ISEKI : Report 2023_A3_Full

2023 ISEKI Report

Contact about this ISEKI report

Public & Investor Relations Section, ISEKI & CO., LTD.

5-3-14,Nishi-Nippori,Arakawa-ku, Tokyo, 116-8541 JAPAN TEL: [phone] FAX: [phone]E-mail:[e-mail]

Issued in June 2023

ISEKI Report

2023

ISEKI & CO., LTD.

Corporate Philosophy (Purpose)	Purpose

ISEKI Group strives to contribute to the creation the prosperous and sustainable society through "providing innovative products and higher quality of services to the customers"

Long-term Vision	Vision

To be a "Solution Provider for Agriculture & Landscape"

Supporting a farming industry full of dreams and beautiful landscapes and creating a future of sustainable agriculture and landscape

Important Values	Value

Seven Promises

- To Contribute to the Creation the Prosperous and Sustainable Society -

1. Spirit · · · · · · · · · · · · · · · · · · · · Inheriting our company's founding philosophy, we always carefully consider food, agriculture and landscape and move forward with farmers.
2. Front runner· · · · · · As a front-runner, we produce innovative products and higher quality services.
3. Quality · · · · · · · · · · · · · · · We will always make premium quality products with passion.
4. Solution · · · · · · · · · · · · · · We constantly take action for solutions to customer issues.
5. Innovation · · · · · · · · · We create innovations with cutting-edge technologies and provide new value.
6. Global · · · · · · · · · · · · · · · · · · With a global perspective, we work toward solutions to the world's social issues.
7. Future · · · · · · · · · · · · · · · · · Paving the way for tomorrow, open up the future of food, agriculture and landscape.

Spirit of ISEKI - Passion of founder -

"I want to free farmers from exhausting labor"

Agriculture was hard work, done by hand and with the help of animal power. To change this, Kunisaburo Iseki, the founder, realized laborsaving through mechanization and endeavored to further develop agriculture.

"We produce good machinery," Kunisaburo Iseki, the founder, used to say. He devoted himself to providing products that made customers happy. The founder's passion has been inherited in an unbroken line to this day as "ISEKI's spirit."

Company Motto

Our management philosophy is to provide:

1. Products that satisfy customers;
2. A stable workplace to the employees;
3. Appropriate dividend to the shareholders;

and thereby we will fulfil our social mission.

Key Points of ISEKI Report 2023

Key Point - 1

What kind of company is ISEKI?

Social issues that we have solved to date and business activities

Introduction (P5-11) / Business strategies (P27-57)

Key Point - 2

ISEKI Group's vision

Our long-term vision of being a "solution provider for agriculture and landscape" and our mid- to long-term strategies, measures, and materiality for achieving that vision

Message from our President (P13-18) / Value creation process (P19-20) /

Materiality (P21-22) / Mid-term Management Plan (P27-30)

Key Point - 3

Uniquely "ISEKI" initiatives

Contents

1. ······ Purpose, Vision, Value, Spirit and Company Motto of ISEKI

1. ······ Key Points of ISEKI Report 2023
2. ······ Contents/Editing policy

5 | Introduction

1. ······ History of solving social issues

1. ······ ISEKI Group

12 |	ISEKI Group's value creation aims
(What kind of value we create)

1. ······ Message from our President

1. ······ Value creation process

1. ······ Materiality

1. ······ Financial and capital strategies

26 |	Business strategies for value creation
(How we create value)

1. ······ Mid-term Management Plan (2021-2025)

1. ······ ISEKI Group's strengths

1. ······ Domestic Market Strategies (Domestic Business Company)

1. ······ Overseas Market Strategies (Overseas Business Company)

43 ······ Product/Development Strategies (Development and Production Company)

47 ······ Human resource strategies

• Maximizing ISEKI Group's human resource capability -

1. ······ Intellectual property strategies

1. ······ DX Promotion
2. ······ Response to climate change

1. ······ Initiatives for the realization of a decarbonized society

58 | Foundation for sustainable growth

(How we achieve sustainability)

Editing policy

This report presents both financial and non-financial information to introduce initiatives for improvement of the corporate value of ISEKI Group to a wide range of stakeholders including shareholders and investors in an easy-to-understand manner.

Covered period

From January 2022 through December 2022.

The report also includes some information from and after January 2023.

Scope

As a general rule, this report covers the activities of ISEKI & Co., Ltd. and ISEKI Group's associated companies in Japan and overseas. Notes will be added in this report when the range of activities and/or data is limited in certain part hereof.

