Toyota Tsusho : Business Reports of FY2023

The following is an unofficial translation of the Japanese-language original version, and is provided for your convenience only, without any warranty as to its accuracy or as to the completeness of the information. The Japanese original version of the notice is the sole official version. If there are any discrepancies between the Japanese original version and the English translation, the Japanese original version prevails and the company disclaims all responsibility for and results of the discrepancies.

To Our Cherished Shareholders

Toyota Tsusho is deeply indebted to all of its shareholders for their continued kindness and encouragement. Our

company plans to convene its 103rd Ordinary General Meeting of Shareholders as described on the following page.

Please accept this letter as a notice of convocation.

Looking at the external environment, social and economic activities are normalizing as we emerge from the COVID- 19 pandemic and are supporting the economy. On the other hand, a high degree of uncertainty continues due to rising prices and persistently high interest rates in major countries, as well as fragmentation and conflict in the international community.

In the business environment surrounding our company, we are witnessing the further acceleration of initiatives to realize a decarbonized society and advances in digital transformation as represented by generative AI, which has the potential to bring about changes not only in industrial structures and corporate activities but also in the way we work.

In such an environment, the Toyota Tsusho Group, in addition to its core business areas, has positioned seven priority domains (Next Mobility, Renewable Energy & Energy Management, Africa, Circular Economy, Batteries, Hydrogen

• Alternative Fuels, and Economy of Life) as its growth strategy, combining its business areas of strength with the themes of carbon neutrality and the circular economy. To accelerate this growth strategy, we have revised, effective April 1 of this year, the names of our divisions so that they express the value that they provide to society and our customers based on clear missions.

By advancing business under a new organizational structure, we will aim to be an irreplaceable presence for our customers, business partners, shareholders, local communities, and future society around the world. In other words, we will strive to achieve the Toyota Tsusho Global Vision of "Be the Right ONE".

I would like to express our company's sincere gratitude to all of our shareholders for their understanding and backing

of the Toyota Tsusho Group, and I humbly request your continued support.

Sincerely yours,

Ichiro Kashitani

President & CEO

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We in the Toyota Tsusho Group deliver to nations around the world a diverse range of products and services essential for building prosperous and comfortable societies.

We are guided by a four-tier philosophy that enables us to successfully meet the challenges of each new age.

Behavioral Guidelines

Living and prospering together with people, society, and the planet, we aim to be a value generating corporation that contributes to the creation of prosperous societies.

Corporate Philosophy

As a good corporate citizen,

We will strive for open and fair corporate activities; We will be socially responsible and strive for conservation environment;

We will be creative and strive to provide added value;

We will respect people and strive to create an engaging workplace.

Fundamental

Philosophy

Vision

Mid-term Business Plan

Annual Plan

Unchanging ideals that should be passed on to the future

Goals and milestones we should reach as we continue pursuing and realizing our fundamental philosophy

Strategies for business activities reflecting shifts in the business environment, consisting of policies, concrete action plans, and numerical targets

	"Genchi,
"Shokon"	Genbutsu,	"Team Power"
(A passion for	Genjitsu"
(Teamwork)
business)	(On site, Hands
	on, In touch)

The Toyota Tsusho Group Way (Toyotsu Group Way)

The bedrock principles that all Toyota Tsusho Group employees should share and the

values that should be embodied in their actions to realize our fundamental

philosophy and achieve our vision

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Our Global Vision sets the direction of the Toyota Tsusho Group's continued evolution as a true global company. It sets forth guidelines to which our entire global workforce should aspire.

The Toyota Tsusho Group will evoke our ideal as

The Right ONE for you

The Right ONE for us

The Right ONE for future

The best assurance of safety, service, quality and reliability based on your needs (Genba)

Maximization of individual capabilities, global networks and diversity to create synergistic strengths

Unique insights and capabilities to explore new possibilities for future and sustainable society

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Key Sustainability Initiatives for the Toyota Tsusho Group

The Toyota Tsusho Group has identified six Key Sustainability Issues (Materiality) that it needs to be aware of as it pursues the realization of its corporate philosophy and Global Vision to clarify those social issues that it needs to focus on based on its management strategies.

Materiality is incorporated into the strategy of the divisions, and each division reports on their progress to the Sustainability Management Committee, and conducts a review as appropriate, taking into account changing trends in international society, environmental changes for the Toyota Tsusho Group, and so on.

To facilitate visualization of the impact of the Company's business activities on sustainable development themes, we have formulated medium-term KPIs for each materiality issue, and will apply the plan-do-check-act (PDCA) cycle.

Both the company and employees are achieving sustainable growth and contributing to solutions to social issues and the realization of the Sustainable Development Goals (SDGs) by each employee engaging in business activities with an awareness of these Materialities.

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Setting Our Sights on Carbon Neutrality

Carbon neutrality strategy map

The Toyota Tsusho Group has established five working groups for the purpose of using a substantial volume of resources in business areas where the Group has many strengths to help achieve carbon neutrality. We have earmarked ¥1.6 trillion for investment through 2030.

