TO OUR SHAREHOLDERSGRATIFYING PERFORMANCE DESPITEADVERSE ENVIRONMENT
net sales, operating income and ordinary income because wesucceeded in implementing a clearly defined strategy that
exploited our competitive strengths in each of our businesssegments and in making further significant cost reductions.
Note: U.S. dollar amounts have been translated from yen, for convenience only,at the rate of ¥122.60=US$1, the approximate exchange rate on theTokyo Foreign Exchange Market on September 30, 2002.

All Business Segments
in Good ShapeAll of Toyota Industries’ business segments saw their net sales
improve over the previous term. However, the level ofAkira Yokoi

Tadashi Ishikawa

ChairmanPresident

operating income varied by business segment, even thoughmost segments maintained stable operating incomes.
Note: Segment net sales figures do not include intersegment transactions.
However, segment operating income figures do include operating income
arising from intersegment transactions.

We are pleased to present the results of operations of Toyota
Industries Corporation (the “Company”) and its consolidated
subsidiaries (“Toyota Industries”) for the six months ended

Automobile Segment

September 30, 2002 (the “term”).

Our Automobile Segment consists of vehicle (automobile

Our results for the term can be summarized in a singleassembly), engine, car air-conditioning compressor and otherword: Gratifying. We achieved record highs for consolidated net

businesses (including foundry parts and electronic components

sales, operating income and ordinary income. Consolidated net

for automobiles). Net sales were ¥291.2 billion (US$2,375.4

sales totaled ¥520.5 billion (US$4,245.4 million) for the term,million) for the term, an increase of 9.4% over the previous

an increase of 8.7% compared with the six months ended

term, and accounted for 56.0% of our total net sales for theSeptember 30, 2001 (the “previous term”). Consolidatedterm. The increase was due mainly to a rise in sales of car air-operating income was ¥25.2 billion (US$205.7 million) for theconditioning compressors and the fact that Toyota Motorterm, an increase of 3.3% compared with the previous term.

Corporation (“TMC”) started charging for some parts for

Consolidated ordinary income was ¥26.9 billion (US$219.5

automobiles we assemble that had previously been suppliedmillion) for the term, an increase of 1.0% over the previous

free. Operating income was ¥15.3 billion (US$124.6 million) forterm. Consolidated net income, however, was down 10.0% to

the term, an increase of 12.8% compared with the previous¥13.6 billion (US$111.0 million). This was due largely to a lossterm.

on disposal of property, plant and equipment that accompanied

Vehicle Business (Automobile Assembly Business)the relocation of a foundry plant.

During the term, we assembled four models underOur results were particularly gratifying considering theconsignment from TMC: Vitz (Yaris in Europe), TOYOTA’s global

adverse business environment that prevailed during the term.

strategic small car; RAV4 compact sport utility vehicle; bB Open

Except for certain regions such as Asia, the world economy as aDeck; and Sprinter Carib (Corolla Wagon overseas, discontinued

whole remained sluggish due to a slow recovery in the U.S. andin July 2002). Though sales of the RAV4 were strong in North

falling stock prices worldwide. The Japanese economy seemed

America, sales of the Vitz (Yaris), our mainstay vehicle,

to have hit bottom at the beginning of the term and somedecreased as a result of TMC’s full-fledged local production ofindustries showed signs of an upturn. However, a poor stock

the Yaris in Europe and intensified competition in the domestic

market performance, weak private sector capital investment andsmall car market. Total Vehicle Business unit production for thestagnant consumer spending due to employment insecurities

term was 109,514, a decrease of 11,735 from the previous

together produced an economic standstill.

term.

Despite the unfavorable business environment, we were able

Net sales of the Vehicle Business amounted to ¥136.3 billion

to improve as compared with the previous term on consolidated2

(US$1,111.7 million) for the term, an increase of 5.3% over theMaterials Handling Equipment Segment

previous term. The increase was due to an increased sales ratio ofOur Materials Handling Equipment Segment manufactures anda more expensive model, as well as the fact that Toyota Industries

sells forklift trucks, warehouse trucks, automated storage andCorporation now pays for tires and hubcaps previously supplied

retrieval systems, and automatic guided vehicle systems. Net

free by TMC and recoups an identical aggregate amount in thesales for the term totaled ¥181.0 billion (US$1,476.5 million),form of increased unit prices to TMC.

an increase of 0.3% over the previous term. Operating income
was ¥7.6 billion (US$61.8 million) for the term, a decrease ofEngine Business

5.4% from the previous term.

