Business strategies f or value cr eatio nMid-term Management Plan (2021–2025)
Outline of Mid-term Management Plan

“Toward the next 100 years...”

ISEKI Group has inherited the company’s founding
philosophy of “freeing farmers from exhausting labor”
in an unbroken line from then until today, and in 2025,
we will mark the 100th anniversary of the company’s
founding. To ensure that ISEKI Group remains farmers’
closest supporter over the next 100 years from 2026, wewill lay firm foundations and make a dramatic leap forwardin the five years of the Mid-term Management Plan.
ISEKI Group’s Corporate Philosophy is to strive tocontribute to the creation the prosperous and sustainable
society through “providing innovative products andhigher quality of services to the customers.” As well as

the provision of products, we will also place efforts into
services (information, know-how, etc.) and continue
our activities as the ISEKI that makes customers happy.
ISEKI Group has set as its long-term vision to be a“solution provider for agriculture and landscape” and has
established two basic strategies to achieve the vision: (1)provision of the best solutions, and (2) enhancement ofcorporate value by strengthening profits and reinforcing
corporate governance. Pursuing solutions to issues related
to agriculture and landscape by steadily implementing
measures in line with our basic strategies, we will aim to
be a solution provider that creates new value.

Fundamentals of Management
Founded in 1926

Business environment and issues
The business environment surrounding ISEKI Group isdiverse, including the impact of COVID-19, global foodissues, and climate change risks. It is also constantlychanging. The Japanese agriculture industry is witnessing
significant structural changes, such as the decline in thenumber of farms, the increase in large-scale farming,
crop diversification, and transition to smart farming.
Overseas, the movement toward electrification is also
accelerating due to various growing needs and, in Europe,
to heightened environmental awareness.

It is with an awareness of this environment that we
recognize (1) responses to changing demand and needs,(2) the improvement of financial structure and expansionof profits, (3) strengthening of ESG initiatives, and (4) therealization of technological innovations as business issues,
and we will promote a variety of measures that aim to
make our long-term vision a reality.

2025 100th anniversary

2021

Integrated manufacturer specializing
in agricultural machinery
Mechanization and laborsaving ofagriculture
Establishing the standard ofJapanese agriculture

2030

Backcasting

Long-term vision (Vision)

Mid-term Management Plan (2021–2025)

To be a solution provider for
agriculture and landscapePositioning

Farming2025 100th anniversary
Building the foundation toward the next 100 years

Food production

Basic strategies

Agricultural machinery

Environmental
preservation

Food(1) Provision of the best solutions(2) Enhancement of corporate value by
strengthening profits and reinforcing corporate
governance

Survival

LandscapeFarmers

Foundation forliving

People and society

Crop diversification

Shift to advanced features
Shift to lower prices(diverse needs)

Lowering of prices

Intensification ofcompetition

From “with COVID-19” to “post COVID-19,” global food issues, climatechange risks
Change in business model (from products to services)
Growing environmental awareness (exhaust emissions, electric vehicles)
Growing demand for disclosure of non-financial information, SDGs
Responses to changes in laws and regulations, compliance

Basic strategies and directions of initiatives
Realization of technological innovations

Diverse environments ineach region

Strengthening of ESG initiatives

Decline in number of farms andincrease in large-scale farming[Founding philosophy] Freeing farmers from exhausting labor

Improvement of financial structure and expansion of profits

Overseas
Responses to changing demand and needs

Japan

Smartification, regulatory reform(WAGRI, open API, DX, etc.)[Corporate Philosophy] We strive to contribute to the creation the prosperous and sustainable society through “providinginnovative products and higher quality of services to the customers”

Business issues

Recognition of environment

Provision of the best solutions

Enhancement of corporate value by strengthening profits and reinforcing corporate governanceTransition from products only to services in addition to products

Transformation to a lean and streamlined businessstructure that can constantly generate profit

Focus on service provision

without being affected by the fluctuation in sales

Selection and concentration

Business model transformation

Improvement of profitability

ESG

Resource concentration

Focus on service
provision

Toward an operating
margin of 5%

Pursuit of value tosociety and sustainability

Promotion centered on
information (DX)
Responses suited to the newnormal
Further expansion ofmaintenance revenue

Structural reforms throughestablishment of an optimal
production system
Improvement of management
efficiency from the perspectiveof group-wide optimization
Financial and capital strategies

Reinforcement of initiatives
and contribution to SDGs
through review of ESG
materiality

Product development andsales strategy integrating
domestic, overseas, anddevelopment and production

Business-specific perspectives
Introduction of an in-house company system

Visualization ofunprofitable businesses

Full use of human resources on aGroup-wide basis
Optimal placement of personnel

Business strategies f or value cr eatio n

Progress status of Mid-term Management Plan
Progress of basic strategies(1) Provision of the best solutions

Japan: “All Japan series” is growing under the priority initiatives of “expansion of large-scale customers.” Under the “revenueexpenditure structural reform,” implements, parts and repair fees are performing well.
Overseas: Increased demand that captures changes in lifestyles in North America and Europe drove the overseas sales overall,resulting in record sales. Trended exceeding the Plan

