Financial Results for the Second Quarter
Fiscal Year Ending December 31, 2020

Investor Relations Presentation Materials
August 18, 2020

President Shirou Tomiyasu

Index
1. Outline of Financial Results for the Second Quarter
Fiscal Year Ending December 31, 2020
2. Domestic and Overseas Markets
3. Performance Forecast for the Fiscal Year Ending
December 31, 2020
4. Topics
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 20202

1. Outline of Financial Results for theSecond Quarter Fiscal YearEnding December 31, 2020

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

Impact of the Novel Coronavirus (COVID-19) and Other
Factors on Consolidated Business Performance<Domestic>
Sales declined due to self-restraints on sales activities including cancelation of exhibitions owing to the impact of
COVID-19, pullback in demand after the consumption tax rate increase, etc.

<Overseas>
North
America: There was some impact of COVID-19 in the first quarter, but it was insignificant.

Europe

:

China

:

ASEAN

: The number of bids in Indonesia declined.

Asia: Sales in South Korea and Taiwan were strong.

Impacted by reduced shipments of tractors to OEM partners owing to a delay in receiving
engines purchased for installation.
Stagnant local sales primarily due to temporary closure of local distributors’ outlets under
lockdowns impacted shipments from the Company and our French subsidiary, leading to a
decline in sales.
Sales of rice transplanters were robust.

<Impact of COVID-19 (Analysis by the Company)>
Impact on net sales: Japan: ¥(1.9) billion, Overseas: ¥(0.7) billion, Total: ¥(2.6) billion
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 20204

Outline of Consolidated Business Performance(January 1, 2020 to June 30, 2020)(JPY bn, %)2Q of FY ended Dec. 2019
Actual%2Q of FY ending Dec. 2020
Actual%YoY
ChangeNet Sales

77.5

100.0

72.2

100.0

(5.3)

(Domestic)

59.9

77.3

57.2

79.2

(2.7)

(Overseas)

17.6

22.7

15.0

20.8

(2.6)

Operating Income

1.6

2.1

1.3

1.8

(0.3)

Ordinary Income

0.8

1.1

1.1

1.5

0.3

Profit (Loss) attributable toowners of parent

0.7

0.9

1.0

1.4

0.3

Averageexchange rate
(yen)

US$

110.7

108.5

(2.2)

Euro

125.7

119.7

(6.0)

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

5

Domestic Sales
YoY-¥2.7 billion

As sales of agricultural machinery and farming implements decreased due to the pullback in demand after the
consumption tax rate increase and the impact of COVID-19, sales declined overall, though sales of spare parts andrevenue from repair fees were strong and sales of construction of facilities increased.
YoY Change

2Q of FY ended
Dec. 2019
Actual2Q of FY ending
Dec. 2020
ActualCultivating & Mowing
Machinery

15.1

13.4

(1.7)

Tractors: (1.5)

Planting Machinery

6.1

5.5

(0.6)

Rice transplanters:(0.5)

Harvesting &Processing Machinery

5.4

4.3

(1.1)

Combineharvesters: (0.9)

Total

26.6

23.2

(3.4)

Farming Implements

12.0

10.7

(1.3)

Spare Parts

6.9

7.2

0.3

Repair Fees

2.6

2.7

0.1

21.5

20.6

(0.9)

Total

48.1

43.8

(4.3)

Construction of Facilities

1.3

3.0

1.7

Others

10.5

10.4

(0.1)

Total

59.9

57.2

(2.7)

Agricultural Machinery

Agricultural Machinery Related(JPY bn)

Total

Main factors of YoY changes

Notes

✔

Sales of agricultural machinery decreased¥3.4 billion due to the pullback in demand
after the consumption tax rate increase, andcancelations of exhibitions and self-restraints
on sales activities owing to the impact of
COVID-19.
Sales of farming implements decreased intandem with the decreased agricultural
machinery sales.

✔

Sales of spare parts and revenue from repair
fees continued to be strong.

