Fiscal Year 2017 First Half Results - Toto Ltd.This presentation material contains forward-looking statements based on assumptions, estimates and plans as of October 30, 2017

Copyright © TOTO LTD. All Rights Reserved.

Fiscal Year 2017 First Half Results

October 30, 2017

This notice has been translated from the original notice in Japanese. In the event of any discrepancy, the original in Japanese shall prevail.


１. Financial Results for First Half of FY 2017

２.Topics

３. Revised FY 2017 Full Year Financial Plan

Contents

Copyright © TOTO LTD. All Rights Reserved. 1

Highlights

New business domains: Increased sales and profits

◆ Remodeling business increased sales and profits. ◆ New Housing business decreased in sales and profits. ◆ Strong start of the new product launched in August.

◆ Considerable increase in sales and profit due to continued demand in ceramic business.

Global housing equipment business (Japan): Sales increased but profit remained flat

Global housing equipment business (overseas): Increased sales and profits

Summary of Consolidated Financial Results for FY2017 First Half

Increase in Sales and Profits. Record High Sales, Operating Profit and Ordinary Profit.

Surpassed Plan, Showing Steady Progress.

◆ Performance driven by strong operation in China. ◆ Increases in sales and profits in China and the Americas.


1st Half, FY16

1st Half, FY17

YoY Influence of

exchange rate Currency-

neutral basis

Net Sales 2,711 2,813 +102 (+4%)

-11 +113 (+4%)

Operating Profit [Operating Margin]

205 [7.6%]

224 [8.0%]

+19 (+10%)

-3 +22

(+11%)

Recurring Profit

194 239 +45

(+23%) +13

+32 (+16%)

Profit attributable to owners of parent 131 150

+19 (+15%)

+13 +6

(+5%)

単位：億円

FY17 Plan

vs. Plan

2,807 +6

205 [7.3%]

+19

213 +26

133 +17

FY2016 FY2017 FY17 Plan 1Q 2Q 1Q 2Q

1 $ ¥115.4 ¥108.0 ¥113.6 ¥111.1 ¥105.0

1 CNY ¥17.6 ¥16.5 ¥16.6 ¥16.2 ¥16.0

1 € ¥127.2 ¥121.9 ¥121.1 ¥122.3 ¥117.0

Starting from the current financial year, the currency conversion method for overseas group companies' profit and loss was changed from the method using the rates on the last day of each term to the method using average rates during each term. All numbers found in the information related to the previous year in this material have been revised retroactively.

Financial results

■Exchange rates

Unit: Y 100 million

Financial Results for First Half of FY 2017


< Net Sales > 1st Half, FY16

1st Half, FY17 YoY Influence of


neutral basis

Domestic H.E. 2,005 2,014 +9 (+1%)

+9 (+1%)

Overseas H.E. 606 665 +59 (+10%)

-11 +70 (+12%)

New Domain 98 132 +34 (+35%)

+0 +34 (+35%)

Others 1 1 +0 +0

Total 2,711 2,813 +102 (+4%)

-11 +113 (+4%)

3

Sales and profit by business segment

< Operating Profit > 1st Half, FY16

1st Half, FY17 YoY Influence of


neutral basis

Domestic H.E. 117 117 +0 (+0%)

+0 (+0%)

Overseas H.E. 111 120 +9 (+8%)

-3 +12 (+11%)

New Domain -1 2 +3 ( ―)

+0 +3 ( ―)

Others -21 -15 +6 +6

合計 205 224 +19 (+10%)

-3 +22 (+11%)

FY17 Plan

vs. Plan

2,039 -25

638 +27

128 +4

1 -0

2,807 +6

FY17 Plan

vs. Plan

106 +11

117 +3

3 -1

-21 +6

205 +19


Unit: Y 100 million


Housing Equipment Business（Japan）

117

+31 -11

+7 -8 -9

-1

Cause of increase/decrease of operating profit (YoY)

-13

117

+3


Unit: ¥ 100 million

1st Half, FY16 Operating profit

Influence of raw materials

increase/ decrease in labor costs

Amortization development of Production investment

Strengthening investment sales

Others Increase /decrease in sales and product range differences

Cost reduction

1st Half, FY17 Operating profit

- Effects of changes in the copper price - Effects of exchange rate changes, etc.

