Toyota Raises Full-Year Forecast, Predicts Second-Half Plunge
Toyota Lifts Full-Year Outlook After Beating Forecast
Haruyoshi Yamaguchi/Bloomberg
Toyota is raising prices for some models and will aim to increase sales of models with few competitors such as the Land Cruiser sport-utility vehicle to counter the yen, Ozawa said.
Toyota is raising prices for some models and will aim to increase sales of models with few competitors such as the Land Cruiser sport-utility vehicle to counter the yen, Ozawa said. Photographer: Haruyoshi Yamaguchi/Bloomberg
Toyota Motor Corp., the world’s largest carmaker, raised its full-year profit forecast as sales in Asia helped the company beat its first-half plan.
Net income may total 350 billion yen ($4.3 billion) for the 12 months ending March 31, compared with an earlier estimate of 340 billion yen, the Toyota City, Japan-based company said in a statement today.
Toyota follows Honda Motor Co. and Nissan Motor Co. in boosting earnings forecasts as economic growth in Asia spurs sales. That’s helping President Akio Toyoda, grandson of the company’s founder, withstand the yen’s advance to near a 15-year high against the U.S. dollar and the lingering effects of record vehicle recalls for defects tied to unintended acceleration.
“Toyota’s double-digit sales growth in Japan, China and Southeast Asia drove the profit gain” in the first half, said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo. “The second half looks shockingly bad. I don’t see the road map to recovery.”
Toyota predicted profit will plunge 77 percent for the remainder of the year. Based on the forecast, second-half net income may fall to 61 billion yen from 265 billion yen a year earlier.
The carmaker’s shares rose 1.9 percent to close at 2,964 yen in Tokyo trading before the earnings announcement. The stock has declined 24 percent this year, compared with Honda’s 7 percent drop and a 50 percent gain for South Korea’s Hyundai Motor Co.
Yen Outlook
The company revised its outlook for the Japanese currency to 85 yen against the dollar from 90 yen. A stronger yen erodes profit by reducing the repatriated value of overseas sales. The yen touched 80.22 against the dollar on Nov. 1, the highest level since April 1995.
“If the yen stays at this level in the mid- to long-term, this is an extremely painful prospect,” Toyota Executive Vice President Satoshi Ozawa said today. The company is aiming to maintain about 3 million units of domestic production capacity to protect jobs, he said.
Toyota is raising prices for some models and will aim to increase sales of models with few competitors such as the Land Cruiser sport-utility vehicle to counter the yen, Ozawa said.
The automaker is also adding “limited” capacity to some plants to increase production of larger models that lag behind demand, Executive Vice President Yukitoshi Funo said today.
Vehicle Recalls
As Toyoda, 54, tries to regain customers’ trust after the acceleration-related problems, the company has continued to recall models for separate faults. Yesterday, Toyota said it will recall about 135,600 Passo and iQ cars in Japan and Europe to fix the vehicles’ electronic power-steering system.
The carmaker also faces falling demand in Japan after a government subsidy program ended Sept. 8. Toyota’s domestic sales plunged 24 percent in October.
“What worries me more than the recalls is a shaky global economy and fallout from the end of government subsidies,” said Yuuki Sakurai, who helps oversee the equivalent of $8.7 billion as chief executive officer and president at Fukoku Capital Management Inc. in Tokyo.
In the U.S., traditionally Toyota’s most profitable market, unemployment near 10 percent forced the Federal Reserve to announce a plan on Nov. 3 to buy an additional $600 billion of Treasuries through June to boost economic growth through lower borrowing costs.
For the full fiscal year, vehicle sales in North America may decline to 2.09 million from 2.098 million, compared with an earlier estimate of 2.17 million, Toyota said.
Slow U.S. Recovery
“Recovery in the U.S. is slow,” Funo said. “Passenger car sales are weak, and this situation will continue for some time.’”
While industrywide U.S. sales in October rose to the fastest annual rate since August 2009, Toyota’s deliveries dropped 4.4 percent as demand shifted to light trucks from cars, such as its Camry and Corolla models, said Bob Carter, the company’s U.S. group vice president. Honda and Nissan each posted sales gains in the nation while U.S.-based carmakers reported a combined sales increase of 15 percent for the month.
Toyota will start selling a new low-cost model for emerging markets starting with India in December. The Etios model will target local market leader Maruti Suzuki India Ltd.’s Swift compact in price, according to the company.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net
To contact the editors responsible for this story: Kae Inoue kinoue@bloomberg.net
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