✔

Sales of construction of facilities increased¥1.7 billion due to completion of large-scale
facilities.

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 20206

Overseas Sales
YoY-¥2.6 billion

Sales declined overall due a decrease in sales to North America, Europe, and ASEAN, despite anincrease in those to China and South Korea.
YoY Change

Main factors of YoY changes(JPY bn)

2Q of FY ended
Dec. 2019
Actual2Q of FY ending
Dec. 2020
ActualNorth America

6.4

4.7

(1.7)

Tractors: (1.7)

Europe

5.9

5.1

(0.8)

Tractors: (0.2)
Lawn mowers: (0.6)

China

0.1

0.4

0.3

ASEAN

0.9

0.5

(0.4)

Tractors: (0.3)

Others

2.1

2.4

0.3

South Korea: 0.2

Product Sales Total

15.4

13.1

(2.3)

✔

Parts & Others

2.2

1.9

(0.3)

✔

Total Sales

17.6

15.0

(2.6)

Notes

✔
✔

Rice transplanters: 0.3✔

Lower sales due to decreased
North
America: shipments of tractors owing to a delay

in receiving engines.
Europe： Decline in sales from shipment
adjustment owing to temporary
closures of local distributors' shops inGermany, Belgium and other countries.
China： Increased sales due to increased
shipments of semi-finished products to
Dongfeng Iseki.
ASEAN： Lower sales due to decreased
shipments of tractors to Indonesia.
Others: Higher sales due to increased
shipments of tractors and combine
harvesters to South Korea.

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 20207

Operating Income
YoY-¥0.3 billion

We covered the decrease in gross profit stemming from revenue decline with a reduction in selling,
general and administrative expenses, improvement in gross profit margin, etc., but there was a YoY
decrease in operating income due to recording of loss on valuation of parts inventory.

(JPY bn, %)2Q of FY ended
Dec. 2019
Actual2Q of FY ending
Dec. 2020
ActualYoY
Change[Breakdown of YoY Change](1.4)

Net Sales

77.5

72.2

(5.3)

Gross Profit

22.5

21.4

(1.1)

Gross Profit
Margin

29.1%

29.7%

0.6%

SG&A Expenses

20.9

20.1

(0.8)

Personnel
Expenses

12.2

12.0

(0.2)

Other Expenses

8.7

8.1

(0.6)

Net Sales

Cost of
Sales

Operating Income

1.6

1.3

(0.3)

(0.3)

(0.3)

0.6

(0.3)

0.8

1.6

2Q of FY
ended
Dec. 19

1.3
Decreasedgross profit due
to decreased
revenue

Improvement ingross profit
margin, etc.

Recording ofloss onvaluation ofparts inventory
accompanying
delay inreceiving
enginespurchased

Decreased
SG&A
expenses

2Q of FY
endingDec. 20[Effect of forex fluctuations (JPY bn)]

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

SG&A
Expenses

Operating
Income

0.0

±0.0
8

Ordinary Income, Quarterly Net Income
Ordinary
incomeYoY¥0.3 billion

Increased YoY owing to a decrease in foreign exchange losses and a reduction in share of loss ofentities accounted for using equity method accompanying improved revenue of Dongfeng Iseki anda change in our investment ratio.

(JPY bn)

2Q of FY ended
Dec. 2019
Actual2Q of FY ending
Dec. 2020
ActualYoY
ChangeOperating Income

1.6

1.3

(0.3)

Balance of Financial Income

(0.4)

(0.4)

±0.0

Other Non-operating Income

(0.4)

0.2

0.6

Ordinary Income

0.8

1.1

0.3

Extraordinary Income

0.1

0.6

0.5

(0.1)

(0.1)

±0.0

0.8

1.6

0.8

Income Taxes - Deferred

(0.1)

(0.6)

(0.5)