- Cost for the operation of new factory

- Change in treatment revision of personnel system - Increase in base pay, etc.



Performance by demand

1st Half, FY16

1st Half, FY17 YoY

Net Sales 1,340 1,367 +27

（+2%）

Operating Profit 93 96 +3

（+3%）

Operating Margin 7% 7% +0pt

1st Half, FY16

1st Half, FY17 YoY

Net Sales 664 647 -17

（-3%）

Operating Profit 23 21 -2

（-11%）

Operating Margin 4% 3% -1pt

FY17 Plan

vs. Plan

1,359 +8

84 +12

6% +1pt

FY17 Plan

vs. Plan

679 -32

21 -0

3% +0pt



< Remodeling>

<New Housing>

Increase in sales and profits in remodeling segment, achieving the initial plan.


Housing Equipment Business（Japan）Detailed performance in remodeling segment

1Q (YoY)

99% （+2％）

97% （-3％）

64.1 billion yen

63.6 billion yen （-1％）

1Q, FY17 1Q, FY17

-0.5 billion yen

69.9 billion yen

73.1 billion yen （+5％）

100% （+0％）

105% （+5％）

2Q, FY17 2Q, FY16

+3.2 billion yen

1H （YoY）

134.0 billion yen

136.7 billion yen （+2%）

99% （-1％）

102% (+3％)

1H, FY16 1H, FY17

+2.7 billion yen


Market growth

Measures including the launch of new products

2Q (YoY)

Market growth Measures including the launch of new products

Market growth

Measures including the launch of new products

Due to market recovery and strong new products, performance during the second quarter grew significantly.


Net Sales Operating Profit

1st Half, FY16

1st Half, FY17

YoY 1st Half, FY16

1st Half, FY17

YoY

Sanitary Ware 406 419 +13

（+3%） 36 36

-0 (-1%）

Washlet 445 459 +14

（+3%） 57 64

+7 （+12%）

Faucet Fixtures 428 424 -4

（-1%） 28 23

-5 （-18%）

Bathrooms 467 464 -3

（-1%） 13 6

-7 （-50%）

Modular Kitchens/Basins

217 209 -8

（-4%） -15 -12

+3 （－）

Others 40 37 -3

（-7%） -3 -1

+2 （－）

Total 2,005 2,014 +9

（+1%） 117 117

+0 （+0%）


Sales per Products



Driven by new products, performance in sanitary ware and Washlet grew.


< Operating Profit > 1st Half, FY16 1st Half, FY17 YoY Currency-neutral basis

China 75 84 +9（+13%） +13（＋17%）

Asian & Oceanian Region

29 26 -3 （-8%） -3 （-9％）

Americas 9 15 +6（+53%） +5（＋51%）

Europe -3 -6 -3 （－） -3 （－）

Total 111 120 +9（＋8%） +12（＋11%）

8

< Net Sales > 1st Half, FY16 1st Half, FY17 YoY Currency-neutral basis

China 297 343 +46(+15%) +58（+20%）


137 146 +9 (+7%) +8 （+6%）

Americas 149 156 +7 (+5%) +5 （+4%）

Europe 21 18 -3 (-15%) -2（-13%）

Total 606 665 +59(+10%) +70(+12%)

Housing Equipment Business（Overseas）

FY17 Plan vs.Plan

81 +3

25 +1

13 +2

-3 -3

117 +3

FY17 Plan vs.Plan

329 +14

143 +3

147 +9

18 -0

638 +27



Driven by the strong Chinese market,

sales and profits continued to rise in the global market as a whole.