Referenced guidelines

• International Integrated Reporting Council (IIRC) : "The International Integrated Reporting Framework"
• Ministry of Economy, Trade and Industry "Guidance for Collaborative Value Creation"
• GRI Standards
• ISO26000
• Ministry of the Environment, "Environmental Reporting Guidelines 2018"
• Ministry of the Environment, "Environmental Reporting Handbook-Environmental Reporting Guidelines 2018"

Communication map

ISEKI Group uses a variety of tools to communicate with its stakeholders, sharing a range of information.

We will continue our efforts toward constructive dialogue

The strengths that ISEKI Group has cultivated to date and unique initiatives such as environmental management

ISEKI Group's strengths (P31-34) /

Strategies of R&D and intellectual property (P43-46, P51-52) /

Environmental initiatives (P54-57, P61-62)

Publication of ISEKI Report 2023

This report was produced as a Group-wide project led by young and mid-career employees. As the Director in charge of investor relations, with responsibility for this report's preparation, I affirm that this report was produced in good faith with the involvement of the management team and the cooperation of individual departments, and its content is accurate.

Director & Senior Corporate Officer

In charge of Personnel, Corporate Planning, and Public & Investor Relations

Deputy in charge of Compliance

Masayuki Fukami

1. ······ Sustainability in ISEKI Group
2. ······ Stakeholder engagement
3. ······ ISEKI Group's environmental management
4. ······ Mid- to long-term environmental targets and results
5. ······ Efforts to improve quality and customer satisfaction
6. • Establishing trust with customers -

1. ······ Supply chain management
2. ······ Communities - Co-existence with local communities -
3. ······ Independent Outside Directors roundtable discussion

1. ······ Corporate governance

1. ······ List of officers

1. ······ Risk management

1. ······ Compliance

81 | Financial and non-financial data

1. ······ Financial highlights
2. ······ Financial summary (consolidated)
3. ······ Non-financial highlights

and the enhancement of information disclosure to ensure our stakeholders' understanding of the Group.

FinancialNon-financial

ISEKI Report (compilation of key information)

	• Mid-term Management Plan	• Corporate Governance Report
	presentation materials	• Sustainability website
	• Quarterly financial summaries	(includes ESG data)
	• Quarterly briefing presentation	• Product information
	materials
	• Securities reports

Corporate website

About forecasts, plans, and targets

Forward-looking statements contained in this report were prepared based on information available at the time of the preparation and involve potential risks and uncertainties. Actual results may differ from those expressed by the statements due

About the front cover: The cover illustrates the concept of creating a future of sustainable agriculture and landscape through ISEKI Group's flagship "Japan series" machines and electric riding lawn mowers for the European market.

From the top: Combine harvester with straight-travel assist function, robot rice transplanter, robotic tractor, and electric riding lawn mower

3 ISEKI Report 2023

84 | Company profile / Stock information

84 ······ Company profile / Stock information / Evaluation by third parties

to changes in economic conditions and market trends.

*Amounts and numbers of shares are rounded down to the unit.

ISEKI Report 2023 4

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

Introduction

History of solving social issues

We embarked on our journey with the philosophy of our founder, "free farmers from exhausting labor," and have created social and economic value through "providing innovative products and higher quality of services to the customers."

We have established the standard of Japanese agricultural machinery and contributed to the progress of automation of agriculture

Direct labor hours per 10 acres in rice farming (national average)

1986

Technologies accumulated in

Development of rotary planting

association with invention

1960

1978

rods for rice transplanters

Number of invention awards received

174

Work efficiency doubled through the uses

Development of domestically-manufactured

232 awards

hours

of rotary-type planting rods (two seedlings

large-sized tractors and riding rice transplanters

(

)

planted per rotation), as compared with

Cumulative number of awards from

Efficiency and productivity were further improved as tractors

the previous crank-type planting rods (one

the Japan Institute of Invention and

1965

became larger and rice transplanters were made rideable.

seedling planted per rotation).

Innovation (as of March 2023)

National Awards for Inventions: 19

141

(

Of which, 2 Honorable Mention Awards

)

hours

and 2 Special Awards

1970

Regional Awards for Inventions: 213

(Of which, Honorable Mention Awards: 38)

1926

118

Began with fully-automated

hours

rice hullers

1975

2009

1966

1971

91

Industry's first!

hours

Seven-row reaping

World's first! "Auto-threshing

Two-wheel rice transplanters

Developed the industry's

combine harvesters"

equipped with backward-tilting

1980

fastest combine harvester

Enabled the process from rice reaping to

seedling tanks

64

capable of six-row reaping

with a maximum working

threshing to finish 16 times faster.

