Message from the President

Tetsuro Toyoda
President

Celebrating Our 80th Anniversary
In November 2006, Toyota Industries will mark a momentous milestone when it celebrates the80th anniversary of its founding. Over the past eight decades, Toyota Industries has successfully
navigated numerous challenges to steadily expand the scope of its business through sustained
innovation and creativity. Our achievements have been made thanks to the loyal patronageof customers, devotion of employees, understanding of local communities and the supportof our shareholders, all of whom I wish to express my deepest appreciation. Toyota Industries’
management remains committed to ensuring the ongoing growth of its businesses while
supporting the livelihood of employees and their families, contributing to society and providing
customers with excellent products and services. Above all, we have renewed our resolve to fulfill
our crucial responsibility of meeting the expectations of our shareholders.

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Record-Breaking Results for Fiscal 2006
In fiscal 2006, ended March 31, 2006, Toyota Industries achieved record-high consolidated net
sales and income amid an expanding global economy. Fueled mainly by increases in the
Automobile and Materials Handling Equipment segments, consolidated net sales for the fiscal
year jumped 21.3% to ¥1,506.0 billion. Consolidated operating income increased 20.6% to ¥64.0
billion, as the rise in net sales and the success of cost-reduction activities compensated forincreased depreciation expenses in the Vehicle and Engine businesses and higher prices for raw
materials. Consolidated ordinary income increased 13.7% to ¥80.6 billion and consolidated net
income rose 8.6% to ¥47.1 billion.

Factors for Increase (Decrease) in Consolidated Ordinary Income
+4.6

-13.2

+21.0
Exchange rate
fluctuations-12.0
Increase indepreciation
expenses

+23.5
Cost
reductions-6.6
Increase in
raw material
prices(¥ Billion)

70.9

Up 9.7 billion yen
over fiscal 2005

-6.4
Increase inpersonnel
expenses

- 1.2

80.6

Increase in Non-operating
miscellaneous income (losses)
expenses

Increase in
net sales

FY

05

06

All Business Segments Maintain Generally Solid
Performances
During fiscal 2006, all segments once again reported favorable results, as evidenced byacross-the-board increases in net sales. Additionally, with the exception of the Automobile
Segment, most segments achieved increases in operating income over the previous fiscal year.
A summary of business results by segment is as follows.
Note: Segment net sales figures do not include intersegment transactions. However, segment operating income (loss) figures do
include operating income (loss) arising from intersegment transactions.

Automobile Segment
In fiscal 2006, net sales increased 21.2% from the previous fiscal year to ¥746.8 billion, but
operating income declined 11.7% to ¥20.1 billion. The increase in net sales was fueled primarily byrobust sales in the Vehicle Business of the Vitz (Yaris outside Japan) and the RAV4, both of which
underwent a full model change in February and November 2005, respectively. In the Engine
Business, factors contributing to higher sales in this segment included the commencement of
production of 2.2-liter direct-injection AD diesel engines for the European market in March 2005
and the start of production of 2.5-liter and 3.0-liter direct-injection KD diesel engines for Toyota
Motor Corporation’s (TMC) Innovative International Multi-Purpose Vehicle (IMV) Project in June

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2005. Also contributing to growth in net sales in the Automobile Segment was an increase inoverseas unit sales in the Car Air-Conditioning Compressor Business. On the other hand, thedecline in operating income resulted from higher depreciation expenses and pre-production
costs associated with the introduction of new products and release of model changes in the
Vehicle and Engine businesses.

Materials Handling Equipment Segment
Net sales by the Materials Handling Equipment Segment rose 18.1% from the previous fiscal
year to ¥595.2 billion. This rise was underpinned by large increases in sales of the TOYOTA, BT and
Raymond brands supported by an expanding global economy in addition to favorable results by
Aichi Corporation, which manufactures and sells aerial work platforms. Operating income surged
48.6% to ¥38.8 billion.

Logistics Segment
The Logistics Segment was newly established in fiscal 2006, separating the logistics-related
businesses (logistics solutions and transportation businesses) that were previously part of the
Others Segment.
During fiscal 2006, the Logistics Segment achieved net sales of ¥65.1 billion. This increasereflected solid results by Asahi Security Co., Ltd. (Asahi Security), which was acquired by Toyota
Industries in March 2005 and provides comprehensive total cash management outsourcing.
Other contributing factors were higher sales in the Logistics Solutions Business, which handles allphases of customers’ logistics and enhances their overall supply chain management, as wellas improved results of the Taikoh Transportation Group, which is involved in cargo transport andother logistics businesses. Operating income of the Logistics Segment was ¥1.6 billion.

