Strategies and Businesses

Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Top Message

Steadily Carry Out Growth Strategies
by Leveraging the Strengths ofEach Business Field

1. Review of Fiscal 2021
Top Message

P. 12–17

Taking the Initiative for GrowthP. 18–25

1. Contributing to Logistics Efficiencies of Customers by Providing Support throughout theLogistics Lifecycle
2. Contributing Both in Terms of Product Development and Production to the Establishment ofa Carbon Neutral Society

Business Activities

P. 26–38

Top Message

2. Medium-Term Growth Scenario

Seeking Further Growth in an
Environment of Lingering Uncertainty
by Building a Robust Corporate
Structure and Regarding Drastic Social
Changes as Growth Opportunities
This section presents Toyota Industries’ efforts
to overcome the COVID-19 pandemic andachieve further growth.

Akira Onishi President

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Toyota Industries Report 2021

In fiscal 2021, COVID-19, which has become a global phenomenon,
repeated the cycle of expanding infections and winding down, and thisdifficult situation is likely to continue around the world with the exceptionof a few countries. I would like to take this opportunity to extend mycondolences to people who have lost their lives to the pandemic and wish
for an early recovery of those who are suffering from COVID-19.
Looking back over the past year, Toyota Industries was struck hardby the pandemic and fell into the red in the first quarter but succeededin getting on a track to recovery in and after the second quarter. I believe
this was made possible because we maintained our Group-wide profit
improvement activities that started from well before the pandemic andworked to resume business activities on a full-scale in keeping with arecovery in the market. Observing market trends and the post-COVID-19
world, we need to determine which initiatives to retain, accelerate or undoand adapt to “new normal” work styles.

Operational test of a control system conducted
remotely at Vanderlande

Providing work instructions to overseas servicing staff
remotely from Japan in the Textile Machinery BusinessIn order to achieve growth over the medium term, it is essential to keep oureyes on changes in the market and make sure to seize growth opportunities.
Specifically, we regard two growth fields as having great potential. Oneis the Materials Handling Equipment Business encompassing logistics
solutions to respond to changes in lifestyles, including more widespreaduse of e-commerce, and labor shortages. The other is responding toelectrification in the automobile and other sectors. In these two growthfields, we will accurately capture changes in customer needs, leverage ourstrengths and turn them into business opportunities. The following highlights
our major efforts in this regard.

Efforts in the Materials Handling Equipment Business
An increase in logistics volume is likely to continue with an expected
post-pandemic recovery of the world economy and an expansion ofe-commerce. In the logistics industry, labor shortages and a rise in laborcosts are driving an increase in needs for mechanization and automation oflogistics operations. These trends are expected to accelerate further, as new
lifestyles and social distancing practices will become more prevalent as aresult of COVID-19.
Under these circumstances, lift trucks and logistics solutions will playincreasingly important roles. Demand for lift trucks is expected to remainstrong due to their versatility. Along with expanding sales further, we will aim
to contribute to customers throughout our entire value chain, including

13Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Top Message

after-sales services. As for a
Toyota Industries’ Products Used at Various Logistics Sites
rise in needs for even greater
Automated storage
and retrieval
efficiencies in distribution
systemSeaportcenters, which has been
High-speed
storage anddriven by an expansion
pickingsystem
Manufacturing sitesof e-commerce, threeSimple AGV
companies in the Logistics
Distribution centerCROSSBELT
Solutions Business, namelySORTER
AGV for containers
Large internal- Truck loader/
Bastian, Vanderlande andcombustion
unloaderlift truck
Toyota Industries, arecollaborating to bolster
Autonomousbaggage
business. The effort ishandling system
beginning to bear fruit asElectric low lift truck
evidenced by an increase
Airportin new orders in recentyears. As one example ofthis collaboration, a system
Electric
Airport baggage
Electric lift truck
Fuel cell lift truck
Reach-type
towing tractor
handling systemelectric lift truckof Vanderlande has been
adopted in a state-of-the-art
distribution center established in Japan by a leading international logistics
and parcel service operator.
We will make an accurate response to a broad range of customer
needs by leveraging a wealth of know-how accumulated in dealing withcustomers worldwide as the top player in the lift truck market as well as
synergies with logistics solutions.
In the Lift Truck Business, there has been a delay in acquiring
A system of Vanderlande introduced in Japancertification from the environmental authority in the United States for engines
to be fitted in certain models of internal-combustion lift trucks manufacturedat a plant in the country (as of June 30, 2021). In 2021, we suspended theirshipment and production in January and June, respectively. We offer oursincere apologies for the inconvenience and concern we have caused toour stakeholders. We are making our utmost efforts to resume shipment,including providing relevant information to the authority, and appreciate yourunderstanding regarding the matter.

