Thu, May 10, 2018 - Page 10 News List

Toyota reports record net profit, warns on outlook

‘PROFOUND CHANGE’:Akio Toyoda said the company is facing a ‘once-in-a-century’ challenge, which it would meet by investing in new technology and building alliances

AFP, TOKYO

Japanese auto giant Toyota Motor Corp yesterday reported record full-year net profit thanks to a weaker yen and US tax cuts, but warned about the outlook for the next 12 months.

Toyota president Akio Toyoda said that the industry was facing a “profound change” and pledged to transform the auto giant into “a mobility company.”

Japan’s leading automaker said net profit jumped 36.2 percent to ¥2.49 trillion (US$22.7 billion) in the year ending March, but for the current year it expects that to fall 15 percent to ¥2.12 trillion.

The boost was driven by a weaker yen and cost-cutting measures, but also US tax cuts, which have pushed up profits for other automakers over the past few months.

“Toyota quickly recovered thanks to the US tax cuts and a weak yen for the last fiscal year,” Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm, told reporters ahead of yesterday’s earnings report.

Sales rose 6.5 percent to a record ¥29.3 trillion, despite a 0.1 percent decline in vehicle sales by unit, and operating profit was up 20.3 percent, Toyota said.

It said it expected the market in developing countries to stay steady, with the market in emerging economies expanding gradually.

However, it also warned of “profound transformation” in the industry as a whole because of “increasing, serious environmental issues and other social challenges, [and] technological innovation, such as automated driving.”

The company is facing a “once-in-a-century” challenge, “as our rivals change, as well as the rules of the competition,” Toyoda said.

The company now faces rivals that include information technology companies with massive capital and the ability to adapt swiftly, Toyoda said, adding that Toyota would invest in new technology and look for alliances to create novel products and services.

He gave no further specifics.

“I have decided to transform Toyota from a car manufacturer to a mobility company,” Toyoda said.

That would entail becoming a firm that “provides various services involving movement of people around the world,” he added, without providing more detail.

The company expects a strong yen for the current fiscal year, with sales forecast to slip 1.3 percent to ¥29 trillion.

A stronger yen makes Japanese automakers less competitive in foreign markets and deflates profits when repatriated.

“It is hard for the company to draw up a positive scenario for the current fiscal year, as positive factors can’t be seen,” Takada said.

Toyota shares surged 3.75 percent to close at ¥7,424 after its earnings announcement.

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