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Toyota Profit Increases Sharply Toyota Bounces Back With Strong Profits
(about 9 hours later)
TOKYO — Toyota Motor roared back to health in its financial year that ended in March, more than tripling its net profit from a year earlier as a weaker yen, together with brisk sales in North America, lifted its bottom line. TOKYO — A leaner Toyota Motor roared back to health in its fourth quarter as a weaker yen and brisk sales in North America almost tripled its net income from a year earlier.
Toyota, the world’s largest automaker by sales in 2012, reported a net profit on Wednesday of ¥962.1 billion, or $9.7 billion, for the most recent fiscal year, compared with ¥283.5 billion the previous year. Sales came to ¥22 trillion, up 18.7 percent. For the January-to-March quarter, net profit was ¥313.9 billion, compared with ¥121 billion in the same quarter last year. The yen, which has weakened by almost 30 percent since September, has also given Toyota’s profit a major bump, driving up the value of its overseas earnings in the home currency and making production in Japan more cost-efficient. For every yen the currency loses in value against the dollar, Toyota estimates, its operating profit rises 35 billion yen.
The automaker, based in Toyota City, Japan, said it expected net profit for the current financial year, which ends next March, to rise further, to ¥1.37 trillion. A companywide cost-reduction drive, as well as strong sales — especially in the United States, its biggest export market — will continue to drive its profit rebound, Toyota said. The financial results, Toyota’s strongest in five years, offered the latest evidence that the automaker is finally shaking off the effects of some of the biggest crises of its 75-year history.
The yen, which has weakened by almost 30 percent since September, has also given Toyota’s profit a major bump, driving up the value of its overseas earnings in the home currency and making production in Japan more cost-efficient. For every yen the currency loses in value against the dollar, Toyota estimates, its operating profit rises ¥35 billion. President Akio Toyoda, who took the helm of the company in 2009, often spoke of the multiple problems facing the company — natural disasters, recalls, the strong yen, energy shortages and high costs of doing business in Japan. He would quip that he was not Toyota’s top executive as much as the company’s chief apologizer for blunders, mishaps and overall sluggish business.
The showing, Toyota’s strongest in five years, offered the latest evidence that the automaker might finally be shaking off the effects of some of the biggest crises of its 75-year history. At a news conference in Tokyo on Wednesday, however, Mr. Toyoda had little to apologize for, but avoided crowing. “We have faced many challenges since 2009 but have learned valuable lessons, including the need for Toyota to maintain sustainable growth,” he said.Toyota, the world’s largest automaker by sales, reported net income on Wednesday for the quarter that ended March 31 of 313.9 billion yen, or $3.17 billion, compared with 121 billion yen in the same quarter last year. Sales for the quarter totaled 5.8 trillion yen, or $58.6 billion.
“What an amazing turnaround for Toyota, which started last year after a couple of years of a roller-coaster ride dealing with numerous recalls and the Japanese earthquake,” Alec Gutierrez, a senior analyst at Kelley Blue Book, a U.S. automotive analysis service, said in an e-mail. “It’s been a wild ride for Toyota, but we’re seeing the fruits of its labor.” The automaker, based in Toyota City, sees further strong growth ahead. It expects net income for the current financial year to rise 42 percent to 1.37 trillion yen. A companywide cost-reduction drive, as well as strong sales — especially in the United States, its biggest export market — will continue to drive its profit rebound, Toyota said.
Mr. Gutierrez said that Toyota faced tough competition from familiar competitors like Honda and Nissan in the United States as well as renewed competition from Detroit and South Korean automakers, and that gaining market share would be more difficult. But the introduction later this year of a completely redesigned version of the Corolla, Toyota’s best-selling compact car, could help bolster sales, while the declining yen will continue to shore up its profitability, he said. Toyota reported net income for the year of 962.1 billion yen, or $9.7 billion, for the most recent fiscal year, compared with 283.5 billion yen the previous year. Sales were 22 trillion yen, up 18.7 percent.
Toyota had just started to regroup from a historic collapse in sales during the global financial crisis when reports of unintended acceleration prompted recalls involving almost 10 million vehicles — a scandal that dealt a heavy blow to the company’s sales and reputation in the United States. “What an amazing turnaround for Toyota, which started last year after a couple of years of a roller-coaster ride dealing with numerous recalls and the Japanese earthquake,” Alec Gutierrez, a senior analyst at Kelley Blue Book, an American automotive analysis service, said in an e-mail. “It’s been a wild ride for Toyota, but we’re seeing the fruits of its labor.”