Economy Of Life

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Carbon neutral declaration

For many years, the Toyota Tsusho Group has operated businesses that have played roles in achieving carbon neutrality and a circular economy. All Group employees have a firm commitment to helping solve social problems for achieving carbon neutrality and a circular economy and providing benefits to customers and business partners.

Scope 1 and 2

Reduction target

• We aim to be carbon neutral by 2050
• We aim for a 50% reduction in Greenhouse Gas (GHG) by 2030 compared to 2019 Included: Parent company, domestic and overseas consolidated subsidiaries (Scopes 1 and 2)

*Scope 3 promotes specific initiatives with suppliers and customers to reduce GHG emissions throughout the value chain.

*Scope 1: Greenhouse gases emitted directly through the Group's own fuel consumption (coal, gas, etc.).

*Scope 2: Greenhouse gases emitted indirectly through the use of purchased electricity and heat.

*Scope 3: Greenhouse gases emitted indirectly other than Scope 1 and 2 (other companies' emission through their business activities).

CO2 converted emission amount (thousand t-CO2)

Benchmark year

50% reduction

Carbon neutrality

-50%

Neutral

CCUS (Carbon dioxide, Capture, Utilization and Storage), etc.

• Figures are for Scope 1 and 2 emissions of the Toyota Tsusho Group and are calculated by using the GHG protocol.

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Passing on a better global environment to the children of the future

Scope 3

The Toyota Tsusho Group uses initiatives backed by its unique strengths to work with customers and suppliers for the reduction and commercialization of supply chain GHG emissions that would be difficult to accomplish by companies on their own. Group companies have many years of experience involving improvements of manufacturing and logistics efficiency and the processing and reuse of end-of-life automobiles and production process waste materials. In recent years, the Group has started new operations that help lower emissions by developing sources of lithium for electric car batteries and supplying parts and materials used to manufacture electric cars. Operations of the Group also include the generation and supply of renewable energy and low-carbon energy that lower the GHG emissions of customers and suppliers. Through these activities, the Toyota Tsusho Group aims to achieve Scope 3 carbon neutrality too.

Major initiatives to lower GHG emissions

1. Efficient manufacturing and logistics

• Highly efficient logistics
• Centralized processing and transport of steel and aluminum
• Factory energy conservation assessments; sale of energy conservation equipment

(2) Reuse of resources

• Recovery and processing of metal scrap
• Automotive airbag scrap recycling
• Collection of used catalysts
• Business for reuse of rare metals
• Recycling of used plastics
• End-of-lifevehicle collection and disassembly
• Distribution, sale and export of used vehicles

1. Automotive batteries
   • Rare earth production
   • Lithium carbonate production, lithium hydroxide production
   • Investment in U.S. EV battery production company
2. Low-carbonenergy

• Generation and supply of electricity using renewable energy sources
• Sale of biodiesel fuel

Businesses that reduce GHG emissions

The Toyota Tsusho Group has activities for lowering GHG emissions across the supply chain as well as for the use of a much broader perspective for reducing these emissions. A diverse array of activities are under way, such as increasing the supply of renewable energy and replacing products with versions that use plant-based and recycled materials. These activities are creating many new business opportunities.

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Business Report (from April 1, 2023 to March 31, 2024)

I. Outlook of Associated Companies

1. Progress and Achievement in Operation

(1) Overview of Operations

During the fiscal year ended March 31, 2024, the global economy was supported by the resumption of economic activities after the pandemic and a recovery in the manufacturing sector, including automobile output as restrictions on the supply of semiconductors ended. However, inflation and high interest rates held down economic growth in major countries. In addition, geopolitical uncertainty increased, mainly due to the prolonged Russia/Ukraine conflict and instability in the Middle East as Israel's war with Hamas continues.

In the United States, firm consumer spending fueled consistent economic growth even as monetary tightening continued. There is uncertainty about the outlook because of rising U.S.-China tension, sharp political divide as the presidential election in November approaches and other reasons. In Europe, the negative effects of chronic inflation on consumer spending impacted the economy. Another issue is differences in the views of EU member countries about support for Ukraine. Nevertheless, there were positive signs about the economy, including an improvement in business sentiment. In China, economic growth slowed as the continuing downturn of the real estate sector and U.S.-China tension had negative effects on consumer spending, exports and foreign direct investments. In emerging economies, economic growth remained restrained against the backdrop of a slowdown in the Chinese economy and persistently high interest rates in the U.S. and Europe.

In Japan, consumer spending was limited by the decline in real wages because of inflation, although wages increased somewhat. The economy was firm throughout the fiscal year as the Nikkei Average rose to an all-time high. Growth was backed by recoveries in automobile production and exports, foreign tourists and other sectors of the economy. In March, the Bank of Japan made a significant change in its monetary policy by ending negative interest rates. As a result, Japan's financial markets began to show signs of returning to normal.

The Toyota Tsusho Group's consolidated revenue for the fiscal year ended March 31, 2024 increased 340.4 billion yen (3.5%) year on year to 10,188.9 billion yen, largely due to growth in automotive sales volume and an increase in trading volume of automobile production-related products, despite a decline in metal market prices and falling electricity prices in Europe.

