This notice has been translated from the original notice in Japanese.
In the event of any discrepancy, the original in Japanese shall prevail.
Fiscal Year 2008 Results
and Fiscal Year 2009 Plan
April 30, 2009
Kunio Harimoto
President, TOTO Ltd.
1
1
Contents 1. Fiscal 2008 Results
2. Plan for Fiscal 2009
3. Fiscal 2009 Management Policy
1) Consolidating our financial position
2) Growth strategies ① Remodeling business
② Overseas business
2
At today’s meeting, I would like to cover the topics shown here.
2
Summary of FY 2008 Financial Results
Significant decrease in sales and profit resulted in deficit in net profit
・Sales for new housing fell significantly short of the year-ago result as demand
for new housing was weaker than expected.
・Sales for the Remodeling business were slightly lower due to the rapidly
deteriorating domestic economy starting last October.
・For overseas sales, sales in China remained firm, although sales in the United
States were impacted by the economic deterioration since last October.
Overseas sales on a yen basis fell below last year as the Japanese currency
appreciated.
・Operating profit and recurring profit fell significantly on weaker sales.
・The Company posted a substantial net loss due to increases in extraordinary
losses, including impairment loss, loss on valuation of inventory, the cost of
inspecting and repairing water heaters, and a loss on valuation of securities, as
well as a reversal of deferred tax assets.
3
First, let me provide a brief overview of our results for FY 2008.
In FY2008 we posted a net loss, a very disappointing result, because of sharp
declines in sales and profit. It was our first loss after nine consecutive years of
profit.
Sales for new housing in Japan fell significantly, as demand for new housing was
weaker than anticipated. This is the major factor in the lower sales and profit.
Sales from the Remodeling business were slightly lower than last year due to the
rapid decline in the domestic economy seen since last October.
For overseas sales, sales in China remained firm, although sales in the United
States were impacted by the economic downturn starting last October.
Overseas sales on a yen basis fell below last year, reflecting the strengthening of
the yen.
Operating profit and recurring profit fell significantly on weaker sales.
We posted a substantial net loss for the year due to increases in extraordinary
losses, including impairment loss, a loss on valuation of inventory, the cost of
inspecting and repairing water heaters, and a loss on valuation of securities, as
well as a reversal of deferred tax assets.
3
FY 2008 Financial Results
※Y billion, rounded down
FY07
Result
YoY
Difference
(%)
FY08
Result
-36.5
501.0
464.5
Operating Profit
22.7
6.5
Recurring Profit
19.2
5.9
Extraordinary Loss
-3.3
-20.4
-17.0
Net Profit
13.2
-26.2
-39.5
Net Sales
(-7％）
％）
-16.1
（ -71％）
％）
-13.3
（ -69％）
％）
Including Reversal of deferred tax assets (10 billion yen)
Decreased in sales and profit.
4
Sales result for the FY 2008 is as shown in the chart
Net sales dropped 7% year on year to 464.5 billion yen,
Operating profit dropped 71% to 6.5 billion yen,
Recurring profit dropped 69% to 5.9 billion yen,
and posted net loss of -26.2 billion yen due to increase in
extraordinary losses as well as a reversal of deferred tax assets.
4
Sales by Business Segment
（¥ Billion）
）
600
（FY07 Result）
501.0
500
65.0
400
9.2
300
246.7
(FY 08 Result) （　）=
464.5
59.0
YoY difference
(-7%)
(-9%)
(-16%)
7.7
Detached houses ±0%
245.8
(-0.3%)
Condos
Commercials
200
-5%
+2%
Overseas
100
180.2
152.0
(-16%)
New Business and others
Remodeling
New Housing
0
FY07 Result
FY08 Result
New Housing Starts
(Jan. - Dec)
1.06 million　1.09 million （＋3%）
）
（＋
Demand based
on delivery time
1.16 million
1.07 million （- 8 % ）
New housing sales decreased sharply and
Overseas sales fell below the previous year due to strong yen.
5
Looking at net sales by business field, the new housing field dropped 16%
year on year to 152 billion yen on the back of the revised Building
Standards Law as well as substantial demand decrease due to the rapid
worsening of the economy. Remodeling sales edged down 0.3% year on
year to 245.8 billion yen, impacted by the severe economic conditions.
