Kubota : Results of operations for the six months ended June 30, 2022 (0.2MB)

FOR IMMEDIATE RELEASE	August 3, 2022

Contact: IR Section

Corporate Planning and Control Dept.

2-47, Shikitsuhigashi 1-chome,

Naniwa-ku, Osaka 556-8601, Japan

Phone: [phone]

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2022 [IFRS]

Kubota Corporation hereby reports its consolidated results for the six months ended June 30, 2022.

Consolidated Financial Highlights

1. Consolidated results of operations for the six months ended June 30, 2022

(1) Results of operations			(Unit: millions of yen, except earnings per share)
	Six months ended		Change	Six months ended	Change
	June 30, 2022		[%]	June 30, 2021	[%]
Revenue	¥ 1,260,480		14.4	¥ 1,101,405	24.6
Operating profit	¥ 121,003		(18.0)	¥ 147,548	80.7
Profit before income taxes	¥ 131,587		(11.9)	¥ 149,409	77.0
Profit for the period	¥ 101,970		(9.9)	¥ 113,140	73.6
Profit attributable to owners of the parent	¥ 91,246		(11.4)	¥ 102,950	72.8
Comprehensive income for the period	¥ 299,131		78.3	¥ 167,788	443.9
Earnings per share attributable to owners of the parent:
Basic	¥ 76.13			¥ 85.22
Diluted	-			-
(2) Financial condition				(Unit: millions of yen)
	June 30, 2022		Dec. 31, 2021
Total assets	¥ 4,554,017			¥ 3,773,510
Total equity	¥ 2,105,949			¥ 1,784,973
Equity attributable to owners of the parent	¥ 1,909,584			¥ 1,677,957
Ratio of equity attributable to owners of the parent
to total assets	41.9%			44.5%

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, 2022	¥ 22.00		Undecided	Undecided
Year ended Dec. 31, 2021	¥ 21.00		¥ 21.00	¥ 42.00

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 buybacks. The specific amount of year-end cash dividends for the year ending December 31, 2022 has not been decided at this time, and Kubota Corporation will publicize the amount as soon as a decision is made.

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Kubota Corporation

and Its Subsidiaries

3. Forecasts of operations for the year ending December 31, 2022

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

	Year ending	Change
	Dec. 31, 2022	[%]
Revenue	¥ 2,640,000	20.2
Operating profit	¥ 260,000	5.6
Profit before income taxes	¥ 273,000	8.1
Profit attributable to owners of the parent	¥ 185,000	5.3
Earnings per share attributable to owners
of the parent - Basic	¥ 154.69

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, 2022" 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, 2022 (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 International Financial Reporting Standards (hereinafter "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, 2022	:	1,200,246,846
Number of common shares issued including treasury shares as of December 31, 2021	:	1,200,246,846
b) Number of treasury shares as of June 30, 2022	:	6,906,235
Number of treasury shares as of December 31, 2021	:	339,469
c) Weighted-average number of common shares outstanding during the six months ended June 30, 2022	:	1,198,540,357
Weighted-average number of common shares outstanding during the six months ended June 30, 2021	:	1,207,946,806

(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 for institutional investors and securities analysts on August 4, 2022. 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.

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Kubota Corporation

and Its Subsidiaries

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, 2022 …………………………………………………………………………	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, 2022 ……………………………………………………………	16
(1)	Condensed consolidated statement of profit or loss ………………………………………………………………………	16
(2)	Consolidated segment information …………………………………………………………………………………………………	17
(3)	Consolidated revenue by product group …………………………………………………………………………………………	18

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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, 2022, revenue of Kubota Corporation and its subsidiaries (hereinafter, the "Company") increased by ¥159.1 billion [14.4%] from the same period in the prior year to ¥1,260.5 billion.

Domestic revenue decreased by ¥3.5 billion [1.1%] from the same period in the prior year to ¥299.1 billion because of decreased revenue in Farm & Industrial Machinery, despite increased revenue in Water & Environment.

Overseas revenue increased by ¥162.5 billion [20.3%] from the same period in the prior year to ¥961.4 billion because of increased revenue in Farm & Industrial Machinery and Water & Environment.

