Top Message

Top Message

Capturing Changes in the Business
Environment and Vigorously Promoting
Initiatives for Sustainable Growthand other Toyota Group companies. Such a capital connection is one
means to ensure even closer collaboration among Group companies.
This is essential in prevailing over ever-intensifying competition caused by
the accelerated trend toward electrification and increasing use of Internetof Things (IoT) technology in the automobile industry. Financial stability
facilitates investments for future growth.
*1: Survey by Toyota Industries Corporation

Akira Onishi President

Here, I would like to highlight our efforts to attain sustainable growth in
the two fields that represent our core businesses, specifically materials
handling equipment and car air-conditioning compressors.

1) Materials Handling Equipment
The Materials Handling Equipment Segment mainly consists of the Lift
Truck Business, in which we already enjoy the global top share*2, and the
Logistics Solutions Business, which we have been augmenting in recent
years. In the Lift Truck Business, we seek to expand our value chain thatencompasses after-sales services, the supply of spare parts and sales
financing operations, in addition to developing new internal-combustionand electric-powered lift trucks.
*2: Survey by Toyota Industries Corporation

Management Based on Diverse Business Portfolio andReadiness to Adapt to Change

Toyota Industries Report 2018

Toyota Industries’ Global
Top Share*1 Products

Logistics Solutions Business

Value chain
Products

Internal-combustion lift truck

Operates mainly in North
America and has an excellent
system building capability
Warehouse truck

Lift truck
Sales
financing
operations

Telematics

Electric lift truck

After-sales service

Fuel cell lift truck

Attachment

Acquiring
dealers

Component

Car air-conditioning compressor

Air-jet loom

Designing
distribution centers

Operates mainly in Europe
as well as globally and has
a strength in starting up
large-scale projects

Sells automated storage andretrieval systems, automatic
guided vehicles (AGVs), etc.,
mainly in Japan

Automated baggage
storage and retrieval
system for airports

Financial Section /Corporate Information

14

Lift Truck Business

Promotion of
ESG Initiatives

In addition to our founding business of textile machinery, we engage indiverse businesses ranging from materials handling equipment to car
air-conditioning compressors, vehicles and engines. Automobile-related
businesses and non-automobile businesses centered on materials
handling equipment are the two major pillars of our business, and thisreflects one of our characteristics of not relying exclusively on one specificbusiness domain.
We boast the world’s No. 1 market share*1 for lift trucks, car airconditioning compressors and air-jet looms. Having a top share product ineach business segment is a strength of Toyota Industries.
Meanwhile, we have been reinforcing our business related to internalcombustion vehicles. We expect them to remain mainstream for some timein the future primarily in the growing emerging country markets. We also
recognize the trend toward vehicle electrification as a driver for our growthand have been steadily preparing ourselves for possible future changes in
the market.
These efforts have led to the dispersion of management risk andcontributed to our stable business performance. We also believe that we
can reinforce business in each segment by promoting horizontal alignment
among business divisions in such areas as development and production
and by sharing the strengths of each.
That we are able to collaborate with Toyota Group companies for many
years and encourage positive competition in safety, the environment,
quality, cost and delivery (SEQCD) provides us with a tremendous
advantage.
Also, we hold a number of stocks in Toyota Motor Corporation (TMC)

Strategies andBusinesses

Our Characteristics and Strengths

Business Development Scenario for Future Growth
Company Introduction

Toyota Industries was founded in 1926 to manufacture and sell theType G automatic loom invented by founder Sakichi Toyoda. Considered as
the origin of the Toyota Group, we have evolved and attained growth throughpositive competition with other Toyota Group companies. In this section,
President Akira Onishi presents Toyota Industries’ characteristics andstrengths that have resulted from such evolution and growth as well asa scenario we created for future growth.

Unit-type automatedstorage and retrieval
system

In the Logistics Solutions Business, we are responding to the growing
need to handle a large number of small-lot parcels in warehouses
following the recent expansion of the e-commerce market. Throughcollaboration with U.S.-based Bastian Solutions LLC and Netherlandsbased Vanderlande Industries Holding B.V., which became our subsidiaries
in fiscal 2018, Toyota Industries is augmenting business globally while

15

Top Message

Next, I would like to provide an overview of our future growthscenario for each of the three sales categories in the Materials
Handling Equipment Segment.

Sales Breakdown of the Materials Handling
Equipment Segment
Logistics solutions
Approx. 20%¥1,283.0 billion

After-sales services,supply of spare parts, etc.

Value chain in the Lift Truck Business Approx. 40%(Thousand units)
1,500*4: Survey by Toyota Industries Corporationn Global Compressor Market*5 and Unit Sales ofToyota Industries(Million units)
80

Electric
type

60

Internalcombustion
type

Compressor market
40

Electric
type

20

Internalcombustion
type

Unit sales of Toyota Industries

2) Car Air-Conditioning Compressor

1,000

500

0
(Year) 08 09 10 11 12 13 14 15 16 17 18*3: Survey by Toyota Industries Corporation

20n Unit Sales of Toyota Industries(Thousand units)
300

200

Europe100

North
AmericaJapan0(FY) 09 10 11 12 13 14 15 16 17 18 19

21

Baggage handling system utilizing autonomous vehicle
technology for airports

16

17

18

19

2X

Financial Section /Corporate Information

Others0(FY) 15

An expansion of the global automobile market and an increase in the*5: Survey by Toyota Industries Corporation
number of cars equipped with air conditioners are expected to contributeto the sustainable growth of the car air-conditioning compressor
Channeling Our Unique,market. Among various types of compressors, compressors for internalAccumulated Resources into Both Types
combustion vehicles will maintain a high level of demand, while the electric
Human resources
Technologies/know-how
compressor market is expected to expand over the medium to long term.
In response to the recent, accelerated trend toward electrification,
Facilities created in-house
Funds
the compressor industry is increasingly concentrating resources on theelectric type. Toyota Industries, on the other hand, makes sure to channel
Internal-combustion typeits unique, accumulated resources into both compressors for internalFocus on this type as amainstream product for the
Industry as a
combustion vehicles, which are expected to remain mainstream for thetime being
whole focusing
time being, and also electric compressors, for which demand is anticipatedAim for a 50% market share byon electric typestrengthening our alreadyto grow in the future. We will utilize our extensive resources encompassing
superior product appeal
human resources, technologies and know-how and work steadily todifferentiate ourselves in both fields.
Electric type
To achieve even greater competitiveness, we have been undertaking
Steadily respond to anticipated demand growth
Leverage our market share, which is higher than internalthe following initiatives in terms of development and production. As
combustion type, to gain from an expansion of the electricfor development, we conduct a range of rigorous evaluation tests for
powered vehicle market
compressors in realistic vehicle environments to satisfy stringent vehicle
conformance requirements ofautomakers. Through thesetests, we offer a high level of
performance, including excellent
fuel efficiency.
With automakers repeating aprocess of trial and error for thepromotion of vehicle electrification,
it is increasingly important for us,
as a component manufacturer, torespond to their varying requests.
Vehicle conformance test based on our know-how of conducting both simulations and experimental evaluations

Promotion of
ESG Initiativesn Logistics Solutions
In the category of logistics solutions, we have been promoting regionaland functional collaboration among Bastian, Vanderlande and Toyota
Industries based on the strengths of each. Vanderlande, positioned at then Global Lift Truck Market*3

Toyota L&F Customer Center Osaka

Strategies andBusinessesn Value Chain-Related
As for value chain-related initiatives, our efforts are divided into three fields:
services, sales financing operations and components. In the services field,
in order to continue generating profits we will utilize our networks, which
we have strengthened by acquiring dealers along with other measures, andprovide services during the entire product lifecycle through maintenanceservices and the supply of spare parts. At the same time, we will augment
proposals for logistics improvement by using telematics to ensure efficient
fleet operations, reduce accidents, encourage fuel-efficient practices andpromote automation. In the field of sales financing operations, we alreadyhave in place a system to undertake these operations in-house in the
United States and Europe. In the future, we will extend our global reach tocapture customers’ needs for equipment leasing and rentals. In terms ofcomponents, we will enhance the product appeal of our engines, motors
and controllers, which are manufactured in-house, with the aim of further
differentiating the performance of both of our internal-combustion lift trucks
and electric lift trucks. Overall, we will continue to make the most of our
now reinforced value chain.

Toyota Industries Report 2018

FY2018

Attachments,
components,
sales financing operations
and sales through
Aichi Corporation, etc.

n Lift Truck Market
We expect continued, moderate growth in the lift truck market
underpinned by steady growth in the world economy and an expected
increase in global logistics volume spurred mainly by new demand in
the expanding e-commerce market. Against this backdrop, we plan toincrease sales by developing a broad range of high-quality products thatsatisfy diverse customer needs, undertaking sales activities based on ourwell-developed distribution networks and promoting solution-based sales
with a focus on resolving customers’ logistics issues.

16

Sales of lift trucks andother materials handlingequipment Approx. 40%

core of such collaboration, has constantly been attaining steady growthin business performance. In its warehouse-related business, it received
an order from a Dutch fresh food supplier for a solution that combines
a shuttle system and case picking system to enable highly efficient
warehouse logistics. In the area of baggage handling systems for airports,
in which Vanderlande boasts the global top share*4, Rotterdam The Hague
Airport will introduce a system utilizing the company’s autonomous vehicle
technology for the first time in the world. It is an innovative baggage
conveying system that not only enables efficient baggage handling but also
flexibly accommodates layout changes and system expansions.
In Japan, we established a new customer center in June 2018 in
Suita City, Osaka. The center is capable of making proposals on various
combinations of materials handling equipment and solutions to resolve
different logistics issues of customers. Utilizing the center as our third
logistics showroom following the ones in Chiba and Aichi prefectures, wewill enhance our customer response mainly in western Japan.
Through these initiatives, we will facilitate collaboration between the Lift
Truck Business and Logistics Solutions Business in the Materials Handling
Equipment Segment with an aim to achieve growth over the medium term.

Company Introduction

mutually leveraging the strengths of each.
We believe that we have established a structure necessary
to attain future growth in each of these businesses. We are
now at the stage to yield positive results by harnessing thestrengths of this structure.
Within the Materials Handling Equipment Segment, salesof materials handling equipment, mainly lift trucks, accountfor about 40% of total sales, while value chain-related sales,
including those from lift truck after-sales services, the supply of
spare parts and sales financing operations account for about
40%. The last 20% is derived from logistics solutions sales.
Since this segment does not rely solely on sales of materials
handling equipment, our business performance is relatively
immune to short-term changes in the lift truck market.

17

Top Message

Toyota Industries will continue to seek more compact and lighter
compressors with higher fuel efficiency. We will also strive to attain a more
superior performance in terms of quieter operation and lower vibration,
which will become more important in vehicle electrification.
While making these efforts to pursue greater product appeal in
the existing domains, we will also concentrate on developing new
business areas.
For example, we expect that the number of heat-emitting components
used within a vehicle, such as electronic devices and batteries, will
increase as vehicle electrification progresses and automated driving
becomes more widespread. In order for these components to function
at peak capacity, it is critical to keep the heat down. To respond to thisneed, we plan to conduct development with a focus on utilizing the cooling
function of a compressor not only for vehicle interior air conditioning but
also for key components.
Besides this cooling functionality, we have applied compression
technology used in compressors to develop an oxygen-supplying air
compressor, which is the “heart” of a fuel cell vehicle (FCV), and hydrogen
circulation pump. These components have been adopted in TMC’s
MIRAI FCV. We intend to further increase the appeal of our products andcontribute to the realization of a hydrogen-based society.

Variable-displacement type

Characteristics

Strengths &sales expansion
policyStandard type with aconsistent cooling capability

Add greater price competitivenessto the existing strength ofhigh reliability and supply products
mainly to emerging countries

Toyota Industries Report 2018

Driven by an internal motor

Save fuel by automaticallyadjusting the cooling capability

Keep air conditioning at
a comfortable level at all times,
including start-stop operation of
HVs and PHVs

Expand sales mainly in developed
countries by taking advantage ofthe excellent fuel efficiency andglobally stable productivity

Utilize machinery and electronics
technologies and consistent
manufacturing capabilities tocapture opportunities in the
expanding electric-powered vehicle
market*6: HV: Hybrid vehicle; PHV: Plug-in hybrid vehicle; EV: Electric vehicle; FCV: Fuel cell vehicle

18

Electric type

JAT810 air-jet loom

Financial Section /Corporate Information

Driven by the power of the engine

Electric-powered vehicles(HV, PHV, EV & FCV)*6

Textile machinery is our original business. I would like topresent a case in China, one of our important markets,
where orders for our mainstay air-jet looms are increasing
following the enforcement of more stringent environmental
regulations in the country.
The Wujiang District in the city of Suzhou, Jiangsu
Province, is the largest production center of synthetic
fiber textiles in China. There, more stringent environmental
regulations were adopted in 2017, mandating factories
operating water-jet looms that use water to insert weft yarn to weave
fabrics to conduct appropriate wastewater treatment. This has prompted
replacement demand for air-jet looms, which do not use water, andprovided us with an opportunity to increase orders by promoting sales of
our air-jet looms, renowned for their excellent energy saving performance,in the Chinese market.
As seen from this example, we believe there may be additional
opportunities to expand sales in the Chinese market of our materials
handling equipment and car air-conditioning compressors, both boastinghigh environmental performance, depending on how China tightens its
regulations in the future.

Promotion of
ESG Initiatives

Fixed-displacement type

Strategies andBusinesses

3) Textile Machinery

Characteristics and Strengths by Compressor TypeInternal-combustion vehicles

Company Introduction

As the holder of the top
market share, we will seek
even closer collaboration
with automakers worldwide
to create a firm platform forthe development of electriccompressors.
In terms of production,
more and more stringent fuelefficiency standards adopted
every year have necessitatedan increasingly complex
compressor structure. As
such, manufacturing capabilities that ensure stable mass production ofhigh-quality products at any production base have become more important
than ever. In producing compressors for internal-combustion vehicles andelectric compressors, machining technology plays a vital role. As such,
we develop specialized facilities and cutting tools in-house to ensurehigh-precision and high-speed machining. This is the foundation of ourcompressors’ high levels of performance and reliability.
We also use IoT technology to link our mother plants in Japan withproduction bases outside Japan and carry out detailed data managementin each work process as an effort to further ensure stable quality on a
global basis.

Accurately Responding to Changing Customer Needs
In recent years, technological trends, customer needs and other market
circumstances have changed dramatically around the world. The
automobile industry, in particular, is said to have entered a period ofdrastic change that occurs only once in 100 years. The need to reduce
CO2 emissions has accelerated the electrification of vehicles, and various
types of electric-powered vehicles ranging from hybrid vehicles (HV) to

19

Top Message

Toyota Industries’ Products Fitted in Electric-Powered Vehicles[HV / PHV / EV]

DC-DC converter[FCV]

Plastic glazing

Oxygen-supplying
air compressor

3.0 L displacement diesel engine*7

Hydrogen circulation pump

PCU (for assisting power
generating motor)

Electric compressor

PCU (for swing electric motor)

Hybrid unit
New hybrid engine (with an integrated motor) and PCUCharging standFour-wheel drive
rear inverter

DC-AC inverter

On-board charger

Inverter for hydrogen
circulation pump

Boost reactor

Toyota Industries Report 2018

Using a DC-AC inverter as an emergency power source
in a disaster-awareness camp

In order to achieve further growth with a focus on our core businesses ofmaterials handling equipment and car air-conditioning compressors, wewill meet changing customer needs and enhance our competitive edge by
providing logistics solutions and responding to vehicle electrification.
Moreover, to extend our reach from the existing business domains forachieving sustainable corporate growth, we will also channel our resources
and take on challenges in new business areas.
Because the world keeps changing faster and faster, we have taken
the necessary action to respond to these rapid changes. Inspiredby our corporate creed, we will step up our efforts to conduct
forward-looking activities based on our areas of specialization.
For a few years from fiscal 2019, we anticipate somewhat
difficult times as we prepare for future growth. The involved
costs could be large and may have a negative impact on ourbusiness performance. We intend to overcome these difficult
times and continue our growth by taking advantage of operating
diverse businesses, with each business segment making
concerted efforts.
The entire Toyota Industries Group will work as a teamtoward this goal, while always going back to our vision to“support industries and social foundations around the world
by continuously supplying products/services that anticipate
customers’ needs in order to contribute to an enriched lifestyleand comfortable society.”

Financial Section /Corporate Information

20

Future Direction of Business Operations
Promotion of
ESG Initiatives

FCVs are likely to gain popularity depending on regional characteristics andcustomers’ preferred vehicle usage.
Utilizing a variety of technologies such as power source technologies
we have accumulated for more than 30 years, the Compressor Divisionand the Electronics Division collaborate to develop and manufacturedevices for use in electric-powered vehicles.
Among such devices, a DC-AC inverter equipped to use home electric
appliances in a vehicle has drawn much public attention as an emergency
power source following the Great East Japan Earthquake, during which
it was used to feed power to evacuation shelters. In Japan, it is fitted in
official cars of local governments and increasingly used as a self-sustained
disaster prevention measure in apartments. We intend to propose otherpossible uses of this product.
Electric-powered vehicles themselves must extend
their driving range in order to gain popularity. In addition to
improving batteries and other devices, this requires reducing
vehicle body weight.
Toyota Industries has developed plastic glazing that isabout 40% lighter than its glass counterpart. This producthas already been used in the panoramic roof and rearwindow of various vehicles, including TMC’s Prius a.
In addition, our plastic glazing is easy to process, thus
providing diverse vehicle design options.
The need for electrification is also growing not just in theautomobile field but also in the construction machinery field.
In response, Toyota Industries has developed a new
hybrid unit for construction machinery by utilizing a pool ofengine and power electronics technologies accumulated in
the fields of materials handling equipment and automobiles.
The unit has been mounted in a hybrid hydraulic excavator of

Hitachi Construction Machinery Co., Ltd.
In this way, we respond to ever-changing customer needs in a timely
and accurate manner. By doing so, we intend to contribute to society andachieve sustainable corporate growth.

Strategies andBusinesses

Contributing to Vehicle Electrification with a Broad Range ofElemental Technologies from Power Source Devices to Lighter Weight Components*7: The Toyota 1KD diesel engine that has been mounted in lift trucks since 2013. Among the74 kW-class engines, it complies with the 2014 standards stipulated by the Off-Road Vehicle
Act without adopting the urea Selective Catalytic Reduction (SCR) system, a world first.

Hybrid hydraulic excavator ZH200-6 ofHitachi Construction Machinery

Company Introduction

Assisting power
generating motor

Toyota Prius a21