TMHG training center

Tadashi Ishikawa

Tetsuro Toyoda

ChairmanPresident

Letter to Shareholders
Summary of Consolidated Interim
Business Results
The interim period ended September 30, 2007 marked
one and a half years since the launch of our MediumTerm Management Plan announced in October 2005. Our
management plan targets an increase in net sales from
¥1,500.0 billion to more than ¥2,000.0 billion and an increasein ordinary income from ¥80.0 billion to ¥140.0 billion overthe five-year period ending March 31, 2011.
Working actively to achieve these targets, we havetaken a host of measures in priority areas within each of ourbusinesses. Thanks to these initiatives, during the first half ofthe fiscal year we achieved record-high interim net sales andordinary income for the eighth consecutive fiscal year.
Net sales increased ¥42.7 billion, or 5%, from the previous
interim period to ¥955.7 billion, and we recorded increases inall business segments. Our profits were also strong, as ordinary
income increased ¥9.8 billion, or 18%, to ¥63.2 billion despite
higher raw materials prices and increases in depreciation and2TOYOTA INDUSTRIES CORPORATION

personnel expenses. The increase in ordinary income was due
to expanded net sales and the promotion of group-wide cost
reduction efforts coupled with the favorable effects of exchange
rate fluctuations and an increase in dividends income.
Interim cash dividends per share were ¥28.00, an increaseof ¥6.00 per share from the previous interim period. We plan
to pay annual cash dividends per share of ¥56.00.
For the full fiscal year, Toyota Industries expects increases
in net sales and ordinary income for the ninth consecutiveyear. Specifically, we forecast net sales of ¥2,000.0 billion,
operating income of ¥95.0 billion and ordinary income of¥120.0 billion. All of these figures represent record highs.

Pursuing Further Growth
As we work to attain the targets of our Medium-Term
Management Plan, we will continue to promote the following
measures in each business.
• In the Materials Handling Equipment Business, we will strive
to maximize synergies within the Toyota Material HandlingGroup (TMHG) and focus on new markets such as the BRICs
and VISTA countries.

• In the Car Air-Conditioning Compressor Business, we willintroduce new products in line with customer needs andaddress the need for the development of compressors using
new types of refrigerants.
• In the Vehicle Business, we aim to expand our role incontributing to Toyota Motor Corporation’s (TMC) growthstrategy by responding to an increased volume ofdomestic production and participating in TMC’s production
preparation overseas.
• In the Engine Business, we will expand the clean diesel
engine business.
• In the Car Electronics Business, we aim to further contributeto TMC’s hybrid vehicle business.
As mentioned, we expect to record net sales of ¥2,000.0
billion ahead of schedule for the fiscal year ending March 31,2008. However, we view this figure as a mere starting point
and are firmly determined to achieve further growth.

Expanding Our Role in theToyota Group
While implementing these measures, Toyota Industries also
introduced several noteworthy new products in our Vehicle
and Engine businesses. We were deeply involved with theseproducts from the development stage, and this participation
enabled us to further expand our role within the ToyotaGroup.

Among our recently launched products is the 4.5-liter8-cylinder VD clean diesel engine for the Toyota Land Cruiser,
which underwent a full model change in September 2007.
Toyota Industries is taking a key role in the Toyota Group’s
diesel engine business, and accordingly, has participated in
the development and production of various types of dieselengines. Since 2006, our total production of engines hasreached the 500,000 unit level. Combined with production
at Toyota Motor Industries Poland Sp. z o.o., for which we
handle operations, our volume of diesel engine production
accounted for approximately 45% of diesel engine production
within the Toyota Group in 2006.
Toyota Industries played an expanded role in the planning,development and production of the new
VD clean diesel engine, which webelieve reflects the trust we haveearned from TMC. This was the firsttime that Toyota Industries led thedevelopment of a diesel engine.
Toyota Industries managed
the overall project for the engine,
VD clean diesel engine
which incorporates a variety ofour technologies. The most important technology is thecompacted graphite iron (CGI) engine block. CGI is harderthan regular cast iron, thereby allowing for the developmentof a thinner engine block. Conversely, the use of CGI isproblematic because processing is more difficult. Tackling thisproblem head on, Toyota Industries was able to successfully

