Long-Term Business Plan for the Fiscal Year Ending March May 1, 2015

Transcription

1 Long-Term Business Plan for the Fiscal Year Ending March 2020 May 1, 2015

2 Historical Overview of Net Income 当期純利益 Net income (Billion ( 当社計画値含む yen; includes Toyota ) ( 億円 Tsusho ) estimates) Toyota トヨタ年間生産台数 Motor s annual ( car 当社推測値含む production volume ) ((Million 万台 ) units; includes Toyota Tsusho estimates) * Plan Target Fiscal years to March *Excludes the JPY 19.0 billion tax reduction effect due to the merger. (Net income before amortization of goodwill) Stable performance as a result of increased automobile production 1

3 Issues and Initiatives to Achieve Annual and Long-Term Plans Initiatives to achieve the long-term business plan Issues Strengthen the earnings foundation of the automotive business Build businesses in which we have invested and expand earnings in them Create a new generation of businesses Initiative Policies Propose businesses that meet customer needs in each region Develop peripheral businesses that leverage strengths Successfully monetize the businesses we launch Restructure for more growth businesses Rigorously invest in areas that leverage our strengths and businesses that are highly profitable 2

4 Fiscal Year Ending March 2020: Multistage Net Income Targets (Billion yen) Returns on new investments (Net income before amortization of goodwill) Existing business growth Monetize prior investments Amortization of goodwill completed (Tomen, Eurus, etc.) Amortization of goodwill suspended (CFAO, etc.) March 2016 Plan March 2020 Target 3

5 Quantitative Targets of Long-Term Business Plan (Billion yen) (Net income before amortization of goodwill) March 2014 Results March 2015 Results March 2016 Plan March 2020 Target Net sales 7, , , ,500.0 PL Operating income BS Financial Benchmarks Net income Total assets 4, , , ,500.0 Shareholders equity ,200.0 Comprehensive income Net assets 1, , , ,900.0 Net interest-bearing debt 1, , , ,600.0 Net DER times Investments New investments Invest within the scope of operating cash flow Emphasize sound finances 4

6 Strengthen the Earnings Foundation of the Automotive Business Automobile Production Automobile Sales Americas & Europe Start in Mexico Deal with changing car models Improve processing technology Use new materials Raise management efficiency Popularize brands Asia Pacific & China Improve capabilities in China Implement IMV Establish Mekong distribution Techno-park Enhance sales network in main countries Scrap and build Deal in commercial components Emerging Countries & Africa Implement IMV Lower costs Expand OEM use Enhance sales network Create individual demand Pre-owned cars and sales finance Deploy Toyota Group Collective Experience Outside Toyota Group * Circle size corresponds to the extent of business expansion Implement production and sales strategies for each region 5

7 Build Businesses in Which We Have Invested and Expand Earnings in Them Successfully Monetize the Businesses We Launch Division Business Areas Future Initiatives Metals Rare earths Lithium Increasing productivity from stable operations Expand sales channels Global Parts & Logistics Automotive Machinery, Energy & Project Techno-park Aftermarket component sales Pre-owned cars & sales finance Hydrogen & electric vehicle businesses Gas business Power generation business Strengthen Tier 1 and Tier 2 relationships Sell more materials and form local relationships Alliances with new car dealers Create framework for popularizing brands Rigorous control of development schedule Strengthen relationships with strong partners Chemicals & Electronics Food & Agribusiness Iodine Superabsorbent polymers (SAP) Wheat & sugar businesses Secure sales routes for unique products Development of businesses from upstream to downstream Expand sales channels Consumer Products & Services Hospital & nursing services Operate in peripheral service businesses Implement initiatives required for rapid returns 6

8 Prior Investment Projects: Growth Areas with Projected Earnings Growth Division Business Area Future Initiatives Machinery, Energy & Project Chemicals & Electronics Food & Agribusiness Consumer Products & Services Renewable energy Electronics Pharmaceuticals business Grain business Beverage business Insurance package services Textiles Portfolio balanced among Japan, Europe and the USA Diversify generation methods (solar, biomass, geothermal, offshore wind, etc.) Exercise Group synergies Expand business in which Toyota Tsusho is strong, incl. automotive Increase products handled by building ties with manufacturers and constructing networks Build value chains from upstream to downstream Strengthen relationships and development with strong partners Operate overseas, and increase insurance products handled Review purchasing and sales routes, and create brand strategies Leverage our strengths to generate additional growth 7

