Three years management plan

from FY 2017 to FY 2019

May 2, 2017
Toyota Tsusho Corporation.
 Contents
Ⅰ. Review and specific management measures
Ⅱ. Next Mobility Strategy
Ⅲ. Africa strategy
Ⅳ. Three Years Management plan - Quantitative targets -
Ⅴ. ESG Policy
Ⅵ. Supplementary Material
Ⅰ. Review and specific management
measures

3
 FY2016 Review and specific management measures ( Billion yen)

Reassessed businesses and booked impairment

FY2015
losses against unprofitable ones

Metric FY2014 FY2015 FY2016

Operating cash flow +169.1 +308.3 +193.7

Free cash flow (30.4) +137.5 +63.3

Net interest-bearing debt 1,233.5 1,102.7 1,050.2

Net debt/equity ratio 1.1 1.2 1.1

FY2015 Increasing cash-generative capacity through better

FY2016 working capital management

We have built a foundation

upon which we can advance from FY2017

4
Shift from 5 years plan to 3 years Management Plan

Living and prospering together with people, society,

and the Earth, we aim to be a value-generating
Fundamental corporation that contributes to creation of a
Philosophy
prosperous society.

Global Vision
Realizing growth through Toyotsu Core Values

With the business environment around mobility changing

dramatically, we shortened our planning horizon from five years
to three to adapt faster to change.
➡ Realization of more-precise plans
➡ Plans are reviewed and updated annually so they
Medium-term
always reflect recent major changes in environment
Business Plan
Taking our Toyotsu Core Values to heart, we will
strengthen our earnings foundation and challenge
three business domains: Mobility, Life & Community
and Resources & Environment

5
 Major Management Turning Point
Analysis of
mobility environment
 Auto industry undergoing once in a
century structural transformation
 Technological innovations like IoT and AI
are changing autos’ value
We must be prepared to swiftly adapt to change by
establishing specialized organizational units with our
sights set on the next generation
Strategy in NEXT Mobility
・Established cross functional project units
(staffed with 150 personnel in total)
・Established Next Technology Fund to
swiftly respond to innovative
technological changes
* See p25 of supplementary materials.
Analysis of
African environment
 Economic growth has slowed due to resource
price declines
 Weak economic structure based mainly on
primary products
 Largely young labor forces
 Industries have high latent growth potential
We will continuously take the lead from a long-term, pan-
African perspective, taking into account the external
environment
Strategy in Africa
・Established Africa Division, our first regional
division, and streamlined reporting lines
・Expediting utilization of local human resources
 CFAO CEO Richard Bielle appointed deputy
head of division
 Toyotsu Kenya Chairman Dennis Awori
appointed to CFAO’s Board of Directors
6
Ⅱ. Next Mobility Strategy
 Auto Industry is at Turning Point
Auto industry is shifting away from conventional production/sales; various
businesses have started to become linked with autos

Life & Resources &

Community Environment

New urban transportation systems Materials revolution

 Changing urban mobility/ownership modes
 Realization of eco-driving through alleviation of  Emergence of new materials such as
traffic congestion aluminum, carbon and resins

ITSs linking people, vehicles Smart cities, smart grids

and society  Low-carbon society (CO2 reduction)
Proliferation of PHVs, EVs, FCVs
 Self-driving vehicles  Energy conservation through utilization of
 Advanced safety renewable energy
 Connected cars  Effective utilization of HEMSs, storage
batteries

Growth in demand for conventional cars

Mobility
Low-cost operations

Mobility 8
 Businesses we are Targeting

Mobility services Materials

 Involvement in self-driving
vehicle/advanced safety technologies
 New services that promote adoption of
next-generation autos
 Businesses involved with vehicle weight
reduction, electrification, new materials,
recycling
 Upstream/midstream battery businesses

Expansion of Next Mobility business domain

Production Production× Technology

Sales Sales x Service

EV components Smart factories

 Supply and storage of electric power from  Improved productivity through visibility &
renewable sources preventive maintenance
 Infrastructure development  Intergenerational transmission
 Power semiconductors of skilled workers’ skills
 Factory networks & security
 Supply of electronic
parts/components for
EV/PHV/FCVs

Automotive electronics example on next page 9

 Automotive Electronics Business Example
New business domains

Software
Toyota Tsusho’s
functions Growth sources Level 5
Further
Security insourcing of Self-driving Level 4
technological
capabilities
AI
Data center through
Level 3
development
& investment Image recognition
(deepening of & processing Next-generation data
Network cloud
strengths) centers
Communication
Embedded Level 2 OTA (software updated
& wireless
software
development Existing Connected wirelessly)
technological
Technology strengths
Cameras Security (ID management,
solutions/EMS
(hardware, monitoring)
services Advanced
software)
Quality Sensors safety
(semiconductors)

