Toyota Motor Management Discusses 2013 Results - Earnings Call Transcript

| About: Toyota Motor (TM)

Toyota Motor (NYSE:TM)

2013 Earnings Call

May 08, 2013 2:05 am ET


Akio Toyoda - President and Director

Nobuyori Kodaira - Executive Vice President and Member of The Board

Unknown Executive

Ladies and gentlemen, thank you very much for attending the press conference. We would like to get started with the meeting to present our fiscal year 2013 financial results.

Let me introduce the attendants. Mr. Akio Toyoda, President of Toyota Motor Corporation; and Mr. Nobuyori Kodaira, Senior Vice President; and Managing Officer, Mr. Takuo Sasaki.

So first of all, Mr. Toyoda, our President, will give you a summary of the financial results to be followed by the detailed presentation by Mr. Kodaira. We would like to open the floor for questions later on.

We are connected with our Nagoya office and so we would like to entertain questions from Nagoya as well. As has been introduced already, including the question-and-answer session, this would be broadcast on the web. I ask for your understanding. And the material that we have distributed today includes the cautionary statement with respect to forward-looking statements, so please, do read this statement at your leisure. Mr. Toyoda, please.

Akio Toyoda

Thank you for waiting, ladies and gentlemen. I am Akio Toyoda. Thank you very much for joining us despite your occupied schedules. I'm very grateful for your attendance.

In the fiscal year to March 2013, our consolidated operating income resulted in JPY 1,320.8 billion due to increased vehicle sales in North America and Asia in particular, and profit improvement activities across the Toyota group. As Toyota Motor Corporation on a standalone basis, we returned to operating profit for the first time in 5 years, since the fiscal year to March 2008. I would like to express my sincere gratitude again to our suppliers and distributors for their tremendous support. And last but not least, our customers for their loyalty to our vehicles.

In the years since my succession as the President in June 2009, we have encountered a number of challenges. For Toyota, this has been a period of perseverance, but also a period of learning through extraordinary and invaluable experiences. When our company fell into losses during the global financial crisis triggered by Lehman Brothers debacle, we learned a particularly important lesson, that a sharp decline, even after a rapid growth, does affect a number of stakeholders, given the extensive value chain in the auto industry, and that sustainable growth is most important. We also realized, clearly, that the company's growth is not the same as expansion of sales volume.

The driver for sustainable growth is ultimately ever better cars. We are now launching the cars, such as the Crown and Avalon, which everyone involved in the process of development had "always better cars" as the first thing in mind.

We are also making progress in reforming manufacturing technologies and vehicle development processes, which are represented by Toyota New Global Architecture, TNGA. This convinces me that the cycle of our business, which is led by our ever better car activities, as defined in the Toyota Global Vision, is now gradually but steadily taking shape.

With regard to the end of the year dividend, we plan to propose JPY 60 per share to the annual general shareholders meeting this year. This implies that our annual dividend per share will be JPY 90, including the interim dividend of JPY 30.

Through sustainable growth, I would like to show our investors that it is worth investing in Toyota and encourage them to hold our shares longer. We also would like to continue to pay dividends stably and sustainably, as an important measure to reward our shareholders.

Before discussing -- before the discussion by Executive Vice President Kodaira of the outlook for the current fiscal year to March 2014, I would like to elaborate my thoughts on sustainable growth.

Lately, the long-standing yen appreciation has been finally changed. Also the world's new car demand is expected to grow going forward, driven by the recovery of the U.S. market and the development of the emerging markets.

With the headwind now behind us, some may think that it is a time to turn aggressive. However, I think that we are just about to start our sustainable growth.

I have mentioned earlier that Toyota has learned a lot through our concerted efforts to overcome various difficulties in the last 4 years. However, have we really turned into a company which is able to be profitable and continue to grow, no matter what happens to its business environment?

Not sure yet, is my honest answer. Certainly, Toyota's vehicle development has changed dramatically in the last 4 years, thanks to the efforts of all those who are involved in Toyota. The company's profit structure has also become significantly stronger. However, our business environment changes constantly and unprecedented crisis, even beyond the scale of the financial crisis touched off by Lehman Brothers debacle, may happen again. Has Toyota really become able to stay profitable and contribute to society? Has Toyota really learned lessons and be reborn?

