Long-Term Business Plan and GLOBAL 2020 VISION August 3, 2011 Inquiries to: Investor Relation Group E-mail: ttc_ir@pp.toyota-tsusho.com Tel: +81-3-4306-8201 Fax: +81-3-4306-8818 1
Notice on Forward-Looking Statements ◆ The presentation material includes “forward-looking statements” such as those pertaining to the strategy and management plan of Toyota Tsusho Corporation and its group companies, which are not historical facts. The forward-looking statements are based on expectations, estimates, and forecasts available at the current moment, and necessarily include risks and uncertainties. Accordingly, the information on the business environment, future performances, business results, and financial standings of the Company explicitly or implicitly expressed in the forward-looking statements could differ materially from the actual results. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason. ◆ The presentation material is not intended to be the basis for an offer or solicitation to buy or sell any security. In making a decision on investment, etc., prospective investors may not rely on the information in this presentation 2
Contents Page ◆ Toward the Realization of VISION 2015 P 4 - 12 ◆ Financial Policy P13 - 17 ◆ GLOBAL 2020 VISION P18 - 23 3
4 Toward the Realization of VISION 2015
VISION 2015 and Long-Term Business Plan 『 VISION 2015 VISION 2015 』 』 『 Create next-generation businesses in different business areas ( ＝ product divisions) for further dramatic advances ◆ Target sales and income balance of 50% from 『 『 Long automotive and 50% from non-automotive businesses Long- -Term Management Term Management 』 ◆ Seek to be among trading houses with highest Policy 』 Seek to be among trading houses with highest Policy profitability and best financial standings profitability and best financial standings Non- (in terms of (in terms of ROE, DER, etc.) Automotive automotive 50 50 Second pillar Synergy (Non- Third pillar Long-term ： ： automotive) (Non- business plan automotive) for this fiscal year Non- Fourth pillar 50 50 (Non- automotive ＝ Target year of automotive) Automotive VISION 2015 People; Toyota Tsusho Group Way; Automotive Business Foundation March 2016 Target March 2010 March 2011 ＝ VISION 2015 Results Results Five years after their formulation, the goals of VISION 2015 are in the Long-term Business Plan 5
Review of Progress to Date and Plan for Fiscal Year Ending March 2012 March 2007 March 2010 March 2011 March 2012 Results Plan Results Results (Billion yen) Net sales 6,212.7 5,102.2 5,743.6 5,800.0 PL 110.0 55.5 85.2 86.0 Operating income Net income 77.2* 27.3 47.1 47.0 2,462.2 2,274.5 2,436.2 2,450.0 Total assets BS 626.5 650.2 667.3 700.0 Net assets Benchmarks 15.7 ％ 4.9 ％ Financial ROE 8.0% 7.7% Net DER 1.2 1.0 1.0 1.0 Others New investments 65.0 83.0 78.0 2-year total 250.0 65 ： 35 60 ： 40 70 ： 30 70 ： 30 Automotive : Non-automotive * Includes ¥19.0 billion tax reduction from merger. Actual net income: ¥58.2 billion. Make steady investments while maintaining financial soundness 6
Numerical Targets of Long-Term Business Plan March 2016 Target Net income 100.0 billion ROE 12~15% Net DER 1.5 times or less (excluding goodwill) 50 ： 50 Automotive : Non-automotive Aim for a balanced earnings structure by the fiscal year ending March 2016 7
Results in Core Business Areas Non-automotive Mobile Power generation business Food resources Digital content (Paprika production, tuna farming, etc.) Gas Rig chartering development business Practical clothing Construction machinery e-Commerce manufacturing and sale manufacturing and sale Iodine/Silica sand Metal recycling Bioplastics Storage Bioethanol batteries, etc. Nanotech materials Rare earths Lithium Compounds Tire installation Knock-down production Parts distribution business Distributor & dealer Automobile sales finance Metal processing business business Automotive Areas where we have an advantage have become apparent 8
Key Measures for the Long-Term Business Plan ■ Steady harvesting of existing investments and acceleration of new investments ■ Focused allocation of resources (make value chain oriented investments in areas where the Company can leverage its strengths) ■ Efficiency improvements for a more profitable operating structure ■ Acceleration of global expansion and enhancement of human resource development The fiscal year ending March 2012 will be a year of acceleration and transformation to achieve the goals of the long-term business plan 9
