shipment slightly increased due to emission regulation
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201714

Industry Shipments and Sales Result
Growth rate of 9 principal products(year-on year) our estimate(%)

Sep.14

Sep.15

Sep.16

Sep.17

Industry

Shipment value

100

76

100

104

ISEKI

Sales Value

97

89

98

96

Shipment rose due to the emission regulation.
Our sales shows gradual decline.

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201715

Domestic

Changes in agricultural structure
and our initiatives

Changes in agricultural structure
Aging and reduced agricultural
population

Large scale farming

Crop conversion of staple food rice

Increased demand forvegetables/dry field
farming

Our initiatives

 Strengthening product appeal‣ Low priced simple machinery‣ Advanced technologies (Robots) Strengthening unique proposals‣ Dream Agricultural ResearchInstitute, etc.

Strengthen our initiatives for principal farmers
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201716

Low price/Simple model
Large tractor TJX series‣ Price reduction by 20%‣ Adopted by JA Group as a low
price model<Growth rate of effective unit sales of TJX series (Jan.-Sep.)>

250%

2016

2017

Reduced material cost Further increase in needs for low price machinery
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201717

Application of advanced technologies
Autonomous tractor‣ Shortage in labor‣ Shortfall of skilled operators
Robotization

Labor saving/
Improved efficiency

Manned monitored type to be commercialized and launched in 2018

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201718

Recent Market Trend in Overseas
（億円）

35

FY Dec.17 Forecast(Announced on Aug. 10)30

JPY 31.4 billion

25
20

FY Dec./16 Actual

JPY 28.2 billion
Sales(Forecast)
JPY 30.6 billion

15
10
5
0
Jan. Feb. Mar. Apr. May. Jun.

Jul.

Aug. Sep. Oct. Nov. Dec.

※The results of “Parts & Others” are not included.

Year-on-year sales exceeded the previous year
In spite of a slight shortfall of the forecast.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201719

Market Trend (North America)
1. Trend in the market
Category (PTO HP)(Unit: 1000, %)Utility tractors(40-100HP)
USA

CanadaJan-Sep, 2016

42.7

3.5

Jan-Sep, 201742.2

Difference (%)

99%

Compact tractors(40HP and lower)

Large class tractors(100PS and above)
USA

Canada

113.4

14.0

2.5

16.5

10.3

123.5

11.7

2.5

14.2

123%

109%

84%

101%

86%

USA

USA

46.2

105.1

8.4

3.9

46.2

113.2

111%

100%

108%

(Source: AEM statistics)

2. Situation of AGCO (OEM partner)
Unit sales (17/Jan.-Sep.)
Utility tractors: higher than last yearCompact tractors : higher than last year

Consolidated net sales (ISEKI to AGCO)(Actual: 10.7)(Forecast: 9.4)
Change in businessterms with AGCO

3. Our situation of sales/orders received
Order & Shipment: lower than last year

While the sales of AGCO remains robust, we expect our sales to be slightly lower than lastyear due to change in business terms and decline in shipment of utility tractors.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201720

Market Trend (Europe)
1. Trend in European Market
Landscaping market: Poor lawn growth due to dry weather.
Sluggish demand for lawn mowers.
2. Situation of distributors
 Unit sales

Consolidated net sales• Distributors (Jan.-Sep.): higher than last year

• ISEKI France S.A.S.
(Consolidated subsidiary): higher than last year

(Actual: 9.3)

(Forecast: 10.5)

3. Our situation of sales/orders received
Order & Shipment (Jan.-Dec.) : lower than last year

Shipment will increase in the second half due to completion of
inventory control in France & Germany.
ISEKI France will remain robust and its sales is expected to exceed the previous year.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201721

Market Trend (ASEAN: Thailand)
1. Trend in the market
In spite of effects from floods in various regions and self-restraint by the state funeral,
future increase in rice price is expected due to increasing amount of rice export.
2. Situation of ISEKI (Sales) Thailand(Mitsubishi Corporation 80%, ISEKI 20% investment)

Tractors strategically marketed in ASEAN• Unit sales (17/Jan.-Sep.) : higher than last year

□ Start of sales of tractors by newly
acquired dealers□ Local sales remains robust. We expect
orders to be increased.

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201722

Market Trend (ASEAN: Others)Indonesia
Market trend: Support for adoption of agricultural machinery through ongoing governmental mechanization drive since 2015
Our situation: Orders of all-purpose combine harvesters remain favorable.
Sales other than tender business have increased as well.

■Others (Myanmar, etc.)
Market trend: Demand expected to rise by progressing mechanization.
Our situation: Orders for tractors & all-purpose combine harvesters increased. We aim at further business expansion.

Trend of our sales (ASEAN)

 Increase in demand from progress inmechanization
 Substantial increase in sales centering on
Thailand(Actual: 3.0)

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

(Forecast: 4.5)

23

Improved profitability of business in Indonesia
Production volume forecast in PT. ISEKI INDONESIA

Production
VolumeProduction
model

North
America
EuropeASEAN

2014
Actual2015
Actual2016
Actual

2017
Plan

1,100

3,900

7,300

8,300

(Units)2017
Jan.Sep.Actual

Annualforecast

6,150

8,500

Economy tractor (small) Economy tractor (large)
Economy tractor
 Strategically marketed tractor in ASEAN<PT. ISEKI INDONESIA moves towards increased production>
Current production capacity: 10,000 units /year

15,000 units/year in 2019
20,000 units/year in 2021

Construction of plant extension(Approx. 8,200m2) started in
October to reach 15,000units/year
production in 2019.

