Supplementary Information toConsolidated Financial Results(January 1, 2021－June 30, 2021)

ISEKI & CO., LTD.
August 6, 2021

Index
1. Outline of Financial Results for the Second Quarter
Fiscal Year Ending December, 2021
2. Performance Forecast for the Fiscal Year EndingDecember 31, 2021

Supplementary Information to Consolidated Financial Results21. Outline of Financial Results for the Second Quarter
Fiscal Year Ending December, 2021

Supplementary Information to Consolidated Financial Results

Key Points on Financial Results for the Second Quarter＜Second Quarter Financial Results＞
Significant YoY increases to both sales and profit(Results Breakdown)
Domestic:

Overseas:

Earnings:

Net Sales (2Q Cumulative)(JPY bn)
80.1
801

82.2
822

775
77.5

Recovery from the reactionary decline after the consumption tax hike
Demand stimulated by government subsidies for agricultural business continuity,etc.
Increased sales in North America and Europe owing to increased demand in linewith lifestyle changes
In Asia, positive impact seen from making a Thai distributor a consolidated
subsidiary at the end of the previous fiscal year and increased sales to China
Gross profit buoyed by increased sales＜Full-year Forecast＞

86.6
866
72.2
722
Domestic

21.7%

22.3%

22.7%

20.8%

27.7%

Overseas

FY2017/1217/12期 FY2018/1218/12期 FY2019/1219/12期 FY2020/12
20/12期 FY2021/12
21/12期
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q

Operating Income (2Q Cumulative)(JPY bn)

4.747

Consolidated Results Forecast Unchanged from Initial Estimates
2.828(Risks in the second half)• In Japan, reactionary pullback after demand stimulated by government subsidies for agriculturalbusiness continuity, etc., and decreased purchase intention due to concerns over lower price ofrice• Disruption of the supply chain due to the impact of the Novel Coronavirus (COVID-19) pandemic• Raw material prices will soar and remain highSupplementary Information to Consolidated Financial Results

2.1
21

16
1.6

1.2
12FY2017/12
17/12期 FY2018/12
18/12期 FY2019/12
19/12期 FY2020/12
20/12期 FY2021/12
21/12期
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q
2Q

4Business Environment✓✓YoYCurrent Quarter(FY2020/12 2Q)(FY2021/12 2Q)

Reactionary decline after consumption tax hikeSelf restraint on sales activities due to COVID-19Domestic✓✓NorthAmerica✓✓

OverseasEurope✓✓•✓•

Asia✓✓✓•✓•

Recovery from post-consumption tax hike reactionary decline
Impact of self restraint on sales activities eased compared toprevious year
Demand stimulated by government subsidies for agricultural business
continuity, etc.

Robust demand owing to growing demand resulting from consumers
staying at home
Delays in shipments of parts led to decreased shipments of tractors(temporary factors of the Company)✓✓

Increased demand due to lifestyle changes
A shortage of containers for marine transportation led to unfulfilledshipments and other backorder generation

Temporary closure of local retail outlets due to lockdowns⇒theCompany adjusted shipments
Partial recovery seen after store operations gradually resumed fromMay onwards✓✓✓

Robust demand for consumer goods owing to lifestyle changes
Local distributors continued operations as essential retail
Sales activities gradually returned to normal as vaccination
progressed

China
Demand for agricultural machinery stimulated by government policies
to secure food and travel restrictions
ASEAN (Thailand)
Low-level purchasing sentiment due to lower volume of agricultural
produce, and sluggish crop prices
South Korea
Demand for large agricultural machinery continued, despite theimpact of restrictions on activities
TaiwanSubsidies in place for purchase of large agricultural machinery

✓•

China
Robust market continued, owing to factors including the continuationof government policies to secure food and stabilization of grain prices
ASEAN (Thailand)
Demand for agricultural machinery was on a recovery track, as thevolume of agricultural produce and crop prices began to recover lastyear
South Korea
Demand for large agricultural machinery continued
TaiwanA pullback effect with the withdrawal of subsidies✓•✓•✓•

Supplementary Information to Consolidated Financial Results5Outline of Consolidated Business Performance(January 1, 2021 to June 30, 2021)(JPY bn, %)FY2019/12

FY2020/12

FY2021/12

2Q Actual%

2Q Actual%

2Q Actual%

YoY
ChangeNet Sales

77.5

100.0

72.2

100.0

86.6

100.0

14.4

(Domestic)

59.9

77.3

57.2

79.2

62.6

72.3

5.3

(Overseas)