9 Policies for New Investments Target implementation of TRY-1 by generating additional growth in core businesses based on long-term strategy and continuing to invest to develop next core businesses Selectively invest in growth areas and highly profitable businesses by leveraging our strengths 8

10 New Investment Areas: Initiatives to Build Next Core Earnings Drivers Our Strengths Core Strength: Highly experienced Growth potential: Sustain and ensure growth in existing businesses (Automotive-related businesses) Next Core Strength: Highly experienced Growth potential: Market share gains, etc. Africa (Groupwide) Power generation business (Incl. renewable energy) Electronics business expansion Challenge Strength: Partners complement our strengths when we are less experienced Growth potential: market scale and product lineup expansion Upstream grain strategy Environment, recycling, medical, agribusiness Market Growth Potential Scale of earnings Business Model Lifecycle Current core earnings drivers Phase 2 core earnings drivers Phase 2 core earnings drivers: businesses with potential for good results and growth Phase 3 core earnings drivers Temporal axis Building the next core earnings drivers Build next core earnings drivers with awareness of business model lifecycle Phase 3 core earnings drivers: businesses that exceed each division s parameters from a long-term perspective 9

11 Next Core Earnings Drivers 1: Build Our Presence in Africa April 2015: Africa designated as our fifth key region Automobile CKD production Rely on CFAO to expand Toyota automobile sales Rely on CFAO to expand in the pharmaceuticals business Toyota Tsusho Support & Cooperation Develop retail business through Carrefour YAMAHA two-wheeler assembly & sales L'Oréal production & sales Cross development from Kenya in the infrastructure business (geothermal power, harbors, etc.) Create Synergy Toyota Tsusho (Toyota models) and CFAO (VW models, etc.) will expand sales of automobiles Automobile production Throughout Africa, develop businesses that demonstrate the Toyota Tsusho Group s strengths 10

12 Next Core Earnings Drivers 2: Develop a Unique Power Generation Business Thermal Power Generation Business Renewable Energy North America Base: TTP (USA) N. America gas-fired CCGT 3,455MW (gross) Asia Pacific Base: TPS (Singapore) 1,966MW in Asian countries (gross) Eurus Energy Wind + solar power: 2,600MW (gross) Largest wind power station in Japan (over 20% share) Ability to structure non-recourse financing and achieve internalizing development and maintenance in Japan ENE-VISION: In-house & biomass power generation Geothermal & solar power generation businesses Creation of power generation infrastructure in Africa & the Middle East Link the power generation resources & network of Group companies to expand initiatives to enter new business areas Regional expansion of the renewable energy business in Japan and overseas Transmission business, surplus power storage and sales (hydrogen, storage batteries, etc.) Investigate potential of new business areas Demonstrate the various power sources we offer and grow by synergistically creating unique clean energy businesses that can provide stable power generation in various countries and business areas 11

13 Collection/ Transport/ Storage Challenge Project: Acquisition of NovaAgri Grain Strategy Component Acquired stable upstream procurement and cost competitiveness. Downstream linkage through value chain (primarily in Asia). Strengths & Issues in Brazil Grain global export share (Fiscal 2013/14) Soybeans: 41%; Corn: 16.5% (both No. 2 globally) Storage capacity for about 90% of domestic production volume (chronic capacity shortage) Room for new entrants, unlike N. America, which is controlled by an oligopoly of grain majors Our Grain Strategy Businesses in Supply Regions Earth & Resources Shipment (Export) Attractive market Initial processing Trading Marine transport Strengths of NovaAgri & Toyota Tsusho High growth in grain production forecast for Brazil Grain infrastructure integrated from inland warehouses to ports in northern Brazil Long term access rights for key ports, access to railroads and truck routes linked with major producing states in Northern Brazil Have four grain silos in Japan, where there is demand Stable supply to customers in Southeast Asia and China Businesses in Consumer Regions Import (Logistics) Now a major strategic market for Toyota Tsusho Life & Community Initial processing Livestock/ Secondary processing Attractive market 2nd Step: ensure raw material procurement for this project 1st Step: Participate in downstream businesses 3rd Step: Leverage the resource procurement capabilities we acquired to further strengthen sales capabilities 12

14 Policies for New Investments 13

15 Policies for New Investments Selectively invest in growth areas and highly profitable businesses by leveraging our strengths Invest within the scope of operating cash flow Rigorously employ quantitative standards (RVA & TVA) and emphasize investment returns For investment projects, determine Groupwide and Division priorities and replace existing projects and businesses (strategic allocation of managerial resources) 14

