Financial Results for the Fiscal Year
Ended December 2019
Investor Relations Presentation Materials
President Shiro Tomiyasu

February 17, 2020

Index
1. Outline of Financial Results for the Fiscal Year
Ended December 2019
2. Domestic and Overseas Markets
3. Performance Forecast for the Fiscal Year Ending
December 31, 2020
4. Progress of Mid-term Management Plan
Financial Results Briefing for the Fiscal Year Ended December 31, 20192

1. Outline of Financial Results
for the Fiscal Year Ended
December 2019

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Outline of Consolidated Business Performance(JPY bn, %)FY2018/12

FY2019/12

Diff.
(Target/Actual)*Actual%Actual%YoYchangeNet Sales

156.0

100.0

149.9

100.0

(6.1)

(5.6)

(Domestic)

122.8

78.7

117.7

78.5

(5.1)

(5.0)

(Overseas)

33.2

21.3

32.2

21.5

(1.0)

(0.6)

Operating Income

3.2

2.0

2.7

1.8

(0.5)

(1.3)

Ordinary Income

2.6

1.7

1.1

0.7

(1.5)

(1.5)

Profit attributable to ownersof parent

1.1

0.7

0.7

0.5

(0.4)

(0.9)

Exchange
rate

US$

110.2

109.3

(0.9)

0.3

Euro

130.9

121.6

(9.3)

0.6

*Comparison with the forecast announced on November 13, 2019.
Financial Results Briefing for the Fiscal Year Ended December 31, 20194

Domestic Sales
YoY-¥5.1 billion

Sales decreased due to effects of construction of large-scale facilities in the previous year,
in addition to decreased sales of agricultural machinery following the increase in VAT,
despite solid performance of repair parts and repair fees.

Agricultural Machinery

Agricultural Machinery Related(JPY bn)

Cultivating &FY2018/12

FY2019/12

ActualActual

Notes

Diff.
(Target/Actual)*Tractors: (1.7)(1.5)

Y o Y change

Mowing Machinery

27.4

25.4

(2.0)

Planting Machinery

9.2

9.0

(0.2)

Harvesting & Processing
Machinery

20.0

18.6

(1.4)

Total

56.6

53.0

(3.6)

(3.3)

Farming Implements

20.2

20.1

(0.1)

(0.4)

Spare Parts

14.8

15.0

0.2

(0.2)

Repair Fees

5.6

5.7

0.1

(0.1)

Total

40.6

40.8

0.2

(0.7)

Total

97.2

93.8

(3.4)

(4.0)

Construction of Facilities

5.7

4.6

(1.1)

(0.3)

Others

19.9

19.3

(0.6)

(0.7)

Total

122.8

117.7

(5.1)

(5.0)

(0.6)
Combine harvesters:
(1.0)

(1.2)

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

[Sales trends for farming implements,
spare parts, repair fees](JPY bn)

38.6

39.8

40.6

40.8

FY2016/12 FY2017/12 FY2018/12 FY2019/12*Comparison with the forecast announced on
November 13, 2019.

5

Overseas Sales
YoY-¥1.0 billion

Overall sales decreased due to decreased sales in China and ASEAN, despite increased
shipments to South Korea and strong sales in North America. Excluding the effect of forex
fluctuations, sales in Europe increased.
(JPY bn)

FY2018/12

FY2019/12

Y o Y change

ActualActualNotes
Favorable sales of compact
tractors, a new product
Tractors: 1.9

Diff.
(Target/Actual)*North America

10.8

12.7

1.9

Europe10.9

10.2(0.7) Note 1

(0.5)

China

1.0

0.1

(0.9) Rice transplanters: (0.8)

±0.0

ASEAN

3.9

1.7

(2.2) Tractors: (2.2)±0.0Others

1.8

3.5

1.7

Product Sales Total

28.4

28.2

(0.2)

(0.7)

Parts & Others

4.8

4.0

(0.8)

0.1

Total Sales

33.2

32.2

(1.0)

(0.6)

South Korea: 1.3 (Combine
harvesters: 1.1)

(0.3)

Note 1: Effect of forex fluctuations in Europe
FY2018/12

FY2019/12

ChangeOf which,forex
fluctuations

10.9

10.2

(0.7)

(0.9)

0.1

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

*Comparison with the forecast announced on
November 13, 2019.