Then in early 2011, Japanese auto parts makers suffered great damage from the earthquake and tsunami that ravaged the country’s northeast coast, forcing Toyota to slash production while it scrambled to meet shortages of components. Fears of an electricity shortfall following the Fukushima nuclear crisis added to Toyota’s problems. Later that year, widespread flooding in Thailand paralyzed manufacturing in the Southeast Asian nation, further disrupting Toyota’s global supply chain. Mr. Gutierrez said that Toyota faced tough competition from familiar competitors like Honda and Nissan in the United States as well as renewed competition from American and South Korean automakers. Gaining market share would be more difficult, he said. But the introduction later this year of a completely redesigned Corolla, Toyota’s best-selling compact car, could help bolster sales, while the declining yen will continue to shore up its profitability, he said.
Toyota had just started to regroup from a collapse in sales during the global financial crisis when reports of unintended acceleration prompted recalls involving almost 10 million vehicles. That recall dealt a heavy blow to the company’s sales and reputation in the United States.
Then in early 2011, Japanese auto parts makers suffered great damage from the earthquake and tsunami that ravaged the country’s northeast coast, forcing Toyota to slash production while it scrambled to meet shortages of components. Fears of an electricity shortfall after the Fukushima nuclear crisis added to Toyota’s problems. Later that year, widespread flooding in Thailand paralyzed manufacturing in the Southeast Asian nation, further disrupting Toyota’s global supply chain.
All the while, a strong yen ate into Toyota’s profits, eroding the value of its overseas earnings and making its factories in Japan painfully expensive to maintain.All the while, a strong yen ate into Toyota’s profits, eroding the value of its overseas earnings and making its factories in Japan painfully expensive to maintain.
President Akio Toyoda, who took the helm of the company in 2009, often spoke of the multiple problems facing Japanese exporters, including the strong yen, energy shortages and other high costs of doing business in Japan. He also quipped that he was not Toyota’s chief executive as much as the company’s chief apologizer for blunders, mishaps and overall sluggish business.
Still, Toyota’s series of setbacks has in many ways made it a leaner, stronger company. To better shield itself from currency fluctuations, Toyota has shifted more production from high-cost Japan to its overseas markets: In 2012, it made almost 20 percent fewer cars in Japan than in 2007, and Mr. Toyoda has said that the weaker yen will not alter that strategy.Still, Toyota’s series of setbacks has in many ways made it a leaner, stronger company. To better shield itself from currency fluctuations, Toyota has shifted more production from high-cost Japan to its overseas markets: In 2012, it made almost 20 percent fewer cars in Japan than in 2007, and Mr. Toyoda has said that the weaker yen will not alter that strategy.
Last month, Toyota announced it would spend $360 million to expand a factory in Georgetown, Kentucky, to bring production of its Lexus luxury sedans to the United States for the first time. Last month, Toyota announced it would spend $360 million to expand a factory in Georgetown, Ky., to bring production of its Lexus luxury sedans to the United States for the first time.
The company has also started to buy more of its parts locally in the countries where it manufactures, a move aimed at making its supply chains more resilient to natural disasters and other disruptions. To make up for lost share in the United States, Toyota is using bolder designs to woo younger drivers and has offered higher discounts to win back market share. The company has also started to buy more of its parts in the countries where it manufactures, a move aimed at making its supply chains more resilient after natural disasters and other disruptions. To make up for lost share in the United States, Toyota is using bolder designs to woo younger drivers and has offered higher discounts to win back market share.
At a news conference in Tokyo on Wednesday, Mr. Toyoda reflected on the company’s recent trials. “We have faced many challenges since 2009 but have learned valuable lessons, including the need for Toyota to maintain sustainable growth,” he said. Despite its rebound, Toyota’s latest earnings remain far below the heights of its financial year that ended in March 2008, when net profit hit 1.7 trillion yen on record sales of 26 trillion yen. American consumers riding out the last of the credit boom had helped lift global sales to a record 9.37 million cars in 2007. Toyota finally topped that record in 2012, with global sales of 9.75 million cars.
Despite its rebound, Toyota’s latest earnings remain far below the heights of its financial year that ended in March 2008, when net profit hit ¥1.7 trillion on record sales of ¥26 trillion. American consumers riding out the last of the credit boom had helped lift global sales to a record 9.37 million cars in 2007. Toyota finally topped that record in 2012, with global sales of 9.75 million cars. In the contemplative, measured tones that have become Mr. Toyoda’s signature, he struck a cautious note. “Have we really turned into a company that will be profitable and continue to grow no matter what happens to its business environment?” he asked.
In the contemplative, measured tones that have become Mr. Toyoda’s signature, the chief executive struck a cautious note. “Have we really turned into a company that will be profitable and continue to grow no matter what happens to its business environment?” he said.
“I am not sure yet, is my honest answer. An unprecedented crisis even beyond the scale of the Lehman shock may happen again,” Mr. Toyoda added. “We’ll only know the answer when such events actually happen.”“I am not sure yet, is my honest answer. An unprecedented crisis even beyond the scale of the Lehman shock may happen again,” Mr. Toyoda added. “We’ll only know the answer when such events actually happen.”