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201724

Improved revenue in the Indonesian businessInitiatives in PT. ISEKI INDONESIA and current earnings(Million dollars)

2014
Actual2015
Actual2016
Actual

2017
Plan

2019
Jan.-Sep.

Net sales

12

37

68

88

61

Operatingincome

(3)

(3)

(2)

4

2

Focus on manufacturing

Strengthen
procurement

Local procurement
Logistic cost reduction

Initiatives
Promotion of
local
procurement

Strengthen production control

Productivity improvement

We will strive to enhance productivity such as optimal procurement of materials
and strengthen production control system.
We plan to ensure a single year profit in FY2017.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201725

Market Trend (China)
1. Trend in Chinese market
Overall demand in agricultural machinery market remained sluggish due to decreased
government subsidy and dropped crop price.
Government subsidy(Yuan bn)

2012

2013

2014

2015

2016

2017

21.5

21.75

23.8

23.8

23.7

18.6
Net sales of Dongfeng Iseki(local currency base)

2. Situation of Dongfeng Iseki(Yuan million)

Unit sales of Dongfeng Iseki (Jan.-Sep.)
Rice transplanters (ride-on) : lower than last yearCombine harvesters : higher than last year

400
350

315

300
250
200

192

153

150

128

103

100

180

51

50

Returned to profitability

0
1Q

2Q
3Q
FY Dec. 16

4Q

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

1Q

2Q
3Q
FY Dec. 17

26

3.Performance Forecast For the Fiscal
Year Ending December, 2017

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

Performance Forecast for FY ending Dec.17(JPY bn)
FY ended Dec.16

FY endingDec.17(Reference)yoy
ChangePrevious
forecast

Diff.(previous /latest forecast)

7.4

160.5

-

125.5

4.5

124.3

1.2

32.1

35.0

2.9

36.2

(1.2)

Operating Income

2.5

4.0

1.5

4.0

-

Ordinary Income

1.6

4.1

2.5

4.1

-

Profit attributableto owners of parent

0.9

2.9

2.0

2.9

-

1.5

30

-

30

-

US$

15

13

(2)

13

-

Euro

17

18

1

18

-

ActualLatest forecast

Net Sales

153.1

160.5

(Domestic)

121.0(Overseas)※Year-end Dividend(yen)Foreign exchangesensitivity(JPY million
Operating Income)※The Company has consolidated shares of its common stock(one-for-ten share consolidation), effective July 1, 2017.

・Previous forecast：Announced on Aug 10
・The assumed exchange rates for the fourth quarter are ¥112 per U.S.dollar and ¥128 per euro

No revision to the performance forecast and year-end dividend
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201728

(Reference) Quarter of the year another change(JPY bn)

FY ended Dec.15
Restated
1Q

2Q

3Q

FY ended Dec.16
Actual

4Q

1Q

2Q

3Q

FY ended Dec.17
Forecast

4Q

1Q

2Q

3Q

4Q

Net Sales

35.6 40.7 41.4 39.1 37.7 43.3 37.4 34.7 36.7 43.5 40.3 40.0

(Domestic)

26.9

33.2

32.9

32.4

28.2

33.1

30.6

29.1

28.5

34.3

31.5

31.2

(Overseas)

8.7

7.5

8.5

6.7

9.5

10.2

6.8

5.6

8.2

9.2

8.8

8.8

Operating
Income

(2.0)

2.6

0.5

(0.9) (0.4)

2.1

1.1

(0.3) (0.3)

3.1

1.8

(0.6)

4th quarter is subject to seasonal decline in demand and apt to fall into the red

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201729

4.Topix

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 2017

Active female participation in the farming industry
Population of agricultural productionMale
farmers53%(1.02 million
persons)

Femalefarmers47%(0.90 million
persons)

Female farmers constitute 47%
Indispensable in agriculture
and local activities*MAFF “Statistics on agricultural workforce”

MAFF’s “Nougyou-Jyoshi(Female farmers) Project” started in 2013
The number of female farmers participated: 37 persons  612 persons in 2017

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201731

Support for female farmers
Nougyou-Jyoshi(Female farmers) project (Sponsored by MAFF)• Product development reflecting
opinions from female farmers• Training for female farmers
Hosting continually in various
locations• Exhibition

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201732

Our latest approach

農業女子耕うん機「ちょこプチ」
2016年発売□Had a booth at Marunouchi Farm (Sponsored by MAFF)
from November 4th to 5th
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201733

Support for active female participation by
agricultural machinery industry

Participants to the 1st workshop□Japan Agricultural Machinery Manufacturing Association Workshop for
active female participation network
We are going to hold an event in Tsukuba-Mirai Office on 5th December.
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201734

Support for active female participation within
our Group
Tsukuba-Mirai OfficeDream Agricultural
Research Institute

IGTC

Training scene

Have trainings within group
Enrich training facility, etc. forwomen
Accommodation facility for women
Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201735

Notes on the Future Forecast

・The objective of this presentation document is to provide information and not intended to induce
any action.
・This document is prepared by ISEKI based on currently available information. It involves potential
risks and uncertainties, and may differ from actual results due to changes in the economic situationand market trends.
・When using this information, investors are requested to make their decisions based on their own
judgment. ISEKI will not be liable for any losses or damages incurred by investment decision madeusing the financial results forecast or targets provided in this document.

ISEKI group is a promotional partner of FOOD ACTION NIPPON.

ISEKI Group joins the nationwide action called “COOL CHOICE”
run by the Ministry of the Environment, the Government of Japan.
The action promotes “smart choice” for the global warming, andas a proposal, we develop and deliver environmental-friendly
products including “Eco Products.”

Financial Results Briefing for the Third Quarter Fiscal Year Ending December 31, 201736