The answer would be only confirmed when such events actually happen. I would like to seriously debate and pursue "true competitiveness", namely competitiveness to enable sustainable growth with everyone involved in Toyota, regardless of the business environment at any given time.

By competitiveness, some may think of low labor costs, favorable foreign exchange rates and so forth. However, in my belief, the longer-term "true competitiveness" entails, to name a few: a capability to develop human resources, a culture to pursue quality and productivity, an ability to innovate and a marketing power, including after sales.

These and other relevant factors are not necessarily measurable or quantifiable. They should also vary from country to region. This is why we introduced the TNGA initiative and the new organizational structure with business units in April. These are our responses to the task of developing "true competitiveness".

For this fiscal year, all 330,000 members of global Toyota will continue to strive together towards sustainable growth. I would very much appreciate your continued support.

Now with respect to specifics of the financial results, I would like to ask Executive Vice President Kodaira to describe and elaborate on.

Nobuyori Kodaira

I am Kodaira, Executive Vice President of TMC. I would like to discuss the details of Toyota's financial results for the fiscal year to March 2013.

Our consolidated vehicles sales for the year increased by 1,519,000 units to 8,871,000 units compared to last year. All regions posted an increase in vehicle sales year-on-year, due to the lack of vehicle supply in the previous year caused by the Great East Japan Earthquake and the Thai floods.

Additionally, vehicle sales increased by 208,000 units in Japan, largely due to the recovery of the market, driven by the eco car subsidies.

In North America, vehicle sales grew strongly by 597,000 units, thanks to the popularity of our core models such as Corolla and Camry in a solid new car market. In Asia, vehicle sales also increased significantly, as we utilized the opportunities resulting from the market's growth in Thailand and Indonesia, in particular.

Our consolidated financial performance for the fiscal year to March 2013 resulted in net revenues of JPY 22,064.1 billion, operating income of JPY 1,320.8 billion, pretax income of JPY 1,403.6 billion and a net income of JPY 962.1 billion. This represents improvement to both revenues and earnings from last fiscal year.

Next I would like to explain the major factors impacting net income year-on-year. Net income increased by JPY 678.6 billion to JPY 962.1 billion compared to last year.

The left side of Slide 7 shows the major factors which impacted operating income. Operating income increased substantially due to increased vehicle sales in all regions, cost reduction activities through collaboration with our suppliers and the change of yen's appreciation in the second half of the fiscal year.

Next, I would like to explain operating income for the full year by region. In Japan, operating income increased as a result of the company-wide profit improvement activities, such as a high level of cost reduction and increased vehicle sales, with an additional impact from the change of the strong yen.

In North America, operating income improved due to increased vehicle sales and cost reduction, despite the one-off negative impact from the settlement costs related to the U.S. class action litigation and other proceedings, which we announced in December. In Asia, operating income reached a new record level against the backdrop of strong vehicle sales.

Next with respect to financial services, operating income, excluding interest rates swap valuation gains and losses, was JPY 286.2 billion, maintaining practically the same level as last fiscal year. Operating income was affected by the reduced reversal of provisions in the United States. However, this was offset by an increased lending balance as a result of expansion in new financing transactions, particularly in emerging markets.

Equity and earnings of affiliated companies for the full year increased by JPY 33.8 billion to JPY 231.5 billion compared to last year. This was mainly due to the strong financial performance of the affiliated companies in Japan.

Our unconsolidated financial performance for the year resulted in net revenues of JPY 9,755.9 billion, operating income of JPY 242.1 billion, ordinary income of JPY 856.1 billion and net income of JPY 697.7 billion. For the first time in 5 years, we posted a positive operating income.

With regard to the year-end dividend, we plan to propose JPY 60 per share at the annual general shareholders meeting next month. The full-year dividend will therefore be JPY 90 per share, including the interim dividend of JPY 30 per share over the previous fiscal year, an increase by JPY 40 per share.