Key Policies for the Fiscal Year Ending March 2012 1 ． (1) Aggressive Acceleration of Investment Amount of Investment (Billion yen) 250.0 83.0 78.0 65.0 65.0 60.0 Non-automotive （190.0） （ 7.0 ） （61.0） （57.5） （24.0） （21.0） Automotive （ 58.0 ） （41.0） （39.0） （60.0） （20.5） （22.0） March 2007 March 2008 March 2009 March 2010 March 2011 March 2012 and 2013 (Plan) Accelerate further investment in non-automotive fields 10
Key Policies for the Fiscal Year Ending March 2012 1 ． (2) Main Areas of Investment in the Next Two Years Midstream Upstream Downstream (Trade, manufacturing (Resource-related) (Retail) & processing) Development of coil centers Development of tire Dealer and peripheral Automotive installation business businesses HEV/EV business Other Natural gas Rare earths Lithium Recycling Grains Lifestyle Distribution network Health/Nursing care/ Bio- and renewable energy Medical Non-automotive Electric power Other Food-related Other Other Accelerate investment in upstream and downstream areas to restructure the value chain 11
Key Policies for the Fiscal Year Ending March 2012 2. Organizational Restructuring to Expand New Business Creation Until March 2011 From April 2011 Goals of Organizational Restructuring Metals Metals Realize synergy between the logistics Machinery & Electronics Global Production Parts & Logistics and automotive parts businesses Automotive Automotive Expand the Machinery, Energy & Project business model Energy & Chemicals Machinery, Energy & Project Chemicals & Electronics Respond to fading boundaries Produce & Foodstuffs between materials industry and Consumer Products, Produce & Foodstuffs electronics field Services & Materials Consumer Products, Global Strategic Integration Services & Materials Increase efficiency by integrating functional support divisions Administration Administrative Strengthen linkage between product strategies and functions to create new businesses 12
13 Financial Policy
About Our Financial Strategy Basic Concepts of Our Financial Strategy ④ Interest-bearing Debt ・ Funding to match asset ① Working Capital Short-term characteristics ・ Limit working capital turnover Working funding ・ Stable, low-cost funding to minimum required capital (cut immoderation, waste and ⇒ ・ Global commitment lines unevenness) ・ Region-by-region CMS Long-term funding ⇒ Set targets every year (PDCA) ⑤ Shareholders’ Equity ② Fixed Assets ・ Emphasis on cost of equity ・ Proactive investment while Fixed assets ・ Accumulation of well- Shareholders’ improving financial soundness sselected investments ・ Returns to shareholders equity ③ ・ Improve Toyotsu Value Achievement (TVA), an internal benchmark, for ・ ROE efficient deployment of financial resources ・ Emphasis on net debt- ・ Promote risk asset management based on improved asset efficiency (Details on next page) to-equity ratio (DER) 14
Risk Management Policy Risk Asset Management (RAM) ◆ Risk Asset Managem ent Policy Risk Asset Managem ent Policy March 31, 2011 1 ） Keep total risk within a sustainable range (RA ≦ RB) RB 2 ） Secure earnings to justify risk taken (Min.R/R ≧ Cost of equity) (Risk buffer; RA mainly net worth) (Risk assets) about ¥550 billion RA ： RB ratio (RA/RB) ⇒ about 0.73 about ¥400 billion R/R (Risk/Return): After-tax ordinary income/RA ⇒ about 16% With investments expected to increase in each business area to achieve the goals of the long-term business plan and vision, efficient use of resources will be even more important. Therefore, we will prioritize risk assets allocated to new businesses and review risk assets in existing businesses to speed up execution of strategies. Evolution of Risk Management ・ Promotion of integrated risk management ・ Continuation and enhancement of qualitative risk management in business execution (internal controls, compliance, etc.) ・ Promotion of creation of a consolidated risk management system 15
Financial Targets Numerical Financial Targets ◆ Build a financial structure for sustained growth through reinvestment of profits Maintain a low debt level that allows us Net income exceeding equity cost to keep an “A” rating even when Equity ⇒ Emphasis on ROE as an Debt conducting large-scale M&A indicator highly correlated ⇒ Emphasis on net DER as an with equity cost indicator of financial soundness Average ROE of 12- -15% 15% Average ROE of 12 Maintain net DER net DER (excluding (excluding goodwill) goodwill) Maintain over medium- over medium -to to- -long term long term 1.5 times or less at 1.5 times at or less We will realize our numerical financial targets by achieving the goals of the long-term business plan. 16
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