6

Operating Income
YoY-¥0.5 billion

Gross profit decreased due to a decline in sales, but reduction in selling, general andadministrative expenses continued through revenue and cost structure overhaul atdomestic dealers and improved operational efficiency.
(JPY bn, %)YoYchangeDiff.
(Target/Actual)*

149.9

(6.1)

(5.6)

44.5

(1.5)

(2.2)

FY2018/12

FY2019/12

ActualActualNet Sales

156.0

Gross Profit

46.0

Gross Profit
Margin

29.5%

29.7%

0.2%

(0.3)%

SG&A Expenses

42.8

41.8

(1.0)

(0.9)

Personnel
Expenses

25.4

24.7

(0.7)

(0.4)

Other
Expenses

17.4

17.1

(0.3)

(0.5)

Operating Income

3.2

2.7

(0.5)

*Comparison with the forecast announced on November 13, 2019.

(1.3)[Breakdown of YoY Change]

(1.3)

0.3

1.0

(0.5)

Decreased grossmargin due todecreased
revenue

Rebound fromnegative
temporaryfactors lastyear*

Decreased
SG&A
expenses

Other

3.2
FY2018/12*Temporary factors last year:
・Decreased temporary factors such as the application of the principle ofcalculating retirement benefits upon the merger of subsidiaries
・Decreased profitability deterioration from unprofitable construction work

2.7
FY2019/12

0.2
0.1[Effect of forex fluctuations (JPY bn)]
Net Sales

Cost of
Sales

SG&A
Expenses

Operating
Income

(1.3)

(1.0)

(0.2)

(0.1)

*Negative cost of sales and SG&A expenses equals positive profit

Financial Results Briefing for the Fiscal Year Ended December 31, 20197

Ordinary Income and Profit
Ordinary
incomeYoY-¥1.5 billion

Profit decreased further due to appropriation of loss on equity method anddisappearance of technical support fee recorded in the previous year.
(JPY bn)
Diff.
(Target/Actual)*

FY2018/12

FY2019/12

ActualActualYoYchangeOperating Income

3.2

2.7

(0.5)

(1.3)

Share of loss of entities using equity
method-¥0.4 billion

Balance of Financial Income

(0.8)

(0.8)

±0.0

(0.1)

-¥0.5 billion

Other Non-operating Income

0.2

(0.8)

(1.0)

(0.1)

Disappearance of technical support
fee recorded in the previous year

Ordinary Income

2.6

1.1

(1.5)

(1.5)

Extraordinary Income

0.1

0.5

0.4

0.1

Extraordinary Losses

(0.5)

(0.3)

0.2

±0.0

Income before Income
Taxes

2.2

1.3

(0.9)

Income Taxes - Deferred

(1.1)

(0.6)

Profit Attributable to Ownersof Parent

1.1

0.7

Non-operating Income (YoY change)

・ Share of loss of entities using equity method -¥0.4 billion(JPY bn)(1.4)

FY2018/12
Actual

FY2019/12
ActualChange

0.5

0.5

(1.1)

(1.5)

(0.4)

(0.4)

(0.9)

*Comparison with the forecast announced on November 13, 2019.

Financial Results Briefing for the Fiscal Year Ended December 31, 20198

Balance Sheet (Consolidated)
There was a decrease in accounts receivable - trade, and in notes and accounts payable- trade due to decreased domestic sales since October.

YoY

As of
Dec. 18

As of
Dec. 19

YoYchangeAs ofDec. 18

As of
Dec. 19

YoYchange

7.5

8.4

0.9

Accounts Payable - Trade

39.7

37.7

(2.0)

Accounts Receivable – Trade

23.3

19.7

(3.6)

Interest-bearing Liabilities

69.8

69.3

(0.5)

Inventories

53.7

54.2

0.5

(Loans Payable)

63.5

60.9

(2.6)

Other Current Assets

7.3

4.9

(2.4)

(Lease Obligations)

6.3

8.4

2.1

(Short-term Loans Receivable)

2.8

1.2

(1.6)

Other Liabilities

22.7

21.2

(1.5)

Total Current Assets

91.8

87.2

(4.6)

Total Liabilities

132.2

128.2

(4.0)

Property, Plant and Equipment

96.8

98.3

1.5

(Lease Assets)

6.0

8.0

2.0

Net Assets

69.0

69.3

0.3

Intangible Assets

1.1

1.3

0.2

Investments and Other Assets

11.5

10.7

(0.8)

