Iseki : Financial Results for the Fiscal Year Ended December 31, 2023 Investor Relations Presentation Materials

Financial Results for the Fiscal Year Ended December 31, 2023

Investor Relations Presentation Materials

ISEKI & CO., LTD.

February 20, 2024

Index

1. Outline of Financial Results for the Fiscal Year Ended December 31, 2023
2. Performance Forecast for the Fiscal Year Ending December 31, 2024
3. Domestic and Overseas Markets
4. Topics

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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1. Outline of Financial Results for the Fiscal Year Ended December 31, 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Key Points
		Net Sales (Full-year)
Consolidated sales hit a record high. Sales increased and operating	(JPY bn, %)	158.1 166.6 169.9 170.0
income decreased year on year. Overseas sales hit a record high for	149.8	149.3
the third consecutive year. Year-end dividend: 30 yen per share
Domestic:	Sales rose partially due to increases in maintenance							Domestic
	revenues and construction of facilities
Overseas:	Sales hit a record high. Sales increased mainly in Europe.	21.5%	22.4% 25.8% 32.4%	33.5% 32.4%	Overseas
Earnings:	Gross profit increased mainly due to the effect of price	FY2019/12FY2020/12FY2021/12FY2022/12FY2023/12FY2024/12
	revisions, but operating income decreased due to higher						Forecast
	SG&A expenses	Operating Income, Ratio (Full-year)
	(JPY bn, %)
Net sales will remain flat, and operating income will decrease	1.8%		2.6%	2.1%
Year-end dividend: 30 yen per share	1.4%	1.3%
	1.2%
		4.1
Net sales:	Overseas, there will be temporary inventory adjustment in			3.5
2.7
2.0			2.2	2.0
	Korea, but it will be covered by an increase in domestic sales
Profits:	Net sales will be almost flat, but operating income will	FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12	FY2024/12
	decrease due to higher SG&A expenses
						Forecast
	Financial Results Briefing for the Fiscal Year Ended December 31, 2023							4

Outline of Consolidated	Business Performance
(January 1, 2023 to December 31, 2023)						(JPY bn, %)
		FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12	YoY	Diff.
								(Target
		Actual	Actual	Actual	Actual	Actual	Change
		/Actual)*
Net Sales	149.8	149.3	158.1	166.6	169.9	3.2	0.9
(Domestic)	117.7	115.9	117.3	112.6	113.0	0.4	(0.9)
(Overseas)	32.1	33.3	40.7	53.9	56.8	2.8	1.8
Gross Profit	44.5	43.4	46.8	49.8	50.3	0.4
Gross Profit Margin	29.7%	29.1%	29.6%	29.9%	29.6%	（0.3）%
Operating Income	2.7	2.0	4.1	3.5	2.2	（1.2）	(0.2)
Operating	Margin	1.8%	1.4%	2.6%	2.1%	1.3%	（0.8）%	(0.2)%
Ordinary Income	1.1	1.7	4.6	3.7	2.0	（1.6）	(0.2)
Profit (Loss) Attributable	0.7	（5.6）	3.1	4.1	0.0	（4.0）	(0.4)
to Owners of Parent
Average	US$	109.3	107.0		109.0	131.3	139.4	8.1	0.1
Exchange	Euro	121.6	121.5		129.8	136.9	148.6	11.7	0.3
Rate (JPY)

* Difference from the forecast announced on 14th November 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Domestic Sales

YoY	Sales increased due to growth in maintenance revenues and construction of
JPY0.4 billion
facilities, despite lower sales of agricultural machinery
increase

			FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12		YoY
	(JPY bn)
	Actual	Actual	Actual	Actual	Actual	Change
		Cultivating &
		Mowing	25.3		22.8		23.9		22.9		22.0		(0.8)
		Machinery
		Planting	9.0		8.8		9.0		7.9		7.2		(0.6)
		Machinery
		Harvesting &
		Processing	18.5		16.8		16.6		16.0		15.7		(0.3)
		Machinery
RelatedMachinery	MachineryAgricultural	Subtotal	53.0		48.6		49.6		46.9		45.0		(1.8)
	Farming
Agricultural		20.0		20.4		22.0		20.5		20.4		0.0
	Implements
	Spare Parts	15.0		15.6		15.3		15.6		16.0		0.3
	Repair Fees	5.7		5.8		5.9		5.8		6.0		0.1
		Subtotal	40.8		42.0		43.3		42.0		42.5		0.4
		Total	93.8		90.6		93.0		88.9		87.5		(1.3)
Construction of Facilities	4.5		6.1		4.2		4.3		5.5			1.1
Others		19.3		19.1		20.1		19.3		19.9			0.6
		Total	117.7		115.9		117.3		112.6		113.0		0.4

Diff.

(Target

/Actual)*

(0.5)

(0.4)

0.0

0.0

(0.3)

(0.9)

0.0

0.0

(0.9)

Main factors of YoY changes

• • Demand remained weak, and sales in agricultural machinery decreased
  • Maintenance revenues (spare parts sales and repair fee revenues) grew, which are a pillar in reform of revenue and cost structure
  • Construction of facilities increased due to large-scale construction
• Difference from the forecast announced on 14th November 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Overseas Sales

YoY

JPY2.8 billion Sales hit a record high for the third consecutive year. Sales increased mainly in

increase Europe.

	FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12
(JPY bn)	Actual	Actual	Actual	Actual	Actual	YoY Change
North America	13.2	12.8	15.1	19.5	14.2	(5.2)
Europe	12.8	13.9	15.9	25.1	33.2	8.1
Asia	5.5	6.2	9.1	8.6	8.1	(0.4)
Others	0.5	0.3	0.5	0.6	1.1	0.4
Total sales	32.1	33.3	40.7	53.9	56.8	2.8
Overseas sales	21.5%	22.4%	25.8%	32.4%	33.5%	1.1%
ratio

Diff.

(Target

/Actual)*

0.2

1.2

0.3

0.0

1.8

1.0%

Main factors of YoY changes

✓	North	Adjustment phase continued
	America:	in compact tractors market,
		which led to decreased sales
✓	Europe:	Sales increased due to firm
		demand from retailers even
		after the price hikes, as well
		as ISEKI Germany becoming a
		consolidated subsidiary in the
		second half of the previous
		fiscal year
✓	Asia:	Sales decreased due to failure
		to cover a decline in
		shipments for Korea mainly
		because of falling rice prices,
		despite higher shipments of
		parts for production to China

* Difference from the forecast announced on 14th November 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Operating Income

YoY	Operating income declined due to reduced gross profit margin and higher
JPY1.2 billion
SG&A expenses
decrease

	FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12	YoY
(JPY bn, %)
					Change
	Actual	Actual	Actual	Actual	Actual
Net Sales	149.8	149.3	158.1	166.6	169.9	3.2
Gross Profit	44.5	43.4	46.8	49.8	50.3	0.4
Gross Profit	29.7%	29.1%	29.6%	29.9%	29.6％	(0.3)%
Margin
SG&A Expenses	41.7	41.3	42.6	46.3	48.1	1.7
Personnel	24.6	25.1	25.2	26.4	27.8	1.4
Expenses
Other Expenses	17.0	16.2	17.4	19.9	20.2	0.2
Operating Income	2.7	2.0	4.1	3.5	2.2	(1.2)
Operating	1.8%	1.4%	2.6%	2.1%	1.3％	(0.8)%
Margin

Diff.			[Breakdown of YoY Change]
(Target
/Actual)*
			Increase in gross profit: ¥0.4 billion
0.9							(1.1)*
		(0.8)		3.5	(2.6)	0.3	(0.6)

3.5

2.2

FY2022/12

Lower

Effect of

Impact of

Other

Increased

Increased

FY2023/12

gross

price

soaring

personnel

SG&A

profit

revisions

raw

expenses

expenses

margin,

material

etc.

prices

*Including figures of ISEKI Germany that became a consolidated subsidiary

(0.2)	[Effect of FOREX Fluctuations (JPY bn)]
Net Sales	Cost of	SG&A	Operating
	Sales	Expenses	Income
(0.2)%	3.1	(2.2)	(0.6)	0.3

* Difference from the forecast announced on 14th November 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Ordinary Income & Profit

Ordinary income

YoY

JPY1.6 billion

decrease

Ordinary income: Financial expenses rose due to increased interest-bearing liabilities, despite an increase in foreign exchange gains.