17.5

22.7

14.9

20.8

24.0

27.7

9.0

Operating Income

1.6

2.1

1.2

1.8

4.7

5.4

3.4

Ordinary Income

0.8

1.1

1.0

1.5

5.5

6.4

4.4

Profit (Loss) Attributableto Owners of Parent

0.6

0.9

0.9

1.4

4.1

4.8

3.1

Average
ExchangeRate (JPY)

US$

110.7

108.5

106.8(1.7)

Euro

125.7

119.7

129.1

9.4

Supplementary Information to Consolidated Financial Results

6

Domestic Sales
YoY¥5.3 billion

With agricultural machinery and farming implements recovering from the reactionary decline following theconsumption tax hike, and demand stimulated by government subsidies for agricultural business continuity,etc., domestic sales increased overall.
FY2019/12

FY2020/12

FY2021/12

2Q Actual

2Q Actual

2Q Actual

Cultivating &Mowing
Machinery

15.1

13.3

14.7

Planting
Machinery

6.1

5.5

6.4

0.9

Rice
Transplanters: 0.4

Harvesting &Processing
Machinery

5.3

4.3

4.8

0.5

CombineHarvesters: 0.4

Subtotal

26.6

23.1

25.9

2.7

Farming
Implements

11.9

10.6

13.5

2.8

Spare Parts

6.8

7.1

7.2

0.1

Repair Fees

2.6

2.7

2.8

0.0

Subtotal

21.4

20.6

23.6

3.0

48.1

43.8

49.6

5.8

Construction of Facilities

1.3

3.0

1.9(1.1)

Others

10.4

10.3

11.0

0.6

59.9

57.2

62.6

5.3

Agricultural Machinery

Agricultural Machinery Related(JPY bn)

Total

Total

YoY Change

Main factors of YoY changes

Notes
1.3

Tractors: 1.0✔

Sales of agricultural machinery and farming
implements rose, having recovered from the postconsumption tax hike slump, and demand wasstimulated by government subsidies for agriculturalbusiness continuity, etc.

✔

YoY easing of the impact of exhibition cancellations
and shrinking scale on account of COVID-19✔

Spare parts sales and repair fee revenues
remained strong✔

For construction of facilities, orders received andcompleted for large-scale facilities declined✔

Overall domestic sales increased substantiallycompared to the year before last

Supplementary Information to Consolidated Financial Results

7

Overseas Sales
YoY¥9.0 billion

Sales in North America and Europe increased owing to rising demand in line with lifestyle changes
In Asia, making a Thai distributor a consolidated subsidiary had a positive impact (at the end of the previous
fiscal year), and sales to China increased
YoY ChangeFY2019/12

FY2020/12

FY2021/12

2Q Actual

2Q Actual

2Q Actual

North America

6.6

5.0

7.8

2.8

Tractors: 2.8Europe

7.3

6.4

10.8

4.4

Tractors: 1.2
Lawn mowers: 2.1(JPY bn)

Main factors of YoY changes

Notes

Asia

3.3

3.4

5.1

1.7

Others

0.2

0.1

0.2

0.0

Total Sales

17.5

14.9

24.0

9.0

✔

NorthAmerica:

Sales increased against the backdrop of afavorable compact tractor market
A shortage of containers for marine transportation
led to unfulfilled shipments and other backordergeneration✔

Europe:Sales, mainly of consumer goods, were robust
owing to lifestyle changes, and sales increased
from the impact of a weak yen
A shortage of containers for marine transportation
led to unfulfilled shipments and other backorder
generation

✔

Asia:

Sales increased due to the impact from making a
Thai distributor a consolidated subsidiary at theend of the previous fiscal year, tender-related
activities in the Philippines, and increased
shipments of semi-finished products to China

Tractors: 1.0
Rice
Transplanters: 0.4

Supplementary Information to Consolidated Financial Results8

Operating IncomeYoY¥3.4 billion

In addition to increased gross profit buoyed by higher sales, operating income
increased owing to special factors, including the absence of a loss on valuation ofparts inventory recorded in the previous fiscal year.
[Breakdown on YoY Change]
FY2019/12

FY2020/12

FY2021/12(JPY bn, %)Increase in gross profit:¥4.3 billion

YoY Change

3.7

2Q Actual

2Q Actual

2Q Actual

Net Sales

77.5

72.2

86.6

14.4

Gross Profit

22.5

21.4

25.7

4.3

Gross Profit
Margin

29.1%

29.7%

29.8%

0.1%

SG&A Expenses

20.8

20.1

21.0

0.8Personnel
Expenses

12.2

12.0

12.3

0.3

Other Expenses

8.6

8.1

8.7

0.5

0.6(0.8)
4.7

1.2
FY2020/122Q

Increased grossprofit due tohigher revenue

Special factors*

Increased SG&A
expenses due tohigher revenue

FY2021/122Q*Special Factors• Absence of loss on valuation of parts inventory included in the previous fiscal year 0.3• Decline in depreciation in line with posting an impairment loss in the previous fiscal 0.3
year[Effect of FOREX Fluctuations (JPY bn)]
Operating Income