New business and others dropped 16% to 7.7 billion yen. Overseas sales
also decreased, falling 9% to the Japanese yen equivalent of 59 billion yen
due to the poor economic conditions and the impact of foreign currency
exchange rates despite relatively healthy demand in China.
5
Sales per Products -YoY Growth
FY08
Products
YoY difference
Sanitaryware
Washlet
Bathroom Products
Fittings
Modular Kitchen
Lavatory
Ceramics Products
TOTAL
-9%
-2%
-9%
-4%
-5%
-10%
-13%
-7%
All the products fell below the previous year
6
Sales per products are as shown in the chart.
Sales for all the products decreased year on year, impacted by
decrease in new housing sales and overseas sales.
6
Cause of Increase/Decrease of Recurring Profit
※Y billion, rounded down
Cause of Increase/Decrease
Positive
Factors
Negative
Factors
FY08
Result
(YoY)
Cost Reduction
Decrease in SG&A
Hold down sales activities
+4.1
+2.3
+0.1
Decrease in New housing sales
Decrease in Remodeling Sales
Effects of stron yen on overseas sales
Increase in material prices
-8.9
-0.3
-1.5
-3.4
-2.0
-0.6
Increase i n general products/Decrease in sal es pri ce
Depreciation institution change
Cos t increase in allowance for retirement due to
decrease in interest income
-1.6
Others
-1.5
Total
-13.3
Worsen in loss from decrease of new housing sales
7
Refers to the cause of increase and decrease of recurring profit,
positive factors were,
4.1 billion yen from cost reduction, 2.3 billion yen from decrease in
SG&A, 0.1 billion yen from hold down in sales activities.
Negative factors were,
-8.9 billion yen from decrease in new housing sales, -3.4 billion yen from
increase in material prices, and -2.0 billion yen from increase in general
products and decrease in sales price.
7
Oversea Sales
＜Performance in local currency＞
＞
(Unit: Y billion, rounded down)
North & Central America
FY07 Results
(Unit: $ million, rounded down)
FY08 Results
YoY difference
FY07 Results
FY 08 Results
YoY difference
for external customers
30.3
24.0
-21%
265
263
-1%
Total sales including internal trades
30.5
2.1
24.0
1.8
-21%
-16%
267
19
264
20
-1%
+6%
114.15
91.03
Recurring Profit
（Exchange rate JPY/US$）
＜Performance in local currency＞
＞
(Unit: Y billion, rounded down)
China
FY07 Results
(Unit: Hundred Chinese yuan, rounded down)
FY08 Results
YoY difference
FY07 Results
FY08 Results
YoY difference
for external customers
22.6
21.9
-3%
14.5
16.6
+14%
Total sales including internal trades
37.2
5.5
33.6
6.0
-10%
+9%
23.8
3.6
25.4
4.6
+7%
+28%
15.61
13.22
Recurring Profit
(Exchange rate JPY/Chinese Yuan)
(Unit: Y billion, rounded down)
Others
for external customers
Total sales including internal trades
Recurring Profit
FY07 Results
FY08 Results
YoY difference
7.3
10.1
19.3
19.6
+37%
+2%
1.4
1.2
-15%
(Unit: Y billion, rounded down)
TOTAL
for external customers
Total sales including internal trades
Recurring Profit
FY07 Results
FY08 Results
YoY difference
60.3
86.8
55.9
77.1
-7%
-11%
9.2
9.0
-1%
8
North & Central America : Remained
same as previous year in local currency
base but fell below the previous year in
Japanese Yen base due to strong yen.
China: Increased significantly in local
currency due to strong demand. But fell
below the previous year in Japanese Yen
base, affected by strong yen.
Others (Asian Countries): ：Increased
in sales by growing in Taiwan & Middle
East market, and consolidating new
markets
Others (Europe):500 million yen in red
by investing for marketing etc.
North & Central America : Remained same as previous year in local
currency base but fell below the previous year in Japanese Yen base due to
strong yen.
China: Increased significantly in local currency due to strong demand.
Fell below the previous year in Japanese Yen base, affected by strong yen,
but increased in profit
Others (Asian Countries): ：Increased in sales by growing in Taiwan &
Middle East market, and consolidating new markets
Others (Europe): 500 million yen in red by investing for marketing etc.
8
Contents 1. Fiscal 2008 Results
2. Plan for Fiscal 2009
3. Fiscal 2009 Management Policy
1) Consolidating our financial position
2) Growth strategies ① Remodeling business
② Overseas business
9
9
Summary of FY 2009 Full-Year Plan
Use cost cutting and other strategies to keep operating profit at the
year-ago level, although sales will likely be lower than the previous year.