Progress of Medium-Term Management PlanTargets
Ordinary Income¥140.0 Billion

Progress of the
1st and 2nd year

108.4

120.0
Net Sales
Over ¥2,000.0 Billion(¥ Billion)

80.6
1,878.3

2,000.0
124.0116.8(¥ Billion)

1,505.9
98.9
856.7

Activities in the Past

Textile Machinery,
OthersMaterials Handling Equipment
916.0• Integrate management of TOYOTA andBT brands (TMHG)• Augment sales strategy and management

1,000.0

Materials Handling
Equipment-Related
Business

1,000.0

Automobile-Related
Business

Car Air-Conditioning Compressor

660.3• Stronger emphasis on variable-displacement
compressors; reinforce production structureVehicle• Establish structure capable of producing
350,000 vehicles

746.7

FY

2006

904.8

2007

960.0

Engine• Augment structure to enable production of500,000 engines• Develop clean diesel engines

2008(Forecast)2011(Targets)

SEMIANNUAL REPORT 20083

Letter to Shareholders
process the CGI by applying its own proprietary production
technologies. As a result, we reduced cylinder thickness
to 5 mm from the previous 7 mm and achieved a balance
between lighter weight comparable to an aluminum blockand a significant increase in rigidity.
At the same time, Toyota Industries also developed ascavenging system that forcibly sucks back oil supplied to theturbochargers. This system suppresses white smoke exhaustemissions as well as drops in oil pressure regardless of thegradient of the surface on which a vehicle is driving.
As exemplified by the integration of the CGI engine blockand scavenging system, by taking a multifaceted approach todeveloping the VD clean diesel engine, we realized an engine
that achieves the top-level power performance of a 4-literclass SUV with fuel economy comparable to a 3-liter class SUV.
Highlighting our commitment to cleaner exhaustemissions, the new VD clean diesel engine offers clean
performance that complies with Euro 4 regulations, the latest
European emissions regulations. This engine also features
significantly reduced noise to realize outstanding quietness
compared to engines of competitors.
In gearing up to launch this engine worldwide, we areimplementing the following rigorous testing to exhaustively
confirm reliability as an engine for off-road vehicles.
• Testing in temperature environments ranging from -30°C to50°C• Steep-gradient testing that involves tilting the engine fromfront to back and from side to side to confirm levels of whitesmoke exhaust emissions and oil pressure• High-altitude drive testing in Costa Rica, New Zealandand Spain
The total distance driven during this durability testing wasequivalent to circling the Earth more than 100 times. This rigid
testing helped us create a tough diesel engine.
While focusing on growth of the global clean diesel
engine market, we intend to expand this business so that it
plays a major role in the Toyota Group.
In the Vehicle Business, along with our role in developing
the Vitz (Yaris overseas) and RAV4, which are also assembled
by Toyota Industries, we have also handled the developmentof vehicles manufactured by other Toyota Group companies,
including such vehicles as the IST, Prius and Belta. As we firmly
build on this solid record of achievement, we have gained
the trust of TMC and steadily expanded this business’s role
within the Toyota Group. We are also bolstering production,and in 2005 we made investments for building a production
structure to increase annual production capacity to 350,000
vehicles. Meanwhile, in 2006 we reached full production

4TOYOTA INDUSTRIES CORPORATION

capacity of the Vitz (Yaris overseas) and RAV4.
Backed by these achievements, Toyota Industries wasconsigned to undertake the development of the Mark X
ZiO, a new concept car developed by TMC that promises
to revitalize Japan’s automobile market which rolled off theproduction line in September
2007. The Mark X ZiO isespecially significant
for Toyota
Industries
from twoperspectives.
First, we playeda larger role in theMark X ZiOdevelopment of thisvehicle and are producing it solely at our own plant. Second,
we have expanded the types of vehicles we are capable ofproducing in terms of size and grade.
Looking to the future, as TMC aims for further growth
globally, we will strive to make unprecedented contributions
in both development and production.

Working to Raise Corporate ValueThe Toyota Industries Group will work in unison to attainthe targets of the current Medium-Term Management Plan.
We believe that business results are the culmination of thevarious approaches taken by management. Accordingly,
as part of unceasing efforts to further raise corporate
value, we will refocus on the basics of manufacturing andstrengthening the Company’s management platform while
continually introducing new products that satisfy customers.
In closing, we ask you for your continued support andguidance.
December 2007

Tadashi Ishikawa
Chairman

Tetsuro Toyoda
President