Toyota Tsusho Corporation

Thank you very much for your patience, ladies and gentlemen. Now, we would like to start our earning call briefing. as well as ESG presentations for March 2023. Thank you very much for your attendance today, taking time out of your presumably busy schedule. The first part of the presentations will be outline of consolidated results and earnings forecast, and the second part, ESG. In the first part, we will have Ichiro Kashitani, the President, Tominaga, the CSO, Thank you very much for coming today. Including questions and answers, the first part will last about 40 minutes. And after that, we will have 60 minutes of sessions with news groups of speakers, some housekeeping announcements, What you may hear may include some uncertain and risk-oriented information, which may be not the results but the outlook for the future. So please remember that. Now, I'd like to invite Kashitani-san for his opening remarks. Thank you very much. I am Kashitani. And I thank you once again for being with us today and thank you for your support for the company. We are extremely grateful. Now, 2019 November was the last time we met and since then it is the first time that we meet face to face. This meeting is broadcast live, thus a hybrid meeting. And those of you who are joining us online, I hope you bear with us that you hear us through the online platform. Iwamoto, our CFO, will give you the details of the financial results for FY22. The income of operating profit was over the previous year's $222.2 billion, and it ended at $284.1 billion. Now, I'd like to ask Iwamoto-san for the reporting of the consolidated results.

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So I would like to talk about the outline of consolidated results for fiscal 2022 and earning forecast for 23. So these are the numbers for the profit and loss statement. For foreign exchange rate, for USD, 112 yen to 135 yen. Euro, 131 yen to 141 yen was the change. So for the revenue of fiscal 2022, 9,848.5 billion. So that is plus 1.8. trillion year on year. Metals, $650 billion. Africa and global logistics, $240 billion each. Chemicals and electronics and food and consumer services, $200 billion each. Automotive and machinery, energy plant. plus $150 billion each. So all divisions saw an increase in revenues and profits. For gross profit, $968.8 billion. Operating profit 388.7 billion and the profit was 284.1 billion. All of these are the highest ever numbers for profits. So for the profit, let me show you a waterfall chart. On the far left is 222.2 billion. And then on the far right, you have this year's numbers, 284.1 billion. And in between, you have asterisks, others. These are financial income and tax. for financial income. Last year, the Argentina equity method numbers, 15 billion was included. That is the only special point on an operating profit basis, 294.2 plus 94.6 billion compared to the previous year and if you look at the content of Forex effect to 28.5 billion. So per one yen lower that is 1.5 billion increase. in profits. So the numbers are becoming larger now. So 1.3 to 1.5 billion impact will be seen with the change of one yen. If you look at the market and prices, the positive is mostly from metals and in total 10.5 billion plus for demand and trading volume it had an impact. of $28 billion, machinery $17.1 billion, global logistics $10.8 billion, chemical electronics $9.9 billion. If you just look at automotive retails, $27.3 billion for Africa and the rest in total $38.5 billion, others $10.9 billion. Basically, there are two factors. When Toyota purchased Sefao, We had goodwill and that was amortized and that is about 5 billion. And for Euros, replacement losses accounts for the rest. Please turn to page four, profit after taxes. plus 16.5 billion last year but minus 14.5 billion is for this year. The major factor is replacement cost for domestic wind power and African consumer business impairment. Now, this is for each segment. Each division saw an increase in profits. This is for profit after taxes. Minus plus 3.7 billion. Last year, we had 15 billion. This is temporary. including lithium, PGM, steel, all the prices are up for we have profits coming from there. Global parts and logistics, 34.3 billion, that is plus 8.7 billion. Globally, automotive parts price changes were seen and the freight cost last year We're not taking a risk, but it seems like we were impacted by the freight cost. And this year we've been able to recover some of that. For automotive, 45.7 billion plus 17.2 billion. So the profits grew significantly. And we are very good at emerging countries, in particular Papua New Guinea, Cambodia, Caucasus. And we were able to have the