Toyota conservative on profit amid CEO transition
Toyota posted third-quarter profit that topped estimates, but kept its conservative outlook for the year intact in the face of stubborn component shortages ahead of a change in leadership.
Profit for the fiscal quarter ended December topped rose 22 percent to ¥957 billion ($7.3 billion) from a year earlier, exceeding analysts’ average projection for $7.2 billion. For the fiscal year ending March, operating profit is on track to reach $18.2 billion, in line with the prior forecast, the company said Thursday.
After 14 years at the helm, Chief Executive Officer Akio Toyoda is preparing to become executive chairman and cede his current role in April to Koji Sato, who runs the Lexus luxury car division. Apart from keeping production intact while shortages persist for parts and semiconductors, Sato will have to guide Toyota into a new era of electrification and driverless vehicles.
Toyota is sticking to its outlook in the face of “soaring materials and energy prices,” even after quarterly profit benefited from higher volumes and a weaker yen that boosted income brought home. It’s seeking to “quickly evaluate alternative semiconductors and respond to design changes for securing stable procurement,” underscoring the persistent automotive chip shortage that has been a drag on the global industry. The carmaker kept its forecast for output of 10.4 million units.
“Third-quarter earnings were expected to be high but perhaps not this much,” said Tatsuo Yoshida, a Bloomberg Intelligence analyst. Based on Toyota’s low expectations for the dollar and euro, as well as cost-cutting efforts, operating profit will probably exceed the outlook for the fiscal year, he added.
“There’s room for upward movement,” Yoshida said.
Shares in Toyota reversed losses and rose as much as 1.3 percent after the results. The stock is up about 6 percent this year, after declining 14 percent in 2022.
Sales for the 12 months ending March will be $274 billion, in line with the prior forecast, the company said. For the latest quarter, revenue rose 25 percent to $74 billion.
Sato will take over as production recovers from COVID-induced lockdowns, supply-chain snarls and component shortages. Toyota expects output to exceed pre-pandemic levels in 2023, forecasting assembly of as many as 10.6 million vehicles. At the same time, it warned that final shipments could be 10 percent lower if it is unable to procure enough parts, especially chips.