A broad range of users loved them and "Sanae"

hours

speed of 2.0m/s, as well as

became a synonym for rice transplanters.

1990

the industry's first combine

44

harvester capable of seven-

hours

row reaping.

2010

2015

25

24

hours

hours

Source: Ministry of Agriculture, Forestry and Fisheries

1926

1950

1960

1970

1980

1990

2000

2010

2020

Present day and toward the future

Smart agriculture

We are promoting smart agriculture that utilizes the latest technologies such as robot technologies and information and communication technology (ICT). We aim to realize highly efficient and productive farm business.

Contribution to agriculture of the world

We will contribute to more efficient food production and more productive agriculture through automation of agriculture in ASEAN and other countries.

Enhancement of quality of life

We will contribute to town development in Europe and enrichment of private lives in North America and other countries.

Environmental preservation

We will contribute to the realization of a decarbonized and recycling-oriented society.

1926

1945 to 1950s

1960 to 1970s

1980 to 1990s

2000s

2010 to 2020s

2030

Main social issues and needs

ISEKI Group's solutions

Creation of social value

- Contribution to sustainable agriculture -

• Post-warfood production increase
• Start of the high economic growth period
• Development and spread of agricultural machinery, which supports food production increase
• Saving of labor and improvement of productivity through automation of agriculture

• High economic growth period, decline in agricultural work force due to concentration of population in urban areas
• Modernization of farming
• Increase in size and diversification of agricultural machinery
• Establishment of integrated system for automating rice farming
• Contribution to industrialization and economic development of Japan
  Our auto-threshing combine harvesters and rice transplanters were selected among the best 100 innovations in post-war Japan.

• Progress of globalization
• Decline in agricultural workers, aging population
• Development of machinery contributing to laborsaving in and lowering cost of farming
• Mechanization of vegetable farming
• Development of riding lawn mowers for Europe
• Improvement of profitability through laborsaving and lower costs
• Diversification and higher profitability through expansion to vegetable farming, etc.
• Improvement of work efficiency in landscaping in countries outside Japan

• Increasing interests in security and safety of food	• Increase in size of farm	• Adding high value to farm produce
business
• Improvement in food self-sufficiency rate	• Reduction of environmental burden
• Decline in agricultural
• Continued development in agriculture	• Food security
workers, aging population

• Development of large machinery to contribute to improvement of

productivity	• Realization of smart agriculture utilizing latest
• Strengthening of intangible aspects such as farm business	technology and data
proposals and support	• Promotion of environmentally sound agriculture

• Full-fledgedroll-out of agricultural machinery in Asian countries
• • Further improvement of efficiency and productivity by making machinery larger, smarter, and so on
  • Reduction of environmental burden
  • Improvement of productivity of agriculture in Asian countries

• Contribution to SDGs achievement

Solutions for agriculture and landscape

Supporting a farming industry full of dreams and beautiful landscapes and creating a future of sustainable agriculture and landscape

1926 Iseki Farm Implement Trading Co. was established.

1936 ISEKI & CO., LTD. was established.

1946 Matsuyama Factory was established.

1949 Kumamoto Factory was established.

1958 Began establishing sales subsidiaries.

Subsequently, sales subsidiaries established around Japan.

1961 Niigata Factory was established.

Listed its shares on the Tokyo Stock Exchange.

1969 Renamed Tokyo Branch as Tokyo Headquarters.

1971 Established N.V. ISEKI Europe S.A. in Brussels.

1972 Expanded Matsuyama Factory, relocated Head Office to Matsuyama.

1977 Established Central Training Center in Ibaraki Prefecture.

Commenced exporting tractors (OEM) to North America

2001 Separated the Production Section from the company and established ISEKI-Matsuyama MFG, Co., Ltd. and ISEKI-Kumamoto MFG, Co., Ltd.

2003 Established Iseki-Changzhou Mfg. Co., Ltd. in Jiangsu Province, China.

2011 Established Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd. in Hubei Province, China.

2012 Established PT. ISEKI INDONESIA.

2013 Established ISEKI Technical Training Center (ITTC).

Established ISEKI SALES (THAILAND) CO., Ltd. (current IST Farm Machinery CO., Ltd.)