Financial Results

Results for local subsidiaries (China)

1st Half, FY16 1st Half, FY17 YoY

Net Sales 1,741 2,083 +342 (+20%)



Exchange rates 1st Half, FY16 1st Half, FY17 FY17 Plan

1CNY ¥16.5 ¥16.2 ¥16.0

435

-43

553

+70

2016年度 2Q累計営業利益

2017年度 2Q累計営業利益

売上増減／商品構成差

製造コスト

販管費増減

Cause of increase/decrease of operating profit

+90

FY17 Plan vs.Plan

2,047 +36

533 +20

26% +1Pt

100

125

2016年度2Q累計 2017年度2Q累計

Washlets : Growth in sales volume


* Base that does not include consolidated adjustment and common expense allocations

Unit: CNY million

Sales the third quarter (July through September) grew by 14% year-on-year.

（with 1H, FY16 as 100 ）

1H, FY16 1H, FY17

Unit: CNY million

1H, FY16 operating income



Increase/decrease in sales and product range differences

Production cost

Performance continued to be robust. Sales and profits surged.


Results for local subsidiaries (China)

(＋26%)

(＋12%)

(＋33%)

(+11%)

(-7%)

■ Net sales growth by region China Total：+20％

■ Sales distribution ratio

YoY

Sanitary Ware +21%

Washlet +23%

Faucet Fixtures +24%

■Net sales growth by produccts


East China

North China

South China

West China

Hong Kong

North China 20%

East China 42%

South China 22%

West China 13%

Hong Kong 3%

■Product range comprising net sales

Others 13%(1H, FY17) 15％(1H, FY16）

Washlet 26% (1H, FY17) 25％(1H, FY16）

Faucet Fixtures 19%(1H, FY17)

18%(1H, FY16） Sanitary Ware 42%(1H, FY17) 42%(1H, FY16）

Performance in all regions excluding Hong Kong grew. All products remained steady.


Results for local subsidiaries (Asian & Oceanian Region)

1H, FY16 1H, FY17 YoY

Net Sales 1,852 1,784 -4％



Taiwan

Exchange rates 1H, FY16 1H, FY17

1 Taiwan dollars 3.33円 3.68円

100 107



Net Sales (For external customers)

1,411 (827)

1,494 (929)

+6% (+12％)



Vietnam

Exchange rates 1H, FY17

1 dong 0.00484円

Tiwan44%

Vietnam

31%others25%


* Base that does not include consolidated adjustment and common expense allocations

Unit: Million Taiwan dollars

Unit: Billion Dong

The sales growth in the third quarter (July through September) is down 11% on a year-on-year basis.

Sales for the third quarter(July through September) grew by 30% year-on-year.

In Taiwan, both sales and profit decreased due to severe market conditions. In Vietnam, sales increased but profit decreased due to start-up costs for new factory and strengthened investment in sales.

Net sales breakdown by area

■Washlets : Growth in sales volume

（with 1H, FY16 as 100 ）

1H, FY 16 1H, FY 17


Cause of increase/decrease of operating profit

12

Financial Results

Results for local subsidiaries (Americas)

Exchange rates 1H, FY16 1H, FY17 FY17 Plan

1$ ¥108.0 ¥111.1 ¥105.0

13

+5

16

-1 -1

100110



Net Sales 134 139 +5

(+4%)



FY17 Plan vs.Plan

140 -1

15 +1

11% +1Pt

Financial Results for First Half of FY 2017 •Base that does not include consolidated adjustment •and common expense allocations

Unit: $ million


Washlets : Growth in sales volume

Unit: $ million




Production cost

Increase/decrease in sales and product range differences

（with 1H, FY16 as 100 ）

1H, FY16 1H, FY17

Increase in sales and profits. Operating margin improved.

The growth in the unit sales of Washlet in the third quarter (July to September) is up 26%.


Results for local subsidiaries (Americas)

(+7%) (-2%) (+8%)

(+6%)

YoY

Sanitary Ware +5%

Washlet +11%

Faucet Fixtures -2%


■ Net sales growth by region

Americas Tota： +4%

■Net sales growth by produccts

■Product range comprising net sales

Others 6%(1H, FY17) 7％(1H, FY16）

Washlet 19% (1H, FY17) 18％(1H, FY16）

Faucet Fixtures 18%(1H, FY17)

18%(1H, FY16）

Sanitary Ware 57%(1H, FY17) 57%(1H, FY16）

West

Canada

Northeast Central

West 43%

Northeast 25%

Central 22%

Canada 10%

Performance in all regions (except for northeastern region) grew. In products, sanitary ware and Washlet grew significantly.

