Toyota CEO Akio Toyoda said the company still has work to do in spite of big profits last quarter.
The weakening of the Japanese yen gave Toyota’s quarterly profit a boost as it prepares for a new product offensive in key markets in China, Europe and North America.
Toyota profits more than doubled to 313.9 billion yen or $3.2 billion as cost cuts and better sales made an impact while the declining value of the yen gave fresh impetus to the company’s turnaround.
“Toyota has recovered much of the market share lost due to the recalls and natural disaster,” said Alec Gutierrez, senior analyst at Kelley Blue Book.
“Although Toyota has seen solid growth in market share and sales since 2012, sales declined in April. Toyota now finds themselves in one of the most competitive environments the industry has seen in decades, facing strong entrants from familiar competitors Honda and Nissan, as well as reinvigorated competition from U.S. and Korean automakers.
“Although Toyota will find that gaining market share will be difficult moving forward, the new Corolla launching later this year could inject new blood into the brand while a declining yen could help shore up the bottom line.”
Toyota reported that profit from North America improved despite some headwinds such as the cost of settlement of unintended acceleration cases and the difficulties in regaining market share. In April, Toyota’s sales in the U.S. fell for the first time in 18 months, Prius deliveries tumbled 21% and the Camry was replaced by the Honda Accord as the top-selling car in the U.S. Cost cutting efforts helped boost the company’s operating profit in Japan where it has nearly 50% market share.
Toyota sales in China are also on the way to recovery, according to Toyota officials, who also noted the company is launching new models in the second half of 2013 and with its joint venture partners is preparing to expand capacity in China.
Toyota also is preparing to launch several new models in Europe even though the overall market is expected to shrink, Takuo Sasaki, TMC managing director, said during a conference call with financial analysts.
The Japanese auto giant reclaimed the title of world’s top-selling automaker and indicated in its new quarterly financial report it expects the strong results to continue in its new business year that ends March 2014 reflects a 1.37 trillion yen or $13.8 billion profit, up from 962 billion yen for the year ended March 2013.
The annual earnings results were better than the average forecast of 912 billion yen or $9.2 billion in a FactSet survey of analysts and also outdid the company’s own forecast for 860 billion yen ($8.7 billion) profit. Toyota reported a 121 billion yen profit for the January-March quarter of the previous year.
A recent decline in the yen, brought about by the economic and monetary policies of Prime Minister Shinzo Abe, who took office late last year, is a boon for Japanese exporters such as Toyota, which has traditionally advocated for a cheaper yen
Toyota President Akio Toyoda warned competition remains tough, while crediting “Abenomics” as helping automakers like “a wind that’s blowing to push us forward.”
“In the years since my succession as president in June 2009, we have faced many challenges. For Toyota, this was a period of perseverance but also a period of learning through extraordinary and invaluable experiences,” Toyoda said.
He said he was far from confident that Toyota was on a path to sustainable growth, and noted it was just “at the starting line.”
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Anti-Japanese sentiment in China, rekindled by a territorial dispute over tiny East China Sea islands in the latter half of last year, hardly dented Toyota’s overall sales growth, despite a sharp drop in China sales that has not completely ended.
Sales for the quarter ending March totaled 5.8 trillion yen ($58.6 billion). Toyota expects sales for the fiscal year through March 2014 to gain 6.5% to 23.5 trillion yen ($237 billion).
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Toyota is expecting the dollar to trade at 90 yen for that fiscal year.
Toyota sold 8.87 million vehicles around the world in its last business year, up nearly 21% from 7.35 million vehicles the previous year.
The annual gain came despite a fall in vehicle sales in the last quarter because of the China woes and a sales decline in Japan when subsidies for green vehicles ended.