Toy­ota’s quar­terly profit up, boosts full year fore­cast

Muscat Daily - - BUSINESS -

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.

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