・Expect sales for new housing to be lower than the result of the previous year,
with further declines in demand anticipated.
・Increase sales in the Remodeling business despite the difficult conditions by
strengthening this business.
・Expect total overseas sales to hold firm from the previous year, with
significant falls in sales in the United States offset by sales in China, Europe,
etc.
・Achieve operating profit at the year-ago level, despite decreasing sales, by
cutting costs and expenses for sales activities, etc.
・Substantially reduce inventory and cap capital spending, to ensure that we
have a strong financial position.
10
We plan to keep operating profit for FY2009 at the year-ago level, using
cost cutting and other strategies to offset an expected fall in sales.
・We expect sales for new housing to be lower than the result of the
previous year, with further declines in demand anticipated.
・We plan to increase sales in the Remodeling business despite the difficult
conditions by strengthening this business.
・We expect total overseas sales to hold firm from the previous year,
with significant falls in sales in the United States offset by sales in China,
Europe, etc.
・We plan to achieve operating profit at the year-ago level, despite
decreasing sales, by cutting costs and expenses for sales activities.
・We will substantially reduce inventory and cap capital spending, to
ensure that we have a strong financial position.
10
FY 2009 Financial Plan
※Y billion, rounded down
FY08
Result
Net Sales
FY09
1H
Plan
2H
Plan
YoY
diffenrece
Total
-9.5
464.5
220.0
235.0
455.0
Operating Profit
6.5
-1.5
8.0
6.5
Remain
Unchanged
Recurring Profit
5.9
-2.0
8.0
6.0
Remain
Unchanged
Extraordinary Loss
-20.4
-
-
-
Net Profit
-26.2
-4.0
6.0
2.0
(-2%)
+28.3
Keep the operating profit same as previous year
while the sales decrease
11
Here is our plan for FY2009.
Net sales decrease -2% to 455.0 billion yen,
Operating profit remain the same to 6.5 billion yen,
Recurring profit remain the same to 6.0 billion yen,
and Net profit is 2.0 billion yen.
11
Sales by Business Segment
（¥ Billion）
）
600
（FY08 Result）
(FY 09 Plan)
464.5
455.0
59.0
59.0
7.7
6.0
(-22%)
245.8
251.0
(+2%)
500
400
300
（　）=
YoY difference
(-2%)
Remain
unchanged
200
100
152.0
139.0
FY08 Result
FU09 Plan
(-8%)
0
New Housing Starts
(Jan. - Dec)
1.09 million　0.95 million (-13%)
Demand based
on delivery time
1.07 million
1.01 million (-6%)
Overseas
New Business and others
Remodeling
New Housing
Decrease in new housing sales, and increase in remodeling sales
12
Looking at net sales by business segment,
we expect new housing sales to be -6% year on year, as a result of weak
demand. For calendar year 2009,　we envisage new housing starts to be
950 million and new housing demand in delivery base to be 1.01million.
Plan for remodeling business is +2% year on year. TOTO will promote
groupwide activities aimed at creating demand for remodeling.
Plan for overseas business is to 59 billion yen, remain unchanged from
previous year.
12
Sales per Products - YoY Growth
FY09 Plan
Products
YoY difference
+2%
±0%
-2%
-2%
±0%
-2%
-23%
-2%
Sanitaryware
Washlet
Bathroom Products
Fittings
Modular Kitchen
Lavatory
Ceramics Products
TOTAL
Increase 2% in sanitary ware sales by increasing
“super water conservation toilet” in overseas market.
13
Here is the plan for sales per products.
We expect sales for bathroom products and fittings to drop due to
decrease in new housing sales.
However, we expect sales for sanitarywares to increase as a result of
sales enhancement for water saving (4.8LPF) toilet in overseas market.
13
Cause of Increase/Decrease of Recurring Profit
※Y billion, rounded down
Cause of Increase /Decrease
FY09 Result
+1.8
+3.7
+3.4
+1.5
+1.0
±0
Positive Increase in Remodeling Sales
Factors Cost Reduction
Decrease in SG&A
Decrease in material price s
Price Revision
Hold down sales activities
-4.1
-2.9
-2.0
Negative Decraese in New housing sales
Factors Increase in general products/Decre ase in sale s prices
Loss from decrease production due to furlough e tc.
