Supplementary Information toConsolidated Financial Results(January 1, 2020 – June 30, 2020)

I S E K I & CO., LTD.
August 6, 2020

Index
1. Outline of Financial Results for the Second Quarter
Fiscal Year Ending December 31, 2020
2. Performance Forecast for the Fiscal Year EndingDecember 31, 2020

Supplementary Information to Consolidated Financial Results21. Outline of Financial Results for the Second Quarter
Fiscal Year Ending December 31, 2020

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

<Overseas>
NorthAmerica: 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 adecline 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
Supplementary Information to Consolidated Financial Results4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)

Supplementary Information to Consolidated Financial Results

5Domestic Sales
YoY-¥2.7 billion

As sales of agricultural machinery and farming implements decreased due to the pullback in demand after theconsumption 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 ofCOVID-19.
Sales of farming implements decreased intandem with the decreased agriculturalmachinery 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-scalefacilities.

Supplementary Information to Consolidated Financial Results

6

Overseas SalesYoY-¥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)

Europe5.9

5.1(0.8)

Tractors: (0.2)
Lawn mowers: (0.6)

China

0.1

0.4

0.3

ASEAN

0.90.5(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
NorthAmerica: 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 toDongfeng 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.

Supplementary Information to Consolidated Financial Results

7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
ChangeNet 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)

Operating Income

1.6

1.3(0.3)[Breakdown of YoY Change](1.4)

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 on
valuation ofparts inventory
accompanying
delay inreceiving
enginespurchased

Decreased
SG&A
expenses

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

Cost ofSales(0.3)(0.3)

Supplementary Information to Consolidated Financial Results

SG&AExpenses

OperatingIncome

0.0±0.08

Ordinary Income, Quarterly Net Income
Ordinaryincome
YoY¥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

1.61.3(0.3)

Balance of Financial Income

(0.4)

(0.4)

±0.0

Other Non-operating Income(0.4)

0.20.6

Ordinary Income

0.8

1.10.3Extraordinary Income

0.1

0.6

0.5

(0.1)

(0.1)

±0.0

0.8

1.60.8

Income Taxes - Deferred

(0.1)

(0.6)

(0.5)

Profit (Loss) Attributable toOwners of Parent

0.7

1.00.3Extraordinary 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)

Supplementary Information to Consolidated Financial Results

2Q of FY
ended 2019
Actual2Q of FY
ending 2020
ActualChange(0.7)

(0.2)

0.5

-0.6

0.6

9

2. Performance Forecast for the Fiscal YearEnding December 31, 2020

Supplementary Information to Consolidated Financial Results

Assumptions for Consolidated PerformanceForecast Assumptions on business environment
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.

Supplementary Information to Consolidated Financial Results

11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>
NorthAmerica： New products with engines made in-house will eliminate the impact of the delay in receiving engines in the firsthalf.

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 willpick 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
Supplementary Information to Consolidated Financial Results

12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

1.10.2(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)※ Forecast announced on August 6, 2020

YoY Change(JPY yen)

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

Year-End
Dividend

3030

Undetermined[Net Sales]
・ In Japan, overall sales are expected to decline due to a decrease in sales ofagricultural machinery and farming implements attributable to the impact of
COVID-19 and the pullback in demand after the consumption tax rate increase,
despite increases in sales of spare parts, revenue from repair fees, and sales
from construction of facilities.
・ Overseas, sales are expected to decline as we will not be able to completely
cover the decrease in sales due to the impact of COVID-19 (Europe) and thedelay in receiving engines (North America) in the first half.
[Income and Profit]
Operating income is expected to decrease owing to temporary negative factors
such as retirement benefit expenses associated with the merger of sales companies
in addition to a decrease in gross profit due to a decrease in sales attributable to theimpact of COVID-19 and the pullback in demand after the consumption tax rateincrease.
＊Exchange rate forecast from the third quarter onward: US$ = ¥105, Euro = ¥118

Supplementary Information to Consolidated Financial Results

13

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

20.220.1

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

Supplementary Information to Consolidated Financial Results

YoY Change※ Forecast announced on August 6, 202014

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 & Others4.8

4.0

3.1(0.9)

Total Sales

33.2

32.2

30.0(2.2)

Supplementary Information to Consolidated Financial Results

YoY Change※ Forecast announced on August 6, 202015

Consolidated Operating Income Forecast
Performance
Forecast(JPY bn, %)Operating income is expected to decrease owing to temporary negative factors in addition to adecrease in gross profit due to a decrease in sales attributable to the impact of COVID-19 and thepullback in demand after the consumption tax rate increase.
FY ended
Dec. 2018
ActualFY ended
Dec. 2019
ActualFY endingDec. 2020※ForecastYoY
Change[Breakdown of YoY Change in operating income](1.6)

1.0(0.7)(0.3)※Net Sales

156.0

149.9

144.5(5.4)

Gross Profit

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)

PersonnelExpenses

25.4

24.7

24.8

0.1

OtherExpenses

17.4

17.1

16.4

(0.7)

3.2

2.7

1.1(1.6)

Operating Income※ Forecast announced on August 6, 2020

1.1

2.7
FY
ended
Dec. 19

Decreasedgross profit
due todecreased
revenue

Decrease inSG&Aexpenses*Temporary
negativefactors

OthersFYending
Dec. 20* Temporary negative factors:
Temporary expenses incurred by applying the principle method to retirement benefit expense calculation: ¥(0.4) bn
Recording of loss on valuation of parts inventory accompanying the delay in receiving engines purchased: ¥(0.3) bn

Supplementary Information to Consolidated Financial Results

16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

Supplementary Information to Consolidated Financial Results

17