To Our Shareholders

BEST EVER PERFORMANCE DESPITECHALLENGING CONDITIONS
We are pleased to present the results of operations of ToyotaIndustries Corporation and its consolidated subsidiaries(“Toyota Industries”) for the six months ended September 30,
2001 (the “term”).
In November 2001, we celebrated our 75th anniversary.
Our longevity is based on the continued support of ourstakeholders, including our shareholders and customers.
During those 75 years our business has developed andchanged substantially. We have evolved from a specialty
maker of automatic looms to a highly diversified company.
Effective August 1, 2001, we substituted our new English
name for our former title of Toyoda Automatic Loom Works,Ltd., reflecting our diversified business universe, which now
extends far beyond the manufacture of automatic looms.
Our results for the term can be summarized in a single

Akira Yokoi

Tadashi Ishikawa

ChairmanPresident

word: Excellent. We achieved record highs for consolidated
net sales, operating income and net income. Consolidated
net sales totaled ¥479.0 billion (US$4,011.4 million), up
39.1% over the six months ended September 30, 2000 (the“previous term”). Consolidated operating income was ¥24.4billion (US$204.4 million), an increase of 13.6%.
Consolidated net income was ¥15.1 billion (US$126.8million), an increase of 90.3%.
Our results were all the more remarkable given theadverse business environment prevailing in the term. The

consolidated net sales and net income reflected our successin implementing a clearly defined strategy. We exploited ourcompetitive strengths in each segment and cut costs
vigorously. An overview of the term by segment follows.
Note: Segment net sales figures do not include intersegment transactions.
However, segment operating income figures do include operating
income arising from intersegment transactions.

growth of the Japanese economy was anemic, with distinct

Automobile Segment

signs of deflation and the government restricted in its policy

This segment consists of vehicle (automobile assembly),options due to its huge fiscal deficit. Expectations of radical
reforms relating to the business and financial sectors by thegovernment were raised but not yet met. The U.S. economy,
which had been robust for almost a decade, slowed, owing to
the bursting of the information technology (“IT”) “bubble.”
The European economy is also slowing as a result of thedownturn in the IT industry. Similarly, in Asia exports andbusiness activity generally were sluggish due to theengine, car air-conditioning compressor and other businesses(including electronic components for automobiles). Net sales
amounted to ¥266.1 billion (US$2,229.0 million), up 16.3%
over the previous term and accounting for 55.6% of total netsales. Operating income was ¥13.5 billion (US$113.4million), down 3.4% compared with the previous term.

Vehicle Business (Automobile Assembly Business)worldwide slackening of demand for IT-related products andWe currently assemble four models in the Toyota Motorthe economic slowdown in the U.S.

Corporation (“TMC”) lineup: Vitz (Yaris in Europe), SPRINTER

Note: U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of ¥119.40=US$1, the approximate exchange rate on
the Tokyo Foreign Exchange Market on September 28, 2001.

Company-Wide Strength2digit percentage increase over the previous term forCARIB (Corolla Wagon outside Japan), RAV4 compact sportutility vehicle and bB Open Deck compact with small pickup
bed. We began assembly and sales of the RAV4 and bB Open
Deck during the term. Sales of the Vitz (Yaris), our mainstay
vehicle, decreased due to TMC’s commencement of Yaris

Despite the unfavorable business environment, most of ourproduction in Europe. Total Vehicle Business unit production forbusiness segments are essentially in good shape. Our two-the term was 121,249, down 23,727 from the previous term.

