Toyota Tsusho Corporation Tsusho Toyota Annual ReportAnnual 2010 THINK CHALLENGE Annual Report 2010 Year ended March 31, 2010 CHANGE Section 01 INTRODUCTORY FEATURE THINK CHANGE 01 CHALLENGE INTRODUCTORY FEATURE Reaffirming the Toyota Tsusho Group Way THINK: “real places, real things, and reality” Toyota Tsusho visits the actual places, sees the actual things, thinks carefully about the best possible solution grounded in reality, and then takes action. Through this process, Toyota Tsusho ensures that it provides value that satisfies its customers. 02 Section 01 INTRODUCTORY FEATURE THINK INTRODUCTORY FEATURE Reaffirming the Toyota Tsusho Group Way CHALLENGE: “Commercial spirit” Toyota Tsusho anticipates trends with lofty ambitions and unfettered thinking, and always stays one step ahead to help its customers by cultivating the toughness and passion needed to persevere to the very end. With this spirit, Toyota Tsusho will boldly tackle new challenges. CHANGE 03 CHALLENGE 04 Section 01 INTRODUCTORY FEATURE THINK CHANGE 05 CHALLENGE INTRODUCTORY FEATURE Reaffirming the Toyota Tsusho Group Way CHANGE: “Team power” Professionals well versed in various markets around the world pool their wisdom, and act in sympathy and cooperation to significantly transform the Group as a whole. CHANGE 06 Section 02 TOYOTA TSUSHO IN PROFILE TOYOTA TSUSHO IN PROFILE Profile Toyota Tsusho Corporation was established in 1948 as Nisshin Tsusho Kaisha, Ltd. and was renamed Toyoda Tsusho Kaisha, Ltd. in 1956. Thereafter, the Company listed its shares on the First Section of the Tokyo Stock Exchange in 1977. In 1985, the Tokyo Branch was upgraded to the Tokyo Head Office. Together with the Nagoya Head Office, this gave the Company a dual head-office structure that continues to this day. The current Toyota Tsusho Corporation was formed through mergers with Kasho Company, Ltd. in 2000 and Tomen Corporation in 2006. More than 60 years have passed since Toyota Tsusho’s establishment. During this period, we have contributed to society while gaining experience and knowledge. Toyota Tsusho will continue to bring together the strengths of its frontline business locations and human resources to make an even greater contribution to society going forward. Four-tier Conceptual Hierarchy The Toyota Tsusho Group aims to established a new era based on a four-tier conceptual hierarchy. Fundamental Philosophy Fundamental Unchanging ideals that should be passed on to future Philosophy generations Vision Goals and milestones that should be reached within 10 Vision years while realizing the Basic Philosophy Long-term Business Plan & Annual Plan Long-term Business Plan Guidelines for business activities refl ecting shifts in the & Annual Plan business environment, consisting of policies, concrete action plans, and numerical targets The Toyota Tsusho Group Way The Toyota Tsusho Group Way Values and principles of conduct to be shared by all Toyota Tsusho directors and employees to realize the Group’s Basic Philosophy and Vision 07 “G’VALUE with you” is the Toyota Tsusho Group’s slogan for realizing its Corporate Philosophy. As our “flagship message,” this slogan is the embodiment of both our guiding principles and commitment to stakeholders. The letter “G” refers to the various important keywords under which the Toyota Tsusho Group will operate. Global Expansion of our activities on the world stage Glowing Sustaining a healthy and glowing morale and passion Generating Continuing to create new businesses Corporate Philosophy Behavioral Guidelines Living and prospering together with people, As a good corporate citizen, we will: society, and the earth, we aim to be a ● Implement open and fair corporate activities value-generating corporation that contributes to ● Fulfill our social responsibilities and conserve the the creation of a prosperous society. global environment ● Offer creativity and provide added value ● Respect people and create an active working environment filled with job satisfaction The Toyota Tsusho Group Way THINK From “nothing” to Real places, From a one-dimensional “something” point past a two- With the mobilization of Real things, Reality dimensional line to a advanced expertise, ability to three-dimensional plane judge, information gathering From upstream fields all the way ability, the ability to build human Value creation to downstream, through the relationships, the strengths of from our construction of a global and the locations and human customers’ highly efficient value chain, we resources at our disposal, and point of view aim to combine our functions. through the art of joining these abilities together, we can discover and cultivate new types CHALLENGE CHANGE of business from “nothing.” Commercial spirit Team power 08 Section 02 TOYOTA TSUSHO IN PROFILE To Our Stakeholders In fiscal year (FY) 2009 ended March 31, 2010, the economic environment surrounding the Toyota Tsusho Group showed the global economy emerge from its worst period following the financial crisis and gradually return to a recovery path, despite some disparity among regions and countries. Accordingly, the Toyota Tsusho Group’s performance in the second to fourth quarters improved in terms of both net sales and earnings, but this was unable to compensate for the large drop in its first-quarter performance. Consequently, overall net sales and operating income for FY 2009 both declined for the second consecutive fiscal year. However, in line with our FY 2009 management policy “Offense” and “Defense,” we invested more than ¥80 billion, primarily in non-automotive fields, and steadily sowed the seeds of future growth. Through rigorous measures to reduce costs and increase business efficiency, we cut costs by more than ¥10 billion, allowing us to shift to a leaner earnings structure. In FY 2010, the global economy remains uncertain, due to the fiscal crisis in Europe, the winding down of economic stimulus measures in various countries around the world etc. Meanwhile, society remains at a major turning point. Recent developments include the increasingly large presence taken on by emerging countries in the global economy and a sudden surge in steps to create a sustainable society. The Toyota Tsusho Group adopted “Think,” “Challenge” and “Change” as the keywords of its management policy for FY 2010. By thinking about the changes in the world ahead while working as one to embrace challenges and drive further evolution, we will approach this turning point as a prime opportunity, rather than as an obstacle. In closing, I would like to extend my sincere thanks to all of our stakeholders for their warm support and understanding of the Toyota Tsusho Group’s corporate philosophy, business values and growth strategies. I look forward to your continued support in the years ahead. August 2010 JUNZO SHIMIZU, President 09 JUNZO SHIMIZU President 10 Contents Section 01 00 Introductory Feature INTRODUCTORY FEATURE Reaffirming the Toyota Tsusho Group Way The Principles of the Toyota Tsusho Group Way Section 02 06 Profile TOYOTA TSUSHO IN PROFILE 08 To Our Stakeholders Section 03 11 Global Network BUSINESS OVERVIEW 12 Toyota Tsusho at a Glance 14 Financial Highlights Section 04 16 Main Feature MAIN FEATURE Close Up on Toyota Tsusho’s Present and Future 16 Introduction Creating New Value in the Automotive Field 18 Creating New Value in Non-Automotive Fields 20 Interview With the President In response to paradigm shifts in the automobile industry and trading compa- nies, we will manage and execute business operations under the keywords of “Think,” “Challenge,” and “Change.” Section 05 32 Business Highlights PERFORMANCE IN REVIEW 34 Segment Overview 34 Metals Division 38 Machinery & Electronics Division 42 Automotive Division 46 Energy & Chemicals Division 50 Produce & Foodstuffs Division 54 Consumer Products, Services & Materials Division Section 06 58 CSR Activities COMMITMENT TO SOCIETY 60 Corporate Governance and Internal Control Systems 64 Management Section 07 66 Network GROUP & FINANCIAL INFORMATION 68 Principal Consolidated Subsidiaries and Affiliates by Equity Method 74 Corporate Information 75 Financial Section A Cautionary Note on Forward-Looking Statements: This annual report contains “forward-looking statements” about Toyota Tsusho’s future plans, strategies, beliefs and performance that are not historical facts. These forward-looking statements are presented to inform stakeholders of the views of Toyota Tsusho’s management but should not be relied on exclusively in making investment and other decisions. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the information presented here, which is based on assumptions and beliefs in light of information currently available to the management at the time of publication. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company assumes no obligation if our forward-looking statements do not reflect actual results due to new information, future events or other developments. Earnings forecasts and other projections in this annual report were formulated and announced as of May 2010. Section 03 11 BUSINESS OVERVIEW BUSINESS OVERVIEW Global Network Toyota Tsusho is a general trading company that develops business together with its consolidated group companies—86 in Japan and 342 overseas—and with customers around the world, via a global network covering Japan and more than 60 other countries worldwide. Toyota Tsusho has a divisional