Cost increase in allowance for retirement due to
decrease in interest income
-1.2
-1.2
Others
Remain
Unchanged
Total
(±0%)
Cover the profit decrease due to sales decrease by
cost reduction and SG&A decrease
14
We expect the Recurring profit to remain same as former year.
Major positive factors to increase profit are,
1.8 billion yen from increase in remodeling sales, 3.7 billion yen from
cost reduction, 3.4 billion yen from holding down sales activities.
Major negative factors to decrease profit are,
-4.1 billion yen from decrease in new housing sales, -2.9 billion yen
from increase in general products and decrease in sales prices, and
-2.0 billion yen from impact from decrease production due to furlough
and inventory reduction activities.
14
Oversea Sales
＜Performance in local currency＞
＞
(Unit: Y billion, rounded down)
North & Central America
FY08 Results
(Unit: $ million, rounded down)
FY09 Plan
YoY difference
FY08 Results
FY09 Plan
YoY difference
for external customers
24.0
21.3
-11%
263
237
-10%
Total sales including internal trades
24.0
1.8
21.3
1.8
-11%
±0%
264
20
237
20
-10%
+1%
91.03
90.00
Recurring Profit
（Exchange rate JPY/US$）
＜Performance in local currency＞
＞
(Unit: Y billion, rounded down)
China
FY08 Results
(Unit: Hundred Chinese yuan, rounded down)
FY09 Plan
YoY difference
FY08 Results
FY09 Plan
YoY difference
for external customers
21.9
22.9
+4%
16.6
17.6
+6%
Total sales including internal trades
33.5
6.0
32.7
6.0
-2%
±0%
25.4
4.6
25.2
4.6
-1%
+1%
13.22
13.00
Recurring Profit
(Exchange rate JPY/Chinese Yuan)
North & Central America：Ensure a
(Unit: Y billion, rounded down)
Others
FY08 Results
FY09 Plan
YoY difference
for external customers
10.1
14.0
+40%
Total sales including internal trades
19.5
23.8
+22%
1.3
0.9
-31%
Recurring Profit
(Unit: Y billion, rounded down)
TOTAL
for external customers
Total sales including internal trades
Recurring Profit
FY08 Results
FY09 Plan
YoY difference
55.9
77.1
58.3
77.8
+4%
+1%
9.0
8.7
-4%
15
profit while sales decrease by increasing
production efficiency at Mexico plant.
China：Domestic sales is firm but profit
remains the same as previous year caused
by decrease of exports.
Others (Asian Countries):Increase in
sales by growing in Middle East and
Indian markets.
Others (Europe): Increase in sales by
starting actual business.
(FY08 result:1.7 billion yen
→ FY09 plan: 3.5 billion yen)
North & Central America：Ensure a profit while sales decrease by
increasing production efficiency at Mexico plant.
China：Domestic sales is firm but profit remains the same as previous year,
caused by decrease of exports.
Others (Asian Countries):Increase in sales by growing in Middle East and
Indian markets.
Others (Europe): Increase in sales by starting actual business.
15
Dividend
FY08 Result
FY09 Plan
1H
¥5.0
¥5.0
2H
¥5.0
¥5.0
Full Year
¥10.0
¥10.0
16
Turning to the payment of dividends, our plan is 10.0 yen per
share annually.
16
Contents 1. Fiscal 2008 Results
2. Plan for Fiscal 2009
3. Fiscal 2009 Management Policy
1) Consolidating our financial position
2) Growth strategies ① Remodeling business
② Overseas business
17
17
(1) Consolidating the Financial Position
◆ Improving profitability
We forecast sales for fiscal 2009 to be 2% lower than the previous year due to sluggish
demand in Japan for new housing and in the United States.
Under the circumstances, TOTO will reinforce its cost reduction measures and reduce
expenses for sales activities to achieve operating profit on a par with the previous year’s
level.
+: Profitability improved Unit: billion yen
Cost
Cost reduction
reduction
FY08 result
+: Profitability improved Unit: billion yen
FY09 plan
Purchase cost reduction
+3.3
+3.0
Porduction streamlining
+0.5
+0.4
－
+0.3
Business withdrawal (dishwasher, fan
unit)
Cost reduction by overseas group
commanies
+0.3
－
Total
+4.1
+3.7
SGA
SGA expense
expense reduction
reduction
(difference
(difference from
from previous
previous year)
year)
FY08 res ult
FY09 plan
Expense
for s ales activities
Domestic total
+1.6
Overseal total
-1.5
+1.5
-1.5
Indirect cost reduction in Japan
+2.3
+3.4
Total
+2.4
+3.4
18
First, I would like to explain the consolidation of our financial position.
