Tadashi Ishikawa

Tetsuro Toyoda

ChairmanPresident

Letter to Shareholders
The fiscal year ended March 31, 2007 (fiscal 2007), was an important year for Toyota Industries in
two major respects. First, we reached a milestone by marking the 80th anniversary of our founding,and second, we initiated our new Medium-Term Management Plan announced in fall 2005.
In reflecting back on the past 80 years, our history can be characterized by our consistentdedication to manufacturing. The Toyoda Type G automatic loom (weaving machine) completed in
1924 by company founder Sakichi Toyoda was significant because this weaving machine was able
to quickly detect breaking of yarn during the weaving process and automatically stop operating.
The development of this weaving machine highlighted a strong desire to eliminate waste and avoid
sending defective goods to post-processes. Guided by this thinking, which represents Toyota
Industries’ origins, together with the spirit of “contributing to society through manufacturing,” which
has been handed down through successive generations, we have steadily broadened the scope of4

Toyota Industries Corporation

Annual Report 2007

Letter to Shareholders

our business over the years from textile machinery to such domains as vehicles, automotive parts,
materials handling equipment and electronics.
Toyota Industries’ businesses today are extensions of these domains, in which we havecompiled many achievements.

New Medium-Term Management Plan Gets Off to a
Smooth Start
The underlying objectives of Toyota Industries’ new Medium-Term Management Plan are to spurfurther growth and raise corporate value. In tandem, our Vision 2010 embodies our aspirations
for the type of company we seek to be in 2010. Under this vision, Toyota Industries is striving toenhance our team strengths and spirit across all businesses and generations and in turn promote
the development of advanced technology and strengthening of our value chain while also fosteringchange, with the goal of becoming “Undisputed No. 1.” Regarding financial targets for fiscal 2011,
the Medium-Term Management Plan aims for consolidated net sales of more than ¥2,000 billion
and ordinary income of ¥140.0 billion as of the end of fiscal 2011.
Fiscal 2007 marked the first year of our new Medium-Term Management Plan and thus was
an extremely important year in getting off to a smooth start and firmly on track toward realizing
our targets. Consolidated net sales amounted to ¥1,878.3 billion, an increase of ¥372.4 billion, or
24.7%, over the previous fiscal year. At the profit level, operating income increased ¥25.9 billion, or
40.5%, to ¥89.9 billion, and ordinary income increased ¥27.8 billion, or 34.5%, to ¥108.4 billion,

Medium-Term Management Plan
¥140.0Ordinary Income

115.0(¥ Billion)

108.4
70.9

80.6

Over
¥2,000.0

58.9

1,878.3

Textile Machinery, etc.

1,950.0

Net Sales(¥ Billion)

1,164.3¥1,000 billion inMaterials Handling
Equipment-related
businesses

1,505.9
1,241.5¥1,000 billion in
Automobile-related
businesses

FY

04

05

06

07

08

11

(Projection)(Targets)(Announced Oct. 2005)

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Annual Report 20075

as an increase in depreciation expenses and rising prices of raw materials were offset by increased
net sales and the effects of cost-reduction efforts. These figures represent record highs and markour eighth consecutive year of increased net sales and ordinary income.

Implementation of Strategies for All Business
Segments Firmly Underway
Solid execution of medium-term strategies and forward-looking initiatives in our main businesses
resulted in strong performances in fiscal 2007. Specific measures implemented in these segments
are outlined below.

Materials Handling Equipment Segment
We anticipate that the global market for lift trucks will experience mild growth overall. Sharp growthis expected particularly in emerging economies such as the BRICs (Brazil, Russia, India and China)
nations. Additionally, we foresee rising demand for products that consider the environment and thesafety of customers.
By accurately responding to market trends and the needs of our customers, we plan to record
higher unit sales and raise our global share to secure our position as “Undisputed No. 1” in the
global lift truck market.
Our medium-term strategy for attaining these goals contains two important tasks. The first is
to offer superior product value, and the second is to maximize synergies between the TOYOTA
brand, the global leader in counterbalanced lift trucks, and the BT brand, the world’s top name inwarehouse trucks.
As the first step of this strategy, in September 2006 we carried out a full model change for
TOYOTA brand’s mainstay 1- to 3.5-ton GENEO (8-Series and Toyota Tonero overseas) internal
combustion counterbalanced lift trucks and commenced production at the Takahama Plant inJapan. We also started production ofthis new lift truck in the United States
in January 2007 and plan to inaugurate
production in France in fall 2007.
Based on the concept of setting new
standards for safety and environmental
friendliness, the new GENEO offers greater
safety, meets environmental regulations
ahead of schedule and offers improved
comfort and ease of operation,
thus providing a differentiatedvalue unmatched by competitor
products. Following its launch, the6