North AmericaSupport for AGCO brand strategy
development

Strong sales of models equipped with ISEKI engines

Asia
Build foundations based on the revamped
IST
Bring high-performance, large-scale
agricultural machinery to market

Improvement of profitability
Environment

Enhanced line-up of smart agricultural machinery
2021: Rice transplanter equipped with straighttravel and turning assist functions started full-scale operation in the field.
Sales of eight-row class models with these specifications increased to 60% of total smart
agricultural machinery sales
2022: In addition to the compact model, 36HP, 50HP, and 60HP models of tractor equipped withstraight-travel assist function were newly launched (March)
Robot rice transplanter sales began (February)

Implements, parts and repair fees performing well
ISEKI Hokkaido’s Sorachi Chuo Service Workshop, ISEKI Group’s largest maintenance facility, wasnewly established

EuropeExpansion of electrification products

Progress

Structural reform and improvement ofmanagement efficiency
Establishment of an optimal production system

2021 Result (unit base): 112% compared to previous year
Centering on rice transplanters, sales in tractors and combine
harvesters also increased.

Revenue-expenditure structural reform
Improvement of operating margin of sales
subsidiaries
Promotion of establishment of large-scaleservice facility

Responses to DX and the new normal
Enhancement of service capabilities
Business model transformation

Priority measures

2022: Launched limited sales of a compact electric tractor(mower) (plans for mass production by 2024)

Exceeded Plan in first fiscal year (2021) after becoming a consolidated company. Strengthen thefoundation even further
Sales of large-scale combine harvesters for South Korea remain steadily. Tractors and ricetransplanters also rolled out

Establishment of Amoni, a web portal for farm business solutions
Development of online marketing activities such as virtual demonstrations
Introduction of i-Magazine, a support tool for centralized management of service information, atconsolidated sales subsidiaries in Japan.

Society

Smart strategies
Smart agricultural machinery sales
increased

Progress

ESG

Domestic Business Company
Overseas Business Company

Selection and concentration

Expansion of large-scale customers“All Japan series” sales increased

Improvement of profitability: Ongoing response to emergence of issues and risks that exceed initial forecasts, such as
adverse impact on production of supply chain disruptions and soaring raw material prices
Effects expected to manifest from the second half of 2022

Governance

Priority measures(2) Enhancement of corporate value by strengthening profits and reinforcing corporate governance

Financial and capital strategies
Creation of cash flows
Capital investment (within range ofdepreciation)
Reduction of interest-bearing liabilities
Shareholder return

Performing well(43.3 billion yen: 109% compared with 2017)
Thailand: Enhanced IST’s dealer sales andservice support
Increase in parts sales, 107% comparedwith previous year

Ratio of eco-product in domestic sales: 39.8% (2021: unit base)
Reduction in CO2 emissions from production activities: Reduced by 18.7% (Compared with2013)
Revision and formulation of Mid -to Long-Term Environmental Targets Please refer to p. 40

Enhancement of brand value
Supply chain management

Revision of CSR procurement guidelines, implementation of CSR procurement questionnaire

Enhancement of engagement
Enhancement of employee engagement

Dec.
2017

406

Dec.
2018

408

Dec.
2019

420

Dec.
2020

Introduction of work-from-home system and region-restricted employee system
Enhancement of employee engagement through promotion of health and productivity management
Implementation of engagement surveys

Enhancement of corporate value
Strengthening of ESG Structure

Increase in the ratio of Outside Directors (1/3)
Introduction of performance-based stock compensation system
Establishment of new Sustainability Committee and Green Innovation Promotion Office

Progress of numerical targets

Implements, parts and repair fees in Japan(100 million yen)
397

(Results for fiscal year ended December 31, 2021)
Cash flows from operating activities of 14.200 billion yen due to increased profit andreduction in inventories, etc.
Capital investment (acquisition of non-current assets) 5.5 billion yen, depreciation 6.5 billion yen
Contraction of interest-bearing debt of 7.1 billion yen due to favorable FCF and other reasons.
D/E ratio 0.9 times
Resumption of dividends (30 yen per share)

Environmental preservation
Expansion of sales of environmentally-friendly
design (eco-products)
Promotion of environmental management(reduction of environmental footprint)

Operating margin
Incidental services
Japan: Expansion of parts, repair fees, andimplements
Overseas: Establishment of parts and service
business

Integration into company headquarters of production engineering department and outsourced
management work at manufacturing plants
Planned revision of category of in-house/outsourced production categories (from 2022),
rearrangement of production categories (from 2023)
Expansion of overseas production base (Extension of plant in Indonesia starts in 2022)
Expansion of production capacity
Shared services, centralized management of suppliers (centralized procurement), reduction in
fixed costs

433

109%
comparedwith 2017

1.6%

Dec.
2021

2016

2.5%

2017

2.0%

2018

5%

Improvementof gross profit Enhanced
marginmanagement
efficiency
Reduction of
fixed costs Structuralreform

5.0%

2.6%

1.8%

2019

2.8%

1.4%

2020

2021

2022
(Forecast)

2023

2024

2025