Textile Machinery Segment
Net sales by the Textile Machinery Segment advanced 13.4% to ¥49.8 billion, primarily reflecting
higher sales of air-jet looms to our principal markets of China and India, as well as robust sales ofring spinning frames mainly by our production and sales subsidiary in India. This segment posted
an operating loss of ¥70 million, an improvement of ¥0.7 billion from the previous fiscal year.

Others Segment
Because we separated our logistics-related businesses from the Others Segment and establishedthe Logistics Segment, net comparisons with the previous year’s results cannot be made. In fiscal
2006, net sales were ¥49.0 billion and operating income amounted to ¥3.7 billion.

Key Initiatives Undertaken during Fiscal 2006
Underscoring a strong determination to expand current and future businesses, Toyota Industries
adopted a number of forward-looking strategic initiatives during the fiscal year under review.
Several of the more notable initiatives are as follows.

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Further Deploying Our Engine Business
Overseas
In March 2005, production of 2.2-liter direct-injection AD
diesel engines for the European market was successively
started at the Hekinan Plant in Japan and at Toyota
Motor Industries Poland Sp.zo.o. (TMIP)*, a joint venturein Europe with TMC. Reflecting a rising awareness that

Toyota Motor Industries
Poland Sp.zo.o.

diesel engines offer superior environmental performance,
the proportion of diesel vehicles in Europe is increasing.
This trend makes it imperative for TMC to strengthen its

2AD diesel engine

lineup of diesel vehicles for the European market where
it is striving to raise its presence. Toyota Industries will work
to contribute to TMC’s European strategy through thejoint development of diesel engines with TMC as well as
the production of these engines.
In June 2005, the Higashichita Plant started
producing 2.5-liter and 3.0-liter direct-injection KD diesel
engines for TMC’s IMV Project. While contributing to

Higashichita Plant

TMC’s overseas strategy, Toyota Industries also continues
to press ahead with initiatives for further expanding its
own business.
* Toyota Industries’ stake in TMIP is 40%. Toyota Industries is chiefly
responsible for production operations at TMIP.

2KD diesel engine

Versatile Approach to Overseas Production of Car Air-Conditioning
Compressors
December 2005 marked the start of production at TD Automotive Compressor Georgia, LLC(TACG), established jointly in July 2004 by Toyota Industries and DENSO Corporation (DENSO) asa second North American compressor production base near Atlanta in the U.S. state of Georgia.
Although fixed-displacement compressors have been
the main compressor used in North America, in view ofincreasing global environmental awareness, we foreseerising demand for variable-displacement compressors,which offer excellent fuel efficiency. TACG is producing
variable-displacement compressors to meet thisdemand.
TD Automotive Compressor Georgia, LLC

In May 2005, Toyota Industries established TD
Automotive Compressor Kunshan Co., Ltd. (TACK), a
joint venture with DENSO, Toyota Tsusho Corporationand others, as its second car air-conditioning
compressor production base in China. In April 2006,
TACK inaugurated production of variable-displacement
compressors, which are being supplied to car makers

TD Automotive Compressor Kunshan Co., Ltd.

mainly in the southern part of China.

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Official Launch of Toyota Material Handling Group (TMHG)In April 2006, Toyota Industries officially launched TMHG as a new organization to integrate the BT
Industries Group and TOYOTA Material Handling Company (TMHC). We have so far successfully
expanded synergies between the BT Industries Group and TMHC by mutually supplying eachother’s brand products, sharing sales and production know-how, exchanging personnel andjointly procuring components. Through this strategic reorganization, we aim to create additional
synergies as well as further solidify the positioning of this segment as “undisputed No. 1” in the
global lift truck market.

Expanding the Scope of Our Logistics Solutions BusinessIn its Logistics Solutions Business, Toyota Industries has redefined the concept of “logistics” toencompass the “flow of cash” and the “flow of information” in addition to the traditional “flowof goods.” During the course of business activities, the flow of goods is usually accompanied byflows of information and money. By broadening our concept of “logistics” to include this overall
flow as well as offering companies optimal logistics by improving this flow, we intend to create
new business models and seize new business opportunities. As part of these efforts, in March
2005 we acquired Asahi Security and made this company into a wholly owned subsidiary. Asahi
Security offers comprehensive cash management outsourcing services, including cash collection
and delivery as well as cash proceeds management for the retail, service and transportation
sectors. In January 2006, we further bolstered our Logistics Solutions Business by acquiring
an equity stake (41.4% share) in Wanbishi Archives Co., Ltd., which provides comprehensive
information management that includes handling collection and distribution of vital documents,
magnetic tapes and crucial corporate data.