Profit (Loss) Attributable to
Owners of Parent

0.7

1.0

0.3

Extraordinary Losses

Income before Income Taxes

Non-operating Income (YoY change)
Decrease in share of loss of entities
accounted for using equity method

0.5 billion

Decrease in foreign exchange losses

0.1 billion(Reference) Related to equity method(JPY bn)
Share of profit or loss ofentities accounted forusing equity method(non-operating)
Loss (gain) on change inequity(extraordinary)

2Q of FY
ended 2019
Actual2Q of FY
ending 2020
ActualChange

(0.7)

(0.2)

0.5

-

0.6

0.6

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 20209

Balance Sheet (Consolidated)
YoY

Accounts receivable – trade decreased and inventories increased, due to lower
domestic and overseas net sales(JPY bn)

As ofJune 30, 19

As ofJune 30, 20

As of
June 30, 19

Change

As ofJune 30, 20

ChangeCash & Deposits

8.2

7.6

(0.6)

Accounts Payable - Trade

45.8

41.3

(4.5)

Accounts Receivable – Trade

34.8

30.2

(4.6)

Interest-bearing Liabilities

75.2

76.9

1.7

Inventories

54.8
5.5

56.6
4.3

1.8
(1.2)

(Loans Payable)

67.8

68.6

0.8

(Lease obligations)

7.4

8.3

0.9

2.8

1.5

(1.3)

Other Liabilities

22.9

19.8

(3.1)

Total Current Assets

103.3

98.7

(4.6)

Total Liabilities

143.9

138.0

(5.9)

Property, plant and equipment

97.4

97.4

±0.0

7.3

7.8

0.5

Net Assets

68.6

69.0

0.4

1.2
10.6

1.4
9.5

0.2
(1.1)

(Retained Earnings)

17.0

17.3

0.3

6.1

5.1

(1.0)

0.2

(0.1)

(0.3)

Total Non-current Assets

109.2

108.3

(0.9)

(Valuation Difference on Available-forsale Securities)(Foreign Currency Translation
Adjustment)

0.7

0.5

(0.2)

Total Assets

212.5

207.0

(5.5)

Total Liabilities and Net Assets

212.5

207.0

(5.5)

Other Current Assets(Short-term loans receivable)(Lease assets)

Intangible assets
Investments and Other Assets(Investment securities, Capital)

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202010

Equity ratio / Interest-bearing liabilities
Interest - bearing
liabilities,
D/E ratio

In June (mid-term), level of borrowings remained relatively high mainly due to effect prior to collectionof spring products, D/E ratio was 1.11 times due to increased interest-bearing liabilities throughincreased lease obligations, etc.

Balance of Interest-Bearing Liabilities (JPY bn)

15/6
Loans payable,
corporate bonds
Lease obligations

Equity Ratio (%)

16/6

17/6

18/6

19/6

20/6

67.6

67.5

64.8

67.8

67.8

68.6

9.1

8.5

7.6

6.3

7.4

8.3

Total

76.7

76.0

72.4

74.1

75.2

76.9

D/E Ratio

1.09

1.16

1.05

1.04

1.10

1.11

Note : D/E Ratio=Interest bearing liabilities(incl. Lease liabilities)/Net assets
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

11

Statement of Cash Flows
Cash flows

We had negative operating cash flows due to the impact of decreased sales.
(JPY bn)
2Q of FY ended
Dec. 2019
Actual2Q of FY ending
Dec. 2020
ActualYoY Change

Cash flows from operating activities

1.0

(3.1)

(4.1)

Cash flows from investing activities

(4.7)

(4.6)

0.1

Free cash flow

(3.7)

(7.7)

(4.0)

Cash flows from financing activities

4.4

6.7

2.3

Effect of exchange rate change on
cash and cash equivalents
Net increase (decrease) in cash andcash equivalents

(0.1)

0.0

0.1

0.6

(1.0)

(1.6)

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202012

2. Domestic and Overseas Markets

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

Domestic Agricultural Machinery Market Trends
Domestic
agricultural
machinery
demandDue to the pullback in demand after the consumption tax rate increase in
October 2019 together with the impact of the novel coronavirus (COVID-19), thedemand was lower than it was before the start of the rush demand in 2018.

