Toyota’s quarterly profit up, boosts full year forecast
Tokyo, Japan - Toyota said on Friday its fiscal first quarter net profit jumped 11 per cent to US$5.6bn with vehicle sales up in Japan and the United States, while it also lifted its annual earnings forecast.
The Corolla and Prius hybrid maker posted a net profit of 613bn yen (US$5.6bn) in the three months to June as revenue rose seven per cent to 7.05tn yen. Quarterly operating profit, however, fell nearly 11 per cent to 574.3bn yen, partly owing to currency fluctuations, it said.
Toyota, which lost its crown as the world’s top-selling automaker in 2016, now expects profit for the year to March 2018 to come in at 1.75tn yen, up from an earlier 1.5tn yen forecast, as it forecasted a downturn in the yen.
Vehicle sales were 2.59mn units in the quarter, slightly up from 2.52mn units a year ago.
Demand rose in North America, Europe, Central and South America, Africa and the Middle East. Sales also rose in Toyota’s home market, Japan, but they fell in the rest of Asia.
The auto giant last year suffered its first drop in annual profit in five years, as it pointed to the cost of customer incentives in the key US market.
Quarterly operating profit in the North American market tumbled by nearly half from a year ago owing to those marketing costs, which can include low-interest financing, cash-back rebates and other perks.
“Toyota is facing tough competition in the North American market due to a delay in its shift to pickups and SUVs,” Satoru Takada, an analyst at Tokyobased research and consulting firm TIW, said ahead of the earnings.
US auto sales have been sputtering, forcing automakers to boost incentives to land customers.
“Foreign exchange is a key factor for the industry,” Takada added. “Current levels are relatively positive for the Japanese auto industry.”
The level of the Japan’s currency against the dollar and other units is a key factor in Toyota’s competitiveness abroad and the value of profits its earns abroad.
The yen has moved sharply over the past year and a half with it surging after Britain’s shock vote to exit the European Union boosted demand for the safe haven asset.
The trend briefly reversed course after billionaire Donald Trump’s November US presidential election win boosted the dollar against the yen and other currencies.
Japan’s auto industry is facing uncertainty over Trump’s drive to support US firms over foreign imports, a stance that has raised fears of a global trade war.
He has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.
Last week, rival Honda said net profit for the first quarter rose by double digits boosted by strong motorcycle sales, as it revised up its full-year forecast.
The Tokyo-based company said solid sales of two-wheel vehicles in Asia and cost reduction efforts contributed to increased profits.