Income before income taxes: Absence of extraordinary items in the same period of the previous year (The impact of ISEKI Germany becoming a consolidated subsidiary; a gain on change in equity related to a Chinese associate accounted for using the equity method; and impairment losses)

	FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12	YoY	Diff.
						(Target
						Change
	Actual	Actual	Actual	Actual	Actual	/Actual)*
Operating Income	2.7	2.0	4.1	3.5	2.2	(1.2)	(0.2)
Balance of Financial	(0.7)	(0.6)	(0.6)	(0.7)	(1.4)	(0.7)
Income
Other Non-operating	(0.8)	0.3	1.1	0.9	1.3	0.3
Income
Ordinary Income	1.1	1.7	4.6	3.7	2.0	(1.6)	（0.2）
Extraordinary Income	0.5	0.6	0.0	3.3	0.0	(3.3)
Extraordinary Losses	(0.3)	(9.4)	(0.4)	(1.9)	(0.2)	1.6
Income Before Income	1.3	(7.1)	4.3	5.2	1.9	(3.3)
Taxes

Income Taxes -	(0.5)		1.4	(1.1)	(1.1)		(1.8)	(0.7)
Deferred
Profit (loss) Attributable	0.7		(5.6)	3.1	4.1		0.0		(4.0)			(0.4)
to Owners of Parent

[Main Components of Other Non-operating Income]

(JPY bn)	FY2022/12	FY2023/12
Actual	Actual
Foreign exchange	0.6	0.9
gains
Share of loss of entities	(0.5)	(0.5)
accounted for using
equity method

[Main Components of Extraordinary Income/Losses]

(JPY bn)	FY2022/12	FY2023/12
Actual	Actual
Impact of ISEKI Germany	0.7	-
becoming a consolidated
subsidiary
Gain on change in equity	2.5	-
(Dongfeng ISEKI in China)
Impairment loss	(1.7)	0.0

* Difference from the forecast announced on 14th November 2023

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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Non-Consolidated Financial Results

Operating

income YoY

JPY0.0 billion

change

Operating income was at the same level as in the previous year partly due to price revisions, despite the continued impact of soaring raw material prices

	FY2019/12	FY2020/12	FY2021/12	FY2022/12	FY2023/12	YoY
(JPY bn, %)
Actual	Actual	Actual	Actual	Actual	Change
Net Sales	90.0	79.2	91.7	97.4	97.0	(0.3)
Domestic	61.7	53.9	59.8	58.0	60.3	2.2
Overseas	28.2	25.2	31.9	39.3	36.7	(2.6)
Gross Profit	12.4	9.4	12.1	11.7	11.6	(0.1)
Gross Profit	13.8%	11.9%	13.3%	12.0%	12.0%	0.0%
Margin
SG&A Expenses	11.4	10.7	11.3	12.5	12.4	(0.1)
Operating Income	0.9	(1.3)	0.8	(0.8)	(0.8)	0.0
Ordinary Income	2.2	(0.2)	3.8	1.2	1.1	(0.1)
Profit	1.5	(13.2)	2.9	(0.1)	0.9	1.0

[Breakdown of YoY Change]

2.7	(2.5)	(0.1)	(0.3)

(0.8)									(0.8)
FY2022/12	Effect of	Impact of	Reduction	Other
price	soaring raw		in SG&A		FY2023/12
		revisions	material		expenses
			prices

Financial Results Briefing for the Fiscal Year Ended December 31, 2023

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