Quality-Improvement andCost-Reduction Activities
Toyota Industries believes that enhancing its ability tooffer products and services of unrivalled quality while
continually reducing costs are essential for achieving
competitive superiority. Acting on this conviction, we
continually undertake initiatives directed toward raisingquality to ensure that we can offer products andservices that satisfy our customers. Toyota Industries
is especially aware that in a worst-case scenario,
any serious quality-related problem could inevitably

Toyota Industries’ top management conducts aquality inspection at a factory

threaten a company’s foundation that supports its
future existence. Accordingly, Toyota Industries has designated “thorough quality assurance”
and “maintenance and improvement of quality” as priority management policies, and therefore
undertakes quality-improvement activities throughout the Toyota Industries Group. These activities
include comprehensive employee quality education such as quality control (QC) methods andthe setting of high-quality targets in each division. Each of the division managers (or an in-housecompany president) overseeing product quality as well as I myself make on-site inspections tocheck quality-improvement activities and confirm progress in reaching our quality targets.
Toyota Industries is also pushing forward with a diversity of cost-cutting initiatives. As prime

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examples, each division undertakes cost-reduction projects through organized and well-planned
cost-reduction activities. Besides our unceasing value engineering (VE) and value analysis (VA)
activities, these cost-reduction activities also extend to an array of other areas that include
consideration of optimized global procurement of materials. These efforts also cover our Head
Office, where we are implementing comprehensive activities to trim fixed costs via improved
operational efficiency and other such measures.

Unveiling a New Medium-Term Management Plan
In October 2005, Toyota Industries formulated a new five-year medium-term management planthat was subsequently launched in the fiscal year beginning April 2006.
The new medium-term management plan integrates management and business plans forthe next five years while articulating the directions that Toyota Industries will pursue. With thefoundation of this plan being the attainment of the spirit of harmony and enhancement of
workplace strengths, which includes nurturing employees, we will strive for the highest levels of
quality, intend to execute reforms by fortifying our value chain and developing leading-edge
technologies as well as achieve growth as a company with dominant businesses. We expect
these measures will allow us to attain our targets of consolidated net sales exceeding ¥2,000
billion and ordinary income of ¥140 billion by fiscal 2011, the fiscal year ending March 31, 2011.
By business segment, we have set a net sales target of ¥1,000 billion for automobile-related
businesses and net sales of ¥1,000 billion in the Logistics and Materials Handling Equipment
businesses. To facilitate the attainment of these challenging targets, we expect to make acapital investment of around ¥500 billion during the five-year period (April 2006 - March 2011).

Business Outlook for Fiscal 2007
In fiscal 2007, ending March 31, 2007, the Japanese economy is anticipated to remain on arecovery track while the economies of the United States, China and other principal countries are
expected to attain stable growth. Nevertheless, the outlook for fiscal 2007 precludes optimism as
there are concerns regarding risk factors such as a further rise in crude oil prices accompanying
political instability in the Middle East as well as possible rapid adjustments in exchange rates.
Amid this economic environment, Toyota Industries expects the Materials Handling Equipment
Segment to continue expanding its business results and also anticipates increased sales in the
Automobile and Logistics segments. Accordingly, consolidated net sales are forecast to rise 10.9%
to ¥1,670.0 billion for fiscal 2007. Despite an increased burden of depreciation expenses in the
Automobile Segment, we expect that a rise in net sales coupled with a bolstering of Group-wide
cost-reduction activities will enable a 5.4% rise in ordinary income to ¥85.0 billion and a 4.1%
increase in net income to ¥49.0 billion.
Note: The financial projections set forth above are based upon a number of assumptions 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 and operational uncertainties, contingencies and risks, many of which arebeyond our control. Financial projections are necessarily speculative in nature, and it can be expected that one or more of
the assumptions underlying the projections will prove not to be valid, and unanticipated events and circumstances are likely
to occur. Actual results will vary from the 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
rapidly changing market trends in the global economy make it particularly difficult to predict product demand and otherrelated matters.

