Toyota yesterday said that its April-to-September net profit dived 25 percent, hit by a sharp rally in the yen and another fall in North American sales, but it upgraded its full-year outlook.
The world’s biggest automaker reported a net profit of ¥946.1 billion (US$9.1 billion) in the first half of its fiscal year, down from ¥1.25 trillion in the same period last year.
Operating profit fell about 30 percent to ¥1.11 trillion, while revenue was off 7.2 percent at ¥13.07 trillion.
However, the Corolla and Prius hybrid maker boosted its full-year to March net profit forecast to ¥1.55 trillion from an earlier ¥1.45 trillion estimate.
The newest figure is still way down from a record ¥2.31 trillion net profit in the most recently ended business year.
The decline in profits underscores the negative impact that a resurgent currency has had on firms doing much of their business abroad.
Japan’s exporters reaped windfall profits over the past few years as government efforts to stimulate the world’s No. 3 economy sharply weakened the yen.
That was good for firms such as Toyota and rivals Honda and Nissan, because repatriated foreign profits were worth more when the yen was weak and because it boosted their competitiveness overseas.
However, the currency has rallied since the start of the year as volatile equity markets and Britain’s vote to exit the EU boosted demand for a unit widely seen as a safe investment.
“The yen’s strength remains a major factor squeezing earnings in the Japanese auto sector,” SMBC Friend Research Center analyst Shigeru Matsumura said before the results were published.
“Japanese carmakers need to make further efforts to make their corporate structure more resistant to the yen’s appreciation,” he added.
Toyota’s vehicle sales in the April-to-September period ticked up to 5.06 million units, from 4.97 million vehicles in the same period last year, with increases in Japan, Europe and Asia.
Still, vehicle sales fell in the Middle East, Africa and the key North American market, where cheap oil has hit demand for Toyota’s fuel-efficient offerings, including the Prius.
The North American sales drop was due to a “drastic shift” in demand from passenger cars to sports-utility vehicles and trucks, the firm said.
Japanese automakers have benefited from healthy growth in the US, where low interest rates boosted demand, although a possible rise in borrowing costs this year could erode sales.
Unsteady demand in emerging markets, such as Thailand and Indonesia, are also red flags, as Toyota and other major automakers wrestle with costs linked to a huge scandal at supplier Takata.
A defect in the firm’s airbags has been linked to more than a dozen deaths and scores of injuries worldwide, prompting the auto industry’s biggest ever safety recall to replace the problem parts and meaning huge expenses for automakers.
Automakers were also hit by temporary factory shutdowns in the south of Japan after a pair of earthquakes caused major damage and claimed dozens of lives in April, affecting production.
Stiff competition at home and abroad has pushed some Japanese automakers to eye tie-ups.
Toyota and small-car maker Suzuki last month said they were holding talks about a possible partnership.
Toyota said the possible deal was prompted by the fact that it trails competitors in North America and Europe in some areas, while Suzuki is struggling to forge its own path in the fiercely competitive industry.
Nissan is buying a one-third stake in Mitsubishi Motors, forging an alliance that will challenge some of the world’s biggest auto groups.
On Monday, Nissan said net profit in the April-to-September period fell 13.3 percent to ¥282.4 billion, the first decline over that six-month span in four years.
Last week, Honda said its net profit rose 12.1 percent from the same period last year to ¥351.8 billion, as cost cuts offset the impact of the rising yen.
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