Annual Report 2014
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Annual Report Year ended March 31, 2014 Aiming to Achieve Sustainable Growth and to Bring Smiles ANNUAL REPORT 2014 Print Search Contents Page 2 Overview of Consolidated Performance Management and President’s Message Special Feature Review of Operations Financial Section Investor Information Four Business Units Highlights Corporate Information Prev Next 3 President’s Message 5 Overview of Four Business Units 9 Special Feature Aiming to Achieve Lexus International Toyota’s DNA Will Endure for the Next 100 Years 5 Sustainable Growth Lexus International: Becoming a Truly Global Luxury Brand 10 Toyota in 10 Years and 100 Years and to Bring Smiles Toyota No. 1 6 Our DNA is Creating Ever-Better Cars Improving Our Earnings Structure and Offering Advanced Technologies in Developed Markets 16 Toyota No. 2 Enriching Lives and Building Tomorrow’s Toyota through Innovation 7 19 Supporting Toyota in Future Growth Markets 8 Unit Center 24 Message from the Executive Vice Developing and Commercializing Major Components with Best-in-World Competitiveness President Responsible for Accounting 26 Consolidated Performance Highlights 34 Management and Corporate Information 44 Financial Section 64 Consolidated Statements of Comprehensive Income 34 R&D and Intellectual Property 44 Selected Financial Summary (U.S. GAAP) 65 Consolidated Statements of Shareholders’ Equity 29 Review of Operations 36 Corporate Philosophy 46 Consolidated Segment Information 66 Consolidated Statements of Cash Flows Corporate Governance Consolidated Quarterly Financial Summary Automotive Operations 37 47 29 67 Report of Independent Registered Public 39 Management Team 48 Management’s Discussion and Analysis of 30 Financial Services Operations Accounting Firm Risk Factors Financial Condition and Results of Operations 31 Non-Automotive Business Operations 41 62 Consolidated Balance Sheets 68 Investor Information 63 Consolidated Statements of Income Cautionary Statement with Respect to Forward-Looking Statements (ii) fluctuations in currency exchange rates, particularly with respect to the value of and government policies relating to vehicle safety including remedial measures such (xi) increases in prices of raw materials; This document contains forward-looking statements that reflect Toyota’s plans and the Japanese yen, the U.S. dollar, the euro, the Australian dollar, the Russian ruble, as recalls, trade, environmental protection, vehicle emissions and vehicle fuel econ- (xii) Toyota’s reliance on various digital and information technologies; expectations. These forward-looking statements are not guarantees of future perfor- the Canadian dollar and the British pound, and interest rates fluctuations; omy, as well as changes in laws, regulations and government policies that affect (xiii) fuel shortages or interruptions in electricity, transportation systems, labor strikes, mance and involve known and unknown risks, uncertainties and other factors that (iii) changes in funding environment in financial markets and increased competition in Toyota’s other operations, including the outcome of current and future litigation and work stoppages or other interruptions to, or difficulties in, the employment of labor in may cause Toyota’s actual results, performance, achievements or financial position the financial services industry; other legal proceedings, government proceedings and investigations; the major markets where Toyota purchases materials, components and supplies for to be materially different from any future results, performance, achievements or finan- (iv) Toyota’s ability to market and distribute effectively; (vii) political and economic instability in the markets in which Toyota operates; the production of its products or where its products are produced, distributed or cial position expressed or implied by these forward-looking statements. These (v) Toyota’s ability to realize production efficiencies and to implement capital expendi- (viii) Toyota’s ability to timely develop and achieve market acceptance of new prod- sold; and factors include, but are not limited to: tures at the levels and times planned by management; ucts that meet customer demand; (xiv) the impact of natural calamities including the negative effect on Toyota’s vehicle (i) changes in economic conditions, market demand, and the competitive environ- (vi) changes in the laws, regulations and government policies in the markets in which (ix) any damage to Toyota’s brand image; production and sales. ment affecting the automotive markets in Japan, North America, Europe, Asia and Toyota operates that affect Toyota’s automotive operations, particularly laws, regulations (x) Toyota’s reliance on various suppliers for the provision of supplies; other markets in which