Toyota Nearly Doubles First Quarter Profit
TOKYO - Toyota Motor Corp. said its profit for the first quarter of the fiscal year nearly doubled from a year ago, and set an ambitious, worldwide production goal that would break industry records if reached.
The Tokyo-based maker of the Prius hybrid and Camry sedan said profit for the April-June quarter rose to 562.1 billion yen ($5.6 billion) after getting a big boost from a weak yen.
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The company also set a worldwide production goal for the 2013 calendar year at 10.1 million vehicles, which would be an industry record, while it stuck to its global vehicle sales goal for the year at 9.96 million vehicles. That puts it in a neck-and-neck race with U.S. rival General Motors Co. for the crown of world's top automaker.
The company also raised its full-year earnings forecast to 1.48 trillion yen ($14.8 billion), up nearly 54 percent from the previous year. Quarterly sales jumped 14 per cent to 6.25 trillion yen ($62.6 billion).
Toyota's fiscal first quarter profit and sales results both beat estimates by analysts surveyed by FactSet.
Toyota is expecting 24 trillion yen ($240 billion) in sales for the fiscal year through March 2014, up 9 percent from the previous year. It had previously forecast 23.5 trillion ($235 billion) yen in sales.
Toyota marked strong sales in the key U.S. market while growing in some emerging markets. Although its vehicle sales lagged in stagnant Japan and Europe, it managed to boost revenue sales and operating profitability in both regions, thanks to cost cuts.
Last year, Toyota again snatched the title of the world's top automaker in global vehicle sales from GM. It has held up for the first half of 2013, but the race is close. GM boasted such bragging rights for seven decades until 2008.
The blessing of a cheap yen, which Detroit rivals have criticized as unfair, is coming on top of years of aggressive cost cuts that Toyota underwent to eke out profits - even when the yen was high.
The dollar had been trading at about 80 yen the same period a year earlier, but it is recently at about 100 yen.
Toyota gained 260 billion yen ($2.6 billion) from a favourable exchange rate in the fiscal first quarter.
"Operating income increased due to the impact of foreign exchange rates and our global efforts for profit improvement through cost reduction,'' said Managing Officer Takuo Sasaki.
Other Japanese automakers have also benefited from a cheap yen. That was reflected in results earlier this month from Nissan Motor Co. and Honda Motor Co.
Toyota has undergone tough times in recent years, starting with a massive recall fiasco in the U.S. that came on the heels of the financial crisis.
It recalled more than 14 million vehicles globally for sticky gas pedals, faulty floor mats, problematic brakes and many other defects, spanning several years from 2009.
Then its supply chain was devastated by the March 2011 earthquake and tsunami in northeastern Japan.
President Akio Toyoda has stressed the automaker will pursue growth cautiously, making sure to avoid any recurrence of quality lapses that devastated its brand image.
"Toyota is being extremely careful about quality after what it's gone through,'' said Koji Endo, auto analyst at Advanced Research Japan in Tokyo. "The recalls were Toyota's big headache for a while, and they have finally disappeared.''
Since last year, Toyota has faced a new set of problems with sales in China, where anti-Japanese sentiments emerged over a territorial dispute over tiny East China Sea islands. The dispute, which set off riots and boycotts, has sent China sales of Japanese automakers lower.
The verdict is still out on how Toyota fares in emerging markets, Endo said. Making products that appeal to first-time car-buyers in places like India is a different game from wooing American drivers, he said.
"Even the approach to design is different,'' said Endo. "Toyota has not been too successful in the past.''