(Retained Earnings)

16.9

17.0

0.1

7.3

5.5

(1.8)

(Valuation Difference on Available-for-sale
Securities)

0.4

0.4

±0.0

Total Non-current Assets

109.4

110.3

0.9

(Foreign Currency Translation Adjustment)

0.8

0.6

(0.2)

Total Assets

201.2

197.5

(3.7)

201.2

197.5

(3.7)

(JPY bn)
Cash & Deposits(Investment Securities, Capital)

Total Liabilities and Net Assets

Financial Results Briefing for the Fiscal Year Ended December 31, 20199

Interest-bearing Liabilities and Dividends
Interest-bearing
Liabilities
Dividends

Interest-bearing liabilities decreased slightly compared to the previous year
The year-end dividend is planned at ¥30.0

1. Interest-bearing liabilities(JPY bn)

75.0
70.0
65.0

2. Dividends(JPY bn)

Balance of interest-bearing liabilities
69.5
8.1

60.0

66.3

69.8
6.3

6.7

69.3
8.4

63.5

60.9

61.4

59.6

FY2016/12

FY2017/12

FY2018/12

FY2019/12

D/E Ratio (x)

1.04

0.94

1.01

1.00

Equity ratio (%)

32.2%

34.4%

33.4%

34.2%

Interest-bearing
liabilities (JPY bn)

69.5

66.3

69.8

69.3

Net assets (JPY bn)

67.1

70.9

68.9

69.2

55.0

Lease
obligations
LoanspayableYear-end
dividend

FY2018/12
Actual

FY2019/12
Planned

30

30

50.0

Financial Results Briefing for the Fiscal Year Ended December 31, 201910

Statement of Cash Flows
Cash flows

Cash flows from operating activities continue to be positive(JPY bn)
FY2018/12

FY2019/12

ActualActualYoYchangeCash flows from operating activities

7.6

10.5

2.9

Cash flows from investing activities

(9.9)

(7.1)

2.8

Free cash flow

(2.3)

3.4

5.7

Cash flows from financing activities

2.0

(2.4)

(4.4)

Effect of exchange rate change on
cash and cash equivalents

(0.1)

0.0

0.1

Net increase (decrease) in cash andcash equivalents

(0.4)

1.0

1.4

Financial Results Briefing for the Fiscal Year Ended December 31, 201911

2. Domestic and Overseas Markets

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Domestic Agricultural Machinery Market Trends
Domestic
agricultural
machinedemandSales were strong until September, due to shipments of tractors (models jointly and bulk purchased
by JA-Group) and rush-demand before increase in VAT, but they decreased from October due topullback in demand after the tax increase.

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

Oct. 2019
Consumption tax 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. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec.
2015

2016

2017

2018

2019

*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 Fiscal Year Ended December 31, 201913

Domestic Agricultural Machinery Shipments and
ISEKI’s Sales Performance
Domestic
agricultural
machinedemandIn contrast to industry expansion, ISEKI’s sales have slightly
decreasedYoY growth rate for 9 principal machinery categories (moving annual total)*ISEKI estimates

Jan.-Dec.,
2017

Jan.-Dec.,
2018

Jan.-Dec.,
2019

Industry(Amount of shipment)

99%

100%

106%

ISEKI

(Sales amount)

102%

99%

95%

(%)

*9 principal machinery: Tractors, combine harvesters, rice transplanters, tillers, drying machines, rice huskers,
binders, harvesters, treatment

Financial Results Briefing for the Fiscal Year Ended December 31, 201914

Domestic Developments
Domestic sales
developments

Promoted sales with the 95th anniversary of ISEKI Group, a campaign celebrating
50 years of the “Sanae” rice transplanter and other measures<95th anniversary of ISEKI Group><50 years since the birth of the “Sanae” rice transplanter>

Financial Results Briefing for the Fiscal Year Ended December 31, 201915

Domestic Trends in Agricultural Administration■Ministry of Agriculture, Forestry and Fisheries (MAFF) budget proposal
2019 supplementary budget + 2020 budget¥2,895.8 billion■ Primary budget allowances for agricultural machinery and facilities
SectionProject Name

BudgetComprehensive Subsidy for Strong Agriculture and the Cultivationof Principal Farmers¥23.0 bn2019 supp.