Vehicle Business net sales amounted to ¥129.5 billion

competitiveness, Toyota Industries and DENSO agreed to(US$1,084.4 million), up 26.5% over the previous term. The

integrate their production of car air-conditioning

increase was due to the fact that Toyota Industries now pays

compressors. Toyota Industries now takes the lead in productfor parts previously supplied free by TMC and recoups andevelopment and manufacturing, while DENSO focuses on

identical aggregate amount in the form of increased unit

sales while undertaking limited manufacturing operations.

prices to TMC. This change increased net sales by

Toyota Industries will gradually take over production of car

approximately ¥29.7 billion (US$248.7 million).

air-conditioning compressors at DENSO’s Toyohashi Plant.
Overseas, production will be shared between the twoEngine Businesscompanies on a country-by-country basis.

We produce gasoline and diesel engines for TMC vehicles
and for our own line of forklift trucks. During the term,Materials Handling Equipment Segment

gasoline engine production totaled 88,590 units, an increase

The Materials Handling Equipment Segment manufacturesof 5,499 units over the previous term. Production of the 2UZ

and sells forklift trucks, warehouse trucks, automated storage

4700cc V8 gasoline engine for the Lexus LX470 increased

and retrieval systems, and automatic guided vehicle systems.

over the previous term, as was to be expected considering it

Net sales for the term totaled ¥180.5 billion (US$1,511.9

was launched only in August 2000.

million), an increase of 119.4% over the previous term.

Production of diesel engines totaled 91,093 units, anincrease of 9,659 units over the previous term. Production of

Operating income was ¥8.0 billion (US$67.1 million), up33.4%.

2000cc-class C-type diesel engines for automobiles

This substantial increase reflected two major changes. Indecreased. This was outweighed by an increase inJune 2000, Toyota Industries acquired BT Industries AB (“BTproduction of 1CD-type 2000cc direct injection turbo-dieselIndustries”), a leading warehouse truck manufacturer basedengines with a common rail fuel system.

in Sweden. BT Industries’ sales were consolidated in Toyota

Total engine production amounted to 179,683 units, up
15,158 units over the previous term.

Industries’ results for the term, whereas they were notconsolidated for the previous term. This increased net sales

In April 2001, Toyota Industries absorbed TMC’s

by approximately ¥78.9 billion (US$660.8 million). Also, inIndustrial Equipment Sales Division. Sales of engines forApril 2001, TMC transferred its Industrial Equipment Sales

forklift trucks are now all intersegment transactions.

Division to Toyota Industries. This increased net sales byPreviously, Toyota Industries sold forklift engines to TMC.

approximately ¥12.8 billion (US$107.2 million).

Excluding intersegment sales, sales of gasoline engines

In the forklift truck business excluding BT Industries, sales

totaled 76,454 units and sales of diesel engines totaledin North America were down, but sales in Europe increased.

81,927 units. On the same basis, total engine sales

In the domestic market, sales of our GENEO-B (7FB outside

amounted to 158,381 units, down 6,144 units from theJapan) electric counterbalanced forklift trucks continued

previous term. Net sales excluding intersegment sales totaled

strong, supported by good demand for environment-friendly¥52.1 billion (US$436.1 million), an increase of 11.3%,vehicles. The GENEO-R (7FBR) electric reach trucks, launchedreflecting a higher ratio of value-added products andin January 2001 mainly for the Japanese market, and others

consequent increase in the average unit sales price.

also contributed to total sales.
BT Industries’ orders received were slightly up over the

Car Air-Conditioning Compressor Businessprevious term. Orders received in Europe remained steady,Car air-conditioning compressors developed andbut orders received in North America decreased due to themanufactured by Toyota Industries are marketed to theadverse economic environment. On the other hand, BT

leading auto manufacturers worldwide through DENSO

Industries’ sales marked a two-digit percentage increase overCorporation (“DENSO”). Demand was strong in Europe, andthe previous term, with sales in Europe continuing strong

continued to grow in Japan and North America, though lessand sales in North America up, reflecting a substantial ordervigorously. In Japan, we sold 2.4 million units, an increase ofbacklog at the beginning of the term.