We forecast that sales for fiscal 2009 will be lower than the previous year,
due primarily to sluggish demand in Japan for new housing and in the
United States following the worldwide economic downturn since last year.
Under the circumstances, TOTO will strengthen its cost reduction
measures and reduce expenses for sales activities to achieve operating
profit on a par with the previous year’s level.
Specifically, we will achieve a reduction of 3.7 billion yen by cutting
purchase costs and streamlining production processes, and a reduction of
3.4 billion yen by cutting sales expenses in Japan, including advertising
and other sales measures and indirect expenses.
18
(1) Consolidating the Financial Position
◆ Ensuring cash flow
By reinforcing inventory reduction and ceasing capital investment, TOTO will ensure cash
flow for stable business management where rapid recovery is unlikely.
(Planning to increase cash flow for FY09 by 5.7 billion yen over the previous year, to
10.5 billon yen)
Unit: billion yen
FY07 result FY08 result FY09 plan
Recurring profit
Depreciation and amortization
Increase/Decreas e in inventories
Corpration tax. etc.
Other
Total operating revenue
Capital inves tment (payment bas is )
Other
Total investment expenditure
Free cash flow
19.2
22.3
0.4
-5.5
-3.6
32.8
5.9
22.4
3.6
-3.5
-5.0
23.4
6.0
22.0
5.0
-2.5
-5.0
25.5
-20.7
-1.4
-22.1
-20.3
1.7
-18.6
-15.0
-15.0
10.7
4.8
10.5
19
In addition, by reinforcing inventory reduction and ceasing capital
investment, TOTO will ensure cash flow for stable business management
in a situation where rapid recovery is unlikely.
We plan to increase cash flow for fiscal 2009 to 10.5 billion yen.
19
(1) Consolidating the Financial Position
◆ Inventory reduction measures
We posted a 9.5 billion yen impairment loss on
land and production facilities for fiscal 2008 due to
the reduced profitability of bathroom products and
modular kitchen products.
For fiscal 2008, we posted a loss of 4.5 billion yen
on valuation of inventories, mainly comprising
restroom products and fitting products, using the
lower-of-cost-or-market method.
⇒　To conduct drastic structural reforms
⇒　To build an inventory reduction system
15
200
10
100
5
0
0
-100
-5
'05
'0 6
'0 7
'08
Valuation loss: 4.5 billion yen
Inventory reduction (domestic):
5.3 billion yen, etc.
70
Inventories (billion yen)
300
Oerating profit (billion yen)
Sales (billion yen)
◆ Bath/Kitchen Products segment
'0 9（planned）
65
67.2
Inventory reduction: 5.0
billion yen
66.7
60
55
55.9
50
50.9
45
40
'06
Working toward turning operating profit into
the black in fiscal 2010 by changing designs
and sharing components based on the
revision of our product system
'07
'08
'09
(plan)
Working toward reducing inventories as at
March 31, 2010 by 5 billion yen over March
31, 2009 mainly by reducing inventories
linked with production and marketing and
cutting the number of items
20
For fiscal 2008, we posted a 9.5 billion yen impairment loss on land and
production facilities due to the reduced profitability of bathroom products
and modular kitchen products stemming from sluggish demand.
We will work to make significant reforms to these products in fiscal 2009.
To this end, we will work toward making operating profit profitable by
fiscal 2010 by revising product systems for design change and making
common components.
For fiscal 2008, we also posted a loss of 4.5 billion yen on valuation of
inventories centered on restroom products and fitting products using the
lower-of-cost-or-market method.
The loss is mainly attributable to increased unmoving inventories and
excessive inventories. We have begun to work on inventory reduction since
fiscal 2008 to build an inventory reduction system at all levels of the
Company.
Specifically, we will work toward an inventory reduction as at March 31,
2010 of 5 billion yen compared with the inventory on March 31, 2009. We
will do this by reducing production and sales-linked inventories and cutting
the number of items.
20
(1) Consolidating the Financial Position
We will withdraw from the dishwasher business to narrow down businesses by taking
the opportunity provided by reduced customer inquiries.
