Toyota hopes to keep its momentum going with new products like the completely redesigned Avalon.
Toyota Motor Co. tripled its net earnings for the July – September quarter as it continued recovering from last year’s devastating Japanese earthquake and tsunami.
The huge jump – which saw the maker’s profit jump to 257.9 billion yen, or $3.2 billion, well in excess of analysts’ consensus forecasts — came despite lopsided exchange rates and the impact of a boycott in China. And it encouraged to maker to forecast that net earnings for the full year will now reach $9.8 billion, up from an earlier forecast of $9.5 billion.
“We have revised the forecast we announced at the end of the first quarter to reflect the progress we have been making,” said Executive Vice President Satoshi Ozawa.
Toyota operates on a fiscal year ending March 31st, so the latest earnings mark the end of the first half of that year during which it saw profits surge 572.1% compared to year-earlier levels.
Like its key rivals, Honda Motor Co. and Nissan Motor Co., Toyota was hammered by the March 11, 2011 earthquake and tsunami that all but shut down the Japanese auto industry for several months. Parts shortages left even overseas operations, such as the Camry plant in Georgetown, Kentucky, operating at reduced line rates for much of the year.
Profits for all of the previous fiscal year totaled just 283.5 billion yen, or barely 10% more than the maker earned during the most recent quarter alone. Net income for the July – September 2011 quarter totaled a meager 80.4 billion yen.
Sales for the quarter rose a more modest 18%, to 5.4 trillion yen, or $67.6 billion. That reflected recovering sales in all of the maker’s key operating regions, including the home Japanese market, North America, Europe and Asia. On a unit basis, Toyota sold 2.2 million vehicles for the quarter, up from 1.8 million a year ago.
“We have seen a significant increase in production in all regions compared to the same period last year when we suffered parts-supply shortage,” said Ozawa.
In North America alone, demand surged by 572,000 vehicles, to 1.3 million for the July – September quarter. Japan was up by a third, to 1.2 million. And even in Europe, demand rose 51,000, to 412,000.
Despite revising its earnings forecast upwards, Toyota actually downgraded its sales expectations for the full fiscal year, however. It now expects to sell 8.75 million cars, trucks and crossovers by March 31, 2012, about 50,000 fewer than President Akio Toyoda had forecast just a few months ago. That would still be a sharp improvement from the 7.35 million vehicles sold during capacity-constrained 2011.
But it reflects mounting concerns about the slumping European market and the potential, ongoing impact of a consumer boycott in China. That was touched off when the Japanese government purchased a chain of uninhabited islets in the South China Sea also claimed by China. The dispute touched off angry demonstrations that even saw a Toyota plant torched and a number of Japanese cars destroyed. The maker’s September sales in China, meanwhile fell by about half.
Sales in China for the full year are now expected to reach only 850,000, down from an earlier projection of 1 million. In turn, that is anticipated to cost $375 million in potential earnings.
Toyota has since offered to cover damages to its vehicles and is offering special incentives to draw buyers back to showrooms. But demand was off another 44% in October.
The maker has also been struggling to overcome the negative impact of a strong yen, especially in dollar-denominated countries like the U.S. This has led it to continue expanding production outside the home market, though Pres. Toyoda, the grandson of Toyota’s founder, has promised to maintain a sizable production base on the home islands.
Much of the improvement in earnings for the latest quarter, Toyota noted, came from a clampdown on costs.
Toyota’s announcement came barely a week after Honda revealed a 36% jump in profits for the July – September quarter. Nissan will present its earnings report tomorrow.
By comparison, Detroit’s two largest makers fared far less well, Ford earnings holding about flat for the quarter, GM reporting a 14.5% decline in net earnings. But Chrysler said its profit for the quarter rose about 80%.