Kubota : RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30 2020 (IFRS)

FOR IMMEDIATE RELEASE	August 4, 2020

Contact: IR Group

Corporate Planning and Control Dept.

2‐47, Shikitsuhigashi 1‐chome,

Naniwa‐ku, Osaka 556‐8601, Japan

Phone: +81‐6‐6648‐2645

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020 [IFRS]

Kubota Corporation hereby reports its consolidated results for the six months ended June 30, 2020.

Consolidated Financial Highlights

1. Consolidated results of operations for the six months ended June 30, 2020

(1) Results of operations		(Unit: millions of yen, except earnings per share)
	Six months ended	Change	Six months ended	Change
	June 30, 2020	[%]	June 30, 2019	[%]
Revenue	¥ 884,170	(8.9)	¥ 970,829	7.1
Operating profit	¥ 81,670	(26.4)	¥ 110,947	9.7
Profit before income taxes	¥ 84,421	(26.4)	¥ 114,640	9.0
Profit for the period	¥ 65,161	(24.9)	¥ 86,737	11.1
Profit attributable to owners of the parent	¥ 59,570	(26.6)	¥ 81,189	12.9
Comprehensive income for the period	¥ 30,848	(60.1)	¥ 77,332	99.2
Earnings per share attributable to owners of the parent:
Basic	¥ 48.87		¥ 65.95
Diluted	‐		‐
(2) Financial condition			(Unit: millions of yen)
	June 30, 2020		Dec. 31, 2019
Total assets	¥ 3,127,889		¥ 3,139,318
Total equity	¥ 1,535,183		¥ 1,537,214
Equity attributable to owners of the parent	¥ 1,441,503		¥ 1,442,837
Ratio of equity attributable to owners of the parent
to total assets	46.1%		46.0%

Note:

Change [%] represents the percentage change from the same period in the prior year.

2. Cash dividends

				(Unit: yen)
		Cash dividends per common share
	Interim		Year‐end	Total
Year ending Dec. 31, 2020	¥ 17.00		Undecided	Undecided
Year ended Dec. 31, 2019	¥ 17.00		¥ 19.00	¥ 36.00

Note:

Although Kubota Corporation's basic policy for the return of profit to shareholders is to maintain stable dividends and raise dividends, the specific amount of cash dividends for each fiscal year is decided in consideration of the development of business performance, financial condition, and shareholder return ratio calculated from dividends and share buy‐backs. The specific amount of cash dividends for the year ending December 31, 2020 has not been decided at this time and Kubota Corporation will publicize the amount as soon as a decision is made.

‐1‐

3. Forecasts of operations for the year ending December 31, 2020

	(Unit: millions of yen, except earnings per share)
	Year ending	Change
	Dec. 31, 2020	[%]
Revenue	¥ 1,780,000	( 7.3)
Operating profit	¥ 150,000	( 25.6)
Profit before income taxes	¥ 155,000	( 25.8)
Profit attributable to owners of the parent	¥ 110,000	( 26.2)
Earnings per share attributable to owners of the parent ‐ Basic	¥ 90.38

Notes:

1. Change [%] represents the percentage change from the same period in the prior year.
2. Please refer to the accompanying materials, "1. Review of operations and financial condition (3) Forecasts for the year ending December 31, 2020" on page 6 for further information related to the forecasts of operations.

4. Other information

1. Changes in significant subsidiaries during the six months ended June 30, 2020 (changes in specified subsidiaries resulting in the changes in scope of consolidation): None
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies due to reasons other than a) above: None
   3. Changes in accounting estimates: None
4. Number of common shares issued

a) Number of common shares issued including treasury shares as of June 30, 2020	:	1,220,576,846
	Number of common shares issued including treasury shares as of December 31, 2019	:	1,220,576,846
b)	Number of treasury shares as of June 30, 2020	:	5,142,876
	Number of treasury shares as of December 31, 2019	:	648,716
c)	Weighted‐average number of common shares outstanding during the six months ended June 30, 2020	:	1,218,840,330
	Weighted‐average number of common shares outstanding during the six months ended June 30, 2019	:	1,230,946,842

(Information on the status of the quarterly review by the independent auditor) This release is not subject to the quarterly review by the independent auditor.

(Method of obtaining supplementary materials on the financial results)

Kubota Corporation plans to hold a result briefing (conference call) for institutional investors and securities analysts on August 7, 2020. The supplementary material will be published on the Company's website on the same day.

< Cautionary statements with respect to forward‐looking statements >

This document may contain forward‐looking statements that are based on management's expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results may differ materially from what is forecast in forward‐looking statements due to a variety of factors, including, without limitation: general economic conditions in the Company's markets, particularly government agricultural policies, levels of capital expenditures both in public and private sectors, foreign currency exchange rates, the occurrence of natural disasters, continued competitive pricing pressures in the marketplace, as well as the Company's ability to continue to gain acceptance of its products.