Support Program to Strengthen Maintenance and Management for
Principal Farmers¥6.4 bn2019 supp.

Production Area and Base Vitalization Program¥34.8 bn2019 supp.

Program of Special Measures to Maintain Increased Profitability for
Livestock and Dairy Farming (Livestock Cluster Program)¥40.9 bn2020 initial

Support for Introduction of Horticulture Crops in Wet Paddy Fields¥11.1 bn2020 initial

Smart Agriculture Acceleration Case Study Project¥0.8 bn2019 supp.

Smart Agriculture Development and Case Study Project, etc.

¥7.2 bn2020 initial

Program to Improve Cultivation Conditions on Agricultural Land
(Setting up GNSS Base Stations, etc.)¥25.0 bn2020 initial

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Accelerating social
implementation of“smart farming”
16Domestic Smart Farming Initiatives
Vision of future farm operations (smart farming)* Figures are from MAFF’s Program to Promote Onsite Implementation of New Farming Technology

Labor reduction(40-50% decrease)

Automation technology based on
location information

Yield improvement(15% increase)

Efficient + precise control
technology utilizing data

Visualization of operating costs Visualization of operations, utilizing
agri-business management(20% reduction in operating costs) software
Farming based on experience and intuition

Rationalized farming

Financial Results Briefing for the Fiscal Year Ended December 31, 201917

ISEKI’s Smart Farming Initiatives in Japan
Joint initiatives

ISEKI’s smart agricultural machinery

Labor
reduction■Automation technology
・Robot tractors
・Assisted automatic straight-travel steering■Automation of water
management
・Water-level sensors
・Water-supply gates

Yield increase■Sensing technology *Real-time variable fertilizing
・ Variable fertilizing rice transplanters
・ Variable fertilizing control systems■Satellite-data sensing
・Appare (satellite)
・Drones■Visualization of machine information
・AGRISUPPORT■Agri-business management
software・agri-note

Operatingcosts
reduction

Growthmanagement

Growthdiagnosis

Realization of smart farming
Financial Results Briefing for the Fiscal Year Ended December 31, 201918

Direction of Domestic Development of Smart Agricultural Machinery<Automation*>
Level 12019
Straight-travel assisted
rice transplanter

Lineup expansion

Level 2
Level 32020

Human-monitored robot
tractor

Product enhancement,
including products formesomountainous areas
Product lineup expansion

Completely unmanned tractors, combine harvesters,
and rice transplanters under development

Variable fertilizing
rice transplanter

Sensing*Automation
level

Smart riding control machines
under development

Level 1Manned riding models: steering assistance, turning assistanceLevel 2

Human-monitored models: unmanned driving except for round-about plowing

Level 3

Remote monitored models: the target is completely unmanned operation, including during movement
between fields
Financial Results Briefing for the Fiscal Year Ended December 31, 201919

Recent Market Trends Overseas
Overseasordersreceived

Progressed as planned until MarchFY2020/12 Forecast(announced Feb. 14)¥31.5 billion(JPY bn) 350.0
35.0
300.0
30.0
250.0
25.0
200.0
20.0

Orders150.0
15.0

FY2019/12 Results¥28.2 billion

100.0
10.0

5.0
50.0
0.0
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 Fiscal Year Ended December 31, 201920

Market Trend (North America)
North
America

FY2019/12: Strong sales of new compact class tractor products.
FY2020/12: Sales in the compact tractor market will continue to perform well. ISEKI will work toward
expanding sales by strengthening partnership with AGCO.

1. Trend in the market

3. Sales and orders at ISEKI(1000 units, %)Category

40HP and lower(Compact tractors)

40HP - 100HP(Utility tractors)

100HP and aboveJan.-Dec. 2018

170

66

22

Jan.-Dec. 2019

178

72

22

Differences (%)

105%

109%

100%

Orders/shipments(Jan.-Mar. 2020)

Unit sales (Jan.-Dec. 2019)
 Compact tractors ：YoY
：YoY
 Utility tractors

120%

Consolidated net sales(ISEKI to AGCO)(JPY bn)

15

12.7(Source: AEM Statistics)

2. Situation of AGCO (OEM partner)

：YoY

10

9.1

13.6

10.8

5

110%
96%

0

FY2017/12

FY2018/12

FY2019/12

FY2020/12(Estimate)

Financial Results Briefing for the Fiscal Year Ended December 31, 201921

Market Trend (Europe)
EuropeFY2019/12: Increased local currency base year on year, despite unseasonable weather. Yen base decreased.
FY2020/12: Despite the effect of currency exchange rates linked to the higher yen, sales are expected to be in line withthe previous year due to launch of new products and strengthened coordination with distributors.

