#1ISEKI 人とのハーモニー BEKI CDICTO Financial Results for the First Quarter Fiscal Year Ending December 2016 Investor Relations Presentation Materials ISEKI & CO., LTD. Shirou Tomiyasu, Director & Senior managing executive officer May 17, 2016 で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials#2Index ISEKI 人とのハーモニー BEKI CDICTO 1. Outline of Financial Results for the First Quarter Fiscal Year Ending December, 2016 2. Recent Development in Domestic and Overseas Markets 3. Performance Forecast for the Fiscal Year Ending December, 2016 4. Topics 夢ある農学応援団と ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 2#3BEKI CO,ICTO ISEKI 人とのハーモニー Remarks on year-on year comparison As a transitory treatment, 9-month results are consolidated for fiscal 2015. Consolidation period (Financial report basis) Companies that have adopted Mar.31 as the fiscal year-end ISEKI & CO., LTD and others Companies that have adopted Dec. 31 as the fiscal year-end Domestic sales companies & others FY 2015 FY 2016 Jan-Mar Apr-Jun | Jul-Sep Oct-Dec Jan-Mar Apr-Jun | Jul-Sep Oct-Dec Consolidation period( Restated basis) Companies that have adopted Mar.31 as the fiscal year-end ISEKI & CO.,LTD and others Companies that have adopted Dec. 31 as the fiscal year-end Domestic sales companies & others FY 2015 FY 2016 Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun | Jul-Sep Oct-Dec Note: The subsidiary in France only adopts the end of September as its fiscal year end. (The results from Oct. to Dec. are posted for the 1st quarter.) 夢ある空応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 3#4ISEKI 人とのハーモニー BEKI CO, CTO 1.Outline of Financial Results of the First Quarter Fiscal Year Ending December, 2016 Net Sales (Billions of yen) 200 169.1 155.7 147.8 145.2 157.4 145.2 150 100 50 0 11/3 12/3 13/3 14/3 15/3 15/12 [9-month] 4 で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials#5Outline of First Quarter Business Performance ISEKI 人とのハーモニー BEKI CO, CTO (JPY bn, %) 1Q of FY ended Dec.15 1Q of FY ending Dec.16 yoy change 1Q of FY ending Diff. Item Dec. 16 (Target/ Restated basis Actual (Restated Target Actual) basis) % % Net Sales 35.6 100.0 37.7 100.0 2.1 38.7 (1.0) (Domestic) 26.9 75.6 28.2 74.8 1.3 29.0 (0.8) (Overseas) 8.7 24.4 9.5 25.2 0.8 9.7 (0.2) Operating Income (2.0) (5.6) (0.4) (1.1) 1.6 (0.5) 0.1 Ordinary Income (2.3) (6.5) (0.7) (1.9) 1.6 (0.5) (0.2) Profit (Loss) attributable to owners of parent (0.6) (0.5) (0.1) * 1st Quarter Dec. 16 Average actual forex rate: ¥117.3 to the US$, ¥128.1 to the Euro で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 5#6Breakdown of Domestic Sales ISEKI 人とのハーモニー BEKI CO, CTO (JPY bn) 1Q of 1Q of FY ended Dec. 15 FY ending Dec. 16 yoy Change (Restated basis) 1Q of FY ending Dec. 16 Diff. (Target/ Actual) Restated basis Actual Note Target Agricultural Machinery Cultivating & Mowing Machinery 7.7 7.7 0.0 8.6 (0.9) Rice Planting Machinery 2.7 2.4 (0.3) 2.8 transplanters: (0.3) (0.4) Harvesting & Processing 3.0 3.0 0.0 3.3 (0.3) Machinery Total 13.4 13.1 (0.3) 14.7 (1.6) Farming Implements 3.8 4.4 0.6 4.5 (0.1) Parts 2.5 2.7 0.2 2.6 0.1 Construction of Facilities 0.9 2.1 1.2 1.0 1.1 Other Agriculture Related 6.3 5.9 (0.4) 6.2 (0.3) Total 26.9 28.2 1.3 29.0 (0.8) Agriculture Related Business 夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 6#7Breakdown of Overseas Sales ISEKI 人とのハーモニー BEKI CO, CTO (JPY bn) 1Q of FY ended Dec.15 1Q of FY ending yoy Restated basis Dec. 16 Actual Change (Restated basis) 1Q of FY ending Diff. (Target/ Dec. 16 Actual) Note Target North America 3.7 2.5 (1.2) Tractors: (1.3) 3.0 (0.5) Europe 2.7 3.1 0.4 Tractors: +0.3 3.1 0.0 Rice China 0.8 1.5 0.7 1.7 transplanters:+0.6 (0.2) ASEAN 0.1 0.7 0.6 Tractors:+0.5 0.2 0.5 Rice Others 0.7 1.0 0.3 1.0 0.0 transplanters: +0.3 Products Total 8.0 8.8 0.8 9.0 (0.2) Parts & Others 0.7 0.7 0.0 0.7 0.0 Total 8.7 9.5 0.8 9.7 (0.2) 夢ある応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 7#8Operating Income ISEKI 人とのハーモニー KICO, CTO. Item 1Q of FY ended Dec. 15 Restated basis 1Q of FY ending yoy Dec. 16 Actual Change (Restated 1Q of FY ending (JPY bn, %) Diff. (Target/ Dec. 16 Actual) basis) Target Net Sales 35.6 37.7 2.1 38.7 (1.0) Gross Profit 9.7 10.5 0.8 10.9 (0.4) Gross Profit Margin 27.2 27.8 0.6 28.2 (0.4) S.G.