We produce gasoline and diesel engines for TMC vehicles and forSales of the Materials Handling Equipment Segment

our own line of forklift trucks and other industrial vehicles. During
the term, gasoline engine production totaled 86,436 units, aincreased slightly over the previous term due in part to an

decrease of 2,155 units from the previous term. Production of theincrease in the number of consolidated subsidiaries, i.e.,

2AZ gasoline engine for the Estima (Previa in Europe), which

overseas forklift truck sales subsidiaries. Another factor for thestarted in August 2002, was insufficient to make up for aincrease was that strong sales of materials handling systemsdecrease in production of the 5E gasoline engine.

such as automated storage and retrieval systems made up for adecrease in sales of forklift trucks and other materials handling

Production of diesel engines totaled 107,258 units for theequipment.

term, an increase of 16,166 units over the previous term.

During the term, total demand in the Japanese forklift truck

Production of the 1CD 2000cc direct injection turbo diesel
engine with common rail fuel system, which are fitted in themarket decreased to approximately 90% of the previous term,

Avensis, Corolla and RAV4 for Europe, increased.

while our sales were 95% of the previous term, outperforming
market demand. In North America and Europe, total demand

Total engine production amounted to 193,694 units for thefor the term was similarly sluggish due to the aftershocks of lastterm, an increase of 14,011 units over the previous term.

year’s September 11 terrorist attacks in the U.S. and otherIn April 2001, Toyota Industries Corporation absorbed TMC’s
Industrial Equipment Sales Division. Sales of engines for forklift

factors, but our sales, which exclude those of BT Industries,

trucks, which Toyota Industries Corporation previously sold tooutperformed the market.

TMC, are now recorded as intersegment transactions. Excluding

BT Industries’ orders received during the term (January tointersegment sales, sales of gasoline engines totaled 72,208 units

June 2002) were slightly up over the previous term (January tofor the term, a decrease of 4,246 units from the previous term,June 2001). Orders received in Europe decreased in the firstand sales of diesel engines totaled 98,022 units for the term, anquarter, but improved in the second quarter, marking a slightincrease of 16,095 units over the previous term. On the same

increase over the previous term. We believe that the Northbasis, total engine sales amounted to 170,230 units for the term,

American market has bottomed out, and BT Industries’ orders

an increase of 11,849 units over the previous term.

received increased compared with the previous term. On theother hand, BT Industries’ sales during the term decreased 8%

Net sales excluding intersegment sales totaled ¥58.5 billion(US$477.1 million) for the term, an increase of 12.3% over thefrom the previous term. Sales in Europe remained atprevious term.

approximately the same level, but sales in North America
registered a double-digit decrease as a percentage compared

Car Air-Conditioning Compressor Businesswith the previous term. Whereas a substantial order backlog

Car air-conditioning compressors developed and manufactured

resulted in higher sales in the previous term, sales in 2001

by Toyota Industries are marketed to leading auto manufacturers

exceeded orders received, and the order backlog had therefore

worldwide through DENSO Corporation (“DENSO”). For thedecreased at the end of the year.

term, sales in Japan increased due largely to a transfer of theOur Materials Handling Equipment Segment also

assembly line for scroll-type compressors from DENSO.

manufactures and sells tow tractors, skid steer loaders, shovel

Overseas, strong car sales in the U.S. led to an increase inloaders, sweepers and other industrial equipment.

orders, and vigorous sales activities in Europe resulted in
expanded sales. In Japan, we sold 2.7 million units for the term,

Textile Machinery Segment

an increase of 0.3 million units over the previous term. Overseas,

Our Textile Machinery Segment comprises the Spinning

we sold 5.1 million units for the term, an increase of 0.7 million

Machinery Business, with the manufacture of ring spinning

units over the previous term. Total unit sales amounted to 7.8

frames at its core, and the Weaving Machinery Business, based

million units for the term, an increase of 1.0 million units over theon the manufacture of air-jet looms. Toyota Industries is a worldprevious term.

