Toyota Motor Corporation

Ladies and gentlemen, thank you very much for joining us today, taking time out of your presumably busy schedule. Now, we would like to begin TMC's FY26 Q2 Financial Results Briefing. I am Irie from Corporate Communications. Pleased to be your emcee today. Now, I would like to invite our Chief Financial Officer, Kenta Ko, for his presentation. Konsan, over to you. Good afternoon, ladies and gentlemen. Thank you for the introduction. I am Koro. Before I begin, I would like to start by sincerely thanking our customers around the world who love Toyota cars, our shareholders who support our efforts, our dealers and suppliers and other stakeholders. Here is a summary of Q2 results. Our operating income for the first half of this fiscal year was 2 trillion yen. Despite the impact of U.S. tariffs, strong demand supported by the competitiveness of products has led to increased sales volumes, mainly in Japan and North America, and has expanded value chain profits. The full year operating income forecast is 3.4 trillion yen, Despite the impact of the US tariffs, we have continued to build upon our improvement efforts, such as increasing sales volume, improving costs, and expanding value-to-profits. We are steadily translating comprehensive future investments into improved productivity and increased returns, with a strong focus on improving the breakeven volume. As for shareholder returns, to reward our long-term shareholders, The interim dividend is raised to ¥45 per share, and the full-year dividend forecast is ¥95 per share. As announced at the Japan Mobility Show 2025, we will clearly define the five brands of the Toyota Group with clear directions. A diverse range of products meet the needs of each individual customer, thereby expanding choice for our customers. I will now delve into our financial results for the period ended September 2025. Consolidated vehicle sales for the first half reached 4,783,000 units or 105% of the same period last year. Toyota and Lexus vehicle sales totaled 5,267,000 units or 104.7% compared to the previous fiscal year. Thanks to a strong demand from customers around the world, vehicle sales increased, mainly in Japan and North America. The ratio of electrified vehicles rose to 46.9%, driven mainly by strong HEV sales in regions such as North America and China. Consolidated financial results. Sales revenues of ¥24,630,700,000. Operating income ¥2,005,600,000. Income before income taxes, ¥2,478.1 billion, and net income of ¥1,773.4 billion. The factors that impacted operating income year-on-year are shown on the slide. The geographical operating income. In Japan, operating income decreased mainly due to the impact of exchange rate fluctuations and increased expenses. In North America, It decreased because of the impact of the U.S. tariffs. Other regions saw an increase, mainly due to higher sales volume, improved model mix, and other factors. Our China business saw increase in operating income and share of profit of investments accounted for using the equity method. Operating income in the financial services segment increased, largely due to an increase in loan balances. Now we will move on to the shareholder returns.

We will raise the interim dividend by 5 yen compared to the previous fiscal year to 45 yen per share. The forecasted full-year dividend will also be increased by 5 yen, reaching 95 yen per share. We will continue to increase dividends in a stable and continuous manner to reward our long-term shareholders. As for share repurchases, In June of this year, we passed a resolution to establish a repurchase program of approximately 3.2 trillion yen as part of taking Toyota Industries Corporation private. Therefore, no new share repurchase program will be established at this time. We will continue to conduct flexible repurchases of shares considering factors such as common stock prices. Next, I'll explain the forecast for the fiscal year ending March 26th. Consolidated vehicle sales remain unchanged from the previous forecast. Toyota Lexus vehicle sales have been revised upward by 100,000 units to 10.5 million units. Through the strong competitiveness of our products, we will capture even more robust demand, particularly in North America. Next, let me explain the full-year consolidated forecast. We have adopted the full-year Forex rate assumptions of 146 yen per dollar and 169 yen per euro. Our forecasts for the full-year consolidated performance are sales revenues of 49 trillion yen, operating income of 3,400,000,000 yen, income before income taxes of 4,150,000,000,000, sorry, 180,000,000,000 yen, and net income of 2,930,000,000,000 yen. The factors impacting operating income year on year are as stated on the slide. Despite the impact of U.S. tariffs amounting to 1.45 trillion yen, improvement efforts such as increasing volume, model mix, cost reductions, and expanding value chain profits are expected to result in a positive impact of 0.9 trillion yen. To maintain and strengthen our earning power, we will work with all stakeholders, including suppliers and dealers, to leverage results of the strengthening of our operational foundations to further improve productivity. I believe everyone here has seen the models we unveiled at the Japan Mobility Show. These cars speak more for themselves than I ever could. Each and every product is something that could not be created overnight. Toyota is a company managed through its products, which are the results of long-term efforts built up by many people. Our products were created by our development teams, production teams, suppliers, dealers, and of course, our customers and the market. The first half financial results reflect these efforts, and our cars have generated solid profits. And now, in addition to Toyota products, Lexus, Daihatsu, and GR, we are able to introduce the new Century brand. By having each brand take on clearer roles within the Toyota Group to form complementary relationships, we can expand customers' choices even further with a diverse range of products that meet the needs of each individual. We hope you will continue to have even higher expectations for the Toyota Group moving forward. A diverse range of products supported by such strong brands has led to 150 million units owned by our customers worldwide, and the value chain business has expanded to the order of 2 trillion yen in operating income. This is the result of efforts by teams on the front lines in service, sales finance, used car sales, insurance, and others to maximize the value of each vehicle supported by product strength, such as ease of repair and strong supply of parts, as well as high residual values. The new RAV4 is the first to adopt IRENE, a platform designed to efficiently develop software. RAV4 is our best-selling global model with an annual sales of 1 million units. We deliberately chose to lead with this challenging model. By utilizing the vast amount of data collected from roads and vehicles around the world, we will develop and refine SDVs together with our customers. By adding our SDV strategy to the virtual cycle of new cars and value chain businesses, we will further strengthen our profit foundation. Over the past two years, we have grappled with certification issues and lack of capacity head-on, carrying out activities to reinforce our operational foundation. As a result, we are thoroughly focused on safety and quality while securing additional capacity, leading to a stable production. On the other hand, investments in human resources and future-oriented investments have expanded, and combined with the impact of US tariffs, our break-even volume has risen significantly. To bring our break-even volume back onto a downward trend, we are launching company-wide initiatives. We will review the allocation of people, materials, and capital, and turn the results of the reinforcement of our operational foundations into earning power. We will pursue waste-free value-added work and improve productivity and also continue to focus on improving the break-even volume. This concludes my explanation of the financial results. Thank you.

Thank you very much, Kansan.