Development
Hardware

analysis & investment

Level １ Domains where we can utilize our
Modularization Electrification
ICTs and track record
Car electronics
Global sales
(conventional)
network IT

We will deepen our strengths and

unfailingly capture newly emerging business opportunities
10
Ⅲ. Strategy focused on Africa
 Efforts and Future Development in Africa
(Automotive Production and Sales）
<Automobile Production <Automotive Sales
and Peripheral business> and Peripheral business>
Expand to other than Toyota, and other than passenger Expansion of B to C(Business to Consumer) is anticipated
automobile through automobile production’s knowhow. with a wide range of lineup from superior to inferior.

Algeria(FUSO) Egypt(TOYOTA) Kenya

SKD※ Business CKD※ Business Captive finance & lease
- Plan - / Used vehicles, etc.

Nigeria(YAMAHA)
Manufacture of Kenia(VW)
Motorcycles CKD Business

Nigeria(FUSO)
SKD Business
- Plan -
TOYOTA/SUZUKI
Nigeria(Mitsubishi) Expand capture area
SKD Business
-Under consideration-

South Africa(TOYOTA)
Automobile production support TOYOTA Business country（22 countries）

※CKD・・・Complete Knock-Down（ All implement the steps other than the parts production ）
SUZUKI’Business countries（4 countries）
※SKD・・・Semi KnockｰDown（Relatively simple assembly ） Both TOYOTA and SUZUKI Business Countries (19 countries） 12
 Efforts and Future Development in Africa
（Other than Automotive）
< Pharmaceutical business > <Retail / Beverage Business, etc.>
The establishment and expansion of other
The expansion of business areas and
countries of retail businesses and new
business developing countries
business with partners
East Africa：
North Africa： plan to purchase of a
Horizontal Expansion of retail business
pharmaceuticals manufacture and sales
（Carrefour S.A.）/ Ivory cost ⇒ Cameroon, etc.）
company ⇒ development of
pharmaceuticals manufacture and sales
West Africa：
Horizontal expansion of beverage
manufacture business
（ Heineken/Congo⇒ Ivory cost, etc.）

Pharmaceuticals
deployment capture Kenya： Fertilizer production
region business ⇒ Neighboring
countries, to west Africa

Ivory cost /taking part in

infrastructure project based in
Kenya (Plan)

Pharmaceuticals developed
countries （22 countries）
South・East Africa：Expand of
Pharmaceuticals sales channels
13
 Aiming to Establish Absolute Strengths in Africa

Full Value Chain

We will expand our business domain from
production through service, mainly in auto
industry

Leading Strong Brands

We will provide optimal products and
services and attract brands customers
seek

Operational Excellence
We will pursue high-quality management
with focus on crisis management and
compliance

Grow with the Society

We will create local jobs and grow
together with local communities
Toyota Tsusho advertisement from 6th Tokyo
International Conference on African Development

Foster auto industry and develop new businesses

With Africa, For Africa
Our aim:
～Become a company that fulfills Africa's needs and seeds～
14
Ⅳ. Three Years Management plan
- Quantitative targets -
 3 years Management Plan’s Quantitative Targets （Billion yen）
FY2016 IFRS-basis results scheduled
to be released in June 2017

JGAAP JGAAP IFRS IFRS

FY2017 FY2019
FY2015 FY2016
plan targets
PL Profit (43.7) 102.5 110.0 130.0

BS Total assets 3,952.1 4,096.8 4,300.0 4,600.0

CF Free cash flow +137.5 +63.3 - -

Financial metrics

ROE -% 11% 10% 10~13%

Net interest-bearing
1,102.7 1,050.2 1,080.0 1,100.0
debt
Net D/E ratio 1.2 1.1 -  1.0

RA:RB 1.1：1 1：1 - < 1.0

ROE Be cognizant of cost of capital and endeavor to efficiently deploy

10～13% shareholders' equity
Achieve positive free cash flow and restrain growth in interest-
Net D/E ratio  1.0 bearing debt (but net D/E ratio may temporarily rise above 1.0
when we undertake large investments)
Maintain stable and sound financial condition by focusing on
RA/RB < 1.0 balance between equity and asset-specific risk exposures
16
 3 years management - Stairs of net income - （Billion yen）