We regard dividends as our most important means to return value to our shareholders. While ensuring the company's long-term financial stability and assessing earning results and investment plans, we would like to meet our shareholders' expectations.

Now turning to our outlook for the fiscal year ending in March 2014. As for our consolidated vehicle sales for the current fiscal year, we expect 9.1 million units, up 229,000 units from the previous fiscal year.

In Japan, we expect an improvement in consumer sentiment, precipitated by the anticipation of economic recovery. However, we forecast that our vehicle sales would decline by 159,000 units year-on-year, due to a weaker demand for new cars after the expiry of the eco car subsidies. However, we expect an increase in vehicle sales outside Japan supported by the U.S. market, which appears to remain solid, and the new product launches which we are planning for emerging markets.

As a result, and also based on the assumption of the foreign exchange rate of JPY 90 to $1 and JPY 120 to EUR 1, our consolidated financial performance forecast for the current fiscal year is to be net revenues of JPY 23,500 billion, operating income of JPY 1,800 billion, pretax income of JPY 1,890 billion and net income of JPY 1,370 billion.

This shows the analysis of our operating income forecast in comparison to the previous fiscal year. R&D and other expenses are expected to increase to support future development of "always better cars." Nevertheless, we plan to maintain and improve our profit structure through cost-reduction activities, such as the company-wide VA and through efficient marketing activities.

Finally, our forecasts of CapEx, depreciation expenses and R&D expenses are shown on this slide. Both CapEx and depreciation expenses are expected to increase in yen terms, as translation from foreign currencies is affected by the weaker yen compared to the last fiscal year. We plan to exercise adequate control to maintain last year's level in original foreign currencies. On the other hand, we will continue to invest actively and strategically into R&D in order to enhance Toyota's "true competitiveness" and to realize sustainable growth in the long-term.

This concludes my presentation on the financial results of the fiscal year to March 2013. Thank you very much.

Question-and-Answer Session

Unknown Executive

At this juncture, we would like to open the floor for questions. If you wish to ask a question, please raise your hand so that the microphone can be brought to you.

Unknown Attendee

Japan Economic Journal. My name is Hama [ph]. I have 2 questions. Question #1, I would like you to give us your own assessment of the fiscal 2012 results and also your view of the current fiscal year. Now compared with the actual rate, the currency is assumed at somewhat higher level for the Japanese yen. If the exchange rate changes much substantially and yen is much weaker, the actual performance would have been much better. And what's the reason for using this perception.

Secondly, how does Toyota's money management change compared with the precrisis period? Prior to the financial crisis, the breakeven volume was substantially higher than 8 million units, but how low has the breakeven volume come down?

Akio Toyoda

I would like to answer the questions, breaking down into 2 parts: part 1 and part 2. With respect to the general assessment of the financial results of the previous fiscal year, for the first time in 5 years, we were able to achieve a positive profit on the standalone basis. And above anything else, during this period, we have been supported by customers. And once again, on this occasion, I would like to extend my heartfelt, deepest gratitude to all the customers.

We went through many trials and tribulations. We were challenged by adversity, but we have never changed our basic philosophy and stance of always trying to come up with ever better cars. And at the same time, we've had been supported by suppliers, dealers, and above all, our employees made concerted efforts in a very intensified manner. And composite result of all those efforts is what you see here today. So on this occasion, I would like to express my heartfelt gratitude to all those people who supported Toyota over this very difficult period.

Now as I mentioned in my earlier remarks, we are now in a position to have a "true competitiveness" that enables sustainable growth. Have we really turned ourselves into such a company as described in global vision? Frankly speaking, I think that we are now at the starting point to move forward to that point. That is to say, we can start making efforts for achieving sustainable growth. And in that sense, I'm excited and I feel exhilarated. Including those of you in the media and including investors, I would like you to look at Toyota, because we're going to make a new start as a company with "true competitiveness" that can achieve sustainable growth.