leader in both businesses. Net sales of the Textile Machinery

Net sales totaled ¥87.7 billion (US$715.7 million) for theSegment amounted to ¥22.8 billion (US$186.0 million) for theterm, an increase of 11.9% over the previous term.

term, an increase of 40.8% over the previous term. Operating

3

TO OUR SHAREHOLDERS
income was ¥0.7 billion (US$5.7 million) for the term, anincrease of 249.8% over the previous term. This increase was due
largely to a substantial increase in exports of air-jet looms to
China and aggressive cost-reduction activities.
During the term, sales of the Spinning Machinery Business fell
short of those for the previous term. Sales in Japan and Pakistan
increased as a result of strong sales activities, but sales in
Bangladesh, Uzbekistan and Thailand decreased. The Weaving
Machinery Business, on the other hand, received a large order for
air-jet looms from a group of textile manufacturers in Jiangsu
Province, China earlier this year, resulting in a substantial increase

Tadashi Ishikawa

in exports to that country. Sales of water-jet looms also increased

Presidentin China, boosting sales of the Weaving Machinery Business overthe previous term.

Corporation embarked on an ambitious three-year cost-Others Segment

reduction program to be implemented throughout theCompany. We have so far achieved most of the objectives as

The Others Segment comprises businesses that we enteredplanned. We established a special project team in each businesscomparatively recently. Although our operations in these fields

division to ensure that our cost-reduction activities wereare still relatively limited, we expect them to become a key pillar

systematic and thorough. As well as enhancing our ongoing VEof Toyota Industries in the future. One of these businesses is TIBC

(Value Engineering) and VA (Value Analysis) activities, we sought

Corporation (“TIBC”), a joint venture with Ibiden Co., Ltd. TIBC

to optimize our procurement of materials and components

produces ball grid array (BGA) plastic package substrates for IC

globally, and reduced general expenses and head office fixedchipsets, and flexible printed circuit (FPC) substrates for IC cards.

costs.

This segment also includes the manufacture and sales of press
dies and production equipment.

Exploiting IT

Net sales of the Others Segment totaled ¥25.4 billion

The exploitation of the latest advances in IT is one of our(US$207.6 million) for the term, an increase of 58.1% over theimportant strategic objectives. We believe that the potential

previous term. This increase was because an increase in sales ofimpact of IT on competitiveness will be significant.

production equipment and the consolidation of all five Taikoh

Using IT, we are overhauling our traditional way of doing

Transportation Group companies (which amounted to ¥11.4

business to accelerate management processes. We are alsobillion) outweighed a decrease in Electronics Business sales,seeking to improve productivity in our development andincluding those of TIBC, which resulted from the bursting of theproduction departments through installation of three-

IT “bubble.” Operating income totaled ¥1.6 billion (US$12.9

dimensional CAD (Computer Aided Design) systems throughoutmillion) for the term, a decrease of 44.2% from the previous

the Company.

term, reflecting a performance by TIBC that did not meet

In addition, we are pushing ahead with the introduction ofexpectations, and other factors.

ERP (Enterprise Resource Planning) systems to facilitate an

ST Liquid Crystal Display Corp. (“ST-LCD”), which produces

improvement in overall management and to allow swifter

low-temperature polysilicon TFT-LCDs, is a 50-50 joint venture

decision-making through universal access to a unified

with Sony Corporation, and we believe that ST-LCD will form themanagement database. We have already set up ERP in ourcore of our Electronics Business in the medium to long term. ST-Accounting and Purchasing departments.

LCD is not consolidated but accounted for by the equity method

In May 2002, we opened “e-Lab,” our base station forin Toyota Industries’ consolidated financial results. ST-LCD’sbuilding a Group-wide information system and conducting IT

performance for the term was worse than the previous term due

research. The e-Lab is responsible for researching digitalto an increase in depreciation that arose from the start-up of asimulation technologies with a view to reducing lead-times

second production line.

from development to manufacture to shipment. It is also
involved in developing an optimal network system for joint

Achievements During the Termdevelopment of parts with suppliers and for parts procurement.