Operating profit decreased by ¥26.5 billion [18.0%] from the same period in the prior year to ¥121.0 billion mainly due to some negative effects from a rise in material prices and logistics expenses, despite some positive effects from sales price increase and favorable impact of foreign exchange rates. Profit before income taxes decreased by ¥17.8 billion [11.9%] from the same period in the prior year to ¥131.6 billion due to decreased operating profit. Income tax expenses were ¥30.9 billion. Share of profits of investments accounted for using the equity method was ¥1.2 billion. Profit for the period decreased by ¥11.2 billion [9.9%] from the same period in the prior year to ¥102.0 billion. Profit attributable to owners of the parent decreased by ¥11.7 billion [11.4%] from the same period in the prior year to ¥91.2 billion.

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

1) Farm & Industrial Machinery

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

Revenue in this segment increased by 16.5% from the same period in the prior year to ¥1,096.2 billion and accounted for 87.0% of consolidated revenue.

Domestic revenue decreased by 3.0% from the same period in the prior year to ¥155.6 billion. Sales of agricultural- related products decreased due to a decline in rice price and termination of subsidies for business continuation of farmers.

Overseas revenue increased by 20.5% from the same period in the prior year to ¥940.6 billion. In North America, shipment of tractors made progress to resolve back orders and replenish dealer inventories, and sales of construction machinery were solid due to demand for infrastructure construction. In Europe, sales mainly of construction machinery and engines increased due to the stable market. In Asia outside Japan, sales of farm equipment, mainly tractors, in Thailand increased due to progress in developing dryland farming, while sales of farm equipment for rice farming were slow due to stagnated rice price. In China, sales of construction machinery and rice transplanters decreased by missing sales opportunities due to lockdown. Sales in India increased due to consolidation of Escorts Limited (currently, Escorts Kubota Limited; hereinafter, "EKL").

Operating profit in this segment decreased by 18.5% from the same period in the prior year to ¥117.3 billion due to some negative effects from a rise in material prices and logistics expenses, while there were some positive effects from sales price increase and favorable impact of foreign exchange rates.

2) Water & Environment

Water & Environment is composed of pipe system-related products (ductile iron pipes, plastic pipes, and other products), materials and urban infrastructure-related products (reformer and cracking tubes, spiral-welded steel pipes, air-conditioning equipment, and other products), and environment-related products (environmental control plants,

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Kubota Corporation

and Its Subsidiaries

pumps, and other products).

Revenue in this segment increased by 4.2% from the same period in the prior year to ¥152.7 billion and accounted for 12.1% of consolidated revenue.

Domestic revenue increased by 2.6% from the same period in the prior year to ¥131.9 billion due to an increase in sales of plastic pipes for construction equipment.

Overseas revenue increased by 15.6% from the same period in the prior year to ¥20.8 billion due to increased sales of reformer and cracking tubes and pumps.

Operating profit in this segment decreased by 26.6% from the same period in the prior year to ¥9.7 billion due to a negative effect from a rise in material prices, despite a positive effect from sales price increase.

3) Other

Other is mainly composed of a variety of other services.

Revenue in this segment decreased by 14.7% from the same period in the prior year to ¥11.6 billion and accounted for 0.9% of consolidated revenue.

Operating profit in this segment increased by 7.0% from the same period in the prior year to ¥1.7 billion.

(2) Financial condition

1. Assets, liabilities, and equity

Total assets as of June 30, 2022, were ¥4,554.0 billion, an increase of ¥780.5 billion from the prior fiscal year-end. With respect to assets, trade receivables increased due to increased revenue in North America and Thailand, and inventories increased mainly due to increased inventories in transit along with port congestion. In addition, goodwill and other items increased along with the consolidation of EKL.

With respect to liabilities, bonds and borrowings increased due to the acquisition of the shares of EKL and an increase in working capital. Equity increased due to the accumulation of retained earnings and an improvement in other components of equity along with fluctuations mainly in foreign exchange rates. The ratio of equity attributable to owners of the parent to total assets stood at 41.9%, 2.6 percentage points lower than the prior fiscal year-end.

1. Cash flows

Net cash used in operating activities during the six months ended June 30, 2022, was ¥22.0 billion, an increase of ¥72.8 billion in net cash outflow compared with the same period in the prior year. This increase was due to the changes in working capital, such as trade receivables and trade payables.

Net cash used in investing activities was ¥226.6 billion, an increase of ¥181.4 billion in net cash outflow compared with the same period in the prior year. This increase was mainly due to an increase in cash outflow related to acquisition of shares of EKL and payments for acquisition of property, plant, and equipment.

Net cash provided by financing activities was ¥189.8 billion, an increase of ¥187.5 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 as of June 30, 2022, were ¥215.3 billion, a decrease of ¥43.3 billion from the beginning of the current period.

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