Sales dip but profits rise for Toyota

TOYOTA Motor Corporation’s profits grew in the Japanese financial year to the end of March, despite a decrease in global automotive sales, according to figures released by the company today.

However, the Japanese car-making giant has forecast tougher times ahead, predicting a drop in profit this financial year.

Toyota president Akio Toyoda said the expected dip in profits would be a challenge for the car-maker.

“We have benefited from an exchange rate tailwind that has helped raise our earnings above the level of our true capabilities,” he said.

“Although this has enabled us to take on new challenges, that set of circumstances is likely to change for the worse this year.

“I accept this change as an opportunity that can help us achieve our challenges.” Last financial year, Toyota recorded an after-tax profit of ¥2.31 trillion ($A26.1b), representing a 6.4 per cent increase over the 2015 fiscal year net income of ¥2.17 trillion ($A22.8b) Toyota Motor Company president Akio Toyoda said in a statement announcing the results that the company's operating income of ¥2.8t ($A32.3b) – an increase of 3.8 per cent over 2015 – was “due to concerted group-wide cost reduction efforts, coupled with the depreciation of the yen”.

Mr Toyoda said the company had faced a number of challenges in the past, but added that the focus continues to be on sustainable growth.

“Personally, I have focused primarily on building a sustainable foundation to create ever-better cars, and the development of human resources,” he said. “After all, there is no use in swinging between elation and despair every time sales and earnings decrease, remain flat or rise.

“Rather, we are steering our business based on the yardstick of personal growth. This means focusing on giving people the encouragement and tools to make judgments and act based on the concept of genchi genbutsu (go and see), in order to attain our goal of making ever-better cars.” Toyota's total vehicle sales – including Toyota, Lexus, Hino and Daihatsu badged vehicles – in the 12-month period to March 31 hit 8,681,328 units, a dip of 290,536 units over the 2015 fiscal year.

The massive North American market was the only region where Toyota increased sales last year, with an extra 124,056 new registrations for a total of 2,839,229. Operating income in North America dropped by ¥32.2b ($A402.7m) to ¥505.6b ($A6.3b), with Toyota blaming “deteriorated profitability of exports on account of the stronger dollar”.

In all other global regions, Toyota sales dropped, even in its home market of Japan. Its tally of 2,059,093 sales there was 94,601 fewer than the previous financial year, but the company's operating income lifted by ¥102.6b ($A1.2b) on the back of cost reduction and favourable exchange rates.

European sales dipped by 14,626 to 844,412 units, while operating profits in that region grew ¥300m ($A3.7m), thanks to “marketing efforts such as pricing improvement and cost-reduction efforts”, according to Toyota.

Asian sales dropped 144,086, to 1,344,836, but operating income grew by ¥21.4 ($A267.8m) on the back of marketing and cost-reduction efforts as well as “improved export profitability on account of weaker local currencies”.

The rest of the world – Central and South America, Africa, the Middle East and Oceania, which includes Australia – experienced a drop of 161,279 sales to 1,593,758 units, with operating income off by ¥6.0b (A$75m) due to “deteriorated import profitability due to weaker local currencies and rising labour costs with inflation in Central and South America”.

Financial services operating income also decreased by ¥2.8b ($A35m) to ¥319b ($A3.9b), with Toyota saying that it maintained the level of the 2015 fiscal year thanks to “increases in lending balance and margins offset increases in costs related to loan losses and residual-value losses”.

In its forecast for the 2017 financial year, Toyota said it was expecting global sales to increase by 219,000 units, to 8.9 million vehicles, with the biggest lift anticipated in Japan (+181,000), while the largest drop will be for Central and South America, Africa, the Middle East and Oceania (-114,000).

For 2017, it forecast operating income of ¥1.7 trillion ($A22b) and net income of ¥1.5 trillion ($A19.4b).

The company added that the forecast does not include any impact from the suspension of some assembly lines in Japan following the recent Kumamoto earthquake.

Toyota Australia's financial results are likely to be released in mid-June.