(Production to be ended: Countertop type: September 30 Built-in type: July 31)
Countertop dishwasher
Built-in dishwasher
We have concluded that the fan unit business is unlikely to grow amid falling market
prices and intensified competition and will withdraw from the business.
(Order processing to discontinue: December 2010)
Multi-blade radial fan: Used for projectors, etc.
Forecasting a profit improvement of approx. 300 million yen over the previous year
21
In addition, we will narrow down some of our businesses to make an
efficient investment of our corporate resources in growing business areas.
Inquiries for dishwashers declined, particularly for countertop
dishwashers. Taking this opportunity, we have decided to withdraw from
the dishwasher business.
We will also withdraw from fan unit business. We applied our precision
tool technology to cooling fans for LC projectors and marketed these
products. However, we have decided to withdraw from the business
because it is unlikely to grow due to intensified competition.
21
(2) Growth Strategy: ① Remodeling business
■ Remodeling business environments
(Unit: billion yen)
350
Year-on-Year Comparison of Sales for Remodeling
300
+6%
+4%
+2%
+1%
-0.3%
250
[Opportunity]
[Opportunity]
◆
◆ UD
UD (Universal
(Universal Design)
Design) and
and
environmental
environmental support
support
◆
Long-term
excellent
◆ Long-term excellent
housing
housing
◆
◆ Preferential
Preferential tax
tax system
system
200
150
100
[TOTO’s
[TOTO’s strengths]
strengths]
◆
◆ Products
Products
◆
◆ Showrooms
Showrooms
◆
◆ Remodeling
Remodeling club
club stores
stores
50
0
1
FY 2003
2
FY 2004
3
F Y 2005
4
FY 2006
5
FY 2007
6
FY 2008
7
8
9
Future
Growth slowed (sales for fiscal 2008 fell somewhat below the previous year)
Returning to growth by acting on business opportunities and
exercising our strengths
22
Next, I would like to explain our domestic growth strategy.
Our Remodeling business is important because it accounts for approx.
62% of domestic sales. We have continued to focus on this business.
However, the growth rate slowed year by year, and eventually sales for
fiscal 2008 fell below those of the previous year.
TOTO is indeed facing a tough business environment under the recession.
On the other hand, however, the Japanese government is working for UD
and environmental support, long-term excellent housing, a preferential tax
system, etc., offering new business opportunities. In addition, TOTO has
strengths that its competitors lack, such as product merchantability,
showrooms, and Remodeling club shops.
We will continue to focus on our Remodeling business so we can resume
steady growth when the economy recovers.
22
(2) Growth Strategy: ① Remodeling business
Companywide efforts to create demand for remodeling
Companywide
efforts
Production and
indirect departments
Expansion
Visitors
Publicizing
the value
Showroom
Sales department
Remodeling
club stores
Remodeling value ⇒ Covers not only the enhancement of product functions
but also life changes or real value enhancement
Directly publicizing the value
to everyone with whom our
employees are associated
All TOTO employees
understand
Conveying the value of remodeling to visitors to TOTO showrooms and creating demand
for remodeling at every opportunity, including customer contact at our showrooms
23
For this purpose, in addition to existing remodeling activities, we will
engage in company-wide remodeling creation activities so that all
employees working at TOTO Group companies understand and publicize
our remodeling value.
We assume that only employees working in the sales department have
understood the true meaning of TOTO's remodeling value, although other
employees working at plants and indirect departments may have understood
some of our products and their functions.
From now on, we will strive to create demand for remodeling by ensuring
that all employees, including those working at plants and indirect
departments, understand our remodeling value and directly convey this value
to all stakeholders.
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(2) Growth Strategy: ① Remodeling business
◆ Activities to create and win demand for remodeling centered on TOTO
plants and group companies
Local customers
Remodeling club stores
・ Easier to seek advice on remodeling
・ Appealing to prospective customers
・ Strengthening ties with existing customers by
inviting them to fairs
・ Getting closer to prospective customers
(a nearby plant is better than a distant
showroom)
・ Customers don't need to visit a distant showroom to
see products.
Remodeling fair
Showroom
Plant
All
employees
・ Able to give advice to relatives and acquaintances on
(remodeling)
・ Able to build contacts with residents by holding fairs
・ Contributing to remodeling of own house
・ Creating demand to contribute to sales and profit
・ Enhancing TOTO brand value
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To this end, in addition to traditional fairs in showrooms, we will hold
remodeling fairs at plants and TOTO Group companies to create demand
for remodeling.
