Annual Report 2007 - Annual Reports

[Pages:140]Annual Report 2007

Year ended March 31, 2007

Building a Platform for Growth

Established in1937, Toyota Motor Corporation--which celebrates its 70th anniversary this year-- has developed into one of the world's best known automobile manufacturers. The Toyota Group sold over 8.5 million vehicles under the Toyota, Lexus, Daihatsu, and Hino brands in more than 170 countries and regions in fiscal 2007. Further, the Company's production is firmly rooted in local communities, with 52 companies manufacturing vehicles and parts in 26 countries and regions. Toyota had approximately 300,000 employees on a consolidated basis at the end of fiscal 2007.

Cautionary Statement with Respect to Forward-Looking Statements This annual report contains forward-looking statements that reflect Toyota's plans and expectations. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Toyota's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) changes in economic conditions and market demand affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which Toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro, the Australian dollar and the British pound; (iii) Toyota's ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management; (iv) changes in the laws, regulations and government policies in the markets in which Toyota operates that affect Toyota's automotive operations, particularly laws, regulations and policies relating to trade, environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies that affect Toyota's other operations, including the outcome of future litigation and other legal proceedings; (v) political instability in the markets in which Toyota operates; (vi) Toyota's ability to timely develop and achieve market acceptance of new products; and (vii) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold.

A discussion of these and other factors which may affect Toyota's actual results, performance, achievements or financial position is contained in Toyota's annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.

Contents

3 Financial Highlights

4 At a Glance

6 Chairman's Message Fujio Cho, Chairman

"By focusing on its core manufacturing principles, Toyota is committed to building cars that customers love the world over."

8 President's Message & Interview Katsuaki Watanabe, President

"I am committed to steadily improving Toyota's corporate value by continuing to pursue farsighted innovations and building a solid management platform."

16 Message from the Executive Vice President Responsible for Accounting Mitsuo Kinoshita, Executive Vice President

"Earnings increased significantly due to higher vehicle sales fueled by brisk overseas sales and to cost reductions."

P8

20 Special Feature

The Challenge: Strengthen

Production Competitiveness

-- Building a solid foundation for sustainable growth --

Because manufacturing capabilities are the core of its competitiveness, Toyota

has to further strengthen the competitiveness of its production for future growth.

This special feature focuses on the steps we are taking to strengthen the international competitiveness of our production.

P20

32 Business Overview

Toyota's fiscal 2007 performance by business segment 33 Automotive Operations 44 Financial Services Operations 46 Other Business Operations

P33

47 Management & Corporate Information

A variety of information relating to the Company and its management, including corporate philosophy, corporate governance, environmental and social initiatives, Toyota milestones, and an overview of operating bases

69 Financial Section 136 Investor Information

P56 (Environmental and Social Initiatives)

P6 P16

P64 (Toyota Milestones)

ANNUAL REPORT 2007

1

Building a Platform for Growth

The platform of a car largely determines basic performance and driving feel. Without solid bases, vehicles lack stability and comfort. Companies are the same. They need strong platforms to perform well and keep growing.

In Toyota's management platform, technological, supply, and sales capabilities drive growth, supported by quality, cost, and human resources. At Toyota, we are building a rock-solid management platform that will launch us toward new levels of achievement.

In this year's annual report, Toyota's chairman discusses how, since its founding, Toyota has upheld its unique manufacturing mind-set and focused on fostering human resources. Also, in an interview, the president explains measures for consolidating foundations and Toyota's forward-looking management strategies. In a special feature section, we hear from one of Toyota's executive vice presidents and other personnel about Toyota's focus on strengthening the international competitiveness of production and a range of initiatives to consolidate foundations and realize future growth. We hope this report furthers readers' understanding of Toyota.

2

ANNUAL REPORT 2007

Financial Highlights

Toyota Motor Corporation Fiscal years ended March 31

Consolidated Performance (U.S. GAAP)

For the Year: Net Revenues ....................................... Operating Income ............................... Net Income........................................... ROE .......................................................

2005

?18,551,526 1,672,187 1,171,260 13.6%

Yen in millions

2006

2007

?21,036,909 1,878,342 1,372,180 14.0%

?23,948,091 2,238,683 1,644,032 14.7%

U.S. dollars* in millions

2007

$202,864 18,964 13,927 --

At Year-End: Total Assets .......................................... Shareholders' Equity............................

?24,335,011 9,044,950

?28,731,595 ?32,574,779 10,560,449 11,836,092

$275,941 100,263

Per Share Data: Net Income........................................... Annual Cash Dividends ....................... Shareholders' Equity............................

2005

? 355.35 65.00

2,767.67

Yen

2006

? 421.76 90.00

3,257.63

2007

? 512.09 120.00

3,701.17

U.S. dollars*

2007

$ 4.34 1.02

31.35

Stock Information (March 31): Stock Price ............................................ Market Capitalization (Yen in millions, U.S. dollars in millions) ............................

?3,990 ?14,403,890

?6,430

?7,550

?23,212,284 ?27,255,481

$63.96 $230,881

* U.S. dollar amounts have been translated at the rate of ?118.05=US$1, the approximate current exchange rate at March 30, 2007.