Toyota operates; ANNUAL REPORT 2014 Print Search Contents Page 3 Overview of Consolidated Performance Management and President’s Message Special Feature Review of Operations Financial Section Investor Information Four Business Units Highlights Corporate Information Prev Next Aiming to Achieve Sustainable Growth and to Bring Smiles First, I would like to extend my sincere gratitude for your continued management structure enables each unit leader to adopt a self- support and understanding. sustaining approach that makes the most of on-site, hands-on Since 2009, Toyota has encountered a multitude of challenges. experience, thereby facilitating quick decision making. This ability Thanks to the tireless efforts of all concerned, today we can take to address individual requirements on a more detailed basis is all pride in the strengths of our management practices and culture. I the more important when considering the varying scales and stages am convinced that we are now in a position to take a definitive of motorization in each market. In 2014, we are taking this concept step forward toward sustainable growth. of self-sustaining operations one step further by making better cars Just as a tree’s growth rings testify to its survival and growth, on an individual platform basis. For example, “Team K” will assume I believe that Toyota’s ongoing growth rests entirely on its ability comprehensive responsibility for the development, procurement, and to grow in the face of any adversity. Having recently achieved the production for models that employ the K platform, including the unprecedented milestone of 10 million vehicles in global Group sales, Camry and Avalon. This greatly broadens the scope of the develop- we are now advancing into uncharted territory. If we are to achieve ment process, which had tended to focus on individual models, and sustainable growth, it is vital that we nurture our human resources allows whole platform teams to channel their energies toward making while building on each growth ring. It is equally important, however, better cars. that we maintain self-restraint and avoid overextension. Balancing In North America, the decision has been made to unify and relo- these concerns and directing management resources to areas that cate the manufacturing, sales and marketing, corporate, and finan- offer the potential for growth, we will pursue bold innovation and cial services headquarters at a new shared campus in Plano, Texas, make aggressive forward-looking investments. from the latter half of 2016. This will allow our North American opera- For example, Toyota reorganized its automotive operations into tions to address the needs of customers in a timelier manner, and to four business units in April 2013. This more agile and autonomous produce ever-better cars that exceed expectations. With a history ANNUAL REPORT 2014 Print Search Contents Page 4 Overview of Consolidated Performance Management and President’s Message Special Feature Review of Operations Financial Section Investor Information Four Business Units Highlights Corporate Information Prev Next spanning more than five decades, Toyota believes that its operations Toyota marked its 75th anniversary in 2012. It is important to however, tasks that were once routine may become increasingly diffi- in North America will benefit through this “One Toyota” concept. By remember that the many fruits that we are able to harvest today cult to perform. We also have to remember that actions taken during undertaking a thorough review of its business structure and working were sown and cultivated by our hard working predecessors. It is a crisis may not be practicable at other times. beyond the boundaries of established manufacturing, sales and imperative that we, too, place similar importance on our responsibili- As I see it, Toyota’s current situation is particularly critical as we marketing, and corporate and financial services, we are better placed ties to plow, plant, and cultivate the seeds of the future. In this are now entering another expansion phase. This is why I believe it is to pursue sustainable growth. manner, future generations can benefit from the work we do today. important to put in place independent business units to carry out all Toyota is equally committed to innovation, the wellspring for new Early in April 2014, we articulated a new internal slogan: “Work appropriate activities on the front line. technologies and future growth. Moving forward, we will maintain our Today, Smile Tomorrow: in Pursuit of True Competitiveness and All 330,000 Toyota employees around the world are doing their commitment to the environment by strengthening and developing our Innovation.” This new slogan encapsulates my strong belief that our best to bring happiness, safety, and peace of mind to customers