Letter to Shareholders

Akira Yokoi

Tadashi Ishikawa

ChairmanPresident

Dear Shareholders:
Excellent Performance for the Term
The results of Toyota Industries Corporation and its
subsidiaries (“Toyota Industries”) for the six months ended
September 30, 2003 (the “term”) can be summarized in asingle word: Excellent. We achieved a record high forearnings performance. Consolidated net sales totaled ¥569.6
billion, an increase of 9.4% compared with the six months
ended September 30, 2002 (the “previous term”).
Consolidated operating income was ¥27.0 billion, an increaseof 7.2% over the previous term. Consolidated ordinary
income amounted to ¥30.2 billion, an increase of 12.1% overthe previous term. Consolidated net income was ¥17.1billion, an increase of 25.6% over the previous term.
The business environment during the term turned out tobe somewhat better than expected. Although it wasanticipated that the world economy would be affected
adversely by the armed intervention in Iraq and SARS (severe
acute respiratory syndrome), the U.S. economy appeared to2TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004

be on its way to recovery and the Chinese economy
continued to expand. The Japanese economy also showedsigns of an upturn, with increased private sector capital
investment and improved corporate profitability.
In addition, we succeeded in implementing a clearly
defined strategy that exploited our competitive strengths ineach of our business segments and in making further
significant cost reductions.

All Business Segments in Good ShapeAll of Toyota Industries’ business segments saw their net
sales improve over the previous term. However, the level ofoperating income varied slightly by business segment,
although most segments maintained stable incomes.
Note: Segment net sales figures do not include intersegment transactions.
However, segment operating income figures do include operating
income arising from intersegment transactions.

Automobile Segment
Net sales were ¥296.2 billion for the term, up 1.7% over theprevious term, and accounted for 52.0% of Toyota Industries’
total net sales for the term. Although sales of vehicles andengines decreased, sales of car air-conditioning compressors
increased. Operating income, on the other hand, at ¥14.7billion for the term was down 3.7% from the previous term.

Materials Handling Equipment Segment
Net sales for the term totaled ¥216.3 billion, up 19.5% overthe previous term. This increase was due mainly to aggressive
sales promotion activities for major customers in and outside
Japan by TOYOTA Material Handling Company (“TMHC”) as
well as the consolidation of Aichi Corporation (“Aichi”), which
was included in our network of subsidiaries in May 2003.
Operating income was ¥8.9 billion for the term, up 16.8%
over the previous term.

Textile Machinery Segment
Net sales amounted to ¥23.8 billion for the term, up 4.5%
over the previous term. Operating income was ¥0.4 billion for
the term, down 42.5% from the previous term. This decrease
was due largely to a rise in the purchase prices of some parts
and a decrease in sales of more profitable machinery, notably
roving frames.

Others Segment
Net sales totaled ¥33.2 billion for the term, up 30.6% over theprevious term, due mainly to an increase in sales of TIBC
Corporation. Operating income totaled ¥3.1 billion for theterm, up 96.7% over the previous term.

Achievements during the Term
Consolidation of Aichi Corporation
In May 2002, following the conclusion of a comprehensive
agreement on capital and business collaboration between
Toyota Industries and Aichi, Toyota Industries acquired 34% of
Aichi’s outstanding shares. We also obtained a warrant thatwould raise our holding to 51%. In May 2003, we exercised thewarrant, incorporating Aichi into our network of subsidiaries.
Aichi’s consolidated net sales for the term totaled ¥18.8billion, up 20.1% over the previous term. Ordinary income
was ¥1.0 billion, compared with an ordinary loss of ¥0.6 billion
for the previous term, and net income was ¥1.0 billion,compared with a net loss of ¥0.8 billion for the previous term.
We believe that Aichi’s remarkable change for the better wasa result of the structural and fundamental reform we haveactively supported. Also, in October 2003, a stricter wasteemissions regulation was enacted covering major
metropolitan areas in Japan (parts of the Kanto, Tokai, andKansai areas). This regulation forbids trucks and dieselpowered vehicles that do not meet the specified emissions

standard from taking compulsory car inspections. This led to asurge in sales of Aichi’s special-purpose vehicles to replacethose sub-standard vehicles.

Global Fund Management
In June 2003, Toyota Industries Finance International AB(“TIFI”), our finance subsidiary established in Sweden,
assumed fund-raising operations for all of our overseas
subsidiaries and began centrally managing the funds of ourEuropean subsidiaries.
Toyota Industries itself commenced centralized fundmanagement of its domestic subsidiaries also in June 2003. InNorth America, Toyota Industries North America, Inc. has
been centrally managing the funds of our North American
subsidiaries since February 2001.
Through these measures, we aim to achieve more
efficient fund-raising and fund management on a global,consolidated basis.

