AMESSAGE

TOSHAREHOLDERS

Center: Chisei Isogai Left: Akira Yokoi Right: Tadashi Ishikawa

It is our pleasure to present our 1999 annual report for Toyoda Automatic Loom Works, Ltd.
Since the launch of our business as a manufacturer of textile machinery more than 70 years ago, the company
has been at the forefront of developing leading-edge technologies and introducing epoch-making products in a wide
range of industries.
At present, our core business is based on the automobile-related sector, which includes the assembly of compactcars, manufacture of automobile engines and development and production of car air-conditioning compressors.
This sector continues to grow along with the expansion of our independent company, Toyota Motor Corporation.
Of particular note, as a result of superior product development and technology with regard to compressors, ourproducts have achieved the top share position for use not only by TOYOTA but also among global auto manufacturers.
In addition, the forklift business is the mainstay of the industrial vehicle segment, another area in which we havebeen successful in developing innovative products that have also enabled us to attain dominance as a leader in this field.
Based on our recognized leadership and superior know-how within textile machinery and other core businesses,
to ensure the growth of the company in the coming century, we have diversified into the electronics sector, with amain focus on producing LCD devices and plastic package boards for mounting ICs. As a high-growth area, we areconfident of our ability to maximize gains through expansion in this segment, which is expected to become a third
pillar of our mainstay businesses.
Cognizant of our corporate and social responsibilities, management also will continue to address a myriad ofissues, which includes seeking solutions to preservation of the environment in addition to contributing to the local
communities in which we work and live. Of equal importance, we will continue to maintain a high priority onachieving the highest quality of customer satisfaction and shareholder value.
Performance and Operating Environment
For the first time in 5 years, we recorded a negative
growth in sales and profits for fiscal 1999. However,results in the domestic and the overseas markets
showed significant contrast between them.
For the domestic market, business downturn
continued to remain gloomy, in the aftermath of theJapanese financial sector's distress. These difficulties
caused a cooling off of capital investment by theprivate sector and a reduction in consumer spending,thus domestic sales declined by 10.0% to ¥380,139
million.
On the other hand, overseas sales greatly improvedin fiscal 1999, creating a sound foundation for the4T O Y O D A
1 9 9 9future growth of the Company. Overseas sales roseby 18.8% to ¥178,737 million from the previous year,
constituting the second consecutive year of growthand marking yet another year of record high figures.
Sales were good, particularly in Europe where thedemand for car air-conditioning compressors forGerman luxury cars was very strong, recording asubstantial increase of 34.5% to 2,314 thousand units.
As a result, our estimated global car air-conditioning
compressor market share has reached 28%.
Also, the number of forklifts sold grew substantiallyby 36.0% to 22,220 units in North America and by
28.3% to 11,239 units in Europe. As a result, ourestimated global forklift market share has reached 14%.Medium and Long-Term Strategy
Our basic management policy is: Quality First,Priority to Customers, Technological Innovation, andActive Participation by All Members of the Company.
In particular, we put emphasis on the following:
1. Development of attractive new products
2. Thorough commitment to productivity improvement
3. Cost reduction campaign in development,procurement, production and administration areas.
We classify each of our business units into thefollowing 3 categories, according to our management
strategy purposes, as follows:
Category I BusinessBusinesses contributing to TOYOTA car production,
as a member of the Toyota Group companies
This category of business is composed of thefollowing business units:l Automobile assemblyl Engines
l Foundry
Our targets are persistent improvement of quality andcost effectiveness, which are designed to keep up therenowned quality of TOYOTA cars. Also, active
innovation should be carried out in order to improvethe value of TOYOTA cars.
We will be focusing, in the Automobile assemblybusiness unit, on the manufacture of TOYOTA compact
passenger cars, in order to satisfy customers the world
over and, in the Engines business unit, on thedevelopment of environment-friendly and highperformance engines, as well as fulfilling the role assupplyer of engines to TOYOTA in general.
Category II BusinessBusinesses seeking global markets through aggressive
product planning and development utilizing ourtechnology
This category of business is composed of thefollowing business units:l Car air-conditioning compressorsl Logistics & Forklifts (material handling systems andindustrial equipment)l Textile machinery
These business units are actively involved in new
product planning, development, production and sales,
taking advantage of our proprietary technology, they
are aiming for the global market.
The Car air-conditioning compressors business unit
plans to boost the global market share over 30% byactively expanding its sales in North America andstarting local production in Germany, so as to enter
rapidly into the popular European car market, evergrowing, while maintaining its dominant position in thedomestic market.
The Logistics & Forklifts business unit plans to raise

the global market share in forklift sales, currently at
14%, to 25% by 2005, through the introduction of
epoch-making new products and by aggressivemarketing overseas.
The Textile machinery business unit has added water
jet looms, acquired from Nissan Texsys Co., Ltd. inApril 1999, to our production line and plan to increase
sales.
Category III BusinessWe intend to expand this business, making it one of
our core businesses in the future. Its main products will
be semiconductors and electronics equipment (mainlyfor automobiles and industrial equipment) and liquid
crystal display devices produced by our joint venturewith Sony Corporation, and plastic package boards forIC chips to be produced by our joint venture withIbiden Co., Ltd., since April 1999.
We plan to achieve a smooth start-of-production andto continue improving our quality and productivity.
Although severe conditions are to be expected for thetime being, we plan to concentrate our efforts on
making these businesses grow to form a strategic
business unit, in the medium and long term
perspectives.
By classifying our businesses into the 3 categories, asmentioned above, we intend to clearly define ourmanagement strategy and to create solid
implementation structures in order to increase theearning powers of the Company.
For the benefit of shareholders, we will try tomaintain a stable dividend policy, increase ROA andROE with effective use of the assets of the Company,
and also increase the value of the Company as awhole, so as to stabilize the movement andappreciation of share prices.
July, 1999

Chisei Isogai
Chairman

Akira Yokoi
Executive Vice Chairman

Tadashi Ishikawa
President

T O Y O D A
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