Toyota quarterly net income rises 4.7% to $5.4 billion
TOKYO -- Toyota Motor today posted a 4.7 percent gain in quarterly net income and raised its full-year profit forecast slightly due to strong demand in the U.S.
Operating profits, however, fell 5.3 percent to 722 billion yen ($6.2 billion) during the October-December quarter due to an increase in expenses.
Net income in the quarter rose 4.7 percent to 628 billion yen ($5.4 billion).
Revenue during the quarter improved 2.4 percent to 7.4 trillion yen ($62.9 billion).
A stabilizing yen against the U.S. dollar following months of deep losses, along with an appreciation in the Japanese currency against the euro and other currencies weighed on the company's third-quarter operating profit.
Toyota said it expects to post record net income of 2.27 trillion yen ($19.43 billion) in the year to March, up slightly from a previous forecast of 2.25 trillion yen, as income in Asia picks up due to increased production efficiencies in China. The company kept its forecast for full-year operating profit unchanged at the 2.8 trillion yen stated in November.
Along with favorable exchange rates in Asia, production changes have lifted earnings even as economic weakness among some Asian countries has resulted in lower vehicle sales.
"Our Chinese operations have improved, which has increased our profitability. This is why we've raised our profit forecast," Managing Officer Tetsuya Otake told a results briefing today.
Higher U.S. sales
Toyota raised its full-year vehicle sales forecast for the North American market to 2.87 million from 2.85 million, as a stable U.S. economy keeps demand strong for its SUVs and pickup trucks. Toyota is positioning its compact RAV4 to supplant the Camry sedan as the new volume leader in the U.S. Lexus had its best year globally in 2015 and finished just behind BMW in the U.S.
Toyota's total 2015 sales in the U.S. improved 5.3 percent to 2.5 million vehicles. January sales fell 4.7 percent to 161,283 vehicles.
While a sharp fall in the Japanese yen versus the U.S. dollar in recent years has boosted profitability, Toyota said its impact has started to subside. For the year, it has set a U.S. dollar rate of 120 yen, compared to a previous forecast of 118 yen.
President Akio Toyoda is steering Toyota toward its third-straight record year, out-earning all other Japanese automakers combined. The automaker sold 10.15 million vehicles globally in calendar 2015, beating out Volkswagen, which has seen its sales suffer due to an emissions-cheating scandal, to keep its title as the world's best-selling automaker.
Toyota’s period of prosperity hasn’t stopped the company from shaking things up. It plans to discontinue the Scion brand that targets young American buyers in August, re-badging all but one model as Toyotas, while buying out Daihatsu Motor for about 389 billion yen in stock to make it a wholly owned subsidiary. The goal will be to transform Daihatsu into a global small-car brand as valued as BMW’s Mini.
Toyota also is looking to deepen its partnership with Mazda Motor. The two companies have assembled a panel to study potential alliances for green cars and other technologies, Tetsuya Fujimoto, a Mazda executive officer, said Thursday. Toyota already owns stakes of Subaru maker Fuji Heavy Industries and truck makers Hino Motors and Isuzu Motors.
The automaker began California sales of its Mirai fuel cell vehicle and production of a redesigned Prius hybrid in the quarter. Toyota could parlay the heavy investment it’s made in hydrogen fuel cells and gasoline-electric autos into more joint production or development projects to lower costs.
Toyota still faces major challenges as it looks to close out the rest of its fiscal year. The automaker is shutting down all Japan assembly plants for at least one week after an explosion at affiliate Aichi Steel’s factory that it relied on for engine, transmission and chassis components. Trading company Toyota Tsusho Corp. warned the disruption to production could compare with Japan’s earthquake and tsunami almost five years ago.
The company said it had yet to factor in any possible impact into its earnings.
Toyota also is among more than a dozen automakers embroiled in an air-bag recall crisis involving Takata Corp. The Japanese supplier is preparing to present a restructuring plan to automakers in early May and is seeking to reach an agreement with Toyota and other customers on the sharing of costs related to the callback of more than 20 million vehicles in the U.S. alone, according to people familiar with the matter.
Toyota said that orders for its new Prius have reached almost 100,000 units.
Reuters, Bloomberg and Automotive News contributed to this report