Wed, Nov 08, 2017 - Page 10 News List

Toyota raises forecast as profit jumps

FOREIGN EXCHANGE:The Japanese automaker has leaned heavily on weakness of the yen to maintain competitiveness, as growing incentives are pressuring its profit

AFP, TOKYO

Japanese auto giant Toyota Motor Corp yesterday reported a rise in first-half net profit and raised its forecast for the whole year, citing a cheaper yen and cost-cutting efforts.

Japan’s No. 1 automaker said net profit rose 13.2 percent to ¥1.07 trillion (US$9.4 billion) for the six months to September on sales of ¥14.2 trillion, up 8.6 percent.

The Prius maker now expects to bank a net profit of ¥1.95 trillion for the fiscal year to March next year, up from an earlier estimate of ¥1.75 trillion.

In the previous fiscal year, Toyota suffered its first drop in annual profit in five years, which it blamed on the cost of customer incentives in the key US market.

Toyota said operating profit from its domestic and European markets showed moderate gains for the first half, but operating profit from North America more than halved due to a decline in sales and swelling incentives.

“Toyota has benefited from a weak yen, but growing incentives in North America have pressured its profit,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.

“Foreign exchange will remain a decisive factor for the second half,” Takada told reporters before the announcement.

The level of Japan’s currency against the US dollar and other units is a key factor in Toyota’s competitiveness abroad and in the value of profits it earns abroad.

The yen has moved sharply in recent years, surging after Britain’s shock vote to exit the EU boosted demand for the safe-haven currency.

The trend briefly reversed course in November last year when then US-presidential candidate Donald Trump’s election victory boosted the dollar against the yen and other currencies.

Japan’s auto industry is facing uncertainty over Trump’s drive to support US firms over foreign imports, a stance that has raised fears of a global trade war.

Trump has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.

The US leader, who left Japan for South Korea earlier yesterday after winding up the first leg of his Asian tour, lashed out at the US trade relationship with Japan while in Tokyo.

“We want fair and open trade, but right now, our trade with Japan is not fair and open,” Trump told Japanese business leaders on Monday.

Last week, Honda Motor Co Ltd revved up its annual profit outlook on strong motorcycle sales and a lower yen, but the more upbeat figures still represented a drop from the previous year.

Nissan is scheduled to report its first-half results today after it suspended all domestic production due to an inspection scandal.

The firm yesterday restarted production after apologizing to its customers.

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