The new Toyota Corolla hit big in the U.S. and Europe.
Driven by strong demand in both North America and Europe, Toyota Motor Co. saw earnings surge 5% in the latest quarter.
Toyota earned 587.77 billion yen, or $5.7 billion, an all-time record, during the April-June quarter, up 4.6%, while global sales increased 2%, to 6.39 trillion yen, or $62.3 billion. Both numbers exceeded industry analysts’ forecasts. According to FactSet, the consensus called for a 12% decline in earnings compared to a year ago, with only a 1% gain in sales.
The earnings announcement came just days after Toyota released its sales numbers for the first six months of 2013 showing it had remained the world’s largest automotive manufacturer, and apparently still on track to become the first in the industry to sell 10 million vehicles in a single calendar year – though the maker slightly reduced the sales forecast it announced in January.
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Company officials credited a number of factors in helping Toyota beat expectations for the latest three-month period, the first quarter of its fiscal year. Among other things, it has made a push to reduce costs, while a weak yen has improved profitability on exports from the home market.
But the maker also benefited from strong sales in key markets, notably the U.S., where it continued to gain momentum with launches of such critical new offerings as the compact Corolla sedan and RAV4 sport-utility vehicle. The Prius, meanwhile, continued to dominate the North American market for hybrid electric vehicles.
(Toyota’s U.S. sales exceed expectations in July. Click Here for more.)
The Corolla also helped Toyota gain ground in a European market that is just beginning to show signs of recovery after its worst downturn in decades.
But Toyota’s strong earnings performance came despite a sales dip in the home market for the world’s largest automaker, the result of a recent increase in the national sales tax. But the maker also lost some ground in the rest of Asia and some other key emerging markets.
“Conditions in Thailand, India, Brazil and other emerging markets are weak,” noted Managing Officer Koki Konishi during a media briefing. “But we’re trying our best to get an additional 50,000 vehicles out of Japan to offset some of that, and to reach around 2.3 million in the U.S.” during the 2014 calendar-year.
Toyota’s first half sales narrowly exceeded those of rivals Volkswagen AG and General Motors Co., but it far outshone the U.S. maker’s modest $190 million second-quarter profit – which was hammered by $1.5 billion in recall costs.
The maker sold 2.24 million vehicles during the quarter, an increase of just under 10,000. Looking forward, Toyota cautioned that it would likely see sales for all of 2014 come in about 110,000 vehicles short of what it had forecast in January – but that would still allow it to break the industry milestone at a predicted 10.22 million vehicles for the full year, a 2% rise from 2013.
The maker, meanwhile, retained its earlier guidance on earnings, forecasting a profit of 1.78 trillion yen, or $17.4 billion at current exchange rates, for the fiscal year ending next March 31. That would be a 2% year-over-year decline. Sales are expected to remain flat, at 25.7 trillion yen, or $251 billion.
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Over the past decade, Toyota has expanded rapidly in markets as diverse as the U.S. and China, but it has no current plans to open other assembly facilities and officials appeared to be saying no new factories are planned in the near-term.
With current annual global capacity at around 9.8 million vehicles, “This would suffice, considering our current production and sales balance,” Managing Officer Takuo Sasaki said.