3. Sales and orders at ISEKI

1. Trend in the market<Landscaping market>(2019)
・Strong pre-season sales
・Unseasonable weather: cold in April, hot and dry inlate June

2. Situation of distributors(JPY bn)

100%
95%
105%

：YoY 95%

Consolidated net sales (Europe)

15
10.7

10.9

FY2017/12

FY2018/12

10 Unit sales (Jan.-Nov. 2019)
・Local distributors：YoY
Lawnmowers ：YoY
Tractors：YoY

Shipments/orders (Jan.-Mar. 2020)

10.2

10.2

FY2019/12

FY2020/12

50Financial Results Briefing for the Fiscal Year Ended December 31, 2019

(Estimate)22•Market Trend (ASEAN: Thailand)
ThailandFY2019/12: The market for agricultural machinery is bearish due to the effects of droughts and floods.
FY2020/12: ISEKI will work toward expanding the IST sales service network and expanding sales bystrengthening the branding.

1. Trend in the market(2019)
・The market for agricultural machinery is bearish, due
to slow economic improvement in rural areas, andthe effects of droughts and floods

3. Sales and orders at ISEKI
Shipments/orders(Jan.-Mar. 2020)：Shipments resumed in Dec. 2019

■Sales at IST (*Including units outside Thailand)

2. Situation of the local distributor “IST Farm
Machinery”
Number of units sold
ASEAN strategy tractor (Jan.-Dec. 2019): YoY 84%
・Opened IST branches⇒Strengthened service
structure

1,000

0

2015

2016

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

2017

2018

2019

23

Market Trend (ASEAN and Neighboring Regions)

Financial Results Briefing for the Fiscal Year Ended December 31, 201924

PT. ISEKI INDONESIA (Manufacturing subsidiary)

Financial Results Briefing for the Fiscal Year Ended December 31, 201925

Trends in Overseas Markets (China)
China

FY2019/12: Sales of rice transplanters, our main product, decreased substantially amid a sluggish market.
FY2020/12: Will implement measures suited to the market trends, with subsidies at the same level as in 2019.

1. Trends in the agricultural machinery industry by product type

3. Situation of Dongfeng Iseki(YoY change in units, %)Dec. 2017 Dec. 2018 Nov. 2019
Rice transplanters (riding)

6%

(20)%

 In domestic sales in China, sales of ricetransplanters decreased substantially.

(11)%(RMB million)

Combine harvesters (allpurpose, auto- threshing)

(12)%

(22)%

(17)%

Tractors (medium- to largesized)

(25)%

(21)%

7%

*Source: China Association of Agricultural Machinery Manufacturers

2. National government subsidy

1,000

Net sales of Dongfeng Iseki(local currency base)

619
500

386

(RMB bn)

2014

2015

2016

2017

2018

2019

23.8

23.8

23.7

18.6

18.6

18.0

225

2020

18.0
(Estimate)

540

0FY2016/12 FY2017/12 FY2018/12 FY2019/12

Financial Results Briefing for the Fiscal Year Ended December 31, 201926

Change in Investment Ratio of Chinese Equity Method Affiliate■ Ratio of investment in Dongfeng Iseki Agricultural Machinery Co., Ltd.
Previously:

Dongfeng Motor Group: ISEKI ＝ 50% ： 50%
Additional investment by Dongfeng Motor
Group

Currently:

Dongfeng Motor Group: ISEKI ＝ 75% ： 25%■Background

For the purpose of working toward further business expansion and localization of business
operations in China■Future direction
・ There will be no change in the importance of business in China in ISEKI’s overseas strategy
・ Local production quality has improved, and Dongfeng Iseki will continue to develop, centering on technicalsupport including licensing technology of ISEKI’s high-performance and hi-tech models.
・We will engage in developing Chinese business, based on a relationship of trust with Dongfeng Motor Group
Financial Results Briefing for the Fiscal Year Ended December 31, 201927

Our Response to the Novel Coronavirus COVID-19 (China)■Status of ISEKI Group’s main bases and operations in China
・ Hubei Province ISEKI Wuhan Office (Wuhan City)
Dongfeng Iseki Wuhan Headquarters (head office) (Wuhan City)
Dongfeng Iseki Xiangyang Plant (Xiangyang City)⇒ Plan to reopen on Friday, February 21. Will take measures upon monitoring the situation

・Other

Dongfeng Iseki Changzhou Plant (Changzhou City, Jiangsu Province)⇒ Will reopen on Wednesday, February 12, to start production on Thursday, February 13
however at a low operating ratio
We will closely monitor the impact of the supply chain.