Nobuyori Kodaira

From myself, I would like to answer your question, but before I move into my answer to those questions, as I mentioned in the presentation earlier, the consolidated operating income of the previous year compared with the previous fiscal year represented the increase of over JPY 960 billion. And of that, the impact of yen depreciation was JPY 150 billion. And therefore, a primary portion of our increase in profit was the cost reduction effort and also company-wide efforts to improve profitability. Those efforts being together with suppliers, and that accounts for the majority portion of profit increase.

You also asked a question regarding the projection for the current fiscal year. The increase in volume and also the correction of yen depreciation are reflected in the projection for the current fiscal year, and also higher raw materials prices reflecting in depreciation and also the research and development expenses for the future growth, and those advanced investments all factored in. And in terms of profit improvement, we have included in the projection all those items that are already planned in pipeline. By making continued efforts for improving profitability, we intend to consistently improve profit structure.

Furthermore, with respect to exchange rate impact, our approach has not changed from the past. That is to say, in calculating earnings projections, we use the most recent exchange rate. We round it up by JPY 5 level and therefore, we use assumption of JPY 90 into $1 and JPY 120 to EUR 1.

Akio Toyoda

Moving on to your second question, that is to say, what's the greatest change now compared with our management prior to the financial crisis triggered by Lehman Brothers debacle. For the past 4 years, I -- there is one thing that I constantly and consistently said, and Toyota is becoming a company that can really follow through and achieve what I have continued to say. That is to say, to create ever better cars and also to exceed customer's expectations to win smile on -- their smiles.

At the initial stage, what does it mean to create ever better cars? Those were some of the rather harsh questions we received, but we simply continue making efforts, always giving priority to ever better cars. And that resulted in the Crown, the new Avalon, which were extremely well accepted in the market. So by showing those actual products, I think our approach of ever better cars is better understood. And therefore, based upon ever better cars, we intend to hone our ability to make a new start, aiming at having a "true competitiveness" to achieve sustainable growth.

Unknown Executive

May we move onto the next question? Anybody else from the audience?

Unknown Attendee

Yamagishi [ph] of Yomiri Newspaper [ph]. I also have 2 questions. First of all, with respect to the size of the domestic production, once again, I would like to ask President Toyoda, to talk about his thoughts. Right now, yen's appreciation is being corrected. This may be the tailwind for your domestic production. But when yen was extremely strong, I think your policy was to decrease the proportion of exports in the domestic production to below 1/2. But with the yen's depreciation, how are you going to maintain 3 million yen -- 3 million units of domestic production?

There has been clear signs of improved performance, both in the previous fiscal year and the current fiscal year. In terms of CapEx for the current fiscal year, it stands at JPY 910 billion. This seems to be around 60% of the CapEx at its peak. Aiming at sustainable growth, how are you going to use the profit generated by improved profits?

Akio Toyoda

First, with respect to the domestic production, the size of that and our approach to that. As we have been saying over the years, Toyota Motor Corporation is a global company, which was born and founded in Japan. And furthermore, for Toyota to be Toyota, that is to say, what it means to be Toyota, we need certain level and scale of domestic production, which stands at 9 million units. And because we had domestic production of the magnitude of 3 million, various industries and various companies can sustain manufacturing activities here in Japan. And that approach or that thinking has not changed whatsoever.

Yen's appreciation or yen depreciation, those are short-term fluctuations of the currencies. But we wanted to establish the profit structure that is not under sway by those short-term factors, and we always wanted to minimize the impact of exchange rate fluctuations. And that policy remains also unchanged and therefore, 3 million units in domestic production here in Japan would represent Toyota's having "true competitiveness". We will constantly make efforts to have this "true competitiveness" with the production that stands at 3 million units.

But the size of this 3 million units in domestic production has been maintained since 1980s. At that time, overseas production was 200,000 units. But currently, we produce 5 million units outside of Japan and 3 million units produced here in Japan. And therefore, these 3 million units was the foundation that supported the overseas production to grow from 200,000 to 3 million units. So we do not separate our production growth domestically and overseas. As a global company, Toyota wants to acquire and further enhance "true competitiveness". And from that perspective, we need to have certain size of domestic production, which is competitiveness here in Japan and that is the size of 3 million. That's the foundation for us having "true competitiveness" and I hope you will truly understand that.