Responding to Electrification
In the future, electrification is expected to gain momentum in a variety offields due to the enforcement of more stringent fuel efficiency regulations
and growing energy-saving awareness among customers. Amid thisenvironment, Toyota Industries will make maximum use of our technologies
in the materials handling equipment and automobile-related fields andincrease our competitive edge by encouraging collaboration among
these fields.

14

Toyota Industries Report 2021l Electrification of Materials Handling Equipment(Lift Trucks and Others)
Electrification of lift trucks started much earlier than automobiles, and morethan 70% of our annual lift truck sales are already electric. These lift trucks
are used mainly in distribution warehouses and food manufacturing factories
as they emit no exhaust gas and are quiet to operate. We are working toincrease the appeal of our products by developing motors, controllers andother key components internally. We will also augment the development ofhigh value-added products. One such product is a lift truck equipped withlithium-ion batteries that enable continuous operation thanks to a shorter
Lift truck equipped with lithium-ion batteries
charging time. Another is a fuel cell lift truck with excellent environmental
performance, not emitting CO2 or NOx while in operation. Through these
efforts, we aim to remain a leader in the market with the electrification ofmaterials handling equipment.
l Car Electrification
With the progress of car electrification, electric vehicles have becomea frequent topic of conversation in our society. However, from a global
perspective, we expect demand for various types of electrified vehicles
Fuel cell lift truck
to increase, not just for battery electric vehicles (BEVs) but also for hybrid
electric vehicles (HEVs), plug-in hybrid
Expansion of Business Field by Leveraging Core Technologies
electric vehicles (PHEVs) and fuel cellelectric vehicles (FCEVs), depending on
Cooling batteries andExpand into heating
electronic devices
functions and coolingthe market characteristics in each region
components
and usage by customers. We will respond
Utilize our strengths
Expand businessof high efficiency
to car electrification by providing products,
field into drive
and reliability
which can be adopted in a broad range oftrain components
Vehicle interior heating
electrified vehicles, in the fields of car airApply
our coresEV
compression technology/Bs
conditioning compressors and electronicVHErPVehicle
Focomponents.
interior cooling
For example, in the field of car airImpellersEV
conditioning compressors, we are
Installed in new MIRAI FCEVs/Hel
icehnv
expanding sales of electric compressors
stioubomto automakers across the world. Withl-crna
etHydrogen
Oxygen-supplyingr inthe emerging need to cool batteries, weFocirculation pump
air compressor
Turbocharger
see great growth potential in this field,
including components for drive systems.
In the electronics field, there has been a rise in demand from the perspectiveof social infrastructure for AC inverters as an emergency power source.
Combined with the RAV4 PHV’s system to feed power externally, we seek toincrease their use in evacuation shelters and similar locations. For on-board
batteries, we have accumulated a variety of knowledge through many yearsof research and development. This is a fiercely competitive sector, but wewill turn it into another growth pillar, following materials handling equipment
Disaster prevention drill using AC inverter’s external powerand car air-conditioning compressors, by offering batteries with uniquefeeding systemcharacteristics and a high competitive edge.

15Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Top Message

3. Future Direction of Management
Changes in the External Environment
Even though there are many views on the post-pandemic society, no one
knows for sure what it will be like. However, we have already witnessed
several changes in how we live and work.
The transformation of society and lifestyles is expected to continue into
the future, and changes that relate to our businesses include an increasein online transactions as seen in the further expansion of e-commerce.
Additionally, environmental initiatives will be of even greater importancefor companies, as green investments are spreading in an unprecedented
scope. We also expect the progress in digitalization will entail changes in
the industry structure.