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

Oct. 2019
Consumption tax
rate increase(JPY bn)

280.0
260.0
240.0

From Oct. 2018
Shipments of tractor models jointly
and bulk purchased by JA-Group

220.0
Mar.

Jun.

Sep.

2016

Dec.

Mar.

Jun.

Sep.

2017

Dec.

Mar.

Jun.

Sep.

Dec.

Mar.

2018

Jun.

Sep.

Dec.

Mar.

2019

Jun.

2020

* 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
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202014

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

Our actual sales were showing signs of weakness, but amid the impact of thenovel coronavirus (COVID-19), our figures were above those of the industry.

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

Jul. 2017Jun. 2018

Jul. 2018Jun. 2019

Jul. 2019Jun. 2020

Jan.-Jun.
2020

Industry(Amount ofshipment)

96%

109%

86%

77%

ISEKI

(Salesamount)

100%

98%

89%

86%

* 9 principal machinery: Tractors, combine harvesters, rice transplanters, tillers, drying machines, rice huskers,
binders, harvesters, treatment
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202015

Response to the COVID-19 Disaster(1) We have launched “ISEKI Virtual Demonstration” that you canwatch anytime, anywhere Introducing work demonstration videos of new products, smart agricultural machinery
utilizing advanced technologies, etc.

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202016

Response to the COVID-19 Disaster(2) Distribution of promotion videos for new product releases
 Promote new products to many people (approx. 100,000 play counts (as of August 2020))
Number of new product releases<< 19 items, 38 models>>[For domestic markets]• Tractors:
7 items• Rice transplanters:
2 items• Vegetable cultivation
machinery:
2 items• Farming Implements:
1 items[For overseas markets]• For Europe:
2 items• For North America:
1 items• For South Korea:
4 items

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202017

Introduction of a New Product
ISEKI straight-traveling and turningassistance system"Japan" lined up with the addition of a
new rice transplanterFirst in the industry

Steering wheel operations are
not required for straighttraveling and turning!

“Support large-scale
farming”<Concepts>

Strengthen smart agricultural machinery and ICT, enhance products for largescale farming, 95th anniversary commemorative machinery
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202018

Overseas Product Sales
overseas
sales

Sales will fall below the previous year primarily due to the impact of the novel
coronavirus (COVID-19) in Europe.

(JPY bn)
35.0

FY2019/12 Results¥28.2 billion

30.0
25.0
20.0
15.0

FY2020/12 Forecast(announced on August 6)¥26.9 billion

10.0
5.0
0.0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

* Based on finished products. “Parts & Others” is not included.

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202019

Response to the COVID-19 Disaster◆ Sales activities<All regions>
Performed sales activities such as distribution of videos on websites andadvertisement using SNS.
✓Europe and U.S.
Developed consumer business by enhancing product lineups to meet increased
demand from hobby users and expanding sales on DIY sales networks.
✓Thailand
Conducted service campaigns for users and enhanced after-sales services.

◆ Production activities
Remotely directed the launch of new products at PT. ISEKI INDONESIA fromJapan and launched the products smoothly.
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202020

Market Trend (North America)
North
America• In the compact tractor market, demand for the products for hobby farmers increased and the market
recovered quickly from the impact of the novel coronavirus (COVID-19). AGCO's actual sales exceeded
the market and remained strong.
• Delay in receiving engines impacted our sales in the first half, but we will strive to recoup the decline
by new products equipped with engines made in-house in the second half.