In addition to that, another aspect of your question was, what sort of usage we're going to put those funds to? My answer is only one. That is to say, to build ever better cars. To sustain that, we need human resources, we need to have a certain systems and structure of the company. And aiming that, we introduced TNGA approach. And we also put in place a new management business structure -- business organization, as well as business units.

If I use an analogy of a tree as a reflection of Toyota, I think that tree has grown very significantly in the past history of our 70 years. But at the same time, with the growth of the trunk of the tree, there has been various branches, some small, grow together. And we are going to prune those small branches so that the true sizable trunk can continue to grow bigger and bigger. And that pruning represents our efforts to establish TNGA and also business units, to really support the growth of the trunk.

So not simply relying on external factors, we will continue to make solid efforts to which we'll invest resources in both financial and other characteristics.

Nobuyori Kodaira

The specifics of that has been fully explained by President. The TNGA aims, simultaneously, the fundamental and far-reaching improvement of the product features and also improved costs and higher efficiency. So we'll use funds for that purpose.

And furthermore, we intend to make solid investment for infrastructure that supports further enhancement of efficiency of operations. Furthermore, we will continue to make investment in research and development, especially for environment and safety, in a very strategic manner to sustain our further growth and development. And furthermore, for our CapEx, we intend to make CapEx with a viewpoint of a medium- and long-term growth, and development over the company as a whole steadily and efficiently.

Unknown Executive

Yes, the gentleman in the white jacket please?

Unknown Attendee

My name is Hiduoka [ph] from Nikkei Business [ph]. I have a question concerning the current status of sales by region and your forecast for this fiscal year. In North America, I think the competition is getting very tough in the sedan segment, and in China, perhaps sales is declining as a result of this conflict on the government level. So are you healing from, so to speak, the trauma that Japan has sustained from the Senkaku island dispute? .

Now various manufacturers on a global basis are competing for this environmental car, and I think in case of Toyota, there is some different development philosophy and it is not an autonomous driving policy. So what is the current status?

Akio Toyoda

First of all, I'd like to refer to this autonomous driving policy, and with the latest situation of the global market, Mr. Kodaira would answer your question.

This mobility, cars, compared to other means of mobility, have a difference. That is to say, the driver would be given liberty and freedom to freely select the road that they would drive and also freely select the point to park their cars, which is the uniqueness of cars as a means of mobility. Therefore, autonomous driving, which signifies this automatic driving of the car, would imply this control of the handling of the cars, accelerating the car or breaking the car, which actually is in physical contact with the driver, and the ownership should rest with the driver. That is our basic philosophy. But in various ways and means, motorization is being accelerated on a global basis. Therefore, maybe a driver may be given additional support for better driving or to avoid risk and danger on the roads, which would actually exceed the ability of human drivers. That would be supportive. And so this is automatic driving or autonomous driving of vehicles that fully respect the capability of human drivers that we support.

Nobuyori Kodaira

Now let me explain about the current status of sales by region: Japan, North America and China. These are the regions that I would like to elaborate. With regards to the Japanese market, as of the end of January, Jema [ph] had made a forecast of the car sales and it is close to their Jema [ph] forecast, 2.95 million units. But I think the current Japanese market is targeting more than that. And the business performance is now showing an upturn for Toyota, and the orders received are increasing.

On the 26th of December last year, including many vehicles, we had disclosed this forecast of 1.4 million units. We would like to modify this upwards by about 50,000 units, so it would probably result in around 1.45 million units. But I think the actual performance may be even better than that.

Turning to the United States, employment is increasing and the housing market is improving. Overall, the U.S. economy is in a very good shape. So the total market probably would be at a scale of about 15.3 million units. As of April, the sales performance on a fleet basis had an increase last year as a result of this effect from the Great East Japan Earthquake, and there was this slight reduction of sales. But the market is now showing an improvement. And with the launch of new models such as Avalon, the market situation is improving. So on a full year basis for 2013, the 2 new models, Camry, Corolla, and also models that we are planning to launch this year IS and Tundra, all in all, we are forecasting a sales volume of 2.2 million units.