‐2‐

Index to accompanying materials

1. Review of operations and financial condition …………………………………………………………………………………………	4
(1)	Summary of the results of operations for the six‐month period ………………………………………………………	4
(2)	Financial condition ……………………………………………………………………………………………………………………......	5
(3)	Forecasts for the year ending December 31, 2020 …………………………………………………………………………	6

2. Other information ……………………………………………………………………………………………………………………............... 6

(1)	Changes in significant subsidiaries ……………………………………………………………………………………………………	6
(2)	Changes in accounting policies …………………………………………………………………………………………………………	6
3. Condensed consolidated financial statements …………………………………………………………………………………………	7
(1)	Condensed consolidated statement of financial position …………………………………………………………………	7
(2)	Condensed consolidated statement of profit or loss ………………………………………………………………………	9
(3)	Condensed consolidated statement of comprehensive income ………………………………………………………	10
(4)	Condensed consolidated statement of changes in equity ………………………………………………………………	11
(5)	Condensed consolidated statement of cash flows ……………………………………………………………………………	12
(6)	Notes to the going concern assumption …………………………………………………………………………………………	12
(7)	Consolidated segment information …………………………………………………………………………………………………	13
(8)	Consolidated revenue by product group …………………………………………………………………………………………	14
(9)	Anticipated consolidated revenue by reportable segment ………………………………………………………………	15
4. Results of operations for the three months ended June 30, 2020 ……………………………………………………………	16
(1)	Condensed consolidated statement of profit or loss ………………………………………………………………………	16
(2)	Consolidated segment information …………………………………………………………………………………………………	17
(3)	Consolidated revenue by product group …………………………………………………………………………………………	18

‐3‐

Kubota Corporation

and Its Subsidiaries

1. Review of operations and financial condition

(1) Summary of the results of operations for the six-month period

For the six months ended June 30, 2020, revenue of Kubota Corporation and its subsidiaries (hereinafter, the "Company") decreased by ¥86.7 billion [8.9%] from the same period in the prior year to ¥884.2 billion.

Domestic revenue decreased by ¥19.9 billion [6.4%] from the same period in the prior year to ¥290.2 billion because of decreased revenue in Farm & Industrial Machinery, Water & Environment, and Other.

Overseas revenue decreased by ¥66.8 billion [10.1%] from the same period in the prior year to ¥594.0 billion because of significantly decreased sales of construction machinery, tractors, and engines. On the other hand, revenue in Water & Environment increased.

Operating profit decreased by ¥29.3 billion [26.4%] from the same period in the prior year to ¥81.7 billion because profitability of products, which were shipped in this fiscal year, in its manufacturing bases deteriorated due to a significant reduction in production in the fourth quarter of 2019. In addition, there were some negative effects from significantly decreased sales in the overseas markets and unfavorable foreign exchange rates. Profit before income taxes decreased by ¥30.2 billion [26.4%] from the same period in the prior year to ¥84.4 billion mainly due to decreased operating profit. Income tax expenses were ¥20.6 billion. Share of profits of investments accounted for using the equity method was ¥1.3 billion. Profit for the period decreased by ¥21.6 billion [24.9%] from the same period in the prior year to ¥65.2 billion. Profit attributable to owners of the parent decreased by ¥21.6 billion [26.6%] from the same period in the prior year to ¥59.6 billion.

Revenue from external customers and operating profit by each reportable segment was as follows:

1) Farm & Industrial Machinery

Farm & Industrial Machinery is comprised of farm equipment, agricultural‐related products, engines, and construction machinery.

Revenue in this segment decreased by 10.2% from the same period in the prior year to ¥719.0 billion, and accounted for 81.3% of consolidated revenue.

Domestic revenue decreased by 9.1% from the same period in the prior year to ¥144.6 billion. Sales of farm equipment and agricultural‐related products decreased mainly due to adverse reaction from rushed demand before the consumption tax hike and a negative effect from voluntary restraint of sales activities along with the infection spread of COVID‐19.

Overseas revenue decreased by 10.5% from the same period in the prior year to ¥574.4 billion. In North America, retail sales had been strong mainly due to solid demand since April and a positive effect from introduction of new models. However, wholesales of construction machinery and tractors decreased because of adverse reaction from carryover of shipment of some products from the fiscal 2018 to the fiscal 2019 caused by typhoon, which had occurred in 2018, and delay in production and shipment caused by suspended operations in its manufacturing bases resulting from the infection spread of COVID‐19. In addition, sales of engines also significantly decreased from the same period in the prior year mainly due to a reduction in production of OEM clients resulting from the infection spread of COVID‐19 and a deterioration in oil and gas market. In Europe, sales of construction machinery, tractors, and engines significantly decreased mainly due to some negative effects from business suspension by dealers and a reduction in production of OEM clients for engines along with the infection spread of COVID‐19. In Asia outside Japan, sales of tractors in Thailand decreased due to a negative impact of water shortage, which had continued since the prior year and inventory adjustments by dealers. On the other hand, sales of engines in China increased due to recovered demand after

‐4‐

Kubota Corporation

and Its Subsidiaries

resumption of economic activities. In addition, sales of farm equipment increased due to a positive effect from introduction of a new model.

Operating profit in this segment decreased by 25.0% from the same period in the prior year to ¥87.1 billion mainly due to significantly decreased revenue in the domestic and overseas markets and a deterioration in profitability of products, which were shipped in this fiscal year, in its manufacturing bases, while there were some positive effects from raised product prices and declined material prices.