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Looking toward the Future“United We Grow”
In April 2005, Toyota Industries World Convention 2005 was held in Japan to gather all persons
involved with Toyota Industries’ Materials Handling Equipment Business under the slogan, “United
We Grow.” This slogan represents our aspirations to continually grow with capabilities befitting theworld’s leading company in materials handling equipment, backed by the solidarity of the BT
Industries Group and TMHC under the framework of TMHG. As I have often pointed out, I believe
the “United We Grow” slogan also transcends the Materials Handling Equipment Segment andsymbolizes the future direction of the entire Toyota Industries Group. Additionally, not only does
the slogan express our strong intention to create new value by fostering further collaboration
among employees within the Toyota Industries Group and creating synergies through the organicinteraction among the Group’s business divisions, but it also symbolizes our resolve to promotestronger relationships with shareholders, customers, members of the local community and otherstakeholders.

Aiming to Increase Corporate Value
The management team of Toyota Industries—your company—believes that its most criticalmission is to raise our long-term, stable earnings power and create even higher corporate value.
To that end, we expect to carry out dynamic and strategic business operations while establishing
more efficient company management systems and steadily improving our business results
through stable growth of our businesses. Throughout its history, Toyota Industries has diversified its
businesses into a broad range of fields. By strategically and organically combining management
resources that are the wellspring of its competitive advantage—namely, the know-how, key
technologies, human resources and markets cultivated by each business—Toyota Industries isconfident it can create new value and realize further growth and development in each business.
In this way, we can attain a “conglomerate premium” whereby the worth of Toyota Industries asa whole adds up to more than the sum of individual businesses.

Cultivating Global-Oriented Personnel to Support Monozukuri
We recognize that raising corporate value depends on how we can cultivate our humanresources. Although in recent years we have achieved solid growth in our logistics and othernon-manufacturing businesses as we steadily diversify our portfolio of businesses, Toyota Industries
is still essentially a company that engages in monozukuri (literally meaning “creating things” butit implies a philosophy that recognizes the value of the innovative creation of quality products).
Unquestionably, the main source of our competitiveness is employees who are well versed in
the Toyota Production System (TPS) and filled with passion and a sense of mission. Therefore,
strengthening employee education in monozukuri will be essential for Toyota Industries to further
hone monozukuri and ensure its ongoing existence amid intensifying competition. At the sametime, we must resolutely promote initiatives to ensure that the specialized knowledge and skills
cultivated over the course of our long history are successfully handed down to subsequent
generations.
Toyota Industries is also moving ahead quickly with the globalization of its businesses, andnon-Japanese employees now account for over half of all staff on a consolidated basis.
Centered around the Materials Handling Equipment Segment, which has achieved the most12

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progress in globalizing its business, Toyota Industries is actively
promoting globalization as it accelerates overseas local
production in its other businesses as well. Crucial to sustaining
this globalization will be the cultivation of global-oriented
personnel who have specialized knowledge and technicalskills to handle the transfer of production know-how such
as TPS—a source of Toyota Industries’ competitiveness—
to overseas production bases and who can execute theirduties within different cultural environments. In the Materials

Employees strive to perfect their skills at theTechnical Training Center

Handling Equipment Segment, in particular, we aim for the effective utilization of humanresources by placing the right people in the right jobs regardless of their nationalities.

Earning Greater Trust of Stakeholders
Deeply committed to strengthening our bonds of trust with shareholders and other stakeholders,
Toyota Industries is proactively bolstering its corporate governance to firmly establish a structurethat facilitates efficient and highly transparent management. As part of these efforts, to respondquickly and flexibly to changes in the management environment and accelerate future-oriented
reforms, we recently adopted our unique Managing Officer System. In addition to a streamlined
Board of Directors for quicker decision-making, managing officers assume greater responsibility
for business operations, thereby contributing to the realization of a more efficient management
structure that enables the further enhancement of operational-based management. At thesame time, we are also implementing thorough compliance measures. Moreover, as a good
corporate citizen, we will work to earn the further trust of society by earnestly undertaking
environmental and social contribution activities.

Sustained Innovation and Creativity
As I mentioned at the outset of my message, in November 2006 Toyota Industries willcommemorate its 80th anniversary. Toyota Industries’ founder, Sakichi Toyoda, aspired to be an
inventor who would contribute to society, and subsequently established Toyota Industries tocommercialize automatic looms, which he invented after numerous trials and errors. His founding
spirit—sustained innovation and creativity, a venture spirit as well as a belief in contributing tosociety—hasn’t lost its luster even after 80 years. Toyota Industries continues to carry on this spirit
to write a new history through sustained innovation and creativity.
In closing, I ask our shareholders for your continued understanding and support.

August 2006

Tetsuro Toyoda
President

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