Financial Results for the Second Quarter
Fiscal Year Ending December 31, 2024
Investor Relations Presentation Materials
ISEKI & CO., LTD. August 22, 2024
Index
１．Outline of Financial Results for the Second Quarter | |
Fiscal Year Ending December 31, 2024 | |
・Key Points | 4 |
・Outline of Consolidated Business Performance | 5 |
・Domestic Sales | 6 |
・Overseas Sales | 7 |
・Operating Income | 8 |
・Ordinary Income & Profit | 9 |
・Balance Sheet | 10 |
・Equity Ratio / Interest-bearing Liabilities | 11 |
・Cash Flows | 12 |
２．Domestic and Overseas Markets | |
・Domestic Agricultural Machinery Market Trends | 14 |
・Domestic Market Trends (Status of ISEKI) | 15 |
・Overseas Market Trends | 16-17 |
３．Performance Forecast for the Fiscal Year Ending | ||
December 31, | 2024 | |
・Performance Forecast for the Fiscal Year Ending | 19 | |
December 31, | 2024 | |
４．Progress of Project Z & Topics | |
・Outline of Project Z | 21-24 |
・PTC Limited to become a consolidated subsidiary | 25 |
・Alliance with YANMAR AGRIBUSINESS | 26 |
・ISEKI’S Technology | 27 |
・Issuance of “ISEKI Report 2024” | 28 |
５．Appendix | |
・(Reference) Trends in Consolidated Financial | 30 |
Results (Quarterly) | |
・Company Outline | 31 |
・Trends in Consolidated Financial Results | 32 |
・Outline of Products and Services | 33 |
・Breakdown of Net Sales by Product | 34 |
・Breakdown of Net Sales by Overseas Region | 35 |
・Principal Domestic Business and Manufacture Locations | 36 |
・Domestic Sales Network | 37 |
・Overseas Manufacturing and Sales Sites | 38 |
・Global Expansion | 39-41 |
・Intellectual Property | 42 |
2
１. Outline of Financial Results for the Second Quarter Fiscal Year Ending December 31, 2024
3
Key Points
Both sales and operating income decreased despite overseas growth
Results were higher than last year’s 2Q on a quarterly basis
Overseas: | Continued growth in Europe |
Net sales reaching a new record high | |
Domestic: | Sales mainly of agricultural machinery decreased |
Earnings: | Decline in operating income due to lower sales and production |
Bottom line in the red due to impairment losses associated | |
with structural reforms |
Quarterly: Operating income remained in the black despite lower sales and lower operating income in 1Q
Higher sales and higher operating income in 2Q
No revision to forecast announced on July 18
Trends in 2Q Net Sales
(JPY bn, %)
72.2 | 86.6 | 86.7 | 92.3 | 91.1 | |||
Domestic | |||||||
20.8% | 27.7% | 33.6% 36.9% | 39.8% | Overseas | |||
FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | |||
2Q | 2Q | 2Q | 2Q | 2Q | |||
2Q Operating Income, Ratio | |||||||
(JPY bn, %)5.4% | 3.0% | 3.0% | |||||
1.8% | 4.7 | 2.4% | |||||
2.5 | 2.7 | 2.2 | |||||
1.2 | |||||||
FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | |||
2Q | 2Q | 2Q | 2Q | 2Q |
(JPY bn)
Quarterly | FY23/12 | FY24/12 | Change | ||
1Q | Net sales | 45.8 | 43.9 | (1.9) | |
Operating | 1.6 | 0.7 | (0.9) | ||
income | |||||
2Q | Net sales | 46.5 | 47.1 | 0.6 | 4 |
Operating | 1.0 | 1.4 | 0.4 | ||
income |
Outline of Consolidated Business Performance
(JPY bn,%) | FY2020/12 | FY2021/12 | FY2022/12 | FY2023/12 | FY2024/12 | ||
(January 1, 2024 | 2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | YoY Change | |
to June 30, 2024) | |||||||
Net Sales | 72.2 | 86.6 | 86.7 | 92.3 | 91.1 | (1.2) | |
(Domestic) | 57.2 | 62.6 | 57.5 | 58.2 | 54.8 | (3.4) | |
(Overseas) | 14.9 | 24.0 | 29.1 | 34.1 | 36.2 | 2.1 | |
Gross Profit | 21.4 | 25.7 | 25.1 | 27.2 | 26.9 | (0.3) | |
Gross Profit Margin | 29.7% | 29.8% | 29.0% | 29.5% | 29.5% | 0% | |
Operating Income | 1.2 | 4.7 | 2.5 | 2.7 | 2.2 | (0.5) | |
Operating Margin | 1.8% | 5.4% | 3.0% | 3.0% | 2.4% | (0.6)% | |
Ordinary Income | 1.0 | 5.5 | 3.3 | 3.0 | 2.4 | (0.5) | |
Profit (Loss) Attributable to | 0.9 | 4.1 | 2.5 | 1.9 | (0.6) | (2.5) | |
Owners of Parent | |||||||
Average | US$ | 108.5 | 106.8 | 119.2 | 133.6 | 150.3 | 16.7 |
Exchange | |||||||
Euro | 119.7 | 129.1 | 131.6 | 143.8 | 162.0 | 18.2 | |
Rate (JPY) |
5
Domestic Sales
FY2020/12 | FY2021/12 | FY2022/12 | FY2023/12 | FY2024/12 | YoY | ||||
(JPY bn) | |||||||||
2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | Change | ||||
MachineryAgricultural | Cultivating & | 13.3 | 14.7 | 14.3 | 12.9 | 12.3 | (0.5) | ||
RelatedMachinery | Mowing | ||||||||
Machinery | |||||||||
Planting | 5.5 | 6.4 | 5.5 | 5.1 | 4.4 | (0.6) | |||
Machinery | |||||||||
Harvesting & | 4.3 | 4.8 | 5.4 | 5.7 | 4.4 | (1.3) | |||
Processing | |||||||||
Machinery | |||||||||
Subtotal | 23.1 | 25.9 | 25.3 | 23.8 | 21.2 | (2.6) | |||
Agricultural | Farming | 10.6 | 13.5 | 10.9 | 11.0 | 11.2 | 0.1 | ||
Implements | |||||||||
Spare Parts | 7.1 | 7.2 | 7.2 | 7.5 | 7.6 | 0.1 | |||
Repair Fees | 2.7 | 2.8 | 2.8 | 2.8 | 2.9 | 0.0 | |||
Subtotal | 20.6 | 23.6 | 21.0 | 21.4 | 21.7 | 0.3 | |||
Total | 43.8 | 49.6 | 46.3 | 45.2 | 42.9 | (2.2) | |||
Construction of Facilities | 3.0 | 1.9 | 1.2 | 2.4 | 1.3 | (1.0) | |||
Others | 10.3 | 11.0 | 9.8 | 10.5 | 10.5 | 0.0 | |||
Total | 57.2 | 62.6 | 57.5 | 58.2 | 54.8 | (3.4) |
Main factors of YoY changes
- Decreases mainly in agricultural machinery and construction of facilities
Agricultural machinery:
The YoY increase in April-June could not offset the decrease in January-March
Farming implements/spare parts/repair fees:
Strong performance continued
Construction of facilities:
Sales declined due to the absence of large facility projects in the period
6
Overseas Sales
(JPY bn) | FY2020/12 | FY2021/12 | FY2022/12 | FY2023/12 | FY2024/12 | YoY Change |
2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | ||
North | 5.0 | 7.8 | 8.4 | 7.4 | 6.3 | (1.1) |
America | ||||||
Europe | 6.4 | 10.8 | 14.2 | 21.0 | 26.2 | 5.1 |
Asia | 3.4 | 5.1 | 6.1 | 4.6 | 3.1 | (1.4) |
Others | 0.1 | 0.2 | 0.3 | 0.9 | 0.5 | (0.3) |
Total sales | 14.9 | 24.0 | 29.1 | 34.1 | 36.2 | 2.1 |
Main factors of YoY changes
• Net sales reaching a new record high
North America:
Adjustment phase continued in compact tractors market, which led to decreased sales
Europe:
Increased sales of purchased products and solid capture of demand for landscaping products led to sales growth
Asia:
Overseas sales ratio
20.8%
27.7%
33.6%
36.9%
39.8% |
2.9%
Weakening demand in ASEAN and Korea led to a decline in orders and a decrease in sales
7
Operating Income
- Gross profit decreased (lower sales and production, mainly of domestic agricultural machinery)
- SG&A expenses increased (effect of FOREX fluctuations)
(JPY bn, %) | FY2023/12 | FY2024/12 | YoY Change |
2Q Actual | 2Q Actual | ||
Net Sales | 92.3 | 91.1 | (1.2) |
Gross Profit | 27.2 | 26.9 | (0.3) |
Gross Profit Margin | 29.5% | 29.5% | 0.0% |
SG&A Expenses | 24.5 | 24.7 | 0.1 |
Personnel | 13.7 | 13.9 | 0.1 |
Expenses | |||
Other Expenses | 10.7 | 10.7 | 0.0 |
Operating Income | 2.7 | 2.2 | (0.5) |
Operating Margin | 3.0% | 2.4% | (0.6)% |
[Breakdown of YoY Change]
Decrease in gross profit: ¥0.3 billion | |||||
(0.3) | 2.4 | 0.8 | (2.7) | (0.5) | (0.2) |
2.7 | 2.2 | |||||
Production | Price | Effect of | Volume/ | Other | SG&A | |
FY2023/12 | Costs | FOREX | Mix | (gross profit) | FY2024/12 | |
2Q | Fluctuations | 2Q | ||||
(gross profit) |
[Effect of FOREX Fluctuations (JPY bn)]
Net Sales | Cost of | SG&A | Operating |
Sales | Expenses | Income | |
2.7 | (1.9) | (0.4) | 0.4 |
8
Ordinary Income & Profit
- As impairment losses associated with Project Z structural reforms were recognized, the profit lines below income before income taxes decreased to a larger extent than operating income
(JPY bn) | FY2020/12 | FY2021/12 | FY2022/12 | FY2023/12 | FY2024/12 | YoY |
2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | 2Q Actual | Change | |
Operating Income | 1.2 | 4.7 | 2.5 | 2.7 | 2.2 | (0.5) |
Balance of Financial | (0.3) | (0.3) | (0.3) | (0.8) | (0.7) | 0.1 |
Income | ||||||
Other Non-operating | 0.1 | 1.1 | 1.0 | 1.1 | 1.0 | (0.1) |
Income | ||||||
Ordinary Income | 1.0 | 5.5 | 3.3 | 3.0 | 2.4 | (0.5) |
Extraordinary Income | 0.6 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Extraordinary Losses | (0.1) | (0.1) | (0.2) | (0.1) | (2.3) | (2.2) |
Income Before Income | 1.6 | 5.4 | 3.1 | 2.9 | 0.2 | (2.7) |
Taxes | ||||||
Income Taxes - | (0.6) | (1.2) | (0.6) | (0.9) | (0.8) | 0.1 |
Deferred | ||||||
Profit (loss) Attributable | 0.9 | 4.1 | 2.5 | 1.9 | (0.6) | (2.5) |
to Owners of Parent |
Breakdown of YoY change in extraordinary
income/losses | (JPY bn) |
Impairment losses on | (2.1) |
non-current assets | |
9
Balance Sheet
•
•
Inventories increased by ¥1.8 billion YoY, but remained flat excluding the impact of FOREX fluctuations
Property, plant and equipment decreased due to the recording of impairment losses associated with structural reforms
(JPY bn) | As of Jun. | As of Dec. | As of Jun. | YoY | Change | As of Jun. | As of Dec. | As of Jun. | YoY | Change |
from Dec. | from Dec. | |||||||||
30, 2023 | 31, 2023 | 30, 2024 | Change | 30, 2023 | 31, 2023 | 30, 2024 | Change | |||
31, 2023 | 31, 2023 | |||||||||
Cash & Deposits | 8.8 | 9.9 | 10.8 | 2.0 | 0.9 | TradeAccounts Payable – | 43.1 | 41.7 | 28.2 | (14.8) | (13.4) | ||||||
Accounts Receivable | 38.3 | 26.9 | 37.8 | (0.5) | 10.9 | Interest-bearing | 77.9 | 76.9 | 84.4 | 6.4 | 7.4 | ||||||
– Trade | Liabilities | ||||||||||||||||
Inventories | 69.1 | 72.8 | 70.9 | 1.8 | (1.8) | (Loans Payable) | 71.0 | 69.8 | 76.8 | 5.8 | 7.0 | ||||||
(Impact of FOREX | 36.4 | ||||||||||||||||
- | - | - | 1.8 | 2.1 | Other Liabilities | 22.3 | 24.2 | 14.0 | 12.1 | ||||||||
fluctuations) | |||||||||||||||||
Other Current Assets | 3.8 | 5.6 | 3.6 | (0.1) | (1.9) | ||||||||||||
Total Current Assets | 120.1 | 115.3 | 123.3 | 3.1 | 8.0 | Total Liabilities | 143.4 | 142.8 | 149.0 | 5.5 | 6.1 | ||||||
Property, Plant and | 84.4 | 84.5 | 82.0 | (2.3) | (2.4) | ||||||||||||
Equipment | Net Assets | 75.1 | 74.2 | 75.1 | 0.0 | 0.9 | |||||||||||
Intangible Assets | 2.4 | 2.4 | 2.7 | 0.3 | 0.2 | ||||||||||||
Investments and | 11.5 | 14.7 | 16.0 | 4.4 | 1.3 | (Retained Earnings) | 22.3 | 20.4 | 19.4 | (2.9) | (1.0) | ||||||
Other Assets | |||||||||||||||||
Total Non-current | 98.4 | 101.7 | 100.8 | 2.4 | (0.9) | ||||||||||||
Assets | |||||||||||||||||
Total Assets | 218.6 | 217.1 | 224.2 | 5.6 | 7.1 | Total Liabilities and | 218.6 | 217.1 | 224.2 | 5.6 | 7.1 | ||||||
Net Assets | |||||||||||||||||
10 |