139,000 units over the previous term. Overseas, we sold 4.3

Sales of materials handling systems, which comprise

million units, up 463,000 units. Total unit sales amounted toautomatic guided vehicle systems and automated storage

6.8 million units, up 602,000 units. Net sales totaled ¥78.4

and retrieval systems for the domestic market, increased

billion (US$656.8 million), up 13.5% over the previous term.

substantially.

In May 2001, to enhance their international

The Materials Handling Equipment Segment also3

To Our Shareholders

manufactures and sells tow tractors, skid steer loaders, shovelloaders, sweepers and other industrial equipment.
Our acquisition of TMC’s Industrial Equipment Sales
Division in April 2001 means that we now undertake
comprehensive materials handling equipment operations,from design through production to sales and marketing. As aresult, we are even better placed to deliver high levels ofcustomer satisfaction.
Note: Toyota Industries consolidated BT Industries’ operating results from thesecond half of the previous fiscal year.

Textile Machinery Segment
This segment comprises spinning machinery business, with themanufacture of ring spinning frames at its core, and weaving
machinery business, based on the manufacture of air-jet

Tadashi Ishikawa
Presidentlooms. Toyota Industries is a world leader in both businesses.
Textile Machinery Segment net sales amounted to ¥16.2billion (US$135.6 million), an increase of 12.5% over thesegment. TIBC manufactures ball grid array (BGA) plastic

previous term. Operating income was ¥201 million (US$1.7

package substrates for application in IC chipsets, and flexiblemillion), compared with a loss of ¥266 million (US$2.2

printed circuit substrates for IC cards. This segment alsomillion) for the previous term and reflecting both increased

includes the manufacture and sales of press dies andnet sales and organizational reform.

manufacturing equipment.
Others Segment net sales totaled ¥16.1 billion (US$134.8

Spinning Machinery Businessmillion), down 14.2% from the previous term. This was due

During the term we conducted vigorous sales activities inlargely to a decrease in sales of press dies and manufacturing

Pakistan, Indonesia and Thailand. As a result, Spinningequipment, which outweighed an increase in electronics

Machinery Business net sales totaled ¥7.0 billion (US$58.5

business sales, including those of TIBC. However, includingmillion), up 44.5% over the previous term.

intersegment transactions, sales were ¥22.7 billion(US$190.0 million), up 8.7% over the previous term.

Weaving Machinery Business
Sales of air-jet looms totaled 1,692 units, a decrease of 291
units from the previous term. Sales in China and Indonesia,
which registered large increases the previous term, weredown. Sales of water-jet looms totaled 741 units, up 247 units.

Operating income totaled ¥2.8 billion (US$23.8 million), an
increase of 51.0%, reflecting a strong performance by TIBC
and other factors.
* ST-LCD is not consolidated but is accounted for by the equity method in
Toyota Industries’ consolidated financial results. Its operating income (loss)
is not included in the operating income (loss) for this segment.

Sales increased in China, South Korea and others. Net sales ofthe Weaving Machinery Business totaled ¥9.2 billion (US$77.1million), down 3.7% from the previous term.

Priorities During the Term
Cost Reduction

4Others Segment

During the term, we both reduced costs aggressively andThis segment, currently relatively small, comprises mainly new

improved manufacturing productivity. We established abusinesses that have outstanding growth potential. A core

special project team in each business division to ensure thatbusiness in this segment is a joint venture, ST Liquid Crystal

our cost reduction activities were systematic and thorough.

Display Corp. (“ST-LCD”), which we established with SonyAs well as enhancing our VE (Value Engineering) and VA

Corporation in 1997. ST-LCD manufactures low-temperature(Value Analysis) activities, we undertook general expense andpolysilicon TFT-LCDs (thin film transistor liquid crystal

head office fixed cost reduction activities, examined thedisplays), expected to be the next-generation TFT-LCD. TIBC

introduction of SCM (Supply Chain Management) andCorporation (“TIBC”), a joint venture we established in 1998

sought to optimize our procurement of materials andwith Ibiden Co., Ltd., is another core business within thiscomponents globally.