■ Sales distribution ratio


Financial Results


Net Sales 16 14 -2 (-13%)

Operating Profit -1 -4 -3

Results for local subsidiaries (Europe)

Exchange rates 1H, FY16 1H, FY17 FY17, Plan

1€ 121.9円 122.3円 117.00円

FY17, Plan vs.Plan

14 -0

-3 -1

Financial Results for First Half of FY 2017 •Base that does not include consolidated adjustment •and common expense allocations

Unit: € million


Decreased sales and profit.

We will continue building distribution channels and promoting adoption in well-known sites.

Palais des Congrès de Paris is one of the international conference halls established throughout France. We are aiming to increase recognition of the TOTO brand throughout the world by delivering our products to sites where international conferences are held.

■Examples of adoption in famous sites: Palais des Congrès de Paris ( International Conference Hall / Paris, France )


Advanced Ceramic Business

Green Building Materials Business

New Domain Business


Influence of exchange rate

Currency-neutral basis

Net Sales 55 92 +37 (+69%)

+0 +37 (+68%)

Operating Profit 2 5 +3 (+114%)

+0 +3 (+113%)


FY17, Plan vs.Plan

82 +10

6 -1

7% -2pt




Net Sales 43 40 -3 (-7%)

-3 (-7%)

Operating Profit -4 -2 +2 （－）

+2 （－）

FY17, Plan vs.Plan

45 -5

-3 +1


Unit: Y 100 million

Unit: Y 100 million

Driven by the ceramic business, sales and profits surged.


Contents

３. Revised FY 2017 Full Year Financial Plan

1. Financial Results for First Half of FY 2017

2. .Topics


Topics

Strong sales of globally unified models

Launched throughout the world starting in Japan, as a globally unified model that combines industrial design and functionality. “Truly unified form” of Washlet and sanitary ware that are different in material is pursued.

NEOREST NX Faucets

Launched 10 series of globally unified model faucets that combine TOTO’s proprietary technology to manipulate water and industrial design. Received the highest ranked “best of best 2017” at the Red Dot Design Award. (Award winning product: The GO SERIES Single-Lever Lavatory Faucet)

■Selling status Japan: Began shipping on Aug. 1. Achieved treble sales against plan in 2 months after launch. China: Will begin shipping on Nov. 1. Scheduled to be sequentially launched in other countries.

■Selling status Vietnam: Began shipping in April. Contributed to sales in luxury market. Japan: Began shipping in May. Selling together with vessel-type washbasin is popular. China: Began shipping in June. Driving the sales in faucets.


Topics

Bolstered collaboration with TDY in domestic showroom operation

The first TDY Sapporo Collaboration Showroom in Hokkaido. The largest exhibition area in Japan as a roadside-type TDY Collaboration Showroom.

TDY Osaka

TDY Hiroshima

TDY Tokyo

TDY Fukuoka

TY Yokohama

TY Shizuoka

TDY Nagoya

TY Niigata

TDY Takamatsu

TDY Kanazawa

TY Kumamoto

TDY Sapporo (Opened on July 29, 2017)

12 sites across Japan


Evaluation from outside company

18

「Asia Pacific」構成銘柄に9年連続で選定

Topics

(Announced in June)

(Announced in September)

Efforts in CSR activities are highly rated. Again selected for the global socially responsible investment indicator.


Topics

Sponsorship

19

TOTO became the official sponsor of the Rugby World Cup 2019™ in Japan

—To be held in 12 cities in Japan for the first time in Asia—

We provide safe, secure and comfortable water spaces to all people, contributing to the success of the event and the impressive moments.


Contents

2. Topics

1. Financial Results for First Half of FY 2017

3. Revised FY 2017 Full Year Financial Plan


Highlights

Sales = 600 billion yen, Operating profit = 54 billion yen

Based on the abovementioned progress, the full-year plan was revised upwards.

