TOKYO -- Toyota again powered through the global microchip shortage in the latest quarter booking a 48 percent surge in operating profit despite output cutbacks and stagnant sales.
Soaring higher on aggressive cost control and beneficial foreign exchange rates, Toyota also lifted its full-year profit forecasts to near record levels, even as it trimmed its sales outlook.
Toyota's operating profit climbed to 749.9 billion yen ($6.72 billion) in the fiscal second quarter ended Sept. 30, from 506.0 billion yen ($4.53 billion) the previous year, when the worldwide auto industry was in the throes of the COVID-19 pandemic.
Operating profit margin came in at a healthy 9.9 percent for the three-month period.
Record Q2 net income
In announcing its financial results on Thursday, Japan's biggest automaker said net income advanced 33 percent to 626.6 billion yen ($5.61 billion) in the July-September quarter.
That marked a record high for the company's fiscal second quarter.
Revenue grew 11.4 percent to 7.55 trillion yen ($67.62 billion), even as global retail sales dipped 0.5 percent to 2.51 million units as Toyota began slowing output due to supply chain issues.
CFO Kenta Kon credited cost control, better inventory management and improved pricing power for the resilient results, even as Toyota cut back on production. Tight supply of vehicles and high demand, for example, enabled Toyota to curb incentives and slash marketing expenses.
Toyota was also lifted by favorable foreign currency exchange rates, which boosted the value of its dollar-denominated earnings when converted back into Japanese yen.
"Production volume declined globally, but our suppliers, plants and dealers made great efforts to supply as many cars as possible," Kon said. "However, in comparison to the past level, although there is some risk of a production decrease, it is going to recover quite a bit."
Easing chip shortage
Toyota expects production to bounce back gradually starting in December and into next year as the global semiconductor shortage eases, Kon said. But there are still lingering uncertainties about supply, and Kon said it was too soon to rule out further interruptions.
"The risk is becoming significantly smaller," he said. "However, we're not in a place to say the risk is zero."
Toyota said last month it would cut global production for a third time this year as the pandemic and global shortage of automotive microchips continue to bite.
Toyota said it will produce between 850,000 and 900,000 vehicles worldwide in November.
That total represents a 15 percent cutback from Toyota's revised November production plan to produce 1 million vehicles in the month.
The reduction followed plans to cut October output by 40 percent and September output by 40 percent, as the semiconductor shortage hit home.
In announcing the November slowdown, Toyota said it sees signs of recovery on the horizon. And even with the cutback, the reduced output level still represents an all-time high for the month of November. That is because in August, Toyota actually raised the November monthly target to 1 million units in an attempt to catch up from earlier setbacks.
Blaming the crimped production, Toyota cut its global retail sales forecast to 10.29 million vehicles from an earlier outlook of 10.55 million, including minicar maker Daihatsu and truck maker Hino. But even that represents a 3.7 percent increase over the previous year.
Bullish profit outlook
Toyota lifted its full-year operating profit outlook 12 percent to 2.8 trillion yen ($25.08 billion), and improved its net income forecast 8.3 percent to 2.49 trillion yen ($22.30 billion).
Both the operating profit and net income totals would represent the second highest earnings on record at the company, coming in just shy of the company's all-time highs.
Revenues are also expected to reach near record levels at 30.0 trillion yen ($268.70 billion), just shy of the all-time high of 30.2 trillion ($270.49 billion) in the fiscal year ended March 31, 2019.
The July-September results build on a stellar fiscal first quarter.
The country's biggest automaker notched all-time high quarterly operating profit in the April-June period -- and record fiscal first-quarter results for net income, revenue and global retail sales. And it achieved an enviable 12.6 percent operating profit margin for that quarter.
