Toyota Motor Corporation

Ladies and gentlemen, thank you very much for coming despite your busy schedules. Let us now start the financial results meeting for the year ending March 2025. I will be the moderator for today. My name is Irie from the Public Relations Department. Now, from EVP and Chief Financial Officer Yoichi Miyazaki, we'll give you the outline of the financial results.

I'm Miyazaki, CFO. I would like to express our heartfelt appreciation to our customers around the world who chose us, as well as shareholders, dealers, and suppliers who support us. So first, I would like to tell you the summary. Our operating income for the fiscal year ended March 2025 was 4.82 million. This high level of operating income was secured through the effects of price revisions and expansion of value chain profits while advancing comprehensive investments that led to the future and reinforcing our operating foundation. The operating income forecast for the fiscal year ending March 2020 is 63.8 trillion. We plan to reap the benefits of our efforts to reinforce our operational foundation while continuing comprehensive investments from a mid- to long-term perspective, as well as strengthening our management foundation and developing new pillars of future profits. With regard to the impact of the U.S. tariff, only the estimated impact of April and May 2025 have tentatively been reduced. As for shareholder returns, the full-year dividend for the fiscal year ended March 2025 is 90 yen, an increase of 15 yen compared to the previous fiscal year. The forecast full-year dividend for fiscal year ending March 2026 will be increased by 5 yen compared to the previous year, reaching 95 yen. Even in the face of declining profits, we will continue efforts to maintain a policy of stable dividend increase that rewards our long-term shareholders. From here, let me explain the details of the results for the fiscal year ended March 25. Consolidated vehicle sales for this year was 9,362,000 units, which was 99.1% of consolidated vehicle sales for previous fiscal year. Toyota Lexus vehicle sales was 10,274,000 units, which was 99.7% of such sales for the previous fiscal year due to supply constraints caused by the certification issue and other factors. The proportion of electrified vehicles was 46.2%, a significant increase from the previous fiscal year, mainly led by HEVs, which were increased by 850,000 units from the previous year. Consolidated financial results were sales revenues of 48,360.7 billion yen, operating income 4,795.5 billion yen, income tax of 6,414.5 billion yen and net income of 4,765 billion yen. I would like to explain the factors which impacted operating income year on year. From FY2024 results of 5 trillion and 352.9 billion yen, we excluded 352.9 billion yen of one-time favorable effects, which was attributable to market conditions and other factors, and 700 billion yen for the comprehensive investments, resulting in the forecast of 4 trillion, 300 billion yen at the beginning of FY2025. Although there was an impact from volume decline and model mix deterioration due to the suspension of production at Toyota Motor Manufacturing in Guyana in the U.S., the profit amounted to $4,795.5 billion due to the improvement of earning power through price revisions, controlling incentives, and the expansion of value chain profits. We believe that the major achievement was a 510 billion yen output of cost reduction efforts and marketing efforts while steadily reaping the benefits of comprehensive investments and the reinforcement of operational foundation for the future, such as restoring the production pace to the current cruising speed of 10 million units. This slide shows operating income by geographical region. Japan continued to maintain a high level of profit despite an increase in expenses due to the strengthening of the supplier base. In North America, operating income decreased due to the factors such as impact of lower production volume caused by the four-month shutdown of Toyota Motor Manufacturing in Indiana and USA due to the quality issues. Asia and other regions recorded higher profits due to price divisions and other factors. Operating income of consolidated subsidiaries and share of profit of investment accounted for using the equity method in China decreased, mainly due to an increase in sales expenses. Operating income in the financial services business increased, largely due to the increase in loan balances. Next, I will explain the forecast for the fiscal year ending March 31.