Our Response
In responding to drastic changes, it will be crucial, more than anythingelse, to place top priority on safety while thoroughly ensuring quality,compliance and other basic matters.
As for quality, we will strive for an even higher level of quality by utilizing
advanced technologies based on digital transformation (DX) on top of ourongoing efforts to maintain and improve quality. For example, we have newly
developed AI to predict product defects in the aluminum die-casting process
Motor housing for an electric compressor
manufactured by aluminum die-castingfor car air-conditioning compressors and are now exploring its applications
in further improving quality and productivity. In the future, we will leveragesuch digital technologies to transform our operations and business models.
After thoroughly ensuring basic matters such as these, it will be
important to proceed with the creation of a flexible and lean organizationin order to capture the aforementioned changes in society as new growth
opportunities. We will channel our management resources into focusedareas and leverage our own strengths to constantly create innovative
products and services.
Our basic approach to promoting these efforts is to provide products
Founder Sakichi Toyoda
and services that are needed by customers and are
helpful to society, as embraced in the Toyoda Precepts
Toyoda Precepts (Corporate Creed)(corporate creed). This stance will remain unchanged.
Carrying out the spirit of founder Sakichi Toyoda,Besides observing laws and regulations, another• Always be faithful to your duties, thereby contributing to thecrucial element in ensuring corporate governance
Company and to the overall good.
is that everyone, from top management to individual• Always be studious and creative, striving to stay ahead ofthe times.
employees, respects the culture of each region and• Always be practical and avoid frivolousness.
understands and trusts each other. We need to do• Always strive to build a homelike atmosphere at work that iswarm and friendly.
more than just establishing a governance system• Always have respect for God, and remember to be gratefulfor the sake of formality, but rather render it actuallyat all times.
functional and effective. As such, our continued aim is16

Toyota Industries Report 2021

to operate the system in a manner to further improve the efficiency, fairness
and transparency of management. With regard to our relationships withcompanies in the Toyota Group, we will continue to reinforce collaborationin various ways to survive the difficult environment, since competition isincreasingly intensifying in the automobile industry and automobile-related
businesses form the core of our monozukuri (manufacturing).
Environmental protection is a theme of growing importance formanufacturers, including Toyota Industries. We will continue to focus on
this area under the Global Environmental Commitment and in accordancewith the Environmental Vision 2050 and the newly formulated Seventh
Environmental Action Plan. (See pages 64–65.) In the “Responding toElectrification” section of this message, I have explained about electrificationin the lift truck, car air-conditioning compressor and electronics productsectors. However, our environment-friendly products, such as electrified
or fuel-efficient products, actually cover every sector of our businesses.
As examples, in the Vehicle Business, more than half of the RAV4
manufactured by Toyota Industries are HEVs and PHEVs. In the Engine
Business, we also manufacture gasoline engines for HEVs. Our textile
machinery products, which form our founding business, are renowned fortheir energy-saving performance. In the future as well, we will continue tofulfill our role as a manufacturer in protecting the global environment. (SeeSpecial Feature 2 “Contributing Both in Terms of Product Development andProduction to the Establishment of a Carbon Neutral Society” on pages
22–25 for our environment-friendly products.)

4. In Conclusion

Environmental Vision 2050 under theGlobal Environmental Commitment(1) E stablishing a carbon neutralsociety(2) E stablishing a recycling-basedsociety(3) R educing environmental risk andestablishing a society in harmonywith nature(4) P romoting environmental
management

RAV4 PHV

Gasoline engine for HEVs

Since we were founded in 1926 to manufacture and sell an automatic
loom invented by founder Sakichi Toyoda, we have attained sustainablegrowth by adapting our business portfolio to changes in society andcustomer needs and accordingly extending our reach in the automobilerelated and materials handling equipment fields. The idea underpinning ourgrowth basically aligns with the environmental, social and governance(ESG) concept and the United Nations’ Sustainable Development Goals(SDGs) in that we seek to respond to social issues from a long-term
perspective.
To date, we have endeavored to develop a variety of competitive
products and accumulate technologies and know-how. We have also built
relationships of trust with our stakeholders, including business partners
and customers, as we engage with them from a long-term perspective.
Capitalizing on these tangible and intangible assets, we intend tostrengthen business even further in order to attain growth over themedium to long term.

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