Toyota Industries Corporation

Annual Report 2007

New GENEO (8-Series and Toyota Tonero)internal combustion counterbalanced lift truck

Letter to Shareholders

Tetsuro Toyoda

Hybrid Lift Truck

President

new GENEO has earned high acclaim from many customers. With this strategic lift truck, we plan
to aim for higher market share and increased profitability in working to be “undisputed No. 1” in the
global lift truck market.
With an eye toward maximizing synergies between the TOYOTA brand and the BT brand, in
April 2006 we officially launched the Toyota Material Handling Group (TMHG) as the framework for
integrating both entities. In undertaking operations, TMHG implements optimal policies in global
markets that are divided into the four geographic regions of Japan, North America, Europe andInternational.
At the same time, key functions such as quality, R&D and plant operations are handled
taking a cross-sectional approach that transcends all geographic regions as we utilize the entire
capabilities of the Toyota Industries Group in making improvements and innovations. The launchof TMHG has already yielded and we believe will continue to generate important synergies that
include mutually supplying each other’s brand products, undertaking joint development, promoting
the implementation of the Toyota Production System (TPS) at production bases worldwide
and reorganizing sales structures. Looking ahead, we plan to focus on the timely planning andintroduction of competitive new products and improvement of after-sales service.

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Automobile Segment
The Automobile Segment is another pillar of the
Toyota Industries Group’s business along with theMaterials Handling Equipment Segment.
Greater global demand for compact cars is
expected due to rising crude oil prices, while
Toyota Motor Corporation’s (TMC) domestic
production is likely to remain at a high level.
In view of these circumstances, we will strive
to expand our role within the Toyota Group

Nagakusa Plant

backed by our strength—always aiming to be
global No. 1 in terms of quality, cost and delivery (QCD)—that we have cultivated as a manufacturer
specializing in compact and midsize cars.
We have achieved smooth progress up through fiscal 2006 in establishing, increasing andstrengthening plant infrastructure and assembly lines. Accordingly, we now operate a solid structure
capable of stable production exceeding 350,000 units annually, up from just over 200,000 units
previously.
During fiscal 2007, we continued full-scale production of the Vitz (Yaris outside Japan) and theRAV4 and attained record-high sales of 350,000 units. We intend to make further improvements in
QCD to ensure continued high levels of production as we work to further strengthen collaboration
between Toyota Industries and TMC. At the same time, we expect to continue to upgrade ourdevelopment capabilities and expand our roles in both production and development.
In the Engine Business, mounting concerns about the environment have led to a high level ofdemand for clean diesel engines in Europe. Meanwhile, Japan and the United States are witnessing
moves to reevaluate diesel engines given their excellent energy efficiency. In addressing thesetrends, we aim to become a top manufacturer of diesel engines within the Toyota Group from botha development and production perspective.
From fiscal 2006, Toyota Industries began producing two globally strategic engines. These
include AD diesel engines, a clean, quiet andfuel-efficient new-generation diesel engine
jointly developed with TMC, and KD diesel
engines for TMC’s Innovative International MultiPurpose Vehicle (IMV) Project. In fiscal 2007, we
maintained high production levels of these engines
throughout the year and increased our production
volume from over 300,000 units to 490,000 units.
We also proceeded firmly on a number of fronts
to strengthen our development capabilities bytaking steps that included constructing a new

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Annual Report 2007

New engine testing center

Letter to Shareholders

testing center and increasing development staff. In responding accurately to TMC’s strategies, wewill strive to even more fully utilize our development and production capabilities within the Toyota
Group.
In the Car Air-Conditioning Compressor Business, although the rise in the percentage of newvehicles fitted with air conditioners in the European market has slowed down, we foresee a growing
need for fuel-efficient air conditioners. Additionally, we anticipate higher demand particularly inemerging markets such as the BRICs due to an increase in automobile sales.
Regarding medium-term targets, as a top manufacturer, Toyota Industries will aim to further
expand global market share while striving to increase its earnings power via thorough cost
reductions.
As we receive steadily increasing orders from
customers, our overriding theme is to respondaccurately to such increases by establishing an
optimized, global and flexible production structure.
Accordingly, Toyota Industries has made smooth
strides in expanding production capabilities.
Achievements include the start of production at
a second North American production base in the
U.S. state of Georgia in December 2005 followed
TD Automotive Compressor Kunshan Co., Ltd.