Financial Results Briefing for the Fiscal Year Ended December 31, 201928

Trends in Overseas Markets (Other)
South
Korea

FY2019/12: Major growth in sales, centered on combine harvesters.
FY2020/12: Will work toward expanding orders by continuing to support local distributors.

1. Trend in the market<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 machines due tofarmland consolidation.
The need for large-size, high-performance machines is growing
as the number of farmers is falling.

2. Sales at Iseki
・Launched our brand’s flagship products, TJ series
tractors and HJ series combine harvesters, via thesales channel of the TYM Group, a major South
Korean agricultural machines manufacturer

 Unit sales of combine harvesters (Jan.-Dec.
2019)： YoY 109%
MarketTong Yang Moolsan (TYM) ： YoY 125%
* Estimates by ISEKI based on information from Korean industry newspapers

TJ series tractor

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

HJ series
combine harvester

Riding, 8 plot, ricetransplanter featuring
straight-travel assistance29

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

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Performance Forecast for the Fiscal Year Ending
December 31, 2020
(JPY bn)

FY2018/12

FY2019/12

FY2020/12*

YoY

Actual%Actual%Forecast%changeNet Sales

156.0

100.0

149.9

100.0

156.0

100.0

6.1

(Domestic)

122.8

78.7

117.7

78.5

120.3

77.1

2.6

(Overseas)

33.2

21.3

32.2

21.5

35.7

22.9

3.5

Operating Income

3.2

2.0

2.7

1.8

3.6

2.3

0.9

Ordinary Income

2.6

1.7

1.1

0.7

2.8

1.8

1.7

Profit attributable toowners of parent

1.1

0.7

0.7

0.5

1.7

1.1

1.0

Foreign
Exchange Rates

US$

110.2

109.3

105.0

(4.3)

Euro

130.9

121.6

118.0

(3.6)

Foreign exchangesensitivity

US$

4(JPY million,
operating income basis)

Euro

10
*Forecast: released on Feb. 14, 2020

Financial Results Briefing for the Fiscal Year Ended December 31, 201931

Domestic Sales Forecast
Domesticsales

Will secure agricultural machinery sales at the same level as in 2019 through the 95th anniversary
campaign and launching of new products, and expand revenue from farming implements, spare partsand repair fees, as well as the construction of facilities
FY2018/12

FY2019/12

FY2020/12

YoY

ActualActualForecastchangeCultivating & Mowing
Machinery

27.4

25.4

25.6

0.2

Planting Machinery

9.2

9.0

9.5

0.5

Harvesting & Processing
Machinery

20.0

18.6

18.1

(0.5)

Total

56.6

53.0

53.2

0.2

Farming Implements

20.2

20.1

20.5

0.4

Spare Parts

14.8

15.0

15.1

0.1

Repair Fees

5.6

5.7

5.8

0.1

Total

40.6

40.8

41.4

0.6

Total

97.2

93.8

94.6

0.8

Construction of Facilities

5.7

4.6

6.0

1.4

Others

19.9

19.3

19.7

0.4

Total

122.8

117.7

120.3

2.6

Agricultural Machinery

Agricultural Machinery Related(JPY bn)

Financial Results Briefing for the Fiscal Year Ended December 31, 201932

Overseas Sales Forecast
Overseas
sales

Expect to increase revenue mainly owing to continued strong sales in North America
and recovery in ASEAN.
(JPY bn)

FY2018/12

FY2019/12

FY2020/12

YoY

ActualActualForecastchangeNorth America

10.8

12.7

13.6

0.9

Europe

10.9

10.2

10.2

±0.0

China

1.0

0.1

0.1

±0.0

ASEAN

3.9

1.7

3.8

2.1

Others

1.8

3.5

3.8

0.3

Product Sales Total

28.4

28.2

31.5

3.3

Parts & Others

4.8

4.0

4.2

0.2

Total Sales

33.2

32.2

35.7

3.5

Financial Results Briefing for the Fiscal Year Ended December 31, 201933

Consolidated Operating Income and Dividend Forecast
An increase in gross profit as a result of increased revenue, as well as strengthening of therevenue structure at domestic dealers and improved profitability in products for overseas markets
will mainly offset an increase in SG&A expenses.