2) Water & Environment

Water & Environment is comprised of pipe‐ and infrastructure‐related products (ductile iron pipes, plastic pipes, valves for public sector, industrial castings, ceramics, spiral‐welded steel pipes, air‐conditioning equipment, and other products) and environment‐related products (environmental control plants, pumps, valves for private sector, and other products).

Revenue in this segment decreased by 2.5% from the same period in the prior year to ¥150.3 billion, and accounted for 17.0% of consolidated revenue.

Domestic revenue decreased by 3.3% from the same period in the prior year to ¥130.9 billion. Revenue in pipe‐ and infrastructure‐related products slightly decreased due to a decrease in sales of plastic pipes, air‐conditioning equipment and spiral‐welded steel pipes caused by the infection spread of COVID‐19. On the other hand, sales of some products, such as ductile iron pipes, increased. In environment‐related products, revenue from construction of waste disposal and treatment facility in Futaba Town, Fukushima Prefecture decreased mainly.

Overseas revenue increased by 3.3% from the same period in the prior year to ¥19.4 billion. Sales of industrial castings to Korea and membrane systems to China increased.

Operating profit in this segment decreased by 7.7% from the same period in the prior year to ¥9.9 billion due to decreased revenue in the domestic market and an increase in construction costs of plant.

3) Other

Other is mainly comprised of a variety of services.

Revenue in this segment decreased by 6.4% from the same period in the prior year to ¥14.8 billion, and accounted for 1.7% of consolidated revenue.

Operating profit in this segment decreased by 5.7% from the same period in the prior year to ¥1.5 billion.

(2) Financial condition

1. Assets, liabilities, and equity

Total assets at June 30, 2020 were ¥3,127.9 billion, a decrease of ¥11.4 billion from the prior fiscal year‐end. With respect to assets, finance receivables increased due to the expansion in sales financing operations in North America, where retail sales were strong. In addition, cash and cash equivalents temporarily increased due to the acceleration of funding in preparation for the growing demand for funds caused by the infection spread of COVID‐19. On the other hand, trade receivables and inventories decreased mainly due to delay in production and shipment caused by suspended operations in its manufacturing bases resulting from the infection spread of COVID‐19. Furthermore, other financial assets also decreased due to sales of securities.

With respect to liabilities, trade payables significantly decreased while bonds and borrowings increased. Equity slightly decreased due to purchases of treasury shares and a deterioration in other components of equity along with fluctuations in foreign exchange rates and prices of securities despite the accumulation of retained earnings. The ratio of equity attributable to owners of the parent to total assets stood at 46.1%, 0.1 percent higher than the prior fiscal

‐5‐

Kubota Corporation

and Its Subsidiaries

year‐end.

1. Cash flows

Net cash provided by operating activities during the six months ended June 30, 2020 was ¥49.5 billion, a decrease of ¥1.4 billion in net cash inflow compared with the same period in the prior year. The decrease was mainly due to an increase in cash outflow related to an increase in finance receivables and a decrease in profit for the period. On the other hand, cash outflow related to the changes in working capital decreased due to a decrease in trade receivables and inventories.

Net cash used in investing activities was ¥30.4 billion, a decrease of ¥34.2 billion in net cash outflow compared with the same period in the prior year. This decrease was mainly due to an increase in cash inflow related to sales of securities and a decrease in cash outflow related to acquisition of property, plant, and equipment and intangible assets.

Net cash provided by financing activities was ¥36.2 billion, an increase of ¥29.7 billion in net cash inflow compared with the same period in the prior year mainly due to an increase in funding.

As a result of the above, and after taking into account the effects from exchange rate changes, cash and cash equivalents at June 30, 2020 were ¥250.7 billion, an increase of ¥51.0 billion from the beginning of the current period.

(3) Forecasts for the year ending December 31, 2020

The Company did not announce the forecasts for the year ending December 31, 2020, as it was difficult to calculate the reasonable forecasts under the uncertain circumstances about the scale of the infection spread of COVID‐19 and the timing of end of COVID‐19. However, the Company has determined the forecasts as follows based on the information available at the present time and its business trends of the first half of this year because economic activities have been resumed gradually in the domestic and overseas markets.

Consolidated revenue for the year ending December 31, 2020 is forecast to decrease by ¥140.0 billion from the prior year to ¥1,780.0 billion. The Company expects the infection spread of COVID‐19 will settle gradually. However, the negative impact of COVID‐19 is expected to continue throughout the year because the pace of a recovery in demand after the resumption of economic activities is expected to be slow and it is expected to take time for a recovery in production, including parts procurement. As a result, the negative impact on consolidated revenue is expected to be a decrease of around ¥158.0 billion.

Operating profit is forecast to decrease by ¥51.7 billion from the prior year to ¥150.0 billion mainly due to a negative impact of the yen appreciation and a deterioration in profitability of products in manufacturing bases along with reduced production volumes, in addition to significantly decreased revenue in the domestic and overseas markets. Profit before income taxes is forecast to decrease by ¥54.0 billion from the prior year to ¥155.0 billion. Profit attributable to owners of the parent is forecast to decrease by ¥39.1 billion from the prior year to ¥110.0 billion.