＜Premise condition＞ FY2017 Plan FY2019 Target

YEN/USD 105 100
YEN/EUR 115 110
Oil Prices (USD/bbl) 50 50
Global Automobile production
9,380 9,790
units(10thousands units)※
※ Source from the automotive industry of the 2016 edition of the Annual Book 2019 issued by IRC
Life &
Resources & Community
Environment +4.0
130.0
Mobility +5.0

+11.0

110.0
+20

FY2017 Investment plan for two years FY2019

Plan about 200 billion yen Target
17
 Reasons for Changes and Amount of Investment
in Three Domains （Billion yen）

Target Period：FY2018～FY2019 for two years

Mobility Resources & Life &

Environment Community

Net income +11.0 Net income +5.0 Net income +4.0

Investment 85.0 Investment 85.0 Investment 30.0

Focus areas Focus areas Focus areas

Automotive Sales
Automotive Production &
relative business
Logistics・Value-chain
Automotive Electronics
Automotive supplies and
materials
Renewable energy
Lithium, Rare-Earth, etc.)and
recycling
Electric Power and Energy
Grain Value-chain
Overseas Plant Infrastructure
Africa Retails ・Beverage
Africa Pharmaceutical ・
Chemical products
Cell phone , Consumer
Electronics
Fertilizer, Detergent , Sanitary
materials and Packaging
material
Lifestyle related
(Insurance, Food)

18
 Further Enhancement of Corporate Value
Investing CF Operating CF

Free cash flow target New investments may

not exceed operating
Pursue operating
efficiency with focus
CF in any operating
division (continued) on working capital
Maintain positive FCF
(From FY2017 to FY2019 ）

Operating CF /
investing CF
management
Actively consider
company-wide involvement Strategic growth
investment
in large strategic Corporate value
projects enhancement

Net DER ratio

Financial
Shareholder returns condition Maintain financial
soundness with net
 Continuation in plan to increase direct shareholder returns DER ratio < 1.0
through dividends
19
Ⅴ. ESG Policy
 Approach to Social Issues through Our Business
Life & Resources &
Community Environment
Social Issues
Poverty and hunger Social Issues
Disease, Mortality risk
Preserve ecosystems
Environments and recycling
Examples of initiatives Examples of Examples of
initiatives
・Fertilizer production business
・Renewable energy business
in Kenya ・Metal resources recycling
・Operation of a hospital in India solution business
・Production business for ・Promotion of carbon fiber
superabsorbent polymers in recycling business
China and Malaysia ・Full-cycle blue-fin tuna
cultivation business
Social Issues
Environments/Traffic Accidents
Education/Employment
Examples of Examples
of initiatives
・City traffic system using ITS (NEXTY)
・Improve environments by next-generation Classification mark in conformity with SDGs
vehicle
SDGs (Sustainable Developments Goals) is 17targets
・Advanced safety technology development the United Nations summit as a universal goals for 2030,
・Lightweight of Aluminum, Carbon, Plastics The objective was to produce a set of universal goals that meet
・Education of truck driving in Kenya the urgent environmental, political and economic challenges
・Engineering guidance in Kenya Toyota Mobility facing our world.
Academy
 Building Workplaces Where All Employees can Thrive
Realization of
diversity & inclusion

Reform work-styles
Building diverse, vibrant, highly productive, performance-maximizing workplaces

Review traditional Expand work-style

(1) Workplace
work-styles choices
initiatives
Develop workplace
Increase organizational institutions and infrastructure
productivity by changing how (3) Development of that enable employees to
individuals and organizations (2) Company-wide choose work-styles
institutions
work and creating work-styles initiatives compatible with their
/frameworks
compatible with each lifestyles
workplace  New HR system*
Demonstrate reform-mindedness and  Telecommuting program
foster cultural reform  Various IT tools
 Work style reform project
Share workplace rules and foster work-style  Paperless workflows
reform culture
 Encourage employees to take paid vacations
(help employees refresh) *From April 1, 2017, previous distinction between
 Reduce overtime managerial career track and clerical positions was
 Morning Win (morning productivity initiative) abolished and job classifications were
consolidated

Through these three levels of work-style reform initiatives,

we will create workplace environments where diverse personnel can thrive 22
 Enhancement of Governance System
With the aim of separation of management and execution
improve board functions and its quality
 Directors make decisions on important management matters and monitor the
execution of business
 The number of directors will be reduced (from 16 to 12), and the board of directors
will focus on essential management deliberations
~ Member of the board after June Ordinary General Meeting of Shareholders~

