Despite China sales drop, Toyota trebles Q2 profit

RESILIENCE::Japanese carmakers took a hit from anti-Japan backlash over a row with China, but while others cut their annual earnings forecast, Toyota has raised it

Reuters, TOKYO

Tue, Nov 06, 2012 - Page 15

Toyota Motor Corp raised its full-year net profit forecast to US$9.7 billion even after its sales in China, the world’s biggest auto market, were battered by public backlash against Japan over a territorial row.

Sales at Toyota and its two Chinese joint ventures almost halved in September and last month. Honda Motor Co’s China car sales more than halved last month, while Nissan Motor Co’s fell 41 percent.

While Honda last week cut its full-year net profit forecast by one-fifth to take account of the China damage and Nissan was expected to follow suit when it released its July-to-September results yesterday, Toyota has found room to revise its forecasts higher as it traditionally gives more conservative earnings guidance and relies less heavily on China sales.

China, the world’s biggest auto market, accounts for about 12 percent of Toyota’s revenues, some way below Nissan’s 27 percent and Honda’s 20 percent. The anti-Japan backlash in China over the disputed Diaoyutai Islands (釣魚台) in the East China Sea — known as the Senkakus in Japan and also claimed by Taiwan — allowed Hyundai Motor Co and BMW AG to pick up market share.

Toyota increased its net profit forecast for the year to the end of March to ¥780 billion, up 2.6 percent from its previous guidance. It said full-year operating profit would be ¥1.05 trillion, up a touch from its earlier forecast of ¥1 trillion.

Net profit in the July-to-September period more than trebled to ¥257.9 billion on solid sales in North America and Southeast Asia, beating an average estimate of ¥228.8 billion from six analysts polled by Thomson Reuters I/B/E/S. A year ago, Japanese manufacturers were still reeling from the March 11 earthquake and tsunami.

In its biggest market, the US, Toyota’s sales rose 16 percent last month from a year ago, giving it and its Lexus brand a 13.9 percent market share, up from 12.3 percent.

Toyota and its group companies sold a total of 7.4 million vehicles worldwide in between January and September, beating General Motors Co and Volkswagen AG to be the to-selling carmaker. Toyota was the world’s biggest automaker from 2008 through 2010 and looks set to regain top slot this year after recovering from a series of crises — from the global financial meltdown and damaging recalls, to natural disasters and the China row.

Toyota yesterday trimmed its forecast for global full-year production — excluding most of its China business — to 8.75 million vehicles from a previous 8.8 million.

As the global market evolves, Toyota is looking to strengthen its foothold in emerging markets and plans to double its China sales to 1.8 million cars by 2015. It has positioned Southeast Asia as a “second mother-base” after Japan.

Toyota’s shares gained 2.22 percent to ¥3,210 in Tokyo trading yesterday.