Performance
forecast
1. Operating income(JPY bn)

FY ended
Dec. 2018

FY ended
Dec. 2019

FY endingDec. 2020

YoY

ActualActualForecast*

ChangeNet Sales

156.0

149.9

156.0

6.1

Gross Profit

46.0

44.5

46.7

2.2

Gross Profit
Margin

29.5%

29.7%

29.9%

0.2%

SG&A Expenses

42.8

41.8

43.1

1.3

Personnel
Expenses

25.4

24.7

25.3

0.6

Other
Expenses

17.4

17.1

17.8

0.7

3.2

2.7

3.6

0.9

Operating Income(JPY bn)

2. Dividend forecast

Year-end dividend

FY2018/12
Actual

FY2019/12
Plan

FY2020/12
Forecast*

30

30

30

[Breakdown of YoY change in operating income]

1.9

(0.9)

(0.4)

(JPY bn)

0.3
※

2.7

FY2019/12

3.6

Increasedgross profit
fromincreased
revenue

Increased
SG&A
expenses

Temporarynegativefactor*(Personnel
expenses)

Others

FY2020/12*Temporary negative factor: application of the principle of calculating retirement benefits
upon the merger of dealers*Forecast: released on Feb. 14, 2020
Financial Results Briefing for the Fiscal Year Ended December 31, 201934

4. Progress of Mid-termManagement Plan

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Positioning of the Mid-Term Management Plan
2016

2017

2018

2019

95th anniversary
2020

Mid-Term Management Plan (2016-2020)
The plan for the first 5 years, formulated as an important step toward approaching our ideal form in 10 years

2020 Mid-Term Management
Plan (2018-2020)
Reviewed strategies for the remaining 3 years inlight of changes in the business environment

Changed year for achieving
numerical targets from 2020 to 2022

Iseki’s 100th anniversaryΞMid-Term VisionΞ To establish a firm position both in domestic and world market

2025

Ξ Corporate Philosophy Ξ

We are contributing to agriculture both in Japan and throughout the world by“Delivering the products that satisfy customers”

Financial Results Briefing for the Fiscal Year Ended December 31, 201936

Mid-Term Management Plan: Basic Strategies/Numerical Targets

ΞFive basic strategiesΞ
responsiveness to drastic changes
1 inStrengthen
agriculture in Japan

2 Expand overseas businesses
3

Strengthen profitability by optimizing development& production

ΞNumerical targetsΞ
Expansionof businessdomains

Net sales(consolidated)¥190.0 billion

Total overseas
net sales ratio*1

40%

Improved
profitability

Operating income(consolidated)
ROE *2

8.0% or more

Shareholder
returns

Dividend per share¥50¥9.0 billion

4 Make active capital investment for growth5

Enhance corporate value by reinforcing
personnel & corporate governance*1: Total overseas net sales ratio: Overseas sales ratio including
equity method affiliates*2: ROE (Return On Equity)=Profit ÷ Equity × 100

Financial Results Briefing for the Fiscal Year Ended December 31, 201937

Changes in Market Environment
Changes from assumptions
Domestic

Overseas» Future investment strategies, acceleratingpromotion of smart agriculture by
agricultural administration

Continued levelling-off of growth in ASEAN
and China» Last-minute rush and pullback due toconsumption tax hike
» Poor crops due to unseasonable weather,extended periods of rain, etc.
Damage due to typhoons and othernatural disasters» ASEAN・Thailand: bearish market, intensifying
sales competition» China: Downturn in the agricultural
machinery market due to changing
subsidy policies, falling grain prices, etc.,
while locally-made products are prominent

Financial Results Briefing for the Fiscal Year Ended December 31, 201938

Progress of Basic Strategies
1. Strengthen responsiveness to drastic changes inagriculture in Japan(1) Develop sales and services into a wider area (Block strategy)●

Establish sales offices focused around largescale maintenance centers
Reorganizing wide-area sales companies
10 site to 7 site system