Satoshi Ozawa Jun Karube YasuhikoYokoi Kuniaki Yamagiwa Soichiro Matsudaira Yuichi Oi
Chairman President & CEO Executive Executive Executive Executive
of the Board Vice President Vice President Vice President / CTO Vice President

Board of Directors

Yasuhiro Nagai HiroshiTominaga Hideyuki Iwamoto Jiro Takahashi Yoriko Kawaguchi Kumi Fujisawa
Managing Managing Managing Outside Director Outside Director Outside Director
Executive Officer Executive Officer Executive Officer
CCO/CAO CSO/CIO CFO

23
Ⅵ. Supplementary Material
 Organizational structure of Next Mobility
Executive Vice President （CTO)

Executive Officer

NEXT Technology Cooper-

Fund Developing ation NEXT Mobility Developing Department 10 People Cooper-
Department ation New Business
Cooperation Developing
Excavating and Department
■Cross Functional Projects ※Executive Officers will be appointed to
developing new
each working group leader
Technologies and
new services speedily New Materials& Next Mobility Smart
Which would lead the Recycle Services EV Components
future, in the form of
Factory
a corporate fund Cooperation
7 People 9
Metals Division Metal G People
(dual
responsibility)
14
Global Parts & Logistics Division Parts & Materials G
【Target】 People
Other than 9
automotive,
Automotive Division Marketing & Services G People
Innovative
technique, Cooperation
Machinery, Energy & Projects Division Machinery Business D 15
People
patent, New
business handled Electronics Business D 86
in each of our Chemical & Electronics Division People
field Chemical Material D
5
Food & Consumer Services Division Life Innovation Team People
（150 People in total）
IT Global
25
 Africa division structure

Company Section Structure Africa Division

Metals (Toyota Tsusho) Chief division

Africa related Business

Global Parts Officer of Africa
& Logistics

Automotive

Machinery,
Energy & Project Healthcare Food and Machinery,
Automotive and Chemical Consumer Technology,
Chemicals
SBU SBU Services & New
& Electronics
SBU Business
Food & Consumer SBU
Services Africa
Automotive
Africa Business Development Department
Africa Division Department

（ Entities ） (CFAO)

CFAO BOD President & CEO

HQ in Africa
Area

Subsidiary Auto, Equip& Consumer Tech. & New

Healthcare
Services Goods Business

26
 Basic Risk Management Policy

◆ Basic risk management policy

1) Keep total risk within risk-bearing capacity risk assets (RA) ≦ risk buffer (RB)
2) Earn returns commensurate with risk RVA*１ ＞0（after-tax ordinary income -RA×10%)

*1:RVA（Risk Adjusted Value Added)

＜FY2016＞ (Preliminary basis) Unit: Billion yen
RA RB RA：RB ratio ⇒ 0.98 ：1
approx. 890 approx. 910 Year-earlier value: 1.08：１
RVA ＞ 0
Year-earlier RA: 850; RB: 790

< Reference > How RA & RB are calculated

RA ＝ risk assets × risk weight (RW)
RW factors (overview)
RA Corresponding assets *RWs incorporate country risk premia that vary by NEXI
category
Trade claims Cash/deposits, trade receivables, inventory Trade claims: default probability
Inventory: market price volatility, etc.

Investment Property, plant & equipment; intangible assets, PPE/intangibles: price volatility, etc.
claims investment securities, equity interests, loans, guarantee Investment securities/equity interests: market price volatility, etc.
obligations Loans/guarantees: liquidity-adjusted default probability

Forex Consolidated subsidiaries’ equity (excluding non- Currencies’ volatility

controlling interests)

RB = shareholders’ equity + AOCI + allowance for doubtful accounts (current) － goodwill
27
 Inquiries:

Investor Relations Group

E-mail ttc_ir@pp.toyota-tsusho.com

Tokyo Head Office

TEL +81-3-4306-8201
FAX +81-3-4306-8818

◆ This presentation contains “forward-looking statements” about the strategies and plans of Toyota Tsusho Corporation and its Group
companies that are not historical facts. These forward-looking statements are subject to a number of risks and uncertainties that could
cause the Group’s actual or implied operating environment, performance, results, financial position, etc. 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. The Group assumes no obligation to update or correct these forward-looking statements.
◆ This presentation is not intended to solicit, offer, sell or market securities, and should not be the sole basis for making investment and
other decisions.

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