Toyota profit more than doubles on yen, cost cuts
TOKYO – Toyota's quarterly profit more than doubled to 313.9 billion yen ($3.2 billion) as cost cuts and better sales worked with a weakening yen to add momentum to the automaker's comeback.
Toyota Motor Corp., which last year reclaimed the title of world's top-selling automaker, said Wednesday it expects the strong results to continue in its new business year that ends March 2014. It projected a 1.37 trillion yen ($13.8 billion) profit, up from 962 billion yen for the year ended March 2013.
The annual earnings result was better than the average forecast of 912 billion yen ($9.2 billion) in a FactSet survey of analysts and also outdid the company's own forecast for 860 billion yen ($8.7 billion) profit. Toyota reported a 121 billion yen profit for the January-March quarter of the previous year.
A recent plunge in the yen, brought about by the economic and monetary policies of Prime Minister Shinzo Abe who took office late last year, is a boon for Japanese exporters such as Toyota because it boosts earnings from overseas. The U.S. dollar has gained about 20 percent against the yen and is now trading at nearly 100 yen.
But Toyota President Akio Toyoda warned competition remains tough, while crediting "Abenomics" as helping automakers like "a wind that's blowing to push us forward."
Toyota has undergone hard times in recent years, starting with the massive recall fiasco which hurt its image in the crucial U.S. market and came on the heels of the financial crisis that also slammed its business. Then the automaker's production was devastated by the March 2011 earthquake and tsunami in northeastern Japan. But the maker of the Prius hybrid and Camry sedan has been gradually recovering.
"In the years since my succession as president in June 2009, we have faced many challenges. For Toyota, this was a period of perseverance but also a period of learning through extraordinary and invaluable experiences," Toyoda told reporters.
He said he was far from confident Toyota was on a path to sustainable growth, and noted it was just "at the starting line."
Analysts warn that Toyota faces intense competition from a powerful Hyundai of South Korea as well as more established U.S. automakers General Motors Co. and Ford Motor Co. They are all fighting for a slice of the pie in growing markets such as Asia and Africa.
Toyota officials were quick to point out that only a small part of its improved fortunes came from a favorable exchange rate.
For its operating profit for the fiscal year ended March, Toyota credited 650 billion yen ($6.6 billion) to what it called marketing activities, or improved sales, 450 billion yen ($4.5 billion) to cost cuts and 150 billion yen ($1.5 billion) to the weaker yen.
Toyota's vehicle sales improved in almost all regions around the world, including the important U.S. market, Japan, the rest of Asia and Europe.
Anti-Japanese sentiment in China, rekindled by a territorial dispute over tiny East China Sea islands in the latter half of last year, hardly dented Toyota's overall sales growth, despite a sharp drop in China sales that has not completely ended.
Sales for the quarter ending March totaled 5.8 trillion yen ($58.6 billion). Toyota expects sales for the fiscal year through March 2014 to gain 6.5 percent to 23.5 trillion yen ($237 billion).
Toyota is expecting the dollar to trade at 90 yen for that fiscal year.
Toyota sold 8.87 million vehicles around the world in its last business year, up nearly 21 percent from 7.35 million vehicles the previous year.
The annual gain came despite a fall in vehicle sales in the last quarter because of the China woes and a sales decline in Japan when subsidies for green vehicles ended.
Toyota expects to sell 9.1 million vehicles in its current business year, with sales growth around the world, including North America, Europe and Asia, offsetting a slight fall in Japan.
"What an amazing turnaround for Toyota ... after a couple of years of a roller-coaster ride dealing with numerous recalls and the Japanese earthquake," said Alec Gutierrez, senior analyst at Kelley Blue Book. "Toyota saw its highest earnings in nearly five years and strong growth in sales last year."
Last month, Honda Motor Co. reported a 367 billion yen ($3.7 billion) profit for the fiscal year through March, up 73.6 percent from a year earlier, and said it's expecting to do even better this fiscal year through March 2014, with a 580 billion yen ($5.8 billion) profit.
Nissan Motor Co. reports earnings Friday.