1. Trend in the market(1,000 units, %)3. Sales and orders at ISEKI

Category(PTO HP)

40HP and lower(Compact
tractors)

40-100HP(Utility tractors)

100HP andabove

Jan.-Jun. 2019

98

31

10

Jan.-Jun. 2020

110

33

9

6.0

Difference (%)

113%

106%

92%

5.0

Shipments/orders (Jan.-Sep. 2020): YoY 92%
Consolidated net sales (ISEKI to AGCO)(JPY bn)(Source: statistics provided by AEM )4.0

2. Situation of AGCO (OEM partner)

3.0

Unit sales (Jan.-Jun. 2020)
 Compact tractors:
YoY 120%
 Utility tractors:
YoY 114%

3.6

3.4

2.8

2.9
2.3

2.4

1Q

2Q

2.0
1.0
0.0
1Q

2Q

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

3Q
FY2019/12

4Q

FY2020/12

21Market Trend (Europe)
EuropeFrom May onward, store operations have resumed gradually, with signs of recovery in the market for
consumers.
In the market for professionals, we will watch the trends in the local governments’ landscaping budgets.

1. Trend in the market

3. Sales and orders at ISEKI<Landscaping market>• From mid-March to early May, demand in agricultural
machinery and landscaping markets was sluggish as a resultof the closure of dealers’ shops due to the lockdown.
• In June, demand for gardening products primarily for
consumers partially recovered due to the favorable weather.
Going forward, as for the products for professionals, wemust pay attention to the trends in local governments’landscaping budgets.

Shipments/orders (Jan.-Sep. 2020): YoY 83%
Consolidated net sales (Europe)

2. Local sales
 Sales (Jan.-Jun. 2020)• Local distributors: YoY 86%(Unit sold base)

FY2019/12

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

FY2020/12

22Market Trend (ASEAN: Thailand)
ThailandDue to the drought from the end of last year together with the COVID-19 disaster, there has been adelay in recovery of the financial situation and demand of farmers.

1. Trend in the market

3. Sales and orders at ISEKI• The effects of the drought have become severe since
December and income compensation has been provided tofarmers.
• Irrigation water storage decreased dramatically, acreage fordry season rice is limited, and a large decrease in yield ispredicted.
• The willingness of farmers to purchase products has
significantly declined and we assume that it will take somemore time for the purchasing power to fully recover.

Shipments/orders (Jan.-Sep. 2020): YoY 212%

2. Situation of the local distributor "IST Farm
Machinery"
Number of units sold
(ASEAN strategy tractor, Jan.-Jun. 2020): YoY 74%

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202023

Market Trend (ASEAN and Neighboring Regions)
ASEAN and
Neighboring
Regions• Indonesian government tendering decreased slightly from the previous year. In addition, the budget
may be diverted to measures against the novel coronavirus (COVID-19), to which we will pay attention.
• In Myanmar, although sales activities are restricted due to the impact of COVID-19, local sales havebeen strong.

1. Trend in the market

3. Initiatives by ISEKI Thailand<Indonesia>• Promotion of mechanization led by the government since2015 continues (government tendering).
• Government tendering decreased year on year. We will pay
attention to its trend in the second half.

<Myanmar>Enhance support of operation/service of distributors.
Enhance supply system of repair parts based on ISEKI
Thailand in anticipation of future market expansion.
Consolidated net sales (Entire ASEAN)(JPY bn)• It is a market where mechanization is accelerating, and local
sales have been strong even with the COVID-19 disaster.

2. Our situation
 Indonesia: Decreased sales compared to previous
period due to a lower tendering volume
 Myanmar: Sales expansion through IST Farm
Machinery
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

FY2019/12

FY2020/12

24

PT. ISEKI INDONESIA (Manufacturing Subsidiary)
PT. ISEKI
INDONESIA

Production in Jan.-Jun. fell short of the plan due to a decrease in production for North America and
ASEAN.
We promote further enhancement of profitability as the base station for earning abroad.
(Units, JPY bn)

Jan.-Jun. 2020

2014
Results

2015
Results

2016
Results

2017
Results

2018
Results

2019
Results

Plan

Results

Production
Volume

1,100

3,900

7,300

8,400

9,700

12,600

6,400

5,000

Operating
Income

(0.3)

(0.4)

(0.3)

0.3

0.1

0.3

0.2

0.2

2017

2018

2019

<<Trend in production volume>>

2014

2015

2016

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202025

Trends in Overseas Markets (China)
China

Sales of ride-on rice transplanters are robust as the government is strongly promoting grain production
centered on rice to secure food, and restrictions on movement of contractors is stimulating demand for
agricultural machinery in Hubei Province.