Exploiting ITmillion), up 22.5% over fiscal 2001 and representing a ¥20.0

We have set the exploitation of the latest advances in IT asbillion (US$167.5 million) increase over our forecast at thean important strategic objective. We believe that thebeginning of fiscal 2002; Income before income taxes ofpotential impact of IT on competitiveness will be significant.

¥47.0 billion (US$393.6 million), up 23.0% over fiscal 2001

Using IT, we are overhauling our traditional way of doingand representing a ¥6.0 billion (US$50.3 million) decreasebusiness to accelerate management processes. We arefrom our forecast at the beginning of fiscal 2002; Netinstalling three-dimensional CAD (Computer Aided Design)

income of ¥25.5 billion (US$213.6 million), up 12.6% oversystems to further improve productivity in our development

fiscal 2001 and representing a ¥5.5 billion (US$46.1 million)

and production activities company-wide. Exemplifying ourdecrease from our forecast at the beginning of fiscal 2002.

adoption of advanced IT, the development department of

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,inherently are subject to significant business, economic competitive,regulatory and operational uncertainties, contingencies and risks,many of which are beyond our control. Financial projections
necessarily are speculative in nature, and it can be expected that one
or more of the assumptions underlying the projections will prove not tobe valid, and unanticipated events and circumstances are likely tooccur. Actual results will vary from the financial projections and thosevariations may be material. Consequently, this report should not beregarded as a representation by us or any other person that thefinancial projections will be achieved. Current negative market trends
in global economic conditions make it particularly difficult at present
to predict product demand and other related matters.

our Vehicle Division has introduced V-Comm (Virtual & VisualCommunication System), which it used to reduce thedevelopment period of the bB Open Deck. We are also using
IT to cut fixed costs and enhance customer satisfaction. We
are pushing ahead with the introduction of ERP (Enterprise
Resource Planning) systems. We are now graduallyharnessing ERP to upgrade our accounting, procurement,personnel and production management. We are convincedthat the adoption of ERP will facilitate improved
management generally among non-manufacturing divisions,and will allow swifter decision-making through universal
access to a unified management database.

Maximizing Shareholder Value
The most important aspect of our corporate mission is toBusiness Outlook for Fiscal 2002
The future course of the world economy is even moreunpredictable than usual. The slowdown in the IT field andthe aftermath of the terrorist attacks on the U.S. in
September 2001 have created great uncertainty. We forecast
that in the second half of the fiscal year ending March 31,
2002 (“fiscal 2002”) Toyota Industries will face increasingly
challenging economic conditions. Our electronics-related
business is likely to be adversely affected by the IT
slowdown, and our Materials Handling Equipment Segment
will suffer from its vulnerability to lower demand in theNorth American market.
Under such circumstances, we will seek to ensure thatour products and services are attuned to customer needs. We

increase shareholder value. We aim to improve profitability
and increase shareholder value through implementation ofambitious strategies with specific goals in each business area,and by streamlining operations. Concurrently, as aresponsible corporate citizen, we emphasize activities toprotect the natural environment and fulfil our other socialresponsibilities.
We thank our shareholders, customers, suppliers,
employees and all others with an interest in our business fortheir support. As we look to secure further growth inshareholder value, we respectfully request a continuation ofthat support.
December 2001

will also continue with our cost reduction activities. We seek
to improve management efficiency through enhanced
application of IT and review the need for further
organizational changes, including changes at head office. We
will reinforce our management base to remain flexible in theface of market change. We are confident that our policy ofAkira Yokoi
Chairmandiversification will pay off, in that even if certain of ourbusinesses experience difficulties, Toyota Industries as awhole will continue to grow.
For fiscal 2002 in full we forecast the following:
Consolidated net sales of ¥940.0 billion (US$7,872.7

Tadashi IshikawaPresident5