Revised FY 2017 Full Year Financial Plan

Operating profit: Upward revision of 3 billion yen (Increase of 1.9 billion yen in the first half and upward revision of 1.1 billion yen for the second half)

Sales: Upward revision of 6 billion yen (Increase of 600 million yen in the first half and upward revision of 5.4 billion yen for the second half)

◆Housing Equipment Business (Japan): Upward revision of 500 million yenfor the full year, due to strong sales of new products. (Decrease of 2.5 billion yen in the first half and upward revision of 3 billion yen for the second half)

◆Housing Equipment Business (Overseas): Upward revision of 3.5 billion yen for the full year, considering the current situation including exchange rates.

◆New-Domain Business: Upward revision of 2 billion yen for the full year due to strong performance in the ceramic business.

◆Housing Equipment Business (Japan): Upward revision of 1.8 billion yen due to new products selling well.

◆Housing Equipment Business (Overseas): Upward revision of 500 million yen, considering the current situation including exchange rates.


Financial Plan

Former Plan VS.

Former Plan

5,940 +60

510 [8.6%]

+30

530 +30

360 +20

9.1％ +0.5pt

11.8％ +0.6pt

FY16 FY17

Revised Plan YoY



Net Sales 5,673 6,000 +327 (+6%)

+33 +294 (+5%)

Operating Profit [Operating Margin]

474 [8.4%]

540 [9.0%]

+66 (+14%)

+5 +61 (+13%)

Recurring Profit 481 560 +79 (+16%)

+4 +75 (+15%)

Profit attributable to owners of parent 329 380 +51

(+15%) +3 +48

(+15%)

ROA 8.7% 9.6% +0.9pt

ROE 11.5% 12.4% +0.9pt

Based on the abovementioned progress, the full-year plan was revised upwards.

FY2016 FY2017 Formar Plan

3Q 3Q 3Q 4Q (Plan)

1 $ ¥102.4 ¥109.4 ¥111.0 ¥111.0 105.0

1 CNY ¥15.4 ¥16.0 ¥16.6 ¥16.9 16.0

1 € ¥114.3 ¥117.9 ¥130.4 ¥130.4 117.0


Unit: Y 100 million

■Exchange rates


Sales and profit by business segment

< Net Sales > FY16 FY17

Revised Plan YoY Influence of


neutral basis

Domestic H.E. 4,233 4,330 +97 (+2%)

+97 (+2%)

Overseas H.E. 1,222 1,375 +153 (+12%)

+30 +123 (＋10%)

New Domain 214 292 +78 (+36%)

+4 +74 (+34%)

Others 2 3 +1 +1

Total 5,673 6,000 +327 (+6%)

+33 +294 (+5%)

<Operating Profit> FY16 FY17

Revised Plan YoY Influence of


neutral basis

Domestic H.E. 291 310 +19 （+6％）

+19 （+6％）

Overseas H.E. 222 250 +28 （+13％）

+5 +23 (+11％)

New Domain 5 19 +14 （+255%）

+0 +14 （+251%）

Others -44 -39 +5 +5

Total 474 540 +66 （+14％）

+5 +61

(+13%)

Former Plan VS.

Former Plan

4,325 +5

1,340 +35

272 +20

2 +1

5,940 +60

Former Plan VS.

Former Plan

292 +18

245 +5

19 +0

-45 +6

510 +30


Unit: Y 100 million



291 310

Cause of increase/decrease of operating profit (YoY)

+34

+68 -23

+15

-18 -16

-11

-29

Former Plan +38 +64 -26 -18 -19 -27 -20 +9

Unit: Y 100 million

FY16 Operating profit

Influence of raw materials

increase/ decrease in labor costs

Amortization development of Production investment


Others Increase /decrease in sales and product range differences

Cost reduction

FY17 Operating profit


- Cost for the operation of new factory

- Change in treatment revision of personnel system - Increase in base pay, etc.

- Effects of changes in the copper price - Effects of exchange rate changes, etc.