Finally, about China. The market has -- against this backdrop of this gradual recovery of the economy, we believe that the sales volume would exceed the level of the previous fiscal year, 19.3 million units. And so, because of this conflict on a government level, there may be some very tough competition from our competitors. However, in April there had been sales achieved at a level of 93% of the previous fiscal year, of 76,000 units. RAV4, Vios and Yaris are the new models that we are planning to launch this year. And so in fiscal year 2013, we would like to achieve a sales level of more than 900,000 units.

Unknown Executive

Any other questions please? Mr. Abe [ph] please?

Unknown Attendee

Abe [ph] of Trinity Newspaper [ph]. I have 2 questions. Earlier, you referred to CapEx, and in your explanation about CapEx, I would like to ask the following further question. In the past, you have mentioned that establishment of a new plant would require very careful consideration and you would be extremely cautious about that. Could you share with us your approach or view regarding the CapEx and also your policy of curtailing the establishment of a new plant? How are they related or what is your view regarding the new plant establishment? That's the first question.

And secondly, Mr. Toyoda, you have consistently talked about "true competitiveness". You've referred to that term several times in your earlier remarks. You already talked about "true competitiveness", including the personnel cost effects, in addition to that, the ability to develop the human resources or innovation. But for different regions, what's your competitiveness refer to in different regions, in Japan, in the United States, in Asia. If you have any concrete idea or concept about "true competitiveness", could you refer to that?

Nobuyori Kodaira

I would like to first of all talk about the CapEx. With respect to CapEx, prior to the Lehman crisis, when Toyota achieved very rapid growth, we, at the same time, incorporated various problems. And reflecting upon that, our basic policy is to make the maximum use of existing capacities. And at the same time, we enhanced productivity as much as possible by increasing rate of operation.

And with respect to the establishment of a new plant, except for those plants whose establishment or building has already been decided, we have no plan of having any new plant established. With respect to the CapEx for fiscal 2013, that is March 2014, that represent increase in Japanese yen, but this is partly due to the cheaper yen. Compared with the foreign currency denomination, the CapEx hardly changes compared with the fiscal -- previous fiscal year.

In terms of efficiency of our CapEx, compared with 2008, the basic unit of investment has been aimed at being reduced by 40%, and we now have a clear prospect of achieving that 40% reduction in basic unit of investment. So through that, we would like to further control fixed costs.

Akio Toyoda

With respect to the "true competitiveness", at the earlier part of this year, beginning of this fiscal year, beginning of this year, I talked with the employees and also suppliers or dealers. And on these occasions, I have constantly mentioned this. And actually, for the current fiscal year, we are going to deeply think together with employees, suppliers and dealers, that what it really means to have "true competitiveness", what "true competitiveness" actually mean and show. This is still May, so we'll continue to think together with those stakeholders what is meant truly by "true competitiveness". But it doesn't mean the answer will automatically come out on the 31st of December.

But I would like to focus on 2 points. That is to say, productivity improvement. That is 1 of the 2 focuses that I will have to obtain "true competitiveness". We consistently make efforts and strive for higher productivity, so that the streamlining and downsizing, making the operation leaner will be consistently achieved. And that will also meant by lead-time shortening. Of course, that will vary from plant to plant and region to region. GIT [ph] will also be different. And by making honest and consistent efforts of higher productivity, we may be able to find answer to what is meant by "true competitiveness". This may not be a clear cut answer to the question raised by Mr. Abe [ph], but this is the sort of effort we are making at the moment and I hope you will understand where we are moving toward.

Unknown Executive

At this juncture, we would like to switch over to Nagoya, since people in attendance in Nagoya office seem to have some questions. Do you have any questions in Nagoya office?

Unknown Attendee

Emai [ph] of Achieve Economic Journal [ph]. Last month, you talked about a new organization set up and I'd like to ask a question regarding that. You created a business unit. You have Toyota #1 and #2 and also a unit center. And all those 3 business units are headed by Executive Vice President, but only also Lexus division is headed by yourself, Mr. Toyoda. So what significance does it carry?

