NEWS

Toyota Motor plans to Beat Profit Record Once Again

Friday, May 08, