Top Message

Value Creation

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Initiatives

Initiatives for Growth

Corporate andFinancial Information

T OP MESSAGE

Aiming to Achieve Continued Growthby Striving to Ensure Safety and Compliance
as well as Provide Products and Services
That Contribute to the Development of SocietyOver the years, we have accumulated experience and expertise in various
business fields and built relationships of trust with our stakeholders.
While valuing such assets, we will work to achieve sustainable growth tocontribute to the protection of the environment and the development ofsociety by recognizing changes in the world, the surrounding environmentand our situation, retaining what we should and changing what we should.

Regarding the Certification of Engines for Lift Trucks
As we confirmed a potential regulatory violation related to Japan’s emissions certification for lift truck engines, we
suspended the shipment of the lift trucks for the Japanese market equipped with these engines on March 17, 2023.
The incident followed the suspension of the production and shipment of certain models of internal-combustion lift trucks
in North America in January 2021.* I wish to express my sincerest apologies for causing a great deal of inconvenience to
our customers, dealers, suppliers and many other stakeholders.
Reflecting the seriousness of the matter, we have set up a special investigation committee comprising external
experts who are not stakeholders. In addition to conducting investigations to reveal the full details and analyzing theroot causes, we will formulate measures to prevent recurrence based on the findings. We intend to implement the final
countermeasures based on the findings of the committee’s investigation as well as the confirmation of the Ministry ofLand, Infrastructure, Transport and Tourism and other relevant ministries and agencies. At the same time, we havealready been doing whatever we can at present, such as separating the certification function from our development
department to reinforce the inspection system for legal certifications. We will fully identify our inadequacies, strive toprevent recurrence by taking the necessary measures and build a corporate culture that places the greatest importanceon compliance and safety.
Once again, I want to apologize for the inconvenience and concern experienced by our stakeholders. We take thisproblem seriously and are determined to work to improve.
* We later obtained the certification of engines for small lift trucks that are our mainstay models in our sales of gasoline/LPG lift trucks in North America and resumed shipments in May 2022.
We will sequentially take measures for the remaining models.

External Environment and Review of Fiscal 2023

Koichi Ito
President

6

Toyota Industries Report 2023

In fiscal 2023, although the automobile market and thematerials handling equipment market remained strong on
the back of the recovery of the global economy, the external
environment remained difficult overall. Unresolved supply
chain disruptions caused production to remain below ourtargets. The exchange rate fluctuated more widely than
expected. In addition, we were affected by global inflation,
which caused raw materials, transportation, labor and othercosts to soar.
In this environment, we sought to increase production
as much as possible by steadily capturing opportunities instrong markets and ensuring safety and quality. As a result,
we achieved historic-high net sales and a high level of profit.
I believe this is because our employees, suppliers and otherrelated people worked as one team and did their best in
their respective positions even amid an uncertain future.

Changes in operating profit+14.0(¥Billion)
159.0

169.9

+45.0
Cost
reduction

Breakdown of major items
Energy costs
Depreciation(11.5)(5.8)+87.0
Exchangerate(52.5)
Raw materials
and(17.5)
parts costs
Labor
costs

Breakdown ofmajor items(12.5)
Logistics
costs

US$
Euro

(31.9)
Expenses& others(20.7)

+36.6
+5.6

Sales

Engine certification related costs
FY2022
results

Operating profit: +10.9 (from 159.0 to 169.9) billion yen

FY2023
results

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Top Message

Results by business segment are as follows. In automobile-related businesses, our production structure was well
prepared to ensure that we were able to tap into the recovery of the automobile market. We were forced to set nonoperation days at the Nagakusa Plant for vehicle assembly and at other plants due to the impact of COVID-19 and theshortage of semiconductors and other parts. However, we achieved our highest net sales in the Automobile Segment
since the adoption of the International Financial Reporting Standards in fiscal 2017, underpinned by other businesses
such as car air-conditioning compressors. In the Materials Handling Equipment Business, demand was strong for both lift
trucks and logistics solutions. Although we had to raise prices due to inflation, orders received remained robust, and net
sales reached a record high. On the other hand, the instability of the supply chain also had repercussions for the Materials
Handling Equipment Business, and production and unit sales of lift trucks were below the initial plan. As for logistics
solutions, things didn’t turn out as we expected, such as delays in the progress of projects and cost increases. These
factors negatively impacted profits of the Materials Handling Equipment Business as a whole.
Going forward, we would like to remain highly responsive and flexible to an uncertain future and the acceleratingchanges in the external environment.

What We Can Learn from Our History
Since our establishment, we have engaged in research and development based on manufacturing that contributes to theimprovement of society by identifying customer needs as the world has undergone changes in many ways.
Our history started with the manufacturing and sales of automatic
looms. However, we did not limit ourselves to textile machinery andentered the automobile business anticipating the motorization of society.
We subsequently expanded our business domains to include the materials
handling equipment business focused on lift trucks, and we continue togrow steadily. In addition, we have been proactively expanding outside
Japan since the 1980s. Combined with M&A activities, these efforts havebroadened the scope of our activities globally. Based on our founding spirit,
we have been focusing on our strengths and what the world needs while
Type G automatic loom
working steadily to establish a solid foothold. I believe this has allowed us toovercome many hardships, such as World War II, the 1973 oil crisis and the2008 global financial crisis. It has made us what we are today.
At present, we provide diverse products with a focus on automobilerelated businesses and the Materials Handling Equipment Business.
Looking back at the past, however, it was never smooth sailing. In 1954,
we established a textile machinery production base in Mexico. However,we were forced to withdraw from the country in a matter of less thaneight years due to reasons such as a delay in factory construction and the
Mexican government’s retraction of support. I believe that this firsthandexperience of the difficulties of doing business outside Japan was leveraged
in our subsequent global expansion. In 1958, we launched the agricultural
machinery business but again withdrew from it after roughly eight years due

Value Creation

Initiatives for Growth

Promotion of ESG
Initiatives

Corporate andFinancial Information

to the inconsistency of our products’ performance and our inexperience in sales. I think that the takeaways from thesebitter lessons were how to navigate difficulties in manufacturing outside Japan and the value to be cherished in sales
activities.
We currently face various difficulties and we will certainly be confronted with hardships in the future. Carrying on
our founding spirit and learning from our history, which is built on the painstaking efforts of our predecessors, we arecommitted to making our utmost efforts and overcoming setbacks so that when we look back in the future, we will findmeaning in such experiences.

Medium-Term Direction
Expanding Businesses to Achieve Vision 2030
The performance of the Textile Machinery Business has many ups and downs because it is greatly affected by the global
textile markets. Therefore, we aimed to break away from being dependent on a single business and began to focus ourefforts on the diversification of2030 Vision targets
Over ¥400 billion
Achieving sustainable (Operating profit ratio of 10%)our business in the 1950s. Lift
growth in harmony
with society
trucks and car air-conditioning(¥ Billion)
compressors, which we
Operating profit(Over ¥4 trillion)
169.9
4,000
159.0
147.4
developed through a series of
134.7
134.6 128.2
127.3
3,379.8
118.1
3,500
trial and error, have now grown
122.9
3,000
68.7
into core businesses that drive
2,705.1
Net sales
Automobile
our company. Fortunately, both
2,500
2,243.2 2,250.4
2,214.9 2,171.3 2,118.3
2,003.9
our Automobile Business and
2,000
1,675.1
Materials Handling Equipment
1,479.8
1,500
Materials HandlingBusiness have continued toEquipment/Logistics
1,000
grow steadily thanks in part to500
the ongoing expansion of the0market. We will engage in(FY) 20112016
2017 2018 2019 2020 2021 2022 2023
2031
R&D and sales expansion
JGAAP
IFRS
activities with a focus on these
two businesses to achieve
Vision 2030, which represents what we aspire to be in the medium term.
Specifically, we will focus our efforts on the domains of electrification andautomation, which are identified as our CSR material issues (materiality), tocreate new values. In the field of automobiles, the move toward electrification isirreversible. As such, we will capture opportunities created by the expansion of
the market, with a clear focus on electric compressors that can be installed in all
types of electrified vehicles, and strive to further expand sales of car electronics
products and bipolar nickel-metal hydride batteries for hybrid electric vehicles(HEVs). Turning to the field of materials handling equipment, the logistics volume
Electric compressor
is expected to increase in tandem with the global economy, which is projected

TIEM established8

Toyota Industries Report 2023

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Top Message

to grow in the medium term. Moreover, the development of e-commerce
has led to the increasing frequency and smaller units of delivery. We
expect that the need for labor savings, greater efficiency and automation oflogistics operations will continue to increase in response to changes in thesurrounding environment that includes rising labor costs, labor shortage
and workstyle reforms at logistics sites. In response, we intend to meetcustomer expectations in dual business fields of lift trucks, of which we offer
a full lineup around the world, and logistics solutions, for which we provide
products and services for projects of all sizes in many different regions.

Value Creation

Initiatives for Growth

Promotion of ESG
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stance as well as identify the areas where they consider we are doing well and we are not taking sufficient measures. We
will continue to ensure these findings are reflected in our management. Going forward, our efforts will focus on identifying
changes in society and the things that are required of us through dialogue with our stakeholders, thus contributing to thedevelopment of society as a good corporate citizen.

Pocket sorter by Vanderlande

Further Strengthening Relationships with Stakeholders by Striving to Achieve Even Greater Harmony with Society
To achieve sustainable growth in harmony with society, it is important to ensure that our businesses continue to benefit
society, instead of relying solely on the growth of the market. It is when we are needed and selected by society that
we can grow. We will engage in activities primarily for the happiness of customers and all stakeholders involved in ourbusinesses, not to mention the protection of the global environment. At the same time, we will strive to further reinforce
the foundation supporting our corporate activities, including our organizations, systems, human resource development
and digitalization.
On the environmental front, climate change is a challenge that urgently
needs to be addressed on a global scale and we have been acting
accordingly. In production, for example, we are producing results byconsistently working on energy-saving activities and sharing best practices
among business divisions. We intend to persistently pursue these activities.
Meanwhile, we have been utilizing renewable energy and developing newtechnologies conducive to decarbonization to steadily advance initiatives
to achieve carbon neutrality. In the field of product development, we plan
to reduce the environmental impact of using our products by applying ourFuel cell lift truck
electrification, fuel cell and other technologies while facilitating collaboration
between the Materials Handling Equipment Business and the automobile-related businesses. At the same time, we will
work to improve the competitiveness of our products.
Regarding biodiversity, which is closely related to climate change, our employees participate proactively inconservation activities that take advantage of the characteristics of each plant, mainly in the vicinity of our production
bases. We intend to expand these initiatives in the future.
Looking at social responsibility, we will strive to enhance the whole Toyota Industries Group through a variety of
initiatives already being undertaken to date. They include carrying out
comprehensive safety measures with a clear focus on ensuring thoroughcompliance, promoting diversity and respecting human rights not only inall our corporate activities but throughout the supply chain. Based on the
Human Rights Policy formulated in 2021, we will strive to steadily enhance
activities regarding respect for human rights, without limiting these activities
to within the supply chain.
We will also enhance dialogue with investors, shareholders and otherstakeholders to promote their understanding of our current situation and

Building a Foundation for Sustainable Growth
To reinforce our foundation, it is important to make sure that every employee understands the importance of safety,
health and quality based on compliance, and that these basics are continually emphasized and enforced. Based on thisunderstanding, we will strive to reinforce our foundation for sustainable growth through two-pronged strategies. One is topromote the adoption of information and digital technologies and use them for reskilling a wide spectrum of employees,
from young employees to older employees. The other is to maintain and increase our overall competitiveness by enabling
our diverse employees to leverage their diversity, facilitating collaboration and providing venues for them to thrive. In thisdramatically changing environment, we will build a foundation that will turn change into an opportunity rather than a risk.
As for corporate governance, we will seek to build an optimal structure to achieve the sound and sustainable
development of the Toyota Industries Group while considering changes in what is expected of companies. As we aim torealize highly effective governance, we will continue to ensure that the Board of Directors engages in open and robust
discussion while leading the Toyota Industries Group in a well-balanced manner based on diverse opinions, thereby
connecting these efforts to enhance corporate value. For the promotion of the diversity of executives, we believe it
should involve more than just formality. It is an important Company-wide task that entails the continued development of aworkplace environment enabling women and other diverse human resources to fully demonstrate their capabilities. Basedon this belief, we will take a bottom-up approach to implement this initiative.

In Conclusion
We desire to develop businesses by gaining theunderstanding and support of our stakeholders through theprovision of products and services that are helpful to society,thus contributing to making the earth a better place to live,
enriching lifestyles and promoting a compassionate society.
To achieve this goal, we will recognize and squarely face thecurrent situation, rectify the points that require rectificationand look forward to the future in our efforts to achieve
corporate growth. We will attach importance to safety andquality with compliance as a fundamental principle andstrive to build a workplace environment that enables diverse
colleagues to thrive and work with a sense of pride. Throughthese efforts, we will continue to forge ahead so that we willremain needed by society.
We look forward to your continued understanding andsupport as we endeavor to implement these initiatives.

Information session on the Materials Handling Equipment Business10

Toyota Industries Report 2023

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