Akio Toyoda

Well, actually the Lexus, or Lexus business, consists of various -- amongst the various brands, Lexus represents a very unique brand. In the case of other carmakers with market brands, they have origin of the company being funded or born and those brands differ from the very beginning. The origin of those demands are different and different brands did have a different starting point. But in the case of Lexus, it shares the same root at Toyota. In other words, Lexus came into being from the same origin as Toyota. So that's uniqueness of Lexus. And therefore, what all the other brands have, but what Lexus does not have, is the story and narrative and also the history.

And given that characteristics of Lexus, my position within a carmaker is that I'm the top executive of Toyota Motor Corporation. At the same time, I drive cars myself, including in some cases, serving as a test driver, and I happen to be born with the family name, which is also shared by the company. And those contents, specific contents of myself, may be able to make some contribution to our efforts to build brand as Lexus. And also, it may be conducive to creating story and narrative for Lexus. The lack of history may be the weakest point of Lexus, but at the same time, building brand is a time-consuming endeavor. And therefore, for us to see any results and outcome of our efforts of trying to build Lexus, will take time.

Since we announced our intention of our building LS until the time that LS actually was launched into the market, it took 7 years between the announcement and the launch of the actual vehicle to the market. And therefore, for Lexus to be evaluated as being established as a true brand will take a lot of time starting from here. I have been trained by medium [ph] for the past 4 years. So probably I may be quite strong at adversity. Even if I may not be able to see any concrete results, we may -- I may be able to make continued efforts until such time that Lexus is truly recognized as a true brand. And that's why I think I may be the person most qualified to be in charge of Lexus, and that's why I have decided to head up the Lexus operation.

But we have both Lexus brand and Toyota brand. And therefore, with vehicles and cars as the focus, I would like to nurture both Lexus vehicles and Toyota brands with a lot of love. And therefore, from this position, I would like to ask for your continued support and assistance.

Unknown Executive

Any further questions from Nagoya office? No. Thank you.

I'm afraid there may be other questions. But in the interest of time, I would like to entertain 2 last questions, one each from 2 different persons.

Unknown Attendee

Higimatsu [ph] from NTB [ph]. Concerning this improvement of your business performance, I have a question of how you plan to return this profit for the Japanese economy. As a top leading Japanese company, I think this auto industry has this extensive value chain and there is this heightening expectation of increased employment and other advantages. So what are your plans for that?

Akio Toyoda

So the 3 arrows of urbanomics: financial, monetary policies and also the growth strategy. And in the recent market, this is really triggering a very favorable response of the market. So I think this should lead to sustainable growth of the Japanese economy. So the third area, the growth strategy, I believe, is very critical and the growth strategy per se, to me, implies that the manufacturers in Japan should do a better job. And so the foundation of manufacturing goods, which is the source of innovation, should be further improved and reinforced. That would make contribution to the revival of the Japanese economy to realize "true competitiveness" and realize sustainable growth. As a company in the auto industry and as Toyota Motor Corporation, we would like to do our best to contribute as much as possible for the future growth of the Japanese economy.

Unknown Executive

Mr. Hazima, please, the last question.

Unknown Analyst

Hazima [ph] from NHK [ph] . A related question. The Japanese government has taken up these initiatives that, I believe, would be implemented steadily. In the private sector, increase of the wages or CapEx in the Japanese market is something that we wonder would be maintained. And domestically, it was considered that there were those 6 pains that we're suffering, such as the increase of the utility tariff. So what are your plans for this domestic production into the future?

Akio Toyoda

So these 6 different sufferings in the Japanese market, of course, had given us problems. That is, indeed, true. Under such circumstances, we had really tried to protect the Japanese employment by reducing costs and controlling fixed costs and also to implement a corporate-wide effort, including our suppliers and dealers. To protect this domestic production, we had implemented a variety of means and now we have this very favorable tailwind thanks to urbanomics. So into the future, this should be conducive to the realization of "true competitiveness" and to actually steadily implement this growth strategy. So this employment foundation that would allow sustainable growth, and also this basic foundation of the auto industry, that can truly realize sustainable growth.

Unknown Executive

Thank you. Now with this, we would like to close off our press conference. Thank you for your attendance today.

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