1.6

1.2

4.7

3.4

Net Sales

Cost of Sales

SG&A
Expenses

OperatingIncome

0.7(0.4)

(0.1)

0.2

Supplementary Information to Consolidated Financial Results

9Ordinary Income and Profit
Ordinary
IncomeYoY¥4.4 billion

In addition to favorable shifts in foreign exchange gain (loss) and share of profit (loss)of entities accounted for using the equity method, profit increased due mainly to one-off
posting of non-operating income.
FY2019/12

FY2020/12

Non-operating Income (YoY Change)

FY2021/12(JPY bn)

YoY Change
2Q Actual

2Q Actual

2Q Actual

Operating Income

1.6

1.2

4.7

3.4

Balance of Financial
Income

(0.3)

(0.3)

(0.3)

(0.0)

Other Non-OperatingIncome(0.4)

0.1

1.1

0.9

Ordinary Income

0.8

1.0

5.5

4.4

Extraordinary Income

0.1

0.6

0.0

(0.6)

(JPY bn)

Extraordinary Losses

(0.1)

(0.1)

(0.1)

0.0

Foreign exchange gain (loss)¥0.3 billion

Share of profit (loss) of entities accounted
for using the equity method¥0.2 billion

Settlement received¥0.4 billion(Reference) Related to Equity Method
FY2020/122Q Actual

FY2021/12
2Q ActualChange(0.18)

0.03

0.21

0.65

-(0.65)

Income Before IncomeTaxes

0.7

1.6

5.4

3.8

Share of profit (loss) of entities
accounted for using the equity
method (non-operating)

Income Taxes - Deferred

(0.1)

(0.6)

(1.2)

(0.6)

Gain (loss) on change in equity(extraordinary)Profit (Loss) Attributable toOwners of Parent

0.6

0.9

4.1

3.1

*Entities accounted for using the equity method
Previous fiscal year: Dongfeng Iseki, IST
Current fiscal year: Dongfeng Iseki

Supplementary Information to Consolidated Financial Results

2 companies
1 company102. Performance Forecast for the Fiscal Year Ending
December 31, 2021

Supplementary Information to Consolidated Financial Results

Assumptions for Consolidated Performance Forecast<Predictions on the business environment>✓ Although the spread of COVID-19 will continue, it is expected to be alleviated by the end of the fiscal year
owing to an increased rate of vaccination✓ Reactionary pullback after demand stimulated by government subsidies for agricultural business continuity,etc., and decreased purchase intention due to concerns over lower price of rice
✓ Raw material prices will soar and remain highOutlook for 3Q and beyond
Domestic✓ Reactionary pullback after demand stimulated by government subsidies for
agricultural business continuity, etc.
✓ Decreased purchase intention due to concerns over lower price of rice

Overseas✓ Continuation of robust orders in North America and Europe✓ Backorders will increase, including unfulfilled shipments, resulting from
disruption of the supply chain due to the impact of the COVID-19 pandemic

Costaspect✓ Raw material prices will soar and remain highSupplementary Information to Consolidated Financial Results

12Forecast of Consolidated Financial Results for the Fiscal YearEnding December 31, 2021
Consolidated
Financial Results
Forecasts

After incorporating risk factors in the second half, initial consolidated financial results
forecasts remain unchanged.
FY2019/12(JPY bn)

FY2020/12

FY2021/12

YoY Change

Actual%Actual%Forecast%

149.8

100.0

149.3

100.0

153.5

100.0

4.1

(Domestic)

117.7

78.5

115.9

77.6

117.9

76.8

1.9

(Overseas)

32.1

21.5

33.3

22.4

35.6

23.2

2.2

Operating Income

2.7

1.8

2.0

1.4

3.6

2.3

1.5

Ordinary Income

1.1

0.7

1.7

1.1

3.52.3

1.7

Profit Attributable to Ownersof Parent

0.70.5(5.6)

-2.4

1.6

8.0

Net Sales

Average
Exchange Rate(JPY)

US$109.3

107.0

105.0(2.0)

Euro

121.6

121.5

123.0

1.5

*Forecast for year ending Dec. 2021: Forecast announcement on Feb. 15, 2021
Supplementary Information to Consolidated Financial Results

13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”.

Supplementary Information to Consolidated Financial Results

14