(These forecasts are based on the assumption of exchange rates of ¥107=US$1 and ¥120=€1.)

2. Other information

(1) Changes in significant subsidiaries

None

(2) Changes in accounting policies

None

‐6‐

Kubota Corporation

and Its Subsidiaries

3. Condensed consolidated financial statements

(1) Condensed consolidated statement of financial position

ASSETS							(Unit: millions of yen)
				June 30, 2020		Dec. 31, 2019		Change
				Amount	%		Amount	%	Amount
Current assets:
	Cash and cash equivalents		¥	250,659		¥	199,665		¥	50,994
	Trade receivables			656,793			682,596			(25,803)
	Finance receivables			308,291			293,933			14,358
	Other financial assets			87,075			71,968			15,107
	Inventories			368,737			382,401			(13,664)
	Income taxes receivable			4,985			6,287			(1,302)
	Other current assets			51,885			82,034			(30,149)
	Total current assets			1,728,425	55.3		1,718,884	54.8		9,541
Noncurrent assets:
	Investments accounted for using			34,573			33,729			844
	the equity method
	Finance receivables			721,561			699,238			22,323
	Other financial assets			116,229			148,936			(32,707)
	Property, plant, and equipment			392,976			405,349			(12,373)
	Goodwill and intangible assets			64,795			60,986			3,809
	Deferred tax assets			45,027			46,984			(1,957)
	Other noncurrent assets			24,303			25,212			(909)
	Total noncurrent assets			1,399,464	44.7		1,420,434	45.2		(20,970)
	Total assets		¥	3,127,889	100.0	¥	3,139,318	100.0	¥	(11,429)

‐7‐

										Kubota Corporation
										and Its Subsidiaries
LIABILITIES AND EQUITY							(Unit: millions of yen)
				June 30, 2020		Dec. 31, 2019		Change
				Amount	%		Amount	%		Amount
Current liabilities:
	Bonds and borrowings		¥	364,585		¥	386,538		¥	(21,953)
	Trade payables			244,678			293,774			(49,096)
	Other financial liabilities			72,910			78,860			(5,950)
	Income taxes payable			22,162			18,611			3,551
	Provisions			34,445			31,001			3,444
	Other current liabilities			196,773			192,959			3,814
	Total current liabilities			935,553	29.9		1,001,743	31.9		(66,190)
Noncurrent liabilities:
	Bonds and borrowings			592,535			516,443			76,092
	Other financial liabilities			25,149			30,247			(5,098)
	Retirement benefit liabilities			15,443			15,773			(330)
	Deferred tax liabilities			19,039			32,984			(13,945)
	Other noncurrent liabilities			4,987			4,914			73
	Total noncurrent liabilities			657,153	21.0		600,361	19.1		56,792
	Total liabilities			1,592,706	50.9		1,602,104	51.0		(9,398)
Equity:
	Share capital			84,130			84,130			－
	Share premium			84,993			84,671			322
	Retained earnings			1,293,047			1,238,824			54,223
	Other components of equity			(13,178)			35,849			(49,027)
	Treasury shares			(7,489)			(637)			(6,852)
	Total equity attributable to owners of the parent			1,441,503	46.1		1,442,837	46.0		(1,334)
	Noncontrolling interests			93,680	3.0		94,377	3.0		(697)
	Total equity			1,535,183	49.1		1,537,214	49.0		(2,031)
	Total liabilities and equity		¥	3,127,889	100.0	¥	3,139,318	100.0	¥	(11,429)

‐8‐

Kubota Corporation

and Its Subsidiaries

(2) Condensed consolidated statement of profit or loss

(Unit: millions of yen, except earnings per share)

				Six months ended	Six months ended		Change
				June 30, 2020		June 30, 2019
				Amount	%		Amount	%		Amount	%
	Revenue		¥	884,170	100.0	¥	970,829	100.0	¥	(86,659)	(8.9)
	Cost of sales			(634,113)			(689,649)			55,536
	Selling, general, and administrative expenses			(166,357)			(166,637)			280
	Other income			4,356			1,326			3,030
	Other expenses			(6,386)			(4,922)			(1,464)
	Operating profit			81,670	9.2		110,947	11.4		(29,277)	(26.4)
	Finance income			3,914			4,444			(530)
	Finance costs			(1,163)			(751)			(412)
	Profit before income taxes			84,421	9.5		114,640	11.8		(30,219)	(26.4)
	Income tax expenses			(20,598)			(29,476)			8,878
	Share of profits of investments accounted for			1,338			1,573			(235)
	using the equity method
	Profit for the period		¥	65,161	7.4	¥	86,737	8.9	¥	(21,576)	(24.9)
	Profit attributable to:
	Owners of the parent		¥	59,570	6.7	¥	81,189	8.4	¥	(21,619)	(26.6)
	Noncontrolling interests			5,591	0.7		5,548	0.5		43	0.8
	Earnings per share attributable to owners of the parent:
	Basic		¥	48.87		¥	65.95
	Diluted			－			－