1. National government subsidy(RMB bn)

2014

2015

2016

2017

2018

2019

2020

23.8

23.8

23.7

18.6

18.6

18.0
18.0 (Estimate)

2. Trends in the agricultural machinery industry
By product type (YoY change, units)

Rice transplanters (riding)
Combine harvesters(all-purpose,auto-threshing)
Tractors(medium- to large-sized)

3. Situation of Dongfeng Iseki(Jan.-Jun. 2020, number of units sold) Ride-on rice transplanters: YoY 303%
 Tractors:
YoY 98%
 Ride-on control machines: YoY large increase(RMB million)

(%)

250

Jan.-Jun.
2018

Jan.-Jun.
2019

Jan.-Jun.
2020

200

80.6%

94.5%

125.6%

150

57.3%

87.7%

91.9%

72.8%

106.4%

117.8%*Source: China Association of Agricultural Machinery Manufacturers

Net sales of Dongfeng Iseki (local currency base)

300

100

190

70

104
71

50

44

40

0
1Q

2Q

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

3Q

FY2019/12

4Q

1Q

2Q

FY2020/12

26

Trends in Overseas Markets (Others)
East Asia• South Korea: The rice transplanter market in Jan.-May remained the same YoY with no signs of impact
of novel coronavirus (COVID-19).
• Taiwan: Large YoY increase due to a subsidy system for purchases of large agricultural machinery

1. Trend in the market

2. Situation of ISEKI<South Korea>
Crop rotation is being encouraged under the leadership of theSouth Korean government and progress is being made inincreasing the size and efficiency of agricultural machinery due
to farmland consolidation.
The need for large-size, high-performance machinery is
growing as the number of farmers is falling.

<Taiwan>
A subsidy system for purchases of large agricultural
machinery was in place from Oct.-Dec. 2019.
Similar subsidy systems have been in place in 2020 as well.

 South Korea:
Sales of our brand’s flagship products, TJ series tractors
and HJ series combine harvesters, via the sales channelof the TYM Group, a major South Korean agricultural
machinery manufacturer, continuing from the previous
quarter.
• Shipments/orders (Jan.-Jun. 2020)
Rice transplanters : YoY 87%
Combine harvesters: YoY 125%
Tractors: YoY 775%

 Taiwan
Sales of tractors, combine harvesters, and ricetransplanters through local distributors• Shipments/orders (Jan.-Jun. 2020)
Tractors: YoY 230%

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202027

3. Performance Forecast for the
Fiscal Year Ending
December 31, 2020

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

Assumptions for Consolidated Performance Forecast Assumptions on business environment
The novel coronavirus infectious disease (COVID-19) will come to an
end in the first half of the fiscal year ending December 31, 2021.
Given that the economic activities have been resuming in Japan andoverseas, the Group's sales will gradually recover from the third
quarter of this fiscal year onward.

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

29

Assumptions for Consolidated Performance
Forecast Outlook by Market<Domestic> ： The exhibition will resume in stages, and the impact of COVID-19 will gradually diminish.
<Overseas>
North
America： New products with engines made in-house will eliminate the impact of the delay in receiving engines in the first
half.

Europe： Shipments from the Company will decline due to the expected inventory adjustment for a certain period of time
due to the impact of the decrease in sales at local distributors in the first half.
The local market, primarily for products for consumers, will recover, and the performance of ISEKI France will
pick up.

ASEAN： The number of bids in Indonesia will decline and impact of drought will persist in Thailand, our mainstay market.