Of the 12 affiliateddealers, 7 are widearea sales companies(2) Overhaul revenue and cost structure● Increased revenue from farming
implements, spare parts and repair fees
Improving profitability of dealers(3) Strengthen product development● Increasing product strength, including that of the
All Japan Series (large-sized, hi-tech products)

Large-sizedmachinery

Financial Results Briefing for the Fiscal Year Ended December 31, 2019

Vegetable cultivation
machinery39

Progress of Basic Strategies
2.
Expand overseas businesses
２．海外事業の拡大(1) Expand business through enhanced cooperation withstrong strategic partners●

Europe:riding lawnmowers

North America:
sub-compact tractors

U.K.: Investment in new distributors
India: Technical/business alliance agreement with TAFE

(2) Develop and launch products that match market needs●

North America: Model change into sub-compact tractors
Europe: Products that comply with Stage V emission standards
China: Sales of hi-tech rice transplanters
ASEAN: New products for Thailand and Myanmar(3) Build up and expand spare parts and after-sales businesses●

ASEAN: tractors

China:
hi-tech ricetransplanters

Strengthening the spare parts, services and support system by ISEKI
ThailandFinancial Results Briefing for the Fiscal Year Ended December 31, 201940

Progress of Basic Strategies
3. Strengthen profitability by optimizing
development and production(1) Improve profitability of products for overseas market●

Effect of improvement from compact tractors for
the North America market⇒Driving continued improvement of profitability of
products for overseas market

Renewing the engine
production line(its automation)(2) Inhouse manufacture of engines complying withexhaust gas regulations●

Starting with production ofengines complying with
Stage V standards for theEuropean market*Stage V: Stage 5 of European
emission standards for diesel
engines

Renewing the engine production line (capital investment)⇒Reducing costs, increasing competitiveness(3) Boost profitability of Indonesia business● Steady improvement, staying profitable⇒Further growth along with acceleration ofoverseas developments

PT. ISEKI INDONESIA: Production of tractors for overseas markets

Financial Results Briefing for the Fiscal Year Ended December 31, 201941

Progress of Basic Strategies
4. Make active capital investment for growth
Projected: ¥25.8 billion

Continue investment for growth
in Japan and overseas(JPY bn)

Major investments (over 3 years)● Equipping large sales offices of dealers ¥5.0 bn● Production facilities¥12.5 bn
(to automate engine lines, to produce new models, toincrease productivity, etc.)● Investment in IT¥1.9 bn*Property, plant, and equipment after delivery

Financial Results Briefing for the Fiscal Year Ended December 31, 201942

Progress of Basic Strategies
5. Enhance corporate value by reinforcing
personnel & corporate governance(1) Foster personnel, create comfortable workplaces●

Foster personnel for development, production, and sales & services(Number of staff who underwent inhouse training: 1,625 in 2018)●

Promoting creation of comfortable workplaces (rate of reinstatement
after childcare leave: 100%)●

Established an operations streamlining project
Toward overhauling work approaches and increasing productivity,
including use of IT(2) Corporate governance●Having a third-party institution evaluate the effectiveness of the Boardof Directors●

Setting up a nomination advisory committee(3) Strengthen CSR initiatives●

Promoting environmentally-friendly products (eco-products)*Eco-products: environmentally-friendly products that have passed
our independently developed evaluation standards (inhousecertification)

Financial Results Briefing for the Fiscal Year Ended December 31, 201943

2020 Mid-term Management Plan: Keyword
Henkaku (Change)「」
Ensuring management transparency
Commitment to earnings
Improving operational efficiency

Financial Results Briefing for the Fiscal Year Ended December 31, 201944

Mid-term Vision
ΞMid-term visionΞ2025 marks 100th anniversary of ISEKI GroupTo establish a firm position both in domestic and world market

Toward the100th anniversary

New Mid-term Plan

ΞNew executive teamΞ(2021-2025)

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

Hajime Odagiri

Director & Corporate Officer,
General Division Manager,
Overseas Business Division

Kazuya Tani

Formulated by
the new executive team

To take office upon the Ordinary General Meeting of Shareholders and Board of Directors meeting
planned on March 27, 2020

Financial Results Briefing for the Fiscal Year Ended December 31, 201945

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 is a promotional partner of FOOD ACTION NIPPON.

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”.

Financial Results Briefing for the Fiscal Year Ended December 31, 201946