Cost Reduction Activities

Capital and Business Collaboration

During the term, we reduced costs aggressively and improved

In May 2002, following the conclusion of a comprehensive

manufacturing productivity. In April 2001, Toyota Industries

agreement on capital and business collaboration between

4

Toyota Industries Corporation and Aichi Corporation (“Aichi”),

that even if some of our businesses experience difficulties, other

the Company acquired the new shares issued by Aichi. As abusinesses will perform well, so allowing Toyota Industries toresult, the Company now holds 34% of Aichi’s outstanding

continue on the path to stable and sustainable growth.

shares. We also obtained a warrant granting us an option toFor fiscal 2003 in full, we forecast the following:purchase up to 51% of Aichi’s shares in May 2003. We will

Consolidated net sales of ¥1,060 billion (US$8,646 million), an

closely monitor the effectiveness of the collaboration before

increase of 8.1% over fiscal 2002 and representing a ¥70 billion

deciding whether to exercise the warrant and welcome Aichi into

increase over our forecast at the beginning of fiscal 2003;

our network of subsidiaries. Although currently suffering from aordinary income of ¥50 billion (US$408 million), an increase ofdeteriorating market environment, Aichi is a leading

4.5% over fiscal 2002 and representing a ¥2 billion increase

manufacturer of aerial lift equipment, with a market share ofover our forecast at the beginning of fiscal 2003; and net

over 70% in Japan. In order to improve its performance, Aichi

income of ¥25 billion (US$204 million), a decrease of 8.5%

has been working to reduce costs and inventories, and shorten

from fiscal 2002 and representing a ¥1.5 billion increase overlead-times from order to shipment.

our forecast at the beginning of fiscal 2003.

The Company will provide Aichi with capital, production

Note: 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, are inherently
subject to significant economic, business, competitive, regulatory andoperational uncertainties, contingencies and risks, many of which arebeyond our control. Financial projections are necessarily speculative innature, and it can be expected that one or more of the assumptions
underlying the projections will prove not to be valid, and unanticipatedevents and circumstances are likely to occur. Actual results will vary fromthe financial projections and those variations may be material.
Consequently, this report should not be regarded as a representation 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
to predict product demand and other related matters.

technology and production control know-how. In the future, weplan to transfer TOYOTA Material Handling Company’s*(“TMHC’s”) manufacturing operations for special-purposevehicles, including aerial lift equipment and skid steer loaders, toAichi, and have Aichi become a specialized manufacturer of thesevehicles. TMHC will in turn concentrate on the manufacture ofmaterials handling equipment such as forklift trucks andwarehouse equipment. Through efficient allocation ofmanagement resources, we will work to turn around Aichi’sperformance as well as increase our shareholder value.

Increasing Shareholder Value* TOYOTA Material Handling Company is a division of Toyota Industries Corporation,and manufactures and sells TOYOTA-brand materials handling equipment.

The most important aspect of our corporate mission is to increase
shareholder value. We consistently aim to improve medium- toBusiness Outlook for Fiscal 2003

long-term profitability and increase shareholder value throughThe future course of the world economy is even more

efficient management and implementation of ambitious

unpredictable than ever. In the U.S., once-robust consumer

strategies with specific goals in each business area. Concurrently,

spending is waning and enterprises are cutting back on capital

as a responsible corporate citizen, we emphasize activities toinvestment. In Europe, some countries are showing signs of anprotect the natural environment and fulfill our other social

upswing, but Germany is slowing down and the situation inresponsibilities.

Europe as a whole is one of stagnation. In Japan, a rapid reboundWe thank all of our stakeholders, including shareholders,in consumer spending cannot be expected in the face of risingcustomers, suppliers, local communities and employees, for theirunemployment, and the slow recovery of the U.S. economy

support. As we look to secure further growth in shareholdermakes it difficult for Japan to turn its economy around throughvalue, we respectfully request a continuation of the support weexports. Economies in the rest of Asia, especially China, continue

have enjoyed to date.

to expand, but it is generally agreed that the pace of expansion

December 2002

will slacken as a result of the slow recovery in the U.S. We expectthat in the second half of fiscal 2003, ending March 31, 2003,
Toyota Industries will face increasingly challenging economicconditions.
In these circumstances, we will seek to ensure that ourAkira Yokoi

products and services are attuned to customer needs. We will

Chairmanalso continue with our cost-reduction activities. Our strategy will
also include a wider use of IT in improving management
efficiency and a strengthening of our management base to makeit even more responsive to market changes.
We are confident that our long-standing policy ofTadashi Ishikawa

diversification will pay off in an unstable market environment, inPresident5