Dear Shareholders:
Gratifying Performance Despite
Adverse Environment

adverse business environment prevailing in the fiscal

For the fiscal year ended March 31, 2003 (“fiscal 2003”),with further signs of deflation, and the government

Toyota Industries posted consolidated net sales ofrestricted in its policy options due to its huge fiscal¥1,069.2 billion (US$8,895.3 million), up 9.1% over fiscal

deficit. A poor stock market performance, stagnant

2002, which marked a record high for a fourth

consumer spending and weak capital investment all

consecutive year. Consolidated operating income

culminated in economic stagnation. The growth rate ofincreased 13.3% to ¥52.5 billion (US$436.6 million).

the U.S. economy slackened, and the European

Consolidated ordinary income totaled ¥51.4 billion

economy continued to decelerate. Though ended(US$427.4 million), up 7.3%. Both these figures werequickly, the war with Iraq led by the United States andrecord highs. Consolidated net income, however,the United Kingdom cast a dark shadow over the world

decreased 19.7% to ¥21.9 billion (US$182.5 million). Thiseconomy. Toward the end of the fiscal year, the SARS

was because we posted extraordinary losses in fiscal(Severe Acute Respiratory Syndrome) epidemic had

2003 that arose from a loss on disposal of property,

serious effects on the Asian economy, notably on China

plant and equipment as a result of the relocation of aand Hong Kong.

foundry plant, as well as a downward re-evaluation ofinvestment securities.

Our results were all the more remarkable given theyear. The growth of the Japanese economy was anemic,

Note: U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of ¥120.20=US$1, the approximate exchange rateon the Tokyo Foreign Exchange Market on March 31, 2003.

Akira Yokoi

Tadashi Ishikawa

ChairmanPresident

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

3Letter to Shareholders

All Segments in Good Shape

Achievements in Fiscal 2003

Toyota Industries’ business segments all increased their net

Capital and Business Collaboration

sales over fiscal 2002. Operating incomes also increased

In May 2002, following the conclusion of a comprehensive

except for the Others Segment.

agreement on capital and business collaboration between

Note: Segment net sales figures do not include intersegment transactions.
However, segment operating income figures do include operating
income arising from intersegment transactions.

Toyota Industries and Aichi Corporation (“Aichi”), Toyota
Industries acquired 34% of Aichi’s outstanding shares. We also
obtained a warrant that would raise our holding to 51%. In

Automobile Segment

May 2003, we exercised the warrant, incorporating Aichi into

Net sales totaled ¥595.5 billion (US$4,953.9 million), up 5.7%

our network of subsidiaries. Aichi is a leading manufacturer ofover fiscal 2002 and accounting for 55.7% of total net sales.

special-purpose vehicles, with its truck mount aerial work

The increase was due mainly to a rise in sales of car air-platforms and self-propelled aerial work platforms boasting a

conditioning compressors. Operating income was ¥30.1

market share of approximately 70% in Japan. In April 2003,billion (US$250.5 million), up 4.0% over the prior fiscal year.

Aichi unveiled a medium-term plan that aims to achieve
consolidated net sales of ¥40.5 billion and consolidatedMaterials Handling Equipment Segment

ordinary income of ¥3.0 billion for the fiscal year ending

Net sales totaled ¥373.0 billion (US$3,103.2 million), anMarch 2006. In order to turn its business performance around,increase of 5.7% over fiscal 2002. This increase was due

Aichi is reforming the revenue structure of its special-purpose

mainly to the consolidation of the financial results of TOYOTA

vehicle business, improving the profitability of its after-sales

Material Handling Company’s (“TMHC’s”) overseas sales

service business for truck mount aerial work platforms andsubsidiaries, which we acquired during fiscal 2002, for the fullself-propelled aerial work platforms. Aichi also aims to expandyear. Operating income was ¥16.2 billion (US$134.6 million),

into the North American market and further enhance its

up 21.0% over the prior fiscal year.

presence in the Chinese market. Toyota Industries intends toprovide Aichi with support in the areas of production

Textile Machinery Segment

technology, production control know-how and personnel.

Net sales totaled ¥48.7 billion (US$405.5 million), an increasein sales of air-jet looms, one of this segment’s primary

Making Inroads into the Logistics Solutions
Businessproducts, to China. Operating income was ¥2.3 billion

Recognizing its growth potential, Toyota Industries entered(US$19.2 million), a big turnaround from an operating loss of

into the Logistics Solutions Business in fiscal 2003,¥0.4 billion (US$3.2 million) in the previous fiscal year.

responding to increasing market needs for streamlinedof 58.7% over fiscal 2002, due mainly to a substantial increaselogistics operations in Japan. This is an area in which we canOthers Segment

take advantage of our longstanding experience in production

Net sales totaled ¥52.0 billion (US$432.7 million), up 58.5%

and sales of materials handling equipment such as forklift

over fiscal 2002, due largely to the consolidation of the Taikoh

trucks and automated storage and retrieval systems, as well

Transportation Group. Operating income was ¥3.9 billion

as our production know-how as demonstrated in the Toyota(US$32.5 million), a decrease of 12.7% from the prior fiscal

Production System.

year, due primarily to an increase in depreciation thatAs part of that move, in March 2002 Toyota Industries

accompanied TIBC Corporation’s capital investment.

established Advanced Logistics Solutions Co., Ltd. (called“ALSO”), a 100% subsidiary that plans overall logistics
operations (including distribution) and operates distribution
centers. ALSO aims to play an important role in our Logistics
Solutions Business.

4TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

We also began other collaboration in this field throughadvanced use of IT for the Company and its subsidiaries.

investment (indirect investment through ALSO with 60%It serves as our database center, managing a vast range ofequity) in Teion Shokuhin Ryutsu Inc. and capital participation

information from Group companies. The lab is engaged in a

(5% equity) in Yukijirushi Access, Inc.

vast array of activities, including developing information

In addition, in February 2003, we concluded an agreement

systems and building a network infrastructure amongon business collaboration with Trancom Co., Ltd. (“Trancom”),

domestic and overseas bases. It is also responsible forwhich possesses advanced information systems and proveninstalling three-dimensional computer-aided design (CAD)

distribution center management capability. As part of theand computer-aided engineering (CAE) systems, andcollaboration, in April 2003, Toyota Industries and Trancom

researching digital simulation technologies with a view toestablished a joint company to undertake the logistics

reducing lead-times from development to manufacture tosolutions business.

shipment.
The effects of these actions should be felt in a shortened

Improving Product Quality

product development period, increased product

At Toyota Industries, we constantly put our best efforts into

competitiveness and improved productivity of technology

improving the quality of our products and services so thatdepartments. The introduction of enterprise resource

they will ensure customer satisfaction. For example, each ofplanning (ERP) systems in the accounting and purchasing

our divisions sets ambitious, yearly quality goals. In addition,

departments has contributed to more efficient accounting,

not only the director in charge of product quality and divisionorder-placing and payment transactions.

managers (or an in-house company president) but also
check the quality improvement activities and confirm

Completion of New Car Air-Conditioning
Compressor Plant

progress in attaining quality goals.

In July 2002, the Higashiura Plant started operations toPresident Ishikawa himself makes an on-site inspection to

manufacture parts for car air-conditioning compressors. The

Cost-Reduction Activities

market demand for our compressors is expected to rise, andStarting April 2001, Toyota Industries embarked on anin order to cope with this increase, we are reinforcing theambitious three-year cost-reduction program to beproduction capacity of our facilities in Japan, North America

implemented throughout the Company. We achieved most ofand Europe. In Japan, now that we have completed ourthe objectives in the second year, i.e., fiscal 2003. We

Higashiura Plant, we have a three-plant structure—in Kariya,

established a special project team in each business division toObu and Higashiura. Under the concept of using natural

ensure that our cost-reduction activities were systematic andenergy and attaining harmony with the surrounding

thorough. In addition to enhancing our ongoing value

environment, we constructed the Higashiura Plant toengineering (VE) and value analysis (VA) activities, weconsume 20% less electricity than conventional plants ofreduced general expenses and head office fixed costs, andcomparable size and production capacity. We installed cleansought to optimize our procurement of materials andenergy systems such as wind and solar power generators ascomponents globally.

well as a cogeneration system. We also installed a water
recycling system and a rainwater utilization system toExploiting Information Technology (IT)conserve water resources.

Recognizing that the utilization of the latest advances in IT
and enhancing market competitiveness, we are further

Commencement of Local Production andReinforcement of Sales Network in China

accelerating the introduction of IT.

In anticipation of expanding demand in China, TMHC

has a significant impact on strengthening corporate structure

In May 2002, we opened “e-Lab,” our base station for

constructed a new forklift truck assembly plant within theTOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

5

Letter to Shareholders

TMIP will engage in the production of 2000cc-class diesel
engines. TMIP is slated to start operations in 2005, with an
initial annual production capacity of 150,000 units. The total
investment in this enterprise is expected to be 200 million
euros.

Medium-Term Management Visionfor Continuous GrowthThrough growth in areas such as materials handlingequipment, car air-conditioning compressors, diesel engines,
electronics and logistics solutions, Toyota Industries is aiming
for an ambitious medium-term target of consolidated net
sales of more than ¥1.2 trillion (US$9,983.4 million) andconsolidated ordinary income of ¥80 billion (US$665.6million) by fiscal 2006, ending March 31, 2006. The Company
plans to strive for continued expansion by implementing
management strategies from the medium- to long-term
standpoints.
Basically, we intend to allocate significant management
resources to the Materials Handling Equipment Segment andTadashi Ishikawa

