Toy­ota warns China mar­ket tougher as profit beats es­ti­mates

The Pak Banker - - COMPANIES/BOSS -

BEI­JING: Toy­ota Mo­tor Corp. warned of tougher com­pe­ti­tion in China and raised its forecast for Ja­pan sales as it re­ported quar­terly profit that beat an­a­lyst es­ti­mates. Net in­come in the April-to-June pe­riod rose to 646.4 bil­lion yen ($5.2 bil­lion), ex­ceed­ing the 617.1 bil­lion yen av­er­age of 12 an­a­lysts' es­ti­mates com­piled by Bloomberg. Op­er­at­ing profit trailed es­ti­mates and Toy­ota cut its full-year de­liv­ery forecast by 30,000 units to 10.12 mil­lion. The an­nual profit forecast was left un­changed.

Toy­ota has out­paced the in­dus­try in China this year, boost­ing de­liv­er­ies by 12% in the world's largest auto mar­ket even as com­peti­tors like BMW AG con­sider re­vis­ing their prof­itabil­ity goals amid slow­ing de­mand. A weaker yen has helped soften the blow from de­clin­ing de­liv­er­ies in Ja­pan and South­east Asia, which helped lead to Volk­swa­gen AG inch­ing ahead as the world's largest au­tomaker by sales.

"The sales ex­penses have gone up and also the sales prices have come down slightly," Tet­suya Otake, a Toy­ota man­ag­ing of­fi­cer, told re­porters in Tokyo on Tues­day. "This is mak­ing our busi­ness in China quite dif­fi­cult. The busi­ness en­vi­ron­ment is get­ting tougher." BMW low­ered pro­duc­tion by 16,000 cars in China, its big­gest mar­ket, Chief Fi­nan­cial Of­fi­cer Friedrich Eichiner said Tues­day. Af­ter a stock mar­ket rout dis­cour­aged cus­tomers from mak­ing large pur­chases, those still buy­ing are de­mand­ing big­ger price cuts, he said. Toy­ota said last week that it sold 5.02 mil­lion ve­hi­cles in the six months through June, trail­ing the 5.04 mil­lion that Volk­swa­gen re­ported weeks ear­lier. De­liv­er­ies de­clined 1.5% for Toy­ota and 0.5% for Volk­swa­gen. While Volk­swa­gen may have sur­passed Toy­ota by sales dur­ing the first half of the year, the Ja­panese car­maker still leads the in­dus­try in prof­its. An­a­lysts pro­ject the com­pany may earn about $26 bil­lion in op­er­at­ing profit for this fi­nan­cial year, al­most dou­ble the $14.8 bil­lion es­ti­mated for Volk­swa­gen.

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