Consolidated operating profit increased 52.8 billion yen (13.6%) year on year to 441.5 billion yen due to an increase in gross profit, which offset higher selling, general and administrative expenses. Profit for the year (attributable to owners of the parent) increased 47.3 billion yen (16.6%) year on year to 331.4 billion yen, largely due to an increase in operating profit, despite a decrease in the share of profit (loss) of investments accounted for using the equity method due to falling electricity prices in Europe and a decline in metal market prices.

Metals

Toyota Chemical Engineering Co., Ltd. is conducting a joint project with Toyota Motor Corporation for the purpose of further upgrading technologies for recycling used lithium-ion electric car batteries. In the autumn of 2023, this project started operating a pilot processing line for recycling batteries by using a method that does not require incineration. We will make contributions to achieving a circular economy as well as carbon neutrality.

Profit for the year (attributable to owners of the parent) decreased 15.9 billion yen (20.8%) year on year to 60.7 billion yen, largely due to lower market prices despite an increase in trading volume of automobile production-related products.

Global Parts & Logistics

In India, Toyota Tsusho, Musashi Seimitsu Industry Co., Ltd. and Delta Electronics, Inc. reached an agreement in September 2023 to jointly establish a company for the production and sale of axles for two- wheeled vehicles. Preparations are under way for starting production during the fiscal year ending in March 2025. The new company is expected to be a global leader in this market as the number of electric two- wheeled vehicles increases in order to play a role in achieving carbon neutrality.

Profit for the year (attributable to owners of the parent) increased 11.2 billion yen (32.6%) year on year to 45.5 billion yen, largely due to an increase in trading volume of automotive parts mainly in Japan and North America.

Mobility

In June 2023, demonstration trials in emerging countries that lasted about one year were completed to

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determine the viability of a last-mile delivery system for the vaccine cold chain. The trials were conducted with Gavi, the Vaccine Alliance. The ability of this delivery system to reduce damage and other problems involving vaccines was confirmed by this alliance. The objective is to use improvements in this last-mile delivery in order to contribute to the advancement of health care worldwide.

Profit for the year (attributable to owners of the parent) increased 10.2 billion yen (22.3%) year on year to 55.9 billion yen, largely due to an increase in sales volume handled by overseas automotive dealerships mainly in Europe.

Machinery, Energy & Projects

In April 2023, North Hokkaido Wind Energy Transmission Corporation started commercial operation of a power transmission and substation system. Located in northern Hokkaido, the system consists of about 78 kilometers of transmission lines and the largest lithium-ion storage battery in Japan. This wind energy company was established and is owned by Eurus Energy Holdings Corporation and other companies. In nearby areas, three companies including Dohoku Wind Farm LLC affiliated with Eurus Energy are constructing a wind power facility scheduled for completion in the fiscal year ending in March 2026 that will have an output of about 540MW, making it one of the largest in Japan. These wind power facilities will further increase the use of renewable energy in Japan and contribute to achieving carbon neutrality.

Profit for the year (attributable to owners of the parent) decreased 4.7 billion yen (14.3%) year on year to 27.9 billion yen, largely due to lower electricity prices in Europe.

Chemicals & Electronics

In November 2023, Toyota Tsusho and Toyota Motor North America, Inc. announced an additional investment of USD370 million in Toyota Battery Manufacturing, North Carolina, where a factory is now under construction. This raises the total investment in this company to approximately USD750 million. The additional investment will further increase the output of electric car batteries. Toyota Battery Manufacturing, North Carolina will manufacture lithium-ion batteries for electric vehicles, meeting the surging demand for these batteries and contributing to the pursuit of carbon neutrality.

Profit for the year (attributable to owners of the parent) increased 7.1 billion yen (14.8%) year on year to

55.0 billion yen, largely due to an increase in trading volume of automobile production-related products in the electronics business and the automotive materials business.

Food & Consumer Services

Toyota Tsusho and Secom Medical System Co., Ltd. have decided to build a second hospital in the Bengaluru region of India. The first hospital, Sakra World Hospital, began operating in 2014. The second hospital will increase the number of beds and further upgrade advanced medical care capabilities and technologies. Completion is scheduled for early 2027. Operating a Japanese-style general hospital will result in an even greater contribution to regional health care in India.

Profit for the year (attributable to owners of the parent) increased 2.3 billion yen (23.8%) year on year to 11.8 billion yen, largely due to a decrease in transportation costs in the South American food business, despite a onetime gain in the previous fiscal year in the domestic consumer products & services business.

Africa

In February 2024, Toyota Tsusho signed a Memorandum of Understanding with the Government of Kenya for the purposes of supporting progress involving carbon neutrality, industrial development and education programs. Major goals of this cooperation are the development of renewable energy projects, the use of high-efficiency transformers to reduce energy losses in Kenya's power transmission system, and use of the multi-pathway approach to increase the use of electric vehicles. The overall objective is the establishment of a value chain in Kenya to facilitate the production, distribution and use of green energy.

Profit for the year (attributable to owners of the parent) increased 32.8 billion yen (90.0%) year on year to 69.1 billion yen, largely due to an increase in sales volume handled by automotive dealerships, especially in the West African region.

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