Car Air-Conditioning Compressor Business in order to furtherPresident

reinforce their already strong competitive advantage. We
intend to establish a diesel engine development/production
premises of Toyota Industry (Kunshan) Co., Ltd., which isstructure to contribute to TMC’s global strategy, and assume aengaged in the production of foundry parts in Kunshan,

full-fledged commitment in the Logistics Solutions Business, a

Jiangsu Province, China. TMHC began local production of 1-3

potential growth area in Japan, in which we have know-how

ton internal combustion counterbalanced forklift trucks, top-and technological advantages. We also plan to promote newsellers in the country, in April 2003.

technologies and business areas that will form the core of ourIn May 2003, we established Toyota Material Handling

we intend to take actions to secure our global presence,a distributor of forklift trucks in China. Sales in that country

maintain a high standard of quality control, engage in cost-were previously conducted through three dealers at seven

reduction activities, change business procedures through thesales bases. The new company, which started operations inutilization of IT, and focus on the development of personnel

June 2003, will take an initiative in forging a strong sales

with specialized knowledge of the Toyota Production System,

network through the enhancement of its dealer network.

which is a source of our competitive edge.

Local Production of Diesel Engines in Poland

Business Outlook for Fiscal 2004

In October 2002, we established Toyota Motor Industries

6

future operations, including the Electronics Business. Further,(Shanghai) Co., Ltd. jointly with Toyota Tsusho Corporation as

Poland Sp.zo.o. (“TMIP”) jointly with Toyota Motor

The future course of the world economy is even more

Corporation (“TMC”) to manufacture diesel engines in Jelcz-unpredictable than ever. We expect that in fiscal 2004, ending

Laskowice, Poland. The Company’s equity share is 40%. To

March 31, 2004, Toyota Industries will face increasingly

accommodate an expected expansion of demand in Europe,

challenging economic and management conditions.

TOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

In these circumstances, we intend to ensure that ourthese changes is difficult to predict, but the management

products and services are attuned to market needs. We also

team of Toyota Industries is fully dedicated to the growth andplan to continue with our cost-reduction activities. We expect

prosperity of your company.

that our strategy will include a wider use of IT in improving

We are not complacent, but we are confident that we havemanagement efficiency and a strengthening of ourexcellent personnel who can think and act independently inmanagement base to make it even more responsive toaccordance with our corporate philosophy and management

market changes.

strategies. This factor does not appear in the balance sheets,

Our long-standing policy of diversification is beginning to

but our employees are one of the most important andpay off, in that even if some of our businesses experience

precious assets of Toyota Industries. They share the same set

difficulties in an unstable market environment, otherof values as the top management, raising value in terms ofbusinesses will perform well enough to allow Toyota

development, manufacturing and sales. We believe first-classIndustries to continue on the path to stable and sustained

staff are a source of producing outstanding shareholder valuegrowth.

in an ever-changing, uncertain management environment.

Although uncertainties prevail in the global economic andWe intend to continue to make strenuous efforts in the fieldpolitical landscapes, for fiscal 2004 we forecast consolidatedof personnel development for Toyota Industries’ future

net sales of ¥1,100.0 billion (US$9,151.4 million), up 2.9% overgrowth and prosperity.

fiscal 2003, consolidated ordinary income of ¥57.0 billion

In this annual report, we have described the direction in(US$474.2 million), up 10.9%, and consolidated net income ofwhich the management team is trying to lead Toyota¥34.0 billion (US$282.9 million), up 55.0%.

Industries. We sincerely hope this report will help all ourNote: The financial projections set forth above are based upon a number ofassumptions and estimates that, while presented with numerical
specificity and considered reasonable by us when taken as a whole, areinherently subject to significant economic, business, competitive,regulatory and operational uncertainties, contingencies and risks, manyof which are beyond our control. Financial projections are necessarily
speculative in nature, and it can be expected that one or more of theassumptions underlying the projections will prove not to be valid, andunanticipated events and circumstances are likely to occur. Actual
results will vary from the financial projections and those variations may
be material. Consequently, this report should not be regarded as arepresentation by us or any other person that the financial projections
will be achieved. Current negative market trends in the global economy
make it particularly difficult at present to predict product demand andother related matters.

investors, shareholders and other stakeholders to understandwhere we are heading. As we look to secure further growth inshareholder value, we respectfully request a continuation of
the support we have enjoyed to date.
July 2003

Increasing Shareholder Value
Akira Yokoi
The most important aspect of our corporate mission is toChairman

increase shareholder value. We consistently aim to improve
profitability and achieve stable corporate growth throughimplementation of ambitious strategies with specific goals ineach business area, and by streamlining management. At thesame time, as a responsible corporate citizen, we emphasize

Tadashi Ishikawa

activities to protect the natural environment and fulfill ourPresident

other social responsibilities.
In fiscal 2003, we implemented important measures forcontinuous growth, and we attempt to take a range of steps
to secure our competitive edge in an environment ofcontinual market and management changes. The nature ofTOYOTA INDUSTRIES CORPORATIONANNUAL REPORT 2003

7