Toy­ota picks up profit pro­jec­tion

Sta­ble yen re­lieves sales dip that has ham­pered car­maker

Toronto Star - - BUSINESS - CRAIG TRUDELL AND MASATSUGU HORIE

Toy­ota raised its full-year profit fore­cast as the yen’s rally stopped short of lev­els the au­tomaker pre­dicted, pro­vid­ing some respite from a sales slow­down that’s threat­en­ing its po­si­tion as the world’s top seller.

Op­er­at­ing profit will prob­a­bly be $22 bil­lion for the year end­ing in March 2017, com­pared with the $20-bil­lion fore­cast the Ja­pan-based com­pany made in Au­gust. Se­condquar­ter net in­come fell 36 per cent to $50 bil­lion, beat­ing an­a­lysts’ es­ti­mates.

A peak­ing U.S. auto mar­ket, tepid de­mand for the new Prius hy­brid and a dearth of other ma­jor new mod­els in its show­rooms have dragged Toy­ota be­hind scan­dal-hit Volk­swa­gen in global de­liv­er­ies this year.

The stronger yen is also re­duc­ing the value of record de­liv­er­ies of RAV4 and other sport util­ity ve­hi­cles in over­seas mar­kets and mak­ing ex­ports of Ja­pan-made Prius and Lexus lux­ury ve­hi­cles less com­pet­i­tive.

“Go­ing for­ward, our ex­ter­nal en­vi­ron­ment is likely to re­main chal­leng­ing with the yen ap­pre­ci­a­tion and on­go­ing changes in mar­ket con­di­tions,” ex­ec­u­tive vice-pres­i­dent Takahiko Ijichi said Tues­day at a press con­fer­ence in Tokyo.

Weaker earn­ings aren’t keep­ing Toy­ota from con­tin­u­ing to re­turn some of its hefty cash pile to share­hold­ers. Toy­ota will buy back as much as 1.31 per cent of shares for $2.5 bil­lion, the com­pany said.

Toy­ota is now op­er­at­ing with the as­sump­tion that fu­ture ex­pan­sion of the global auto mar­ket will en­tail plateau­ing or shrink­ing de­vel­oped mar­kets, bal­anced by higher de­mand in emerg­ing coun­tries, chief com­pet­i­tive of­fi­cer Didier Leroy told re­porters last month.

“If you con­sider the next, let’s say 20 years, the growth of the busi­ness for the au­to­mo­tive in­dus­try will not come from more and more sales,” Leroy said. “It will come from a lot of other ser­vices,” in­clud­ing car- and ride-shar­ing, con­nec­tiv­ity and data man­age­ment.

The tech­no­log­i­cal shakeup has spurred Toy­ota to form a series of al­liances. The car­maker made in­vest­ments in ride-shar­ing leader Uber Tech­nolo­gies in May and car­shar­ing startup Ge­taround last month. It will be­gin pi­lots with both com­pa­nies by early next year.

Toy­ota has been dis­cussing at least 10 dif­fer­ent ar­eas for deeper co-op­er­a­tion with Mazda Mo­tor Corp., from elec­tric ve­hi­cles to con­nected cars. Pres­i­dent Akio Toy­oda has also been ex­plor­ing joint re­search and devel­op­ment with Suzuki Mo­tor Corp. that could cover sim­i­lar fields.

As for its cur­rent lineup, Toy­ota’s newly re­designed Prius that be­gan pro­duc­tion in late 2015 has been strug­gling in the U.S., with de­liv­er­ies drop­ping 12 per cent this year through Oc­to­ber. Sales for the en­tire Prius fam­ily have plunged 28 per cent, in­clud­ing older ver­sions and the plug-in hy­brid that re­cently re­turned from hia­tus.

The trend is alarm­ing for a model line that was in de­cline for sev­eral years lead­ing up to a sub­stan­tial over­haul, with Toy­ota promis­ing a sportier ride and im­proved safety and tech fea­tures.

Prius has in­stead been the most sig­nif­i­cant drag on a pas­sen­ger-car lineup in U.S. that’s seen sales de­cline 10 per cent so far this year.

A tough U.S. auto mar­ket and low Prius de­mand has bat­tered Toy­ota.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.