Anna Mukai and Masatsugu Horie Tokyo
Toyota, the second-biggest car maker, has forecast profit would more than double to a five-year high this year as it shakes off last year’s natural disasters and introduces new models to regain market share.
The Japanese car maker said yesterday that net income might increase to ¥760 billion (R75bn) in the fiscal year to March 2013, after falling to ¥284bn. The profit forecast was 7 percent below the average estimates of analysts, while the company projected higher-than-expected revenue growth.
Chief executive and president Akio Toyoda is rolling out new Prius hybrids, Corolla compacts and Lexus sedans to regain lost ground in what may be his first crisis-free year since taking the helm in 2009.
While production has returned to normal, the grandson of the founder of Toyota now faces a reborn General Motors (GM) that is leading the industry in global sales, a rising Hyundai and a growing Volkswagen that is dominating luxury car sales in China.
The profit forecast showed “they have strong confidence of improving profits and regaining market share”, said Kunihiko Shiohara, an analyst at Credit Suisse in Tokyo. “It’s going to give quite a favourable impression on the automotive industry as a whole, as well as impressions on the Japanese economy.”
Toyota rose as much as 0.8 percent in Frankfurt yesterday after a revenue forecast of ¥22 trillion, which was 6 percent higher than analysts’ estimates. The projection for operating profit of ¥1 trillion was in line with expectations.
The company reported full-year results after the close of trading in Tokyo, where Toyota shares have gained 23 percent this year, outperforming Nissan, Honda and GM.
Toyota said that deliveries, including those of its Daihatsu and Hino subsidiaries, would rise 18 percent to 8.7 million vehicles this fiscal year, led by North America, where sales would climb 26 percent to 2.35 million units. They would increase 6.2 percent in Japan, 34 percent in the rest of Asia and 10 percent in Europe.
The recovery began last quarter, with net income quadrupling to ¥121bn as Toyota cranked up production 36 percent and the Japanese market became profitable for the first time in more than two years. The yen, which appreciated and eroded the value of Japanese exports during 2010 and 2011, became this year’s worst performer by the end of March.
The rebound was not enough to keep full-year income from tumbling 31 percent as the March 11 Japanese disaster and subsequent floods in Thailand crippled automotive output.
Toyota was not alone as Honda last month reported annual profit fell 60 percent and Nissan, which reports tomorrow, has said since February that net income would slide 7.9 percent in the year to March.
Toyota has been slower than Nissan and Honda in recovering. While Toyota is forecasting its operating profit margin will reach 4.5 percent this fiscal year, Honda expects to reach 6 percent and analysts estimate Nissan to hit 7.2 percent.
“We know Toyota is slow in taking action but it’s about time for them to answer how long they will stick to Japanese production at the expense of being profitable and globally competitive,” said Yuuki Sakurai, the chief executive at Fukoku Capital Management in Tokyo. “It’s one lap behind other car makers.”
Still, Toyota’s projections indicate that it will earn more than GM, which reported last week that net income fell 61 percent to $1.3bn (R10.2bn) on losses and restructuring costs in Europe. Analysts estimate the Detroit-based company will earn $7.4bn over the next four quarters, excluding preferred dividends, which last year totalled $1.6bn.
After ceding its title as the largest car maker to GM in 2011, not much is going wrong for Toyota in its two biggest markets this year.
Pent-up demand and government subsidies have helped Japan grow faster than any other major car market this year. Passenger vehicle sales in the country leapt 57 percent in early 2012, led by Toyota’s Prius hybrids, according to the Japan Automobile Dealers Association. That benefited Toyota as it generated 60 percent of its revenue from Japan last fiscal year.
The reliance on its home market may drop as Toyota forecast its deliveries to North America will overtake those of Japan this fiscal year. Toyota’s sales in the US have increased 12 percent this year – outpacing GM, Ford, Nissan and Honda – on demand for the Camry sedan and the Prius hybrids, as buyers who put off purchases returned to dealerships to find more fuel-efficient models.
Total US light-vehicle sales, which rose to a seasonally adjusted annual rate of 14.4 million in April, have exceeded analysts’ estimates three out of four months this year.
In Europe and China, where car sales fell during the first quarter, Toyota has been less vulnerable to sliding demand as it is less reliant on those markets than companies such as Peugeot Citroën and GM. Toyota, which had a global market share of 10 percent in 2011, accounted for 3.2 percent of Europe’s market and 4.3 percent in China, data show.
“We want this year to be a calm year,” Toyoda said yesterday. “It’s only been five months, but we expect everyone’s efforts to shine this year.”