Toyota back in the black

A YEAR after then Toyota chief executive Katsuaki Watanabe apologised for the company’s tardy response to the global financial crisis that plunged the Japanese giant to its first loss since 1950, his successor, Akio Toyoda, has announced a surprise profit.

The relatively slim ¥147 billion ($A1.8 billion) operating profit beat Toyota’s own gloomy predictions of a year ago and marked a ¥608 billion ($A7.3b) turnaround in the fortunes of the world’s number-one vehicle manufacturer, despite a decline in sales and ongoing woes with global recalls.

It was a measure of Toyota’s austerity measures at home and abroad that it was able to return to health while its net revenue fell 7.7 per cent in the financial year ending March 31.

Toyota says it slashed costs by ¥990 billion ($12b) during the year.

Vehicle sales declined about four per cent, to 7.24 million units, which nevertheless was an improvement over the 7.18 million target.

Despite the improved outlook, Toyota still faces stiff headwinds, with class-action lawsuits pending in the United States and investigations by US authorities into the timing of recalls for safety fixes.

Left: Toyota Prius.

Mr Toyoda – grandson of company founder Kiichiro Toyoda – told journalists in Japan at the media conference called to announce the results on Tuesday: “We are still in the storm, but even in the same storm, we see the sky starting to clear up in the distance.”

While Toyota enjoyed a 10 per cent improvement in vehicle sales in Japan last financial year, the company is expecting fewer sales in its domestic market where the Japanese government is set to axe incentives for fuel-efficient cars in September.

Those incentives have helped to make Toyota’s hybrid Prius the top-selling car in Japan for 12 successive months.

Globally, the company is forecasting a small increase in vehicle sales in fiscal year 2010-11, to 7.29 million units, and an operating profit of ¥280 billion ($A3.37b) – up about 22 per cent on last financial year.

Most of Toyota’s pain in the past 12 months has been in North America, where sales fell 10 per cent to 2.16 million units, and Europe, where Toyota vehicle volumes plunged almost 20 per cent. However, the company managed to eke out a small profit in the US, compared with red ink last financial year.

A bright spot was Asia where sales were up about 10 per cent, thanks mainly to the strong Chinese and Indian markets.

In his official statement on the results, Mr Toyoda said he was extremely grateful to Toyota’s dealers and suppliers who had remained fully committed to the brand.

Some analysts regard Toyota’s prediction of a ¥280 billion profit this year as conservative, saying that despite its woes, it could double that figure.

The company has recorded profits in the past three consecutive quarters, with the January-March quarter profit hitting ¥95.3 billion yen ($A1.14b) – a massive improvement on the same period last year.