% change

2006 vs 2007

+13.8 +19.2 +19.8

--

+13.4 +12.1

% change

2006 vs 2007

+21.4 +33.3 +13.6

+17.4

+17.4

Net Revenues

+13.8%

?23.95 trillion

A new record

(? Billion) 25,000

20,000

15,000

10,000

5,000

0 FY '03 '04 '05 '06 '07 Note: Fiscal years ended March 31

Operating Income

+19.2%

?2.24 trillion

A new record

(? Billion) 2,500

2,000

1,500

1,000

500

0 FY '03 '04 '05 '06 '07

Net Income

+19.8%

?1.64 trillion

A new record

(? Billion) 2,000

1,600

1,200

800

400

0 FY '03 '04 '05 '06 '07

Cash Dividends per Share

+?30.00

Annual Cash Dividends

per Share ?120.00

8 consecutive years of increased dividends

(?) 150

120

90

60

30

0 FY '03 '04 '05 '06 '07

ANNUAL REPORT 2007

3

At a Glance

Toyota Motor Corporation Fiscal years ended March 31

Consolidated Segment Information Business Segment

Financial Services

5.3%

Net Revenues

Other Business

5.4%

Automotive

89.3%

Operating Income

Financial Services

7.1%

Other Business

1.8%

Automotive

91.1%

Geographic Segment

FY 2007

Asia

7.1%

Europe

11.2%

Net Revenues

Other Regions

6.1%

Japan

47.0%

FY 2007

Operating Income

Asia

5.3%

Europe

6.1%

Other Regions

3.7%

Japan

64.9%

Japan

(? Billion) 16,000

North America

28.6%

FY 2007

North America

20.0%

FY 2007

Net Revenues

North America

Europe

Asia

(%)

(? Billion)

16

16,000

(%)

(? Billion)

16

16,000

(%)

(? Billion)

16

16,000

Other Regions

(%) (? Billion)

(%)

16 16,000

16

12,000

12

12,000

12

12,000

12

12,000

12 12,000

12

8,000

8

8,000

8

8,000

8

8,000

8

8,000

8

4,000

4

4,000

4

4,000

4

4,000

4

4,000

4

0

0

FY '04 '05 '06 '07

0

0

FY '04 '05 '06 '07

0

0

FY '04 '05 '06 '07

0

0

FY '04 '05 '06 '07

0

0

FY '04 '05 '06 '07

Operating income margin (Right scale)

Operating income margin (Right scale)

Note: Fiscal years ended March 31

4

ANNUAL REPORT 2007

Operating income margin (Right scale)

Operating income margin (Right scale)

Operating income margin (Right scale)

Consolidated Vehicle Production and Sales

Vehicle Production by Region: Japan................................................................................ Overseas Total ................................................................ North America ............................................................. Europe .......................................................................... Asia ............................................................................... Other Regions ............................................................. Consolidated Total .........................................................

2005

Thousands of units

2006

4,534 2,697 1,156

596 647 298 7,231

4,684 3,027 1,201

623 836 367 7,711

2007

5,100 3,080 1,205

709 755 411 8,180

% change

2006 vs 2007

+8.9 +1.8 +0.3 +13.9 ?9.7 +12.0 +6.1

Vehicle Sales by Region: Japan................................................................................ Overseas Total ................................................................ North America ............................................................. Europe .......................................................................... Asia ............................................................................... Other Regions ............................................................. Central and South America..................................... Oceania .................................................................... Others ....................................................................... Consolidated Total .........................................................

2,381 5,027 2,271

979 833 944 185 239 520 7,408

2,364 5,610 2,556 1,023

880 1,151

233 251 667 7,974

2,273 6,251 2,942 1,224

789 1,296

284 268 744 8,524

?3.9 +11.4 +15.1 +19.6 ?10.3 +12.6 +21.8

+6.7 +11.6

+6.9

Vehicle Production by Brand: Toyota / Lexus ............................................................. Daihatsu ....................................................................... Hino ..............................................................................

Consolidated Total ......................................................... Toyota Group Total*.......................................................

6,393 745 93

7,231 7,719

6,848 763 100

7,711 8,460

7,225 855 100

8,180 9,080

+5.5 +12.1

0.0 +6.1 +7.3

* Includes 488 thousand units in fiscal 2005, 749 thousand units in fiscal 2006, and 900 thousand units in fiscal 2007 produced by unconsolidated companies-- principally in the United States (at New United Motor Manufacturing, Inc., a Toyota-General Motors joint venture company), China, the Philippines, and Malaysia--that do not appear in the consolidated totals.

Vehicle Production

6.1 + % 8.18 million units

A new record

Asia

9.2%

Europe

8.7%

Other Regions

5.0% Japan 62.4%

(Thousands of units) 10,000

8,000

6,000

4,000

North FY 2007

America

14.7%

Note: Fiscal years ended March 31

2,000

0

FY

'03 '04 '05 '06 '07

Japan Overseas Total

Vehicle Sales

6.9 + % 8.52 million units

A new record

Other Regions

15.2%

Asia

9.3%

Japan

26.7%

(Thousands of units) 10,000

8,000

6,000

4,000

Europe

14.3%

2,000

FY 2007

North America

34.5%

0

FY

'03 '04 '05 '06 '07

Japan Overseas Total

ANNUAL REPORT 2007

5

Chairman's Message

Tokyo Head Office

"By focusing on its core manufacturing principles, Toyota is committed to building cars that customers love the world over."

6

ANNUAL REPORT 2007

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