Consolidated vehicle sales is expected to be 9.8 million units, which is 104.7% of the previous fiscal year. Toyota and Lexus vehicle sales are expected to reach 10.4 million units, or 101.2% of the previous fiscal year due to the recovery in production volume. Electrified vehicle sales is expected to be a total of 5.184 million units, Thank you very much. Next are the factors which impacted operating income forecast year-on-year. A 400 billion yen increase due to the elimination of one-time expenses related to Hino Motors. A 745 billion yen decrease due to the impact of foreign exchange rates. the impact of material prices is 350 billion yen. With regard to the impact of U.S. tariffs, only the estimated impact in April and May 2025, 180 billion yen, has been tentatively factored in. Regarding comprehensive investment, we have added 470 billion yen. we will steadily strengthen our management foundation as necessary and develop new pillars of future profit to realize sustainable growth from a mid- to long-term perspective and transformation into a mobility company. Additionally, as in the previous year, we expect to reap some of the benefits of comprehensive investment and achieve an improvement of 349%. point five billion yen through factors such as increased sales volume, cost reduction efforts and expansion of value chain profits. As a result, the current forecast is three trillion eight hundred billion yen. But we will use this as a starting point for future improvements. I will explain Toyota's profit structure. In the past, as a result of pursuing a management style focused on quantitative targets, we faced an extremely severe situation during the 2009 Lehman shock where we fell into a deficit of 461 billion yen and were left with only 1.5 trillion yen in cash on hand. Subsequently, we rebuilt our financial base mainly by improving our break-even volume so that we can continue to survive under any circumstances. As a result, we have been able to consistently achieve an ROE of over 10% after further learning and making improvements during the COVID-19 pandemic. Additionally, we have significantly improved profitability, increasing the marginal profit per unit by approximately 1.6 times. The first driving force behind this improvement was product and region-centered management. We have been developing ever better cars tailored to each region, expanded the Toyota and Lexus lineup, and nurtured GR as a new brand. And this has allowed us to increase the average unit price, reduce incentives, and carefully sell each ever better car. The second driving force was the implementation of a Toyota Strength TPS, a Toyota production system, and cost reduction efforts. Since the COVID-19 pandemic, we have returned a cumulative 3.7 trillion yen on a non-consolidated basis to suppliers while working together with our stakeholders to further enhance our cost competitiveness. We believe that these efforts are reflected in the results of the fiscal year ended March 2025, as explained at the beginning of this meeting. Another newly emerging presence that is becoming a pillar of our financial foundation is the value chain. The bar chart shows operating income by business. Compared to the fluctuating profits from new vehicles, value chain profits such as those from parts and finance has been steadily expanding at a pace of 150 billion yen annually over the past several years. The full-year forecast shows that it will expand to more than 2 trillion yen. We plan to further enhance the value of our 150 million units in operation, which is our strength, through expanding maintenance services, strengthening our connection with finance and insurance by connected technologies, as well as expanding the used car business and accessories business. In addition to this, we will also leverage software-defined vehicles and expand profit from new products and services created by working together with outside partners in woven cities. And this long-term stable financial foundation is the base of our group vision, inventing our path forward together. As a result of these efforts, we intend to expand and stabilize earnings, especially in the asset business, which is less susceptible to market and economic conditions, and achieve a business structure that allows us to reduce the amount of capital required to prepare for profit fluctuations. On top of that, we intend to increase the flexibility of our capital policy, focusing on returns to shareholders, including such things as further acceleration of stable dividend increases. An ROE of 20 percent was set as an indicator to measure the progress of this transformation of our business structure and capital structure, towards a mobility company. The next section explains shareholder returns. Our dividend policy is to increase dividends in a stable and continuous manner in order to reward our long-term shareholders. Despite a decrease in profit for the fiscal year ended March 2025, we have decided to pay a full year dividend of 90 yen, an increase of 15 yen from the previous fiscal year as announced. For the fiscal year ended March 2026, despite the difficulties in anticipating the business outlook due to the impact of U.S. tariff impacts and other factors, the full year dividend forecast is 95 yen per share, an increase of 5 yen from the previous fiscal year. We have not set year-end share repurchase budget. However, depending on the stock price level and other factors and the need to respond to requests to sell our shares, we will continue to flexibly implement share repurchases in the future. Lastly, Toyota alone cannot achieve structural reform of our business going forward. We will work together with our stakeholders with their support. This concludes my explanation of the financial results.