by the commencement of production at a plantin China in April 2006. We are also focusing efforts on further expanding sales to automakers,
and during fiscal 2007 these efforts have enabled us to secure new customers, mainly comprising
European manufacturers of compact cars.
As a result, in fiscal 2007 we sold 20.45 million car air-conditioning compressors, surpassing 20
million units for the first time. Deploying our technological superiority as a competitive advantage,
we plan to continue to develop cutting-edge technologies and new products that contribute to new
car development as we respond to an ever-greater need for car air-conditioning compressors forhybrid vehicles in addition to conventional engine-powered vehicles.
The Automobile Segment is also involved in car electronics and automotive stamping dies.
In other words, this segment is active in a broad range of fields covering the entire automobile
business from vehicle assembly and engines to components. To prevail amid severe competition,
we intend to strengthen collaboration among these businesses to leverage our strong overallcapabilities.
With this in mind, in January 2007 we established the Automotive Headquarters to fortify
collaboration among respective businesses in the Automobile Segment. We have now consolidated
and achieved close cooperation among the vehicle assembly, engine, automotive stamping dies andcar electronics businesses to create synergies. In so doing, we are actively contributing to TMC’s
global strategy. Besides strengthening each individual business, we plan to focus on increasing our
total strengths while elevating the potential and performance of the Automobile Segment.

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Textile Machinery Segment
Ever since our founding, textile
machinery has been tantamount toa “family business,” and a strong
performance by this segment
energizes all employees of the
Toyota Industries Group. In fiscal
2007, this segment posted excellent

JAT710 air-jet loom

results, as sales of our mainstay airjet looms surpassed 10,000 units due to extremely buoyant conditions that included extraordinary
demand in China. As an easy-to-understand example, the continuous operation of 10,000 airjet looms for one month would weave enough material for dress shirts for 100 million people, anumber that virtually corresponds to Japan’s entire population. Compared with the Toyoda Type G
automatic loom of 80 years ago, current air-jet looms boast four times greater weaving width andsix times higher weaving speed, thus giving these weaving machines 24 times the productivity.
Up until approximately five years ago, total worldwide demand for air-jet looms was around
10,000 units annually, but subsequently surged to over 20,000 units annually since 2002. Alongwith improvements in air-jet loom productivity, the main factor driving this increase has beentechnological innovations in air-jet looms enabling the production of fabrics that were previously
difficult to produce unless using other machines such as rapier weaving machines.
For fiscal 2008 and beyond, we plan to further strengthen the product appeal of our air-jet
looms and maintain our position as the global leader as we continue the legacy of our “familybusiness.”

Refocusing on the Basics of Manufacturing andStrengthening the Company’s Constitution
To continue “contributing to society through manufacturing,” sustainable growth and development
is imperative. Maintaining an unwavering commitment to this concept, we believe that refocusing
on the “basics of manufacturing” is of paramount importance at the juncture of our 80th
anniversary.
Accordingly, in fiscal 2007 we pursued further growth and development with a renewed spirit
by thoroughly promoting guidelines focused on the basic thinking and behavior for all employees of
the Toyota Industries Group.

Attracting Highly Ambitious Individuals and Creating a Vibrant Workplace
Toyota Industries has designated “enhance team strength and spirit” as the main thrust of its Vision2010 and a core initiative for driving future growth. Realizing this concept hinges on further raising thelevel of every employee’s unique skills and specialized techniques as well as management capabilities.

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Letter to Shareholders

As a key focal point, in fiscal 2007 Toyota
Industries promoted the cultivation of personnel
possessing the skills, perspectives and spiritof TPS in all business divisions, with eachdivision working to attain clearly defined targets.
Concurrently, the Corporate Center (corporate
headquarters) upgraded TPS training programs
and undertook TPS training by encouraging theparticipation of staff and providing TPS support

Technical Learning Centerfor each business division. Determined toaccelerate the development of personnel possessing top-caliber skills and techniques as well as
the required execution capabilities in terms of manufacturing, we further enhanced our TechnicalTraining Center with the establishment of the Engineering Education Office and began operations inJanuary 2007 as the Technical Learning Center.
With the adoption of these measures, we believe that the strengths of each individual are
steadily advancing. Combined with these assets, we believe that a “spirit of harmony,” namely,
teamwork and an overarching sense of humanity, will serve as a cornerstone needed to fully
utilize our team strengths. We will press forward with the creation of a spirited workplace where
communication flows smoothly and employees can gather for positive discussions and work totheir fullest abilities with a high sense of motivation.

