Strong demand for new models, such as the redesigned Corolla, helped Toyota top 10 million sales.
Even after paying a $1.2 billion settlement to the U.S. Justice Department to settle a safety dispute, Toyota Motor Co. wrapped up its fiscal year with record annual profits and sales, Toyota becoming the world’s first maker to ever sell 10 million vehicles in a 12-month period.
But the Japanese giant also warned today that earnings for the year ahead will likely slip slightly as momentum from a weak yen begins to fade. The maker could also feel the impact of an increase in the sales tax in Japan where it overwhelmingly dominates the market.
For the full fiscal year that ended on March 31st, Toyota delivered net profits of 1.82 trillion yen, or $17.9 billion at current exchange rates. That was nearly double the 962 billion yen it earned the year before. Annual sales, meanwhile, increased 16%, to 25.69 trillion yen, or $252 billion.
Notably, Toyota moved 10.13 million vehicles during the fiscal year, the first automaker ever to achieve that goal – and something it may achieve during the 2014 calendar year, as well, if it hits its targets.
(Toyota announces plans to move U.S. headquarters to Texas. Click Here for that report.)
“Increased vehicle sales and cost-reduction efforts and other factors contributed to the growth of operating income,” noted Executive Vice President Nobuyori Kodaira.
(Honda wraps up fiscal year with record earnings. Click Here for more.)
But the January to March period was not quite as solid as the first three quarters of Toyota’s fiscal year. The maker took a sharp blow to earnings from the critical U.S. market after paying a $1.2 billion penalty to the Justice Department to settle an ongoing investigation triggered by the 2009-2010 recall of millions of vehicles related to so-called unintended acceleration.
Other one-time costs, including charges connected with ending vehicle production in Australia resulted in a total $2.17 hit to the bottom line during the fourth quarter of the fiscal year. For the period, Toyota made 297.0 billion yen, $2.89 billion, compared with 313.9 billion yen, or $3.05 billion, a year earlier. The maker noted it had also increased R&D expenses during the quarter – though it expects that move to pay off in improved products and increased sales long-term.
Toyota delivered a strong performance for the year in most of its key markets, including the U.S., Europe, and Asia. It saw strong growth, in particular, in the home Japanese market, “Due to the improving economic situation,” noted Toyota Motor Corp. Managing Director Tetsuya Otake. But it also benefitted from the strong response to new models like the redesigned Corolla, as well as a push to buy before a big consumption tax hike took effect on April 1.
(Ford earnings fall 40% for first quarter. Click Here for the full story.)
The new tax could have a slightly negative impact on sales during the new fiscal year, however. And Toyota also noted that the huge gains in earnings it has delivered over the last several years were driven in part by the declining value of the yen, so as the yen stabilizes it will lose some of that momentum in the new fiscal year.
The maker forecast that its profit for the 12-month period through March 2015 will slip slightly to 1.78 trillion yen, or $17.5 billion, though it anticipates a further increase in global car sales, with a target of 10.25 million vehicles for the new fiscal year.
Toyota handily topped traditional rivals General Motors and Volkswagen AG during the 2013 calendar year, but VW officials say the German maker hopes to also break the 10 million barrier in 2014.
(GM earnings hammered by recall costs. Click Here for the story.)
The impact of increased competition was apparent in the final quarter of Toyota’s fiscal year where it actually sold fewer vehicles in the key North American market, volume dipping to 567,000 vehicles compared to 603,000 the previous year.
A weak yen and strong sales prior to the new Japanese tax increase helped Honda deliver its own big jump in earnings for the final quarter of the fiscal year, to 170.5 billion yen, or $1.67 billion, up from 75.7 billion yen the year before. Earnings for the full fiscal year were up 36%, to 574 billion yen, or $5.6 billion. The third-largest Japanese maker expects to see a 4% rise for the new fiscal year.
Detroit’s two biggest automakers, meanwhile, reported declines in earnings for the January to March period, General Motors hammered by more than $1 billion in expenses for a variety of recalls during the period. Newly merged Fiat Chrysler Automobiles also went slightly into the red, though that was largely driven by losses in Europe by the Fiat side of the company. It will report a breakout for Chrysler next week.
(For the details on Fiat Chrysler earnings, Click Here.)
Nissan, Japan’s second-largest maker also will report earnings next week.