& A. Expenses 11.7 10.9 (0.8) 11.4 (0.5) Operating Income (2.0) (0.4) 1.6 (0.5) 0.1 [year-on-year change] Increase in gross profit resulting from an increase in sales Reduced personnel expenses Reduction in other expenses Others [Comparison with the target] : 0.3 : 0.8 [Incl. SG&A: 0.4] : 0.8 [Incl. SG&A: 0.4] (0.3) [Incl. exchange gain: (0.1)] 1.6 Decrease in gross profit due to the drop in sales Reduced personnel expenses Reduction in other expenses : (0.4) : 0.2 : 0.3 夢ある空応援団) 0.1 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 8#9Ordinary Income and Net Income ISEKI 人とのハーモニー BEKI CO,ICTO (JPY bn,) 1Q of FY ended Dec. 15 1Q of FY ending Dec. 16 yoy Change (Restated basis) 1Q of FY ending Diff. (Target/ Dec.16 Actual) Restated basis Actual Target Operating Income (2.0) (0.4) 1.6 (0.5) 0.1 Balance of Financial Income (0.1) (0.2) (0.1) (0.1) (0.1) Other Non-operating Income (0.2) (0.1) 0.1 0.1 (0.2) Ordinary Income (2.3) (0.7) 1.6 (0.5) (0.2) Extraordinary Income 0.2 0.4 0.2 0.1 0.3 Extraordinary Losses (0.4) 0.4 (0.1) 0.1 Income before Income Taxes (2.5) (0.3) 2.2 (0.5) 0.2 Taxes, Deferred Taxes Profit (Loss) attributable to owners of parent [Factors of year-on year change] [Extraordinary Income] Gain on sales of investment securities (0.3) (0.3) (0.6) (0.5) (0.1) Posting of a surcharge in the same period last year : 0.4 : 0.3 で夢ある農学応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 9#10Balance Sheet ISEKI 人とのハーモニー BEKI CO, CTO (JPY bn) yoy Item As of Mar. 15 As of Mar. 16 As of Dec.15 change Cash/Deposits 6.6 15.2 8.6 8.8 Accounts Receivables 30.4 30.7 0.3 24.9 Inventories 47.7 49.3 1.6 47.8 (Product Inventory) 30.8 30.4 (0.4) 29.7 Other Current Assets 7.1 4.6 (2.5) 5.2 Noncurrent Assets 112.3 111.8 (0.5) 114.4 Total Assets 204.1 211.6 7.5 201.1 Accounts Payables 38.7 41.2 2.5 40.0 Debts 57.6 71.0 13.4 56.7 Other Liabilities 36.7 33.4 (3.3) 36.3 (Total Liabilities) 133.0 145.6 12.6 133.0 Net Assets 71.1 66.0 (5.1) 68.1 (Retained Earnings) 15.7 12.6 (3.1) 13.5 Total Liabilities and Net Assets 204.1 211.6 7.5 201.1 で夢ある農学応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 10#112.Recent Development in Domestic and Overseas Markets で夢ある農学応援団) ISEKI 人とのハーモニー BEKI CO, CTO Variable fertilizing 8-row rice transplanter NP80-FV ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials#12Industry Shipments and Sales Result Growth rate of 9 principal products(year-on year) ISEKI 人とのハーモニー BEKI CDICTO ( % ) Mar.13 Mar. 14 Mar. 15 Sep.15 Mar.16 Industry Shipment value 106 127 7 67 76 98 ISEKI Sales Value 104 117 73 89 107 Note: The value of shipments on the above was calculated based on our standard. で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 12#13Recent Market Trend in Overseas (JPY bn) ISEKI 人とのハーモニー BEKI CDICTO 35 30 25 20 20 15 10 5 0 * *FY Dec. 16 Sales result & Orders received FY Dec.16 FORCAST (Announced on Feb. 12th) ¥33.7 billion FY Dec. 15 Restated Actual ¥28.6 billion Jan. Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Shipment result (from Jan.- Mar.) + Orders received (from Apr.-Jun.) The results of "Parts & Others" are not included. で夢ある農学応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 13#14Market Trend (North America) 1. Market in North America (Unit: 1000) Category | Compact Tractors (PTO 40HP or below) Utility Tractors (PTO 40HP or above, 100hp or below) ISEKI 人とのハーモニー BEKI CDICTO (PTO HP) Jan.-Mar., 2015 USA Canada USA Canada 18 2 20 11 1 12 Source: Association of Equipment Jan.-Mar., 2016 23 2 25 12 1 13 Manufacturers statistics Growth rate 2. Situation of AGCO (OEM partner) 126% 79% 122% 103% 89% 102% Figures have been rounded and non-adjusted. Net Sales in North America Unit sales (Jan.-Mar.) Compact tractors: (JPY bn) 3.7 ➤ Utility tractors: Higher than last year Higher than last year 3 2.5 2 3.5 3.1 [Forecast] [3.1] 2.5 3. Our situation 1 0 Order & shipment (Jan.- Jun.): Stayed good since April 1Q 2Q 3Q 4Q 1Q 2Q 20 FY Dec.15 (Restated) FY Dec. 16 Since the market demand of compact tractors remains active, we try to increase our sales more. 夢ある農学応援団! ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 14#15Market Trend (Europe) 1. Trend in European market Sluggish demand caused by warm winter in landscaping market 2. Situation of distributors ISEKI 人とのハーモニー BEKI CDICTO ➤Unit sales Net Sales in Europe (JPY bn) Distributors (from Jan.-Mar.) : 5 Lower than last year 3.8 4 • ISEKI France (from [Consolidated subsidiary] Jan. - Mar.): 3.0 [Forecast] 3.1 [3.3] 3 2.7 Lower than last year 2 1.5 3. Our situation 1 Order & shipment (Jan. - Jun.): 0 1Q 2Q 3Q 4Q 1Q 2Q In line with the plan FY Dec. 15 (Restated) FY Dec 16. Running sales promotion of new products, we try to make further sales this year 夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 15#16Market (Thailand) ISEKI 人とのハーモニー BEKI CDICTO 1. Trend in Thai market Uncertain future outlook due to prolonged drought and sluggish economy 2. Situation of ISEKI (Sales) Thailand [Mitsubishi Corporation 80%, ISEKI 20% investment] Strong sales mainly in new products (tractors) launched last year. - Unit Sales (Jan.-Mar.): Higher than last year 3. Establishment of local subsidiary [ISEKI (THAILAND) CO.,LTD.] A new local subsidiary, to be established in Sep. 2016, provides both sales support and after-sales services both in Thailand and across ASEAN countries. Through the effort to make more sales by the sales company and provide sales support by the new local subsidiary, we try to expand our sales in the region. で夢ある農学応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 16#17Market Trend (Indonesia) 1. Trend in Indonesian market Rise in demand through government tender is expected. ISEKI 人とのハーモニー BEKI CDICTO 2. Our situation Sales Through the agricultural machinery diffusion policy by the Indonesian government, we have received orders for tractors and walk-behind rice transplanters in 2016. (Manufactured in China) In 2016, we try to acquire more orders than the previous year. で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 17#18Market Trend (China) 1. Trend in Chinese market ISEKI 人とのハーモニー BEKI CDICTO Government subsidy 2008 2009 2010 2011 2012 2013 2014 2015 (billion of yuan) 2016 40 130 155 175 215 217.5 238 238 1st period 209 Annual 237.5 2. Situation of Dongfeng Iseki Sales of Dongfeng Iseki (Jan.-Mar.) *Excluding export to Southeast Asia from China Rice transplanters (walk-behind/ride-on) Higher than last year Trend of ISEKI's sales in China (including equity) [Forecast] (JPY bn) 5.6 (5.8) CO 6 5 4 Dongfeng Iseki (Membership company) 3 2.3 ➤ High-clearance multi-purpose vehicles Higher than last year 2 1.3 0.6 0.2 1 ➤Tractor (full-fledged sales) 0.8 0.1 0.1 0.1 1.5 2.1 0 1Q 2Q 3Q 4Q 1Q 2Q : Got off a good start FY Dec. 15 FY Dec. 16 (Restated) Both rice transplanters and high-clearance vehicles keep a high level of sales. Running sales promotion of rice transplanters in a spring demand season and full-fledge sales of tractors, we try to make further sales this year. で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 18#193.Performance Forecast For the Fiscal Year Ending December, 2016 で夢ある農学応援団) HBER ISEKI 人とのハーモニー BEKI CO, CTO Combine harvester w/ yield sensor HJ-S series (4-6 row harvesting) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials#20ISEKI 人とのハーモニー BEKI CDICTO Performance Forecast for FY ending Dec. 16 1. Performance forecast FY ended Dec. 15 Restated basis FY ending Dec. 16 yoy (JPY bn) Change (Restated basis) * Item Forecast 2Q Full year 2Q Fll year 2Q Full year Net Sales 76.3 156.8 83.0 165.0 6.7 8.2 Operating Income 0.6 0.2 1.4 3.5 0.8 3.3 Ordinary Income 0.6 0.4 1.3 3.2 0.7 2.8 Profit attributable 0.7 1.9 to owners of parent Note: Company forex rate: ¥120 to the US$, ¥130 to the Euro The effects of The 2016 Kumamoto Earthquake : we are currently assessing its impact and any impact on business performance in the future will be promptly disclosed as needed. 2. Year-End Divided Forecast (Yen) Dec. 15 Dec. 16 Plan 1.5 1.5-3.0 夢ある農学応援団) * Announced on Feb 12th ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 20#214.Topics で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials ISEKI 人とのハーモニー BEKI CO, CTO#22ISEKI 人とのハーモニー BEKI CDICTO 1) Establishment of a new subsidiary in Thailand - “ISEKI (THAILAND) CO., LTD.” to be established In the ASEAN region: (New release announced n April) Supporting the distribution of our products & planning sales strategies Developing / procuring farming implements & spare parts - Providing after-sales service & establishing parts centers Scheduled to be established in September, 2016 Capital Ownership 90 million baht (Approx. JPY 0.3 billion) 100% owned by ISEKI & Co., Ltd. Fiscal year-end December 31 Location で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials Bangkok 22 22#232) New branch of Dream Agricultural Research Institute <Strategic Base> Dream Agricultural Research Institute (Located in Tsukuba-Mirai City, Ibaraki Pref.) Research & diffusion of advanced agri-business technologies Exhibition Hall SEKI ISEKI 人とのハーモニー BEKI EDICTO • Exhibition hall . • Workshop facility Training Group's employees O Demonstration farm field • Laboratory/ seminar room Establishing branches in wide areas Professional experts to propose profitable farming methods to prospective farmers [Agri-Heroes support projects] Personnel Allocation Extend to nation-wide sales companies [Branches of the Institute] ** 夢ある農学応援団と ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials Nation wide sales network 23#24Establishment of Agri-Support Center in Kyushu ISEKI 人とのハーモニー BEKI EDICTO Our 1st branch of the Institute opened in February "A facility in Kyushu to propose, introduce, instruct farming methods" Yield amount of vegetables in Kyushu : Approx. 20% of all harvested in Japan Site area 5,620m² Training facility 1,492m² Exhibisiton & Warehouse 1,823m2 Farm Location 840m²+ 4ha (Demonstration farm) |Masuki-cho, Kumamoto Pref. ▸ Enhance abilities to make proposals for vegetable farming • Exhibiting vegetable farming machinery • Planning & Hosting seminars • Organizing a promotion team for vegetable farming ▸ Adjacent demonstration farm . • Demonstrating proposing local farming techniques Proposal of advanced farming technologies & techniques で夢ある農学応援団 ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 24#25ISEKI 人とのハーモニー BEKI CDICTO 3) Establishment of a new plant factory Advanced research & demonstration facility opened in March Joint research with Ehime University 2005 Joint research started (Facility in the premise of Ehime University) 2014 Launched plant growth diagnosis machine ISEKI Detail Area Location Solar-powered greenhouse plant Plant growth diagnosis machine, environments control device 500m² Matsuyama City, Ehime Pref. ISEKI Matsuyama Mfg. Co., Ltd.) <Plant growth diagnosis device> Awarded "2016 Special award for development" The Japanese Society of Agricultural Machinery and Food Engineers で夢ある農学応援団) - ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 25#26Notes on the Future Forecast ISEKI 人とのハーモニー BEKI CDICTO •The objective of this presentation document is to provide information, and it is not intended to invite any action. • The document has been prepared by ISEKI based on 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 not liable for any losses incurred by investment decision made utilizing the business forecast or targets given in this document. おいしいニッポンを。 安心を、 未来へつなぐ食料自給率1%アップ運動 FOOD ACTION NIPPON ISEKI group is a promotional partner of FOOD ACTION NIPPON. で夢ある農学応援団) ISEKI 1Q of FY ending Dec. 16 Investor Relations Presentation Materials 26