If all employees working at TOTO Group companies consistently
undertake company-wide activities in remodeling creation for two years,
the TOTO Group will be able to build on its strengths. This experience
will surely become a driver for a breakthrough when a change in
momentum emerges, as it certainly will in the near future. We believe that
the experience will become a new vitality in all processes of creating ?
selling ? introducing customer opinions to TOTO.
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(2) Growth Strategy: ① Remodeling business
(Continuation and Reinforcement)
Activities to create demand for remodeling
Remodeling
club stores
(contractors)
Strengthening proposal
capability to customers by
enhancing the quality of our
Remodeling club stores
Capturing demand for
remodeling and carrying out
activities to create demand
Sales partners
TOTO
(agencies and
distributors)
(TOTO, Daiken, YKK AP Alliance)
Activating workshops and water-service
workshops at fairs held by partners
Holding Remodeling Fairs
(on April 28 and 29 at Tokyo and Sapporo)
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Meanwhile, we will continue activities to create demand for remodeling, and
strengthen those that we have engaged in to date.
Our Remodeling club shops will cooperate with each other to become safe
and secure workshops in their local community and enhance customer
satisfaction.
We will activate workshops and water-service workshops by holding fairs
jointly with sales partners.
TOTO has held TDY Remodeling Fairs with Daiken and YKKAP at seven
locations in Japan in the last six months.
We held such fairs yesterday and the day before yesterday at Tokyo Big
Sight and Sapporo.
Despite the failing economy, visitor numbers were the same as they were at
the fairs held two years ago.
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(2) Growth Strategy: ② Overseas business
Activities to strengthen efforts for overseas business
Common strategy
Toward a true global company
Region-based strategy
USA
USA
Giving
Giving first
first priority
priority to
to cash
cash flow
flow
Seeking
Seeking on-site
on-site solutions
solutions
① Environmental Strategy
⇒ Environmental consideration in
all our activities
China
China
② Product and Brand Strategy
⇒ Supporting both environmental
considerations and living proposals
Asia
Asia
and
and
Oceania
Oceania
Reinforcing
Reinforcing sales
sales in
in India
India and
and the
the Middle
Middle
East
East
Tapping
Tapping into
into new
new markets
markets
Europe
Europe
Substantial
Substantial business
business launch
launch
③ Human Asset Strategy
⇒ Strengthening local human assets
Reinforcing
Reinforcing sales
sales in
in midland
midland China
China
Reinforcing
Reinforcing sales
sales of
of hydrotect
hydrotect tiles
tiles
Seeking the early formation of a global quintuple system
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Next, I would like to explain our overseas strategies.
They are subdivided into the common strategy and the region-based strategy.
Our common strategy includes:
* "Environmental Strategy" that takes the environment into consideration in
all our activities.
* "Product and Brand Strategy" that supports environmental considerations
and living proposals
* "Human Asset Strategy" that aims to enhance local human assets
We will be outlining our region-based strategy later.
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(2) Growth Strategy: ② Overseas business
◆ Environmental Strategy
① Products
～ Reducing the environmental burden with TOTO technology ～
Water-saving toilet
Self powergenerating products
③ Corporate activities
② Production bases Cutting CO2
Cleaning air
Hydrotect
Reusing
discharged water
Water
Environment Fund
Contribution to
NGO bodies
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First, our Environmental Strategy that is applied to all regions.
Our customers can save water and energy and clean the air by using a
4.8-liter ultra water-saving toilet, fittings that generate electricity for
sensors and valves on water flows, and hydrotect tiles that can clean the
air using photocatalyst technology, all of which have been pioneered by
TOTO.
We will make proposals to customers using the keywords "Environmental
Consideration."
In addition, we will work to ensure the environmental consideration of
production bases and corporate activities in local communities based on
the concept of the environment.
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(2) Growth Strategy: ② Overseas business
◆ Business in the United States
・　Surrounding economic environment
Although new housing starts for February increased over the previous month for the
first time in eight months, they declined again in March. The US government announced
housing-related economic measures, including a reduced interest rate and moratorium
for loan payments. However, no major impact has been observed. The economy has
remained as weak as before.
