Toyota raises profit outlook on weak yen, strong US sales

PUBLISHED : Friday, 02 August, 2013, 3:30pm
UPDATED : Friday, 02 August, 2013, 11:09pm

Toyota Motor raised its operating profit forecast for the financial year ending March next year on Friday as the weaker yen makes exports more profitable and on the back of strong sales in its biggest market, the United States.

The world’s best-selling carmaker now expects to book 1.94 trillion yen (HK$152.6 billion) in annual operating profit, up from its previous forecast of 1.8 trillion yen.

Friday’s revised figure nudges Toyota closer to the record profit mark of 2.27 trillion yen it booked in the year to March 2008. The average estimate of 26 analysts also projects a profit of close to 2.27 trillion yen.

Toyota managing officer Takuo Sasaki said Toyota, which booked a record operating profit in the year ended March 2008 when the yen was much weaker, then plunged into a loss the following year as the global financial crisis unfolded.

“Our profitability has improved steadily compared to what it was before the Lehman shock,” he told a news conference.

Toyota, the third biggest carmaker in the United States, sold 1.3 million vehicles there in January-July, up 8 per cent from a year ago. In the month of July, sales rose 17 per cent as the Avalon and RAV4 proved popular.

The United States is Toyota’s biggest market, accounting for nearly a quarter of its global sales. Its January-July market share dropped by 0.1 percentage point to 14.3 per cent.

In July, US new-vehicle sales rose 14 per cent and the annual sales rate in the month finished at 15.67 million vehicles, below the expected 15.8 million rate.

Globally, Toyota has posted a 5.4 per cent rise in its biggest regional market North America in January-June as the United States is seeing the strongest pace of annual sales in more than five years.

In Japan, its second largest market, sales dropped 12.7 per cent year-on-year in Jan-July after green car subsidies ended last year, but it is seeing strong sales of profitable luxury models.

Toyota, however, is facing slower-than-expected growth in Southeast Asia, its biggest regional market after North America and Japan, underperforming industry-wide growth as it is hurt by government policy swings in Thailand and Indonesia.

Toyota also raised its calendar year this year group-wide global production forecast to 10.12 million vehicles from the previous forecast of 9.94 million vehicles. Toyota’s group-wide production include figures at group companies Daihatsu Motor and Hino Motors.

A weakening yen that makes exports profitable and lets it convert money made overseas at a favourable rate have set Toyota nicely to boost its performance.

On Friday, Toyota posted an 87.9 per cent rise in operating profit to 663.4 billion yen ($6.69 billion) for its April-June first quarter, roughly in line with the average estimate of 649 billion yen in a Thomson Reuters I/B/E/S survey of four analysts.

That was the biggest quarterly operating profit in six years and just shy of its record, in April-June 2007, of US$6.9 billion, or 675.4 billion yen, and was stronger than Volkswagen AG’s group April-June operating profit of US$4.5 billion and General Motors’ US$1.8 billion.

Shares in Toyota have more than doubled since mid-November when expectations mounted that Shinzo Abe would take over as prime minister and implement bold economic policies, helping to weaken the yen. Toyota has outperformed the benchmark Nikkei average, which is up about two-thirds over that period.