‐9‐

Kubota Corporation

and Its Subsidiaries

(3) Condensed consolidated statement of comprehensive income

							(Unit: millions of yen)
			Six months ended	Six months ended		Change
				June 30, 2020		June 30, 2019
	Profit for the period		¥	65,161	¥	86,737	¥	(21,576)
	Other comprehensive income, net of income tax:
	Items that will not be reclassified subsequently to profit or loss:
	Remeasurement of defined benefit			113		30		83
	pension plans
	Net change in fair value of financial assets measured at			(7,887)		5,275		(13,162)
	fair value through other comprehensive income
	Items that may be reclassified subsequently to profit or loss:
	Exchange rate differences on translating			(26,539)		(14,710)		(11,829)
	foreign operations
	Total other comprehensive income, net of income tax			(34,313)		(9,405)		(24,908)
	Comprehensive income for the period		¥	30,848	¥	77,332	¥	(46,484)
	Comprehensive income attributable to:
	Owners of the parent		¥	28,401	¥	70,513	¥	(42,112)
	Noncontrolling interests			2,447		6,819		(4,372)

‐10‐

Kubota Corporation

and Its Subsidiaries

(4) Condensed consolidated statement of changes in equity

Six months ended June 30, 2020														(Unit: millions of yen)
			Equity attributable to owners of the parent
			Share		Share		Retained		Other		Treasury		Total equity	Noncontrolling		Total
					components		attributable to
			capital		premium		earnings		of		shares	owners of the		interests		equity
									equity				parent
Balance as of Jan. 1, 2020	¥	84,130	¥	84,671	¥	1,238,824	¥	35,849	¥	(637)	¥	1,442,837	¥	94,377	¥	1,537,214
	Profit for the period						59,570						59,570		5,591		65,161
	Total other comprehensive								(31,169)				(31,169)		(3,144)		(34,313)
	income, net of income tax
	Comprehensive income						59,570		(31,169)				28,401		2,447		30,848
	for the period
	Transfer to retained						17,873		(17,873)				－				－
	earnings
	Dividends paid						(23,185)						(23,185)		(2,721)		(25,906)
	Purchases and sales of treasury										(7,000)		(7,000)				(7,000)
	shares
	Share‐based payments with				(61)		(35)				148		52				52
	transfer restrictions
	Changes in ownership				383				15				398		(423)		(25)
	interests in subsidiaries
Balance as of June 30, 2020	¥	84,130	¥	84,993	¥	1,293,047	¥	(13,178)	¥	(7,489)	¥	1,441,503	¥	93,680	¥	1,535,183
Six months ended June 30, 2019														(Unit: millions of yen)
			Equity attributable to owners of the parent
			Share		Share		Retained		Other		Treasury		Total equity	Noncontrolling		Total
					components		attributable to
			capital		premium		earnings		of		shares	owners of the		interests		equity
									equity				parent
Balance as of Jan. 1, 2019	¥	84,130	¥	85,305	¥	1,135,395	¥	35,343	¥	(323)	¥	1,339,850	¥	86,583	¥	1,426,433
	Profit for the period						81,189						81,189		5,548		86,737
	Total other comprehensive								(10,676)				(10,676)		1,271		(9,405)
	income, net of income tax
	Comprehensive income						81,189		(10,676)				70,513		6,819		77,332
	for the period
	Transfer to retained						3,463		(3,463)				－				－
	earnings
	Dividends paid						(22,184)						(22,184)		(3,938)		(26,122)
	Purchases and sales of treasury										(7,063)		(7,063)				(7,063)
	shares
	Share‐based payments with				(56)		(19)				122		47				47
	transfer restrictions
	Changes in ownership				(202)				(449)				(651)		(3,617)		(4,268)
	interests in subsidiaries
Balance as of June 30, 2019	¥	84,130	¥	85,047	¥	1,197,844	¥	20,755	¥	(7,264)	¥	1,380,512	¥	85,847	¥	1,466,359