Making Inroads into
the Logistics Solutions BusinessToyota Industries started full-fledged operations in the
Logistics Solutions Business, responding to increasing market
needs for streamlined logistics operations in Japan. This is anarea in which we can take advantage of our long-standing
experience in production and sales of materials handlingequipment such as forklift trucks and automated storage andretrieval systems, as well as our production know-how asdemonstrated in the Toyota Production System (“TPS”).
We signed contracts with a number of wholesalers andmanufacturers for the management of distribution centers in
the Tokyo metropolitan and Chubu (Central Japan) areas
during the term. To strengthen our position in this area, weare forging alliances with other logistics operators andpreparing for our entry into the third party logistics business,
which encompasses thorough evaluation of clients’ logistics
operations, making improvement proposals, and undertaking
across-the-board logistics operations. As part of the alliancewith logistics operators, in February 2003, we concluded anagreement on business collaboration with Trancom Co., Ltd.
(“Trancom”), which possesses advanced information systems
and proven distribution center management capability. In April
2003, Toyota Industries and Trancom established ALTRAN
Corporation, a joint company to undertake logistics solutions
business.

Reinforcement of Sales Network
in China and Australia
In anticipation of expanding demand in China, TMHC
constructed a new forklift truck assembly plant within thepremises of Toyota Industry (Kunshan) Co., Ltd., which isengaged in the production of foundry parts in Kunshan,
Jiangsu Province. TMHC began local production of 1-3 ton
internal combustion counterbalanced forklift trucks, top-sellers
in the country, in April 2003.

TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 20043

Letter to Shareholders
management base, and securing higher profitability.
For fiscal 2004 in full, we forecast the following:
Consolidated net sales of ¥1,150.0 billion, up 7.6% over fiscal
2003 and representing a ¥50.0 billion increase over ourforecast at the beginning of fiscal 2004; ordinary income of¥58.0 billion, up 12.9% over fiscal 2003 and representing a¥1.0 billion increase over our forecast at the beginning of fiscal
2004; and net income of ¥34.0 billion, up 55.0% over fiscal
2003, the same as our forecast at the beginning of fiscal 2004.

Tadashi Ishikawa
President

In May 2003, we established Toyota Material Handling(Shanghai) Co., Ltd. jointly with Toyota Tsusho Corporation as
a distributor of forklift trucks in China. The new company,
which started operations in June 2003, will take the initiativein forging a strong sales network through the enhancement ofits dealer network.
In June 2003, Toyota Industries established ToyotaIndustries Corporation Australia Pty Limited (“TICA”) in
Sydney as a new distributor, with a view to expanding sales offorklift trucks and other materials handling equipment in thelocal market. TICA started operations in July 2003 after taking
over the materials handling equipment sales operations ofToyota Motor Corporation Australia Ltd., which wasresponsible for sales of TOYOTA-brand materials handlingequipment in the country. TICA undertakes on sales andmarketing activities specifically for materials handlingequipment, allowing more agile management and swifter
decision-making.

Business Outlook for Fiscal 2004
Although the economies of Japan and the U.S. show signs ofan upswing, the overall business environment does not allow
optimism, due to an accelerating appreciation of the yen,anxiety over deflation, and uncertainties in the Middle East.
We expect that in the second half of fiscal 2004, ending
March 31, 2004, Toyota Industries will continue to facechallenging economic conditions.
Even so, we are confident that our long-standing policy ofdiversification will pay off in such circumstances, in that even
if some of our businesses experience difficulties, otherbusinesses will perform well, so allowing Toyota Industries tocontinue on the path to stable and sustainable growth.
Meanwhile, we will seek to ensure that our products andservices are attuned to customer needs, and continue with
our quality improvement and cost-reduction activities. Our
strategy will also include promoting global businesses,
improving management efficiency, strengthening 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 maybe material. Consequently, this report should not be regarded as arepresentation by us or any other person that the financial projections
will be achieved. Current market trends in the global economy make itparticularly difficult to predict product demand and other related
matters.

Looking towards the Future
The most important aspect of our corporate mission is toincrease shareholder value. We consistently aim to enhance
corporate performance by improving medium- to long-term
profitability, implementing ambitious strategies with specificgoals in each business area, familiarizing more employeeswith TPS—an essential source of our competitiveness—andlaying down efficient management systems.
Concurrently, as a responsible corporate citizen, weemphasize activities to protect the natural environment andfulfill our other social responsibilities.
We thank all of our stakeholders, including shareholders,customers, suppliers, local communities, and employees, fortheir support. As we look to secure further growth inshareholder value, we respectfully request a continuation of
the support we have enjoyed to date.
December 2003

Akira Yokoi
ChairmanTadashi Ishikawa
President

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TOYOTA INDUSTRIES CORPORATIONSEMIANNUAL REPORT 2004