Toyota Motor Corp reported a stronger-than-expected quarterly operating profit and raised its annual forecast on cost cuts and Japanese government subsidies, though this is still some way below analysts’ expectations.
Widespread floods in Thailand late last year battered Toyota just as it was recovering from production lost to the earthquake in Japan in March. The floods cost Toyota 240,000 vehicles in lost output worldwide, dragging global sales last year down by 6 percent and allowing General Motors Co and Volkswagen AG to overtake it in global vehicle sales.
Toyota now expects operating profit — earnings from its core operations — for the year to end-March of ￥270 billion (US$3.5 billion), up from a previous ￥200 billion. Consensus forecasts from 23 analysts surveyed by Thomson Reuters I/B/E/S are for ￥331 billion. Operating profit last year was ￥468 billion.
Toshiyuki Kanayama, senior market analyst at Monex Securities, said the revised profit guidance was a bit of a disappointment.
“But the market is looking at the next financial year. The key for Toyota shares will be whether profit [next year] will rise to about ￥800 billion,” he said.
Toyota, which has a market value of US$135 billion — more than rivals Honda Motor Co Ltd, Nissan Motor Co Ltd and Suzuki Motor Corp combined — now sees annual net profit, which includes earnings made in China, of ￥200 billion, up from the ￥180 billion it projected in early December.
Senior managing officer Takahiko Ijichi told a news conference that Toyota aimed to sell at least 1 million vehicles in China this year, up from 800,000 last year.
Its October-to-December operating profit jumped 51.1 percent to ￥149.7 billion (US$1.95 billion) from a year earlier, well ahead of the average estimate of a small decline to ￥93.9 billion in a poll of nine analysts.
Quarterly net profit slid 13.5 percent to ￥80.9 billion.
Asked about intensifying competition in North America, where Toyota reaffirmed its forecast for annual sales of 1.9 million vehicles, Ijichi said: “The Big Three [Ford Motor Co, General Motors and Chrysler Group LLC] have improved their financial standing quite a bit, partly thanks to support from the government.”
“Their cars are also getting better and in that sense the competitive landscape has gotten a lot tougher. Korean brands are also pushing hard, so, for Toyota and Japanese brands, it’s a very tough race,” Ijichi said.
“That’s why we’re gearing up with new models, particularly fuel-efficient ones, to recover lost ground,” he added, saying that Toyota plans to launch 19 new or refreshed models in the US this year.
The yen’s prolonged strength is weighing on Toyota, which last year built 2.76 million cars in Japan, one third of Japan’s total vehicle production. It exported 57 percent of that output, much of it at a loss.