products, and that led to good sales without incentives. And that's why we grew profit significantly. Russia had negative numbers, but all of that was covered. So the growth was very significant. Machinery, energy, and project, 32.6 billion. That is plus 11.4 billion. And for this... Transient losses were seen, one-off losses were seen, but rising market prices in Europe were seen, Europe's merchant business. improved. After August, euros became 100% subsidiary and that had a positive effect. Chemicals and electronics, 47.9 billion, that is an increase of 4.9 billion. For electronics business, the volume itself is a flat but the prices went up and that contributed to profits nafsa prices were stable and high and iodine which we are good at was also solid for food and consumer services last year we had one of loss and this year, too, we have some losses. But on the other hand, we also have one-off gains. So on an apple-to-apple basis, roughly the same as the previous year. This year in Brazil, transport costs had to be incurred and that had a negative impact. However, still we had 9.5 billion in profits. That is an increase of 4.1 billion. Africa, 36.3 billion. That is an increase of 10.3 billion. Automotive business was very good. West Africa was extremely good. Congo, Benin, Cote d'Ivoire were good and East Africa was also good. Angola, Uganda, and South Africa saw an increase of 14% as well. On a percentage basis for sales, 14% in South Africa and 19% in Africa other than South Africa. So it would have been over 40 billion if it were not for the extraordinary losses. Now on the next page is the balance sheet. The exchange rate. 134 Yen to the dollar, so it's a plus 12 Yen. And Euro, minus 9 Yen. Total assets, the 6 trillion, 370 billion. Forex impact, 180.7 billion. Inventory, 1.227 trillion fourth quarter, we were able to reduce inventory to the appropriate level. So net worth close to 2 trillion, 1.914 trillion. Net interest bearing debt against the increase in revenue, we've been able to control it to 1.298 trillion. Net DER was improved by 0.03 to 0.68. Because yours became 100% subsidiary, even with the change in net worth, the net DER improved. On page seven is the cash flow. Operating cash flow, 444.2 billion positive. For investing cash flow, 139.9 billion outflow on a gross basis, 208.8 billion. Euros numbers are not included here but even including those numbers, free cash flow would have been positive. So this is the forecast for fiscal 2023 and as you see here, Operating profit 400 billion, after tax profit 280 billion. 1.5 billion percent minus and the major effect is Forex. 125 yen to the dollar, that is 10 yen stronger. 10 yen would have an impact, a negative impact of about 15 billion. Net DER, we want to promote investment and therefore we have less than 1.0. For ROE, this year was very good at 15.6. But we want to continue to have 13% or more. Phase 9 is by division. Which division was good or bad? So this is a forecast for metals. The market is very stable. And there will be a decrease in profit due to market conditions, especially lithium prices have come down. So the number is 60 billion. That is minus 22%. Global parts and logistics parts are moving very solidly. Automotive production volume is expected to increase as a whole. So 37 billion is expected for mobility. Sales is very solid and the margin will probably come down so minus 4%, 44 billion is expected. Machinery, energy and project, European electricity prices are stable now so that will have a negative impact but there's a positive side of increased investment. Development costs will be incurred as well. So minus 8%, 30 billion is expected for machinery energy and project. For chemicals and electronics, current NAFSA and electronics prices. If you look at these prices, the numbers are solid. So 52.0 billion, an increase of 9% is expected. Food and consumer services, one-off gains will come down but still we will have 9 billion even though it's a minus of 6%. For Africa, the one of losses of the previous year will go away and last year intangible fixed asset depreciation existed but that will go away. So we have an aggressive plan of forecasting 47 billion for Africa. Page 10 is shareholder return. We have a lot of discussions on this internally. For 202 yen, that is plus 10 yen for the past year. For this fiscal year, 204 yen is expected. That is an increase in dividends for 14 terms in a row. So it says progressive dividend, but for a shareholder return, we are having internal discussions now. So for capital policy, we are hoping to have another occasion to explain to you. But we will increase dividends is the intent that we have for this plan. That is all from my side.