2014 Integrated the businesses of Iseki-Changzhou Mfg. Co., Ltd. and Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd. and established Dongfeng Iseki Agricultural Machinery Co., Ltd.

Acquired French agents Yvan Beal S.A.S. and YB Holding S.A.S. (current ISEKI France S.A.S.) and made them subsidiaries.

2015 Established Dream Agricultural Research Institute.

2016 Established Iseki Basic Engineering Training Center (IETC).

2017 Established ISEKI Global Training Center (IGTC).

2020 Made Thai distributor IST Farm Machinery Co., Ltd. a subsidiary.

2022 Made Germany distributor Iseki-Maschinen GmbH a subsidiary.

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Introduction

ISEKI Group

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

At a glance

2025 100th anniversary of the founding

Integrated manufacturer specializing in agricultural machinery

Net sales

By product

By region

Domestic net sales

Establishing the standard of

Japanese agricultural machinery

•Saving of labor and improvement of productivity through automation of agriculture

•Accumulated technologies in association with many invention

(P5-6)

Accelerating overseas expansion

(Overseas net sales)

20132022

15.5% 32.4%

(P16, 39-42)

Net sales

166.6 billion yen

Cultivating and mowing machinery ········ 63.9 billion yen (38.4%)

112.6 billion yen

Overseas net sales

53.9 billion yen

Overseas net sales (%)

32.4%

Japan ················· 112.6 billion yen

Three strengths that form our foundation

Technological capabilities Innovation based on collaboration

Support capabilities to offer farm business proposals

(P31-34)

Planting machinery ··························· 9.3 billion yen (5.6%)

Harvesting and processing machinery ····· 17.9 billion yen (10.8%)

Implements, spare parts and repair fees ··· 46.9 billion yen (28.2%) Other agriculture-related business ········· 28.3 billion yen (17.0%)

North America ········· 19.5 billion yen

Europe··················· 25.1 billion yen

Asia ························ 8.6 billion yen Other ······················ 0.6 billion yen

SDGs to be realized by ISEKI Group through its business

Toward the realization of a sustainable society

•Supporting the enhancement of resilience in agriculture •Landscaping for comfortable villages and towns

•Environmental preservation for a recycling-oriented society

Business overview

	ISEKI Group engages in business activities centered around the
	development, production, sales and services of agricultural
ISEKI & CO., LTD.	machinery as well as landscaping machinery.
[Development and design]

Overview of products and services

We engage in a variety of businesses that include development, production and sale of and post-sales services for cultivating and mowing machinery such as tractors and riding lawn mowers, planting machinery such as rice transplanters and vegetable transplanters, and harvesting and processing machinery such as combine harvesters for agricultural use by agricultural producers, hobby farmers, etc. in Japan and other Asian countries, as well as for landscape developers, hobby farmers, general consumers, etc. in Europe and North America. We also sell OEM products such as implements and parts.

	Main Products	Main sales region
	Tractors, riding lawn mowers, tillers,	Japan and Asia
Cultivating and
multipurpose vehicles,	(for agricultural use)
mowing machinery	high-clearance multipurpose vehicles,	Europe and North America
Tractors	etc.	(for landscaping)
	Rice transplanters, vegetable	Japan and Asia
Planting machinery
transplanters, etc.	(for agricultural use)

		ISEKI		Sales
P7-11,		Group		subsidiaries
43-46,	(	ISEKI & CO., LTD.	)	[Sales and services]
51-52	and	P7-11,
Associated	35-42
	companies

Production-related companies

[Production and parts processing]

Purchasing and procurement

Suppliers

Raw materials and	Products for sale
production parts

Direct sales

Customers

Distributors

OEM partners

Development and production: Development and design are primarily conducted by ISEKI & CO., LTD., while the production-related companies conduct production and parts processing.

Sales and services: Sales are conducted through the Group's sales subsidiaries in Japan and through its affiliated companies overseas. The Group also conducts sales and service activities through local distributors and OEM partners.

Rice transplanters
	Combine harvesters, binders,
Harvesting and	rice hullers,	Japan and Asia
processing machinery	measuring and sorting machinery	(for agricultural use)
Combine harvesters	rice graders, etc.
Implements,	Parts for repairing products of Japanese	Japan, Asia, Europe,
spare parts and	and foreign implements manufacturers,
and North America
repair fees	etc., repair, maintenance, etc.
Implements
	Facility construction,
Other
agricultural materials,
agriculture-related	Japan
coin rice milling business,
business
rice cooking business, etc.
Solution culture facility

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