Making Strides in Global Environmental Management
No discussion concerning corporate management can take place in the 21st century without
mentioning environmental concerns. Toyota Industries has continually carried out environmental
management and proactive information disclosure over the course of three successive
environmental action plans. Under our Third Environmental Action Plan completed in fiscal 2006,
Toyota Industries achieved all numerical targets, which included reducing CO2 emissions by 5%compared with fiscal 1991 levels and attaining a 50% reduction of targeted PRTR (pollutant releaseand transfer register) substances compared with fiscal 1999 levels.
The increased environmental load results not only from the production process but also the use of
products by customers. Driven by this awareness, we are making unprecedented efforts to expand
our lineup of ecological products under our Fourth Environmental Action Plan launched in fiscal 2007.
In the automobile field, for example, Toyota Industries is working on the development of products that
reduce CO2 emissions, including diesel engines and key components for hybrid vehicles. We believethat these efforts will also spawn new business opportunities further down the road.
We plan to expand this approach to all Toyota Industries Group companies and work to build
global environmental management to vigorously reduce emissions of greenhouse gases, utilize
resources more efficiently and reduce environmental risk factors, which we believe will allow us toresolutely fulfill our corporate responsibility.

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Annual Report 200711

Building Quality into Our Own Processes
and Assuring Quality for Customers
One aim of Toyota Industries’ manufacturing philosophy
is to ensure that customers can use our products witha sense of reassurance worldwide. Based on TPS andTotal Quality Management (TQM), our development,
design, production technology, manufacturing and quality
assurance divisions act in unison, with design reviews as
a core element, as part of our steadfast efforts to attainquality. Reflecting the success and recognition of thesequality initiatives, in fiscal 2007 the Automobile Segment
once again earned the Superior Quality PerformanceAward presented to suppliers by TMC.

Superior Quality Performance Award

Our approach to quality initiatives is unrelenting. For
instance, we believe that the presidential guidelines issued at the beginning of fiscal 2008 ensurethat all employees thoroughly understand the meaning of “quality assurance.” Fully absorbing
this concept will further improve our awareness and actions, and each individual will be able toincorporate quality into his or her own work activities. We believe that employees who take pridein manufacturing will in turn ensure that no defects are sent to post-processes, thereby ultimately
eliminating problems for our customers.

Thoroughly Ensuring Safe Work
Operations
Safety serves as the basis for earnestly
undertaking manufacturing and represents thestarting point of all our activities. Within the Toyota
Group, we say, “safe work is ‘the door’ to all
work.” In keeping with this stance, all employees
strive to work cohesively in taking steps to ensurethat even the smallest risk is not overlooked andthat the sources of any potential accidents are

On-site inspections by top management

clearly eliminated.
As a means of bolstering our safety initiatives in fiscal 2007, we implemented a variety of
initiatives such as improving management systems along with safety inspections and audits by the
executive vice president in charge of overseeing production. At the same time, in accordance withthe theme of making regular on-site inspections, top management continued to visit numerous
worksites in person to confirm that safety is categorically being maintained accompanied by
improvements in quality and productivity.

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Letter to Shareholders

Raising Corporate Value
Regarding the outlook for fiscal 2008, the global economy is expected to sustain a mild expansion
despite disparities among geographic regions. Nonetheless, there are concerns of risks within
Toyota Industries’ operating environment, including exchange rate fluctuations and rising prices for
crude oil and other raw materials.
In view of these factors, we are aiming for an increase in consolidated net sales of ¥71.7 billion,
or 3.8%, to ¥1,950.0 billion; an increase in operating income of ¥5.1 billion, or 5.6%, to ¥95.0
billion; and an increase in ordinary income of ¥6.6 billion, or 6.0%, to ¥115.0 billion.
We believe this solid performance will be the result of our various management approach.
Above all, we are resolved to making unrelenting efforts to raise corporate value by refocusing on
the basics of manufacturing, strengthening our corporate constitution and providing products that
ensure the satisfaction of customers worldwide.
In closing, we fully appreciate the continued support and guidance of our shareholders,customers, local communities, and employees and their families.

June 2007

Tadashi Ishikawa
Chairman

Tetsuro Toyoda
President

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Annual Report 200713