Toyota 2005 Annual Report Download - page 14

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12 >PRESIDENT’S MESSAGE
In development, we are fast-forwarding process innovation to shorten the lead
times needed to bring appealing vehicles to market. Also, we are targeting competi-
tive advantage by forging ahead even further in the development of environmental,
safety, and other next-generation technologies. Research and development expenses
amounted to ¥755.1 billion in fiscal 2005, and we plan research and development
spending of ¥770.0 billion in fiscal 2006.
In supply, we will increase local production dramatically. Based on a strategy of
building vehicles in regions where demand exists, plans call for an approximate
doubling of current local production to about 5 million units. Already, new plants
have either started production or are being built in North America, Thailand,
China, and Russia. Meanwhile, domestic production will support overseas manu-
facturing by absorbing fluctuations in global demand. Therefore, we plan to raise
domestic production capacity. The resulting additional investment will raise capital
investment year on year from ¥1,087.2 billion to ¥1.25 trillion in fiscal 2006.
In marketing, we will continue to fortify our sales network in regions worldwide.
In Japan, our mainstay market, we reorganized sales channels by launching a new
Netz channel in fiscal 2005. We are also strengthening sales capabilities through
brand realignment, with the Japanese premier of the Lexus range scheduled for
August 2005.
[CAPITAL POLICY AND RETURNS ]
“To grow consolidated dividend payout ratios, our profit distribution
will reflect consolidated results more closely. ”
➤We have regarded actively returning profits to our shareholders as an important
management policy. But, starting in fiscal 2005, we aim to further emphasize that
philosophy in three respects. First, we will view returns to shareholders on a
consolidated basis. In the past several years, we have returned most of non-
consolidated cash flows to shareholders through cash dividends and purchases of
common stock. However, given the increasing globalization of our operations, we
will strive to grow consolidated net income per share continuously and reflect those
improvements in returns to shareholders. Second, we will shift the primary axis of
dividend policy from cash dividend amounts to consolidated dividend payout ratios.
Finally, Toyota aims to increase cash dividends to a markedly higher level.
In light of the anticipated growth of automotive markets worldwide, the Company
will leverage retained earnings to further expand operations and to construct a strong
management platform. Specifically, we will undertake forward-looking investment to
enhance product competitiveness and establish next-generation technology. At the
same time, Toyota will allocate resources to grow operations globally by upsizing
production and sales systems at home and abroad and to develop new operations.
Toyota is committed to building shareholder value through aggressive investment
that will enable the Company to triumph over global competition and continue
growing in the 21st century.
800 400
400 200
1,600
1,200 600
800
’01 ’02 ’03 ’04 ’05 ’06
00
(planned)
FY
(¥ Billion)
R&D expenses (Right scale)
* Excluding vehicles and equipment
on operating leases
Capital Investment*
and R&D Expenses
770
1,250