Sustained Innovation and Creativity - Toyota Industries Corporation

Management’s Discussion and Anal y sis ofFinancial Condition and Results of Op er a tionsThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations is based oninformation known to management as of June 2006.This section contains projections and forward-looking statements that involve risks, uncertainties and assumptions.You should be aware that certain risks and uncertainties could cause the actual results of Toyota Industries Corporationand its consolidated subsidiaries to differ materially from any projections or forward-looking statements. These risks anduncertainties include, but are not limited to, those listed under “Risk Information” and elsewhere in this annual report.The fi scal year ended March 31, 2006 is referred to as fi scal 2006 and other fi scal years are referred to in acorresponding manner. All references to the “Company” herein are to Toyota Industries Corporation; and referencesto “Toyota Industries,” “Toyota Industries Group” or the “Group” herein are to the Company and its 153 consolidatedsubsidiaries.Result of OperationsOperating PerformanceIn fi scal 2006, the Japanese economy was on a solidrecovery track. Private-sector capital investmentincreased on the back of improved corporate earningswhile consumer spending rose as employment conditionsimproved. The overall economic outlook was also positiveoverseas, with an expanding U.S. economy and theEuropean economy maintaining their underlying strengths.In Asia, the Chinese economy continued to grow at abrisk pace.In this environment, Toyota Industries made effortsto strengthen its corporate structure by attempting toensure customer trust through its dedication to quality,the development of appealing new products, aggressivesales promotions and execution of a Group-wide programto reduce costs.As a result, total consolidated net sales of ToyotaIndustries amounted to ¥1,506.0 billion, an increase of¥264.4 billion (21.3%) over fi scal 2005. (For a breakdown ofoperating results by business segment, refer to OperatingPerformance Highlights by Business Segment.)At the profi t level, ordinary income amounted to ¥80.6Net Sales, Overseas Sales andOverseas Sales RatioOrdinary Income andOrdinary Income Ratio(¥ Billion)(%)1,600 80(¥ Billion)100(%)101,4001,200706080 81,00050606800406003040440020020102020FY02030405 0600FY02030405 060Net sales (left)Overseas sales (left)Overseas sales ratio (right)Ordinary income (left)Ordinary income ratio (right)64 Toyota Industries Corporation Annual Report 2006