TOKYO -- Toyota will soon throw open the factory taps to deliver all-time high production output, record global sales and a best-ever operating profit level.
The forecast puts the automaker on the path to brisk expansion after a year in which production plans were dented by lingering pandemic woes and semiconductor shortages.
Ramping up supply should help alleviate tight inventories in key markets such as the U.S. and create a robust profit structure to fund Toyota’s future investment in electric vehicles.
Toyota’s outlook, outlined on Wednesday as CEO Koji Sato announced quarterly financial results, underscores its financial strength even as it races to play catch up on EVs and cope with an influx of aggressive new rivals from the likes of Silicon Valley and China.
Production of Toyota and Lexus brand vehicles will climb to a record 10.1 million vehicles in the current fiscal year ending March 31, 2024, Toyota predicted.
That is up from the 9.13 million turned out in the just ended fiscal year. That result was a record in its own right, but the results still fell below Toyota’s initial forecast for 9.7 million as it struggled with production interruptions.
“Since March, we have been able to continue high-level production while prioritizing safety and quality,” CFO Yoichi Miyazaki said at a briefing here.
“At sales sites in each region, the production volume still cannot keep up with customer demand, so we will continue to promote improvements together with our suppliers in order to further increase the production volume.”
Meanwhile, consolidated global retail sales are expected to soar to record 11.38 million units in the current fiscal year. That is up 7.8 percent over last year and tops the pre-pandemic high of 10.60 million vehicles notched in the fiscal year ended March 2019. The consolidated figure covers deliveries for the Lexus and Toyota brands, as well as Daihatsu and Hino.
The combined effort should drive Toyota’s operating profit back to its best-ever level of 3.0 trillion yen ($22.62 billion) in the current fiscal year, the company forecast.
That would equal the record 3.0 trillion yen ($22.62 billion) operating profit booked in the fiscal year ended March 2022. Although the envisioned operating profit margin will be 7.9 percent, slightly lower than the healthy 9.5 percent margin registered two years ago.
Funding EV plans
Miyazaki said the company’s robust profitability will generate funds to pay for future EVs.
Toyota on Wednesday earmarked an additional 1 trillion yen ($7.54 billion) to help it reach its EV sales target of 3.5 million full electric vehicles by 2030.
That brings Toyota’s total commitment to 5 trillion yen ($37.71 billion) in the period.
"The profit structure that we are aiming for is one that can generate new room for investment," Miyazaki said. "And through that we can finance future investments in EVs."
Miyazaki spoke as Toyota reported an earnings upturn in its fiscal fourth quarter ended March 31. Operating profit climbed 35 percent to 626.9 billion yen ($4.73 billion) in the January to March quarter, while net income increased 3.4 percent to 552.2 billion yen ($4.16 billion).
Global retail sales expanded 2.9 percent to 2.67 million units in the three months.
The consolidated figure covers deliveries for the Lexus and Toyota brands, as well as the Daihatsu minivehicle and Hino truckmaking subsidiaries.
For the full fiscal year ended March 31, however, operating profit declined 9.0 percent to 2.73 trillion yen ($20.59 billion), from the year before. Surging raw material prices, higher labor costs and ramped up r&d spending dinged results.
Operating profit margin shrank to 7.3 percent from 9.5 percent the previous fiscal year.
Net income fell 14 percent to 2.45 trillion yen ($18.48 billion) in the 12 months to March 31, from 2.85 trillion yen ($21.49 billion) a year earlier. Worldwide retail sales increased 1.7 percent to 10.56 million vehicles for the full fiscal year, from 10.38 million the year before.
Looking ahead to the current fiscal year ending March 31, 2024, Toyota predicts operating profit will zoom back to record levels of 3.0 trillion yen ($22.62 billion).
Toyota expects net income to bounce back 5.3 percent to 2.58 trillion yen ($19.46 billion) in the current fiscal year. That would be the second-highest net income on record for Toyota.