Asia： Strong sales in South Korea and Taiwan will continue from the first half.

<Outlook on Production>
As distribution inventory and inventory at distributors increased in the first half due to the stagnant sales in Japan and overseas,
we expect inventory adjustment in the second half.

<Impact of COVID-19 (Estimates)>
Impact on net sales: Japan: ¥(2.7) billion, Overseas: ¥(1.6) billion, Total: ¥(4.3) billion
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202030

Consolidated Net Sales ,Operating Income Forecast
Performance
Forecast• Net sales are expected to decrease by ¥5.4 billion year on year to ¥144.5 billion, due to the impact of COVID-19 and the pullback indemand after the consumption tax increase.
• Operating income is expected to decrease by ¥1.6 billion year on year to ¥1.1 billion, owing to temporary negative factors in addition toa decrease in gross profit resulting from a decrease in sales.
FY ended
Dec. 2018
ActualFY ended
Dec. 2019
Actual

156.0(Domestic)(Overseas)

FY endingDec. 2020
Forecast

YoY
Change

149.9

144.5

(5.4)

122.8

117.7

114.5

(3.2)

33.2

32.2

30.0

(2.2)

46.0

44.5

42.3

(2.2)

Gross Profit
Margin

29.5%

29.7%

29.3%

(0.4)%

SG&A Expenses

42.8

41.8

41.2

(0.6)

Personnel
Expenses

25.4

24.7

24.8

0.1

Other
Expenses

17.4

17.1

16.4

(0.7)

3.2

2.7

1.1

(1.6)

(JPY bn, %)Net Sales

Gross Profit

Operating Income※ Forecast announced on August 6, 2020[Breakdown of YoY Change in operating income]

※

(1.6)

(0.3)

(0.3)

(0.4)
※

1.0

2.7
FY
ended
Dec. 19

1.1
Decreasedgross profit
due todecreased
revenue

OthersRecording ofloss onvaluation ofparts
inventory
accompanying the delay
in receiving
enginespurchased

Temporary
expenses
incurred byapplying theprinciple
method toretirement
benefitexpensecalculation

Temporarynegativefactors

FY
endingDec. 20

Temporary negative factors: ¥(0.7) bn
Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202031

Performance Forecast for the Fiscal Year Ending
December 31, 2020
Performance
Forecast

・Under the assumption that COVID-19 will come to an end in the first half of the fiscal year ending December 31, 2021,
and given that the economic activities have been resuming in Japan and overseas, the Company expects that theGroup's sales will gradually recover from the third quarter of this fiscal year onward. As for income and profit, we
factored inventory adjustment in response to the recent increase in distribution inventory into the calculation of theconsolidated financial results forecast.
・The dividend forecast remains undetermined due to the uncertainty about the economic impact of COVID-19.

1. Consolidated Full-Year Performance Forecast

2. Dividend Forecast(JPY bn)

FY ended
Dec. 2019
ActualFY endingDec. 2020※ Forecast

Net Sales

149.9

144.5

(5.4)

(Domestic)

117.7

114.5

(3.2)

(Overseas)

32.2

30.0

(2.2)

Operating Income

2.7

1.1

(1.6)

Ordinary Income

1.1

0.2

(0.9)

Profit (Loss) attributable toowners of parent

0.7

0.2

(0.5)

US$

109.3

106.5

(2.8)

Euro

121.6

118.8

(2.8)

Foreignexchange rates(yen)

YoY Change(JPY yen)

FY ended
Dec. 2018
ActualFY ended
Dec. 2019
ActualFY endingDec. 2020※
Forecast

Year-End
Dividend30

30

Undetermined[Net sales]• Net sales are expected to decrease by ¥5.4 billion year on
year to ¥144.5 billion, due to the impact of COVID-19 andthe pullback in demand after the consumption tax increase.
[Income and profit]• Operating income is expected to decrease by ¥1.6 billion
year on year to ¥1.1 billion, owing to temporary negative
factors in addition to a decrease in gross profit resulting froma decrease in sales.
* Exchange rate forecast from the third quarter onward:
US$ = ¥105, Euro = ¥118