・　Our policy for fiscal 2009
Since the market environment is tough, we will minimize investments and give first
priority to profit and cash flow in our management by expanding environmentallyfriendly products to differentiate TOTO from its competitors and seek increasing
orders of high-class on-site works.
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Next, I would like to explain our region-based strategies.
The business environments in the United States is very severe at present.
Although new housing starts for February increased over the previous
month for the first time in eight months, they declined again in March.
The US government announced housing-related economic measures,
including a reduced interest rate and a moratorium for loan payments.
However, no major impact has been observed. The economy has remained
weak.
TOTO's investment in business in the United States will be minimized
during fiscal 2009 while the economy remains uncertain. Instead, our
management will focus on profit and cash flow.
Meanwhile, our 4.8-liter ultra water-saving toilets and other
environmentally-friendly products have won high acclaim from customers.
TOTO will therefore work to increase the differentiation of its products
from those of its competitors and seek increasing orders of high-end,
on-site work.
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(2) Growth Strategy: ② Overseas business
◆ Business in China
・　Surrounding economic environment
GDP growth during January to March, announced by the National Bureau of Statistics
of China, stood at a low 6.1%. Meanwhile, the Chinese government announced economic
measures totaling 4 trillion yuan (52 trillion yen), leading to a slight upturn in consumer
sentiment. Stock prices have remained steady.
・Policy for fiscal 2009
Sales are unlikely to increase due to the worldwide recession and the end of special
demand resulting from the Olympic Games last year. To increase sales, TOTO is
strengthening its efforts in midland China where economic growth is remarkable,
expanding an assortment of ultra water-saving toilets, and implementing measures
based on its strong environmental technology that differentiates TOTO products from
those of its competitors.
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GDP growth during January to March, announced by the National Statistics
Bureau of China, stood at a low 6.1%. However, since the Chinese
government announced economic measures totaling 4 trillion yuan
(52 trillion yen), consumer sentiment seems to be improving. Stock prices
have remained steady.
Sales are unlikely to increase, compared with sales last year, due to the
slowdown of GDP growth this year and the end of special demand for the
Olympic Games. To increase sales, TOTO is strengthening its efforts in
midland China, expanding an assortment of ultra water-saving toilets, and
implementing measures based on its strong environmental technology that
differentiates TOTO products from those of its competitors.
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(2) Growth Strategy: ② Overseas business
◆ Other (business in Europe)
In March 2009, TOTO participated in ISH, the largest housing
facility exhibition in the world, and
carried out a major launch of business in Europe
Local responses
・ TOTO's exhibition was the center of attention at the ISH.
・ European companies in the industry generally welcomed TOTO's entry.
・ Existing overseas business partners (in China, USA, Asia, etc.) were reminded of
TOTO's presence again.
・ A flood of inquiries for trade was received from dealers around the world.
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Next, I would like to talk about our business in Europe.
This March, TOTO participated in the ISH, the largest housing facility
exhibition in the world, and carried out a major launch of business in Europe.
TOTO achieved a very good local reputation at the ISH.
· TOTO was the center of attention at the ISH.
· European companies in the industry generally welcomed TOTO's entry.
· Existing business partners (in China, USA, Asia, etc.) were reminded of
TOTO's presence again.
· TOTO received a large number of inquiries for trade from dealers around
the world.
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Medium- and Long-Term Directions
The worldwide economic environment is uncertain
and erratic, changing at an unprecedented speed.
A drastic revision of our medium- and long-term
strategies is required.
TOTO Group Naissance M100 Plan (tentative title)
To be announced in early July
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In closing, I would like to explain the concept of TOTO's medium- and longterm strategies.
We recognize that a drastic revision of our medium- and long-term based
strategies is required because they are based on business environments that
have changed significantly.
TOTO has begun to discuss how to handle strategies based on medium- and
long-term viewpoints, an appropriate image of corporate governance and
business that seek to fulfill the strategies, how to handle numerical targets as
their milestone, how to handle PDCA for the strategies, etc.
The result of the discussions will be developed into the TOTO Group
Naissance M100 Plan (tentative title) for the year 2017, eight years from now
and TOTO's 100th anniversary (M100). TOTO will announce the plan in early
July of 2009.
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This presentation material contains forward-looking statements based on assumptions,
estimates and plans as of April 30th, 2009. Actual performance may differ materially
from these forward-looking statements due to risks and undermined factors arising from
changes in the world economy, competition and foreign currency exchange rates.
http://www.toto.co.jp/
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