Performance by demand

FY16 FY17

Revised Plan YoY

Net Sales 2,835 2,925 +90

（+3%）


（+7%）


Former Plan VS.

Former Plan

2,905 +20

243 +17

8% +1pt

FY16 FY17

Revised Plan YoY

Net Sales 1,397 1,405 +8

（+1%）


（+1%）


Former Plan VS.

Former Plan

1,419 -14

49 +1

4% +0pt


Unit: Y 100 million

< Remodeling>

<New Housing>

Upward revision for remodeling segment due to new products selling well. Downward revision for new housing segment.



Sales per Products

Net Sales Operating Profit

FY16 FY17 Revised Plan

YoY FY16 FY17 Revised Plan

YoY

Sanitary Ware 863 906 ＋43 （+5%）

82 90 +8

（＋9％）

Washlet 931 963 ＋32 （+3%）

129 143 +14

（＋11%）

Faucet Fixtures 932 945 ＋13 （+1%）

76 72 -4

（-5%）

Bathrooms 960 972 ＋12 （+1%）

32 24 -8

（-25%）

Modular Kitchens/Basins

454 455 ＋1

（+0%） -24 -15

+9 （－）

Others 90 87 -3

（-4%） -5 -5

+0 （－）

Total 4,233 4,330 ＋97 （+2%）

291 310 +19

（＋6%）


Unit: Y 100 million

Upward revision for performance of sanitary ware and Washlet.


< Net Sales > FY16 FY17

Revised Plan YoY


China 613 715 +102（+16%） +90（+15%）


286 317 +31（+11%） +22（ +7%）

Americas 285 307 +22（ +8%） +14（ +5%）

Europe 37 36 -1（ -3%） -2（ -7%）

Total 1,222 1,375 +153（+12%） +123（+10%）

Housing Equipment Business（Overseas）

Former Plan VS.

Former Plan

690 +25

318 -1

298 +9

35 +1

1,340 +35

<Operating Profit> FY16 FY17

Revised Plan YoY


China 152 181 +29（+19%） +26（+17%）


55 62 +7（+12%） +5（ +8%）

Americas 22 20 -2（-10%） -3（-12%）

Europe -8 -13 -5 （－） -4 （－）

Total 222 250 +28（＋13%） +23（+10%）

Former Plan VS.

Former Plan

170 +11

59 +3

24 -4

-9 -4

245 +5


Unit: Y 100 million

Upward revision due to review of exchange rates.


Advanced Ceramic Business

Green Building Materials Business

New Domain Business

FY16 FY17

Revised Plan

YoY Influence of


neutral basis

Net Sales 125 202 +77 (+62%)

+3 +74 (+59%)

Operating Profit 12 23 +11 （＋84%）

+0 +11 （＋83%）


FY16 FY17

Revised Plan

YoY Influence of


neutral basis

Net Sales 89 90 +1 (+0%)

+1 (+0%)

Operating Profit -6 -4 +2 （－）

+2 (－）

Former Plan VS.

Former Plan

173 +29

21 +2

12% -1pt

Former Plan VS.

Former Plan

98 -8

-2 -2


Unit: Y 100 million

Unit: Y 100 million

Upward revision for ceramic business, which is performing well


FY16 FY17 Former Plan

1H ¥ 34.0 ¥ 36.0 ¥ 35.0

2H ¥ 34.0 ¥ 36.0 ¥ 35.0

Full Year ¥ 68.0 ¥ 72.0 ¥ 70.0

Dividend payment Ratio

34.9％ 32.1％ 32.9％

Dividend Plan

Returning Profits to Shareholders

Interim dividend: 2 yen increase on a year-on-year basis. 1 yen increase against initial plan.

Annual dividend: 4 yen increase planned year-on-year. 2 yen increase planned against initial plan.

This presentation material contains forward-looking statements based on assumptions, estimates and plans as of October 30, 2017.

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.

Documents

Fiscal Year 2017 First Half Results - Toto Ltd.This presentation material contains forward-looking statements based on assumptions, estimates and plans as of October 30, 2017