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202032

Domestic Sales Forecast
Overall sales are expected to decline due to a decrease in sales of agricultural machinery and farming implements
attributable to the pullback in demand after the consumption tax rate increase and the impact of COVID-19, despite
increases in sales of spare parts, revenue from repair fees, and sales of construction of facilities.
FY ended
Dec. 2018
ActualFY ended
Dec. 2019
ActualFY endingDec. 2020※ Forecast

Cultivating & Mowing
Machinery

27.4

25.4

23.7

(1.7)

Planting Machinery

9.2

9.0

8.4

(0.6)

Harvesting &Processing Machinery

20.0

18.6

16.8

(1.8)

Total

56.6

53.0

48.9

(4.1)

Farming Implements

20.2

20.1

19.0

(1.1)

Spare Parts

14.8

15.0

15.3

0.3

Repair Fees

5.6

5.7

5.9

0.2

40.6

40.8

40.2

(0.6)

Total

97.2

93.8

89.1

(4.7)

Construction of Facilities

5.7

4.6

6.3

1.7

Others

19.9

19.3

19.1

(0.2)

Total

122.8

117.7

114.5

(3.2)

Agricultural Machinery(JPY bn)

Agricultural Machinery RelatedDomestic
Sales

Total

YoY Change

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

※ Forecast announced on August 6, 202033

Overseas Sales Forecast
Overseas
Sales

Though recovery trend is anticipated in the second half, sales are expected to decline as we will not beable to completely cover the decrease in sales due to the impact of COVID-19 (Europe) and the delay inreceiving engines (North America) in the first half.

(JPY bn)

FY ended
Dec. 2018
ActualFY ended
Dec. 2019
ActualFY endingDec. 2020※ Forecast

North America

10.8

12.7

11.7

(1.0)

Europe

10.9

10.2

9.3

(0.9)

China

1.0

0.1

0.6

0.5

ASEAN

3.9

1.7

0.8

(0.9)

Others

1.8

3.5

4.5

1.0

Product Sales Total

28.4

28.2

26.9

(1.3)

Parts & Others

4.8

4.0

3.1

(0.9)

Total Sales

33.2

32.2

30.0

(2.2)

YoY Change

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

※ Forecast announced on August 6, 202034

4. Topics

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 2020

Publication of ISEKI Report
ISEKI Report 2020
Contents
 Value creation by ISEKI
Group Business promotion of
ISEKI Group ESG initiatives that
support value creationand others

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202036

Intellectual Property
1. Number of patents registered in Japan by sector

Ranked No. 1 in the Other Special Machinery Sector
Year
Statistics
Sector2000-2006

2007-20142016-2017

Number of patents published by sector
Agriculture andFishery

Rank

2018

2019

Number of patents registered by sector
Other Special Machinery

First

SecondFirst

2. Patent grant ratio

Ranked No. 1 in All IndustriesYear

2004-2010

Patent grant
rate

-

Rank

First

2011

2012

2013

2014

2015

2016

2017

2018

2019

91.8% 94.7% 97.0% 99.2% 97.5% 100.0% 98.1% 96.4% 97.7%
SecondFirst

Second First* Patent grant rate = Number of patents granted / (Number of patents granted + Number of patents applications refused + Number of patents applications withdrawn or abandoned )Number of patents applications withdrawn or abandoned = Number of patents applications withdrawn or abandoned after notice of reasons for refusal
Source: Japan Patent Office Annual Report 2020 (the Japan Patent Office)Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202037

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 and uncertainties. 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 notliable for any losses incurred by investment decision made utilizing the business forecast or targets
given in this document.

ISEKI group is a promotional partner of FOOD ACTION NIPPON

Financial Results Briefing for the Second Quarter Fiscal Year Ending December 31, 202038