16 Rigorously Manage the Investment Cycle 1. Policy Committee (March) 2. Investment Strategy Meeting (Monthly) Set and approve division policy based on Group policy Manage the pipeline Senior managers and chief division officers discuss strategic significance and priorities Go 5. Portfolio Meeting (October) 3. Investment and Loan Meeting (Weekly) Business monitoring system Restructuring & exit decisions Adds rigor to exit rules Discusses investment and loan proposals Drop Exit Revamp 4. Decision (Monthly) Go Strengthening governance with outside directors 15

17 Quantitative Assessment Criteria for New Loans and Investments: Risk Adjusted Value Added (RVA) and Capital Efficiency Indicator (TVA) Risk Adjusted Value Added: RVA>0 Capital Efficiency: TVA>0 RVA = Ordinary income x 60% RA x risk cost Verifies whether we are generating sufficient earnings from risks taken TVA = (Ordinary income net interest expense) (1 country tax rate) capital employed country capital cost rate Verifies whether we are generating expected earnings and capital employed Background for Risk and Capital Cost Rates 1. Target: RA RB Net worth 2. Target return for RA Return on equity = ROE 3. Cost rate is set at 10% to 13% to increase ROE We use and rigorously apply quantitative benchmarks 16

18 Clarifying Benchmarks for Supporting or Exiting Businesses Consolidated Subsidiaries and Major Affiliates Annual fixed benchmark (Once annually) Balance sheet benchmark (Monthly) First 5 years After 5 years FS deviation over 50% (After-tax profit) Business profit below 100 million (3 consecutive years) or after-tax loss for fiscal year New benchmark Negative RVA Yellow (Loss exceeds -50%) Red (Insolvency) Under Scrutiny status (Support) Evaluate after two years Continue Exit 17

19 Key Performance Indicators 18

20 Basic Policy for ROE Long-term business plan target (Year ending March 31, 2020) ROE:10% to 13% Improve benchmark ROE of 10% to 13% in light of factors including various changes in the operating environment and the application of quantitative benchmarks for assessing businesses 19

21 Basic Risk Asset Management Policy Basic Risk Asset Management Policy 1) Keep total risk within a sustainable range RA RB 2) Secure earnings to justify risk taken RVA * >0 (Ordinary income after tax RA 10%) March 31, 2015 = Preliminary basis = 1:RVA(Risk Adjusted Value Added) RA (Risk assets) Approx. JPY 980 billion RB (Risk buffer; mainly net worth) Approx. JPY 990 billion RA:RB ratio 0.99 : 1 (Reference) 1.13 : 1 as of March 31, 2014 RVA > 0 (Risk cost 10% ) We target sound, strong finances that enable future investments by reviewing existing investments and improving capital efficiency and the risk profitability of businesses 20

22 Dividends 21

23 Dividend Policy We will generate stable, sustained shareholder returns with a target consolidated payout ratio of 25% calculated using net income before amortization of goodwill Cash dividends per share (Yen) 28 Dividend payout ratio Payout ratio (using earnings before amortization of goodwill) % 22% New Divided Policy 23% 50 24% 56 29% 19% 62 31% 20% March 2011 March 2012 March 2013 March 2014 March 2015 March 2016 Planned 22

24 Personnel Development 23

25 Personnel Development to Achieve Global 2020 Vision We need to develop people who can manage diverse employees, create businesses and build businesses with overseas partners in order to achieve our 2020 Vision and become a truly global corporation Specific Initiatives Young Employees Assign to companies throughout the Group to acquire firsthand competencies Give all employees overseas assignments within their first 7 years Outside Directors 3 outside directors, incl. 2 women, to vitalize the Board of Directors Introduction of governance code to expand functions of outside directors D&I Form Diversity Task Force in each department Proposals for issues including work from home, shorter hours, maternity leave and nursing leave Global D&I Hire and employ elite foreign employees with business creation and senior management skills Actively promote foreign employees 24

26 Inquiries: Investor Relations Group TEL FAX The presentation material includes forward-looking statements such as those pertaining to the strategy and management plan of Toyota Tsusho Corporation and its group companies, which are not historical facts. The forwardlooking statements are based on expectations, estimates, and forecasts available at the current moment, and necessarily include risks and uncertainties. Accordingly, the information on the business environment, future performances, business results, and financial standings of the Company explicitly or implicitly expressed in the forwardlooking statements could differ materially from the actual results. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason. The presentation material is not intended to be the basis for an offer or solicitation to buy or sell any security. In making a decision on investment, etc., prospective investors may not rely on the information in this presentation. 25