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Kubota Corporation

and Its Subsidiaries

(5) Condensed consolidated statement of cash flows

							(Unit: millions of yen)
				Six months ended	Six months ended		Change
					June 30, 2020		June 30, 2019
	Cash flows from operating activities:
		Profit for the period		¥	65,161	¥	86,737
		Depreciation and amortization			33,099		30,581
		Finance income and costs			(2,910)		(3,590)
		Income tax expenses			20,598		29,476
		Decrease (increase) in trade receivables			10,600		(37,635)
		Increase in finance receivables			(63,460)		(34,059)
		Decrease (increase) in inventories			6,300		(29,360)
		Decrease (increase) in other assets			37,786		(3,315)
		(Decrease) increase in trade payables			(46,317)		17,536
		Increase in other liabilities			11,320		12,778
		Other, net			(1,534)		(2,361)
		Interest received			2,058		2,071
		Dividends received			1,430		1,917
		Interest paid			(419)		(563)
		Income taxes paid, net			(24,191)		(19,340)
		Net cash provided by operating activities			49,521		50,873	¥	(1,352)
	Cash flows from investing activities:
		Payments for acquisition of property, plant, and equipment			(38,434)		(51,722)
		and intangible assets
		Proceeds from sales and redemptions of securities			26,916		5,321
		Net decrease in short‐term loans receivable from associate			250		150
		Net increase in time deposits			(25,373)		(8,513)
		Net decrease (increase) in short‐term investments			2,894		(7,646)
		Other, net			3,330		(2,188)
		Net cash used in investing activities			(30,417)		(64,598)		34,181
	Cash flows from financing activities:
		Funding from bonds and long‐term borrowings			204,676		172,621
		Redemptions of bonds and repayments of long‐term borrowings			(93,171)		(98,498)
		Net decrease in short‐term borrowings			(38,197)		(22,333)
		Repayments of lease liabilities			(7,272)		(9,733)
		Dividends paid			(23,185)		(22,184)
		Purchases of treasury shares			(7,000)		(7,063)
		Proceeds from acquisition of noncontrolling interests			(24)		(5,652)
		Other, net			366		(655)
		Net cash provided by financing activities			36,193		6,503		29,690
	Effect of exchange rate changes on cash and cash equivalents			(4,303)		(1,142)		(3,161)
	Net increase (decrease) in cash and cash equivalents			50,994		(8,364)
	Cash and cash equivalents, at the beginning of the period			199,665		229,123
	Cash and cash equivalents, at the end of the period		¥	250,659	¥	220,759	¥	29,900

(6) Notes to the going concern assumption

None

‐12‐

Kubota Corporation

and Its Subsidiaries

1. Consolidated segment information

1. Reportable segments

Information by reportable segment is summarized as follows:

									(Unit: millions of yen)
			Farm &		Water &
			Industrial			Other		Adjustments		Consolidated
				Environment
Six months ended June 30, 2020		Machinery
Revenue	External customers	¥	718,996	¥	150,326	¥	14,848	¥	－	¥	884,170
	Intersegment		137		535		13,240		(13,912)		－
	Total		719,133		150,861		28,088		(13,912)		884,170
Operating profit	¥	87,149	¥	9,904	¥	1,530	¥	(16,913)	¥	81,670
									(Unit: millions of yen)
			Farm &		Water &
			Industrial			Other		Adjustments		Consolidated
				Environment
Six months ended June 30, 2019		Machinery
Revenue	External customers	¥	800,822	¥	154,138	¥	15,869	¥	－	¥	970,829
	Intersegment		121		537		14,032		(14,690)		－
	Total		800,943		154,675		29,901		(14,690)		970,829
Operating profit	¥	116,245	¥	10,733	¥	1,623	¥	(17,654)	¥	110,947

Notes:

1. 1. Adjustments include items such as the elimination of intersegment transfers and corporate expenses which are not allocated to any particular reportable segment. The corporate expenses included in Adjustments consist mainly of administration department expenses, basic research expenses, and foreign exchange gains or losses incurred by Kubota Corporation.
   2. The aggregated amounts of operating profit are equal to those presented in the condensed consolidated statement of profit or loss. Please refer to the condensed consolidated statement of profit or loss for the reconciliation of operating profit to profit before income taxes.
   3. Intersegment transfers are recorded at values that approximate market prices.
   4. Beginning with the current consolidated fiscal year, in conformity with the change in the business reporting structure of the Company, the amounts related to "Air‐conditioning equipment" are reported in the "Water & Environment" segment, whereas they were formerly reported in the "Farm & Industrial Machinery" segment. The information for the same period in the prior year has been retrospectively adjusted to conform to the current fiscal year's presentation.
2. Geographic information

Information about revenue from external customers by location is summarized as follows:

			(Unit: millions of yen)
	Six months ended		Six months ended
	June 30, 2020		June 30, 2019
Japan	¥	290,193	¥	310,102
North America		300,361		338,283
Europe		108,788		132,379
Asia outside Japan		161,160		166,842
Other areas		23,668		23,223
Total	¥	884,170	¥	970,829

Notes:

1. Revenue from North America included that from the United States of ¥270,045 million and ¥300,073 million for the six months ended June 30, 2020 and 2019, respectively.
2. There was no single customer from whom revenue exceeded 10% or more of total consolidated revenue of the Company.

‐13‐

Kubota Corporation

and Its Subsidiaries

(8) Consolidated revenue by product group

(Unit: millions of yen)

			Six months ended			Six months ended			Change
			June 30, 2020			June 30, 2019
			Amount		%		Amount		%		Amount	%
	Farm Equipment and Engines	¥	583,805		66.0	¥	637,736		65.7	¥	(53,931)	(8.5)
	Domestic		129,099				142,604				(13,505)	(9.5)
	Overseas		454,706				495,132				(40,426)	(8.2)
	Construction Machinery		135,191		15.3		163,086		16.8		(27,895)	(17.1)
	Domestic		15,501				16,497				(996)	(6.0)
	Overseas		119,690				146,589				(26,899)	(18.3)
Farm & Industrial Machinery		718,996		81.3		800,822		82.5		(81,826)	(10.2)
	Domestic		144,600		16.3		159,101		16.4		(14,501)	(9.1)
	Overseas		574,396		65.0		641,721		66.1		(67,325)	(10.5)
	Pipe‐ and Infrastructure‐related Products		90,325		10.2		89,930		9.3		395	0.4
	Domestic		75,393				75,647				(254)	(0.3)
	Overseas		14,932				14,283				649	4.5
	Environment‐related Products		60,001		6.8		64,208		6.6		(4,207)	(6.6)
	Domestic		55,519				59,698				(4,179)	(7.0)
	Overseas		4,482				4,510				(28)	(0.6)
Water & Environment		150,326		17.0		154,138		15.9		(3,812)	(2.5)
	Domestic		130,912		14.8		135,345		13.9		(4,433)	(3.3)
	Overseas		19,414		2.2		18,793		2.0		621	3.3
Other		14,848		1.7		15,869		1.6		(1,021)	(6.4)
	Domestic		14,681		1.7		15,656		1.6		(975)	(6.2)
	Overseas		167		0.0		213		0.0		(46)	(21.6)
Total	¥	884,170		100.0	¥	970,829		100.0	¥	(86,659)	(8.9)
	Domestic		290,193		32.8		310,102		31.9		(19,909)	(6.4)
	Overseas		593,977		67.2		660,727		68.1		(66,750)	(10.1)

Note:

In conformity with the change in the business reporting structure of the Company, the amounts related to "Air‐conditioning equipment" are reported in the "Pipe‐ and Infrastructure‐related Products", whereas they were formerly reported in the "Farm Equipment and Engines", and the amounts related to "Pumps" and the amounts related to "Valves for private sector" are reported in the "Environment‐related Products", whereas they were formerly reported in the "Pipe‐ and Infrastructure‐related Products". The information for the same period in the prior year has been retrospectively adjusted to conform to the current fiscal year's presentation.

‐14‐

Kubota Corporation

and Its Subsidiaries

(9) Anticipated consolidated revenue by reportable segment

(Unit: billions of yen)

			Year ending			Year ended			Change
			Dec. 31, 2020			Dec. 31, 2019
			Amount		%		Amount		%		Amount	%
	Domestic	¥	280.0			¥	306.3			¥	(26.3)	(8.6)
	Overseas		1,150.0				1,252.0				(102.0)	(8.1)
Farm & Industrial Machinery		1,430.0		80.3		1,558.3		81.1		(128.3)	(8.2)
	Domestic		276.0				287.8				(11.8)	(4.1)
	Overseas		44.0				42.3				1.7	4.1
Water & Environment		320.0		18.0		330.1		17.2		(10.1)	(3.0)
	Domestic		29.5				31.2				(1.7)	(5.6)
	Overseas		0.5				0.4				0.1	23.5
Other		30.0		1.7		31.6		1.7		(1.6)	(5.2)
Total	¥	1,780.0		100.0	¥	1,920.0		100.0	¥	(140.0)	(7.3)
	Domestic	¥	585.5		32.9	¥	625.4		32.6	¥	(39.9)	(6.4)
	Overseas		1,194.5		67.1		1,294.6		67.4		(100.1)	(7.7)

Note:

Beginning with the current consolidated fiscal year, in conformity with the change in the business reporting structure of the Company, the amounts related to "Air‐conditioning equipment" are reported in the "Water & Environment" segment, whereas they were formerly reported in the "Farm & Industrial Machinery" segment. The information for the same period in the prior year has been retrospectively adjusted to conform to the current fiscal year's presentation.

‐15‐

Kubota Corporation

and Its Subsidiaries

4. Results of operations for the three months ended June 30, 2020

(1) Condensed consolidated statement of profit or loss

(Unit: millions of yen, except earnings per share)

			Three months ended	Three months ended		Change
				June 30, 2020		June 30, 2019
				Amount	%		Amount	%		Amount	%
	Revenue		¥	444,627	100.0	¥	490,117	100.0	¥	(45,490)	(9.3)
	Cost of sales			(312,295)			(347,623)			35,328
	Selling, general, and administrative expenses			(78,289)			(81,523)			3,234
	Other income			1,173			603			570
	Other expenses			(4,004)			(3,508)			(496)
	Operating profit			51,212	11.5		58,066	11.8		(6,854)	(11.8)
	Finance income			2,719			2,805			(86)
	Finance costs			(540)			(395)			(145)
	Profit before income taxes			53,391	12.0		60,476	12.3		(7,085)	(11.7)
	Income tax expenses			(12,509)			(15,176)			2,667
	Share of profits of investments accounted for			1,051			1,003			48
	using the equity method
	Profit for the period		¥	41,933	9.4	¥	46,303	9.4	¥	(4,370)	(9.4)
	Profit attributable to:
	Owners of the parent		¥	38,814	8.7	¥	43,907	9.0	¥	(5,093)	(11.6)
	Noncontrolling interests			3,119	0.7		2,396	0.4		723	30.2
	Earnings per share attributable to owners of the parent:
	Basic		¥	31.87		¥	35.70
	Diluted			－			－

‐16‐

Kubota Corporation

and Its Subsidiaries

1. Consolidated segment information

1. Reportable segments

Information by reportable segment is summarized as follows:

									(Unit: millions of yen)
			Farm &		Water &
			Industrial			Other		Adjustments		Consolidated
				Environment
Three months ended June 30, 2020		Machinery
Revenue	External customers	¥	372,098	¥	65,474	¥	7,055	¥	－	¥	444,627
	Intersegment		94		264		6,221		(6,579)		－
	Total		372,192		65,738		13,276		(6,579)		444,627
Operating profit	¥	56,664	¥	1,606	¥	524	¥	(7,582)	¥	51,212
									(Unit: millions of yen)
			Farm &		Water &
			Industrial			Other		Adjustments		Consolidated
				Environment
Three months ended June 30, 2019		Machinery
Revenue	External customers	¥	414,247	¥	68,137	¥	7,733	¥	－	¥	490,117
	Intersegment		30		241		7,154		(7,425)		－
	Total		414,277		68,378		14,887		(7,425)		490,117
Operating profit	¥	64,786	¥	1,345	¥	548	¥	(8,613)	¥	58,066

Notes:

1. 1. Adjustments include items such as the elimination of intersegment transfers and corporate expenses which are not allocated to any particular reportable segment. The corporate expenses included in Adjustments consist mainly of administration department expenses, basic research expenses, and foreign exchange gains or losses incurred by Kubota Corporation.
   2. The aggregated amounts of operating profit are equal to those presented in the condensed consolidated statement of profit or loss. Please refer to the condensed consolidated statement of profit or loss for the reconciliation of operating profit to profit before income taxes.
   3. Intersegment transfers are recorded at values that approximate market prices.
   4. Beginning with the current consolidated fiscal year, in conformity with the change in the business reporting structure of the Company, the amounts related to "Air‐conditioning equipment" are reported in the "Water & Environment" segment, whereas they were formerly reported in the "Farm & Industrial Machinery" segment. The information for the same period in the prior year has been retrospectively adjusted to conform to the current fiscal year's presentation.
2. Geographic information

Information about revenue from external customers by location is summarized as follows:

			(Unit: millions of yen)
	Three months ended	Three months ended
	June 30, 2020		June 30,2019
Japan	¥	140,166	¥	154,155
North America		151,248		175,602
Europe		49,291		64,754
Asia outside Japan		91,035		84,884
Other areas		12,887		10,722
Total	¥	444,627	¥	490,117

Notes:

1. Revenue from North America included that from the United States of134,856 million and 156,738 million for the three months ended June 30, 2020 and 2019, respectively.
2. There was no single customer from whom revenue exceeded 10% of total consolidated revenue of the Company.

‐17‐

Kubota Corporation

and Its Subsidiaries

(3) Consolidated revenue by product group

(Unit: millions of yen)

			Three months ended		Three months ended		Change
			June 30, 2020			June 30, 2019
			Amount		%		Amount		%		Amount	%
	Farm Equipment and Engines	¥	297,957		67.0	¥	330,987		67.5	¥	(33,030)	(10.0)
	Domestic		70,854				79,203				(8,349)	(10.5)
	Overseas		227,103				251,784				(24,681)	(9.8)
	Construction Machinery		74,141		16.7		83,260		17.0		(9,119)	(11.0)
	Domestic		7,413				7,775				(362)	(4.7)
	Overseas		66,728				75,485				(8,757)	(11.6)
Farm & Industrial Machinery		372,098		83.7		414,247		84.5		(42,149)	(10.2)
	Domestic		78,267		17.6		86,978		17.8		(8,711)	(10.0)
	Overseas		293,831		66.1		327,269		66.7		(33,438)	(10.2)
	Pipe‐ and Infrastructure‐related Products		41,078		9.2		43,545		8.9		(2,467)	(5.7)
	Domestic		33,269				37,099				(3,830)	(10.3)
	Overseas		7,809				6,446				1,363	21.1
	Environment‐related Products		24,396		5.5		24,592		5.0		(196)	(0.8)
	Domestic		21,658				22,450				(792)	(3.5)
	Overseas		2,738				2,142				596	27.8
Water & Environment		65,474		14.7		68,137		13.9		(2,663)	(3.9)
	Domestic		54,927		12.3		59,549		12.1		(4,622)	(7.8)
	Overseas		10,547		2.4		8,588		1.8		1,959	22.8
Other		7,055		1.6		7,733		1.6		(678)	(8.8)
	Domestic		6,972		1.6		7,628		1.6		(656)	(8.6)
	Overseas		83		0.0		105		0.0		(22)	(21.0)
Total	¥	444,627		100.0	¥	490,117		100.0	¥	(45,490)	(9.3)
	Domestic		140,166		31.5		154,155		31.5		(13,989)	(9.1)
	Overseas		304,461		68.5		335,962		68.5		(31,501)	(9.4)

Note:

In conformity with the change in the business reporting structure of the Company, the amounts related to "Air‐conditioning equipment" are reported in the "Pipe‐ and Infrastructure‐related Products", whereas they were formerly reported in the "Farm Equipment and Engines", and the amounts related to "Pumps" and the amounts related to "Valves for private sector" are reported in the "Environment‐related Products", whereas they were formerly reported in the "Pipe‐ and Infrastructure‐related Products". The information for the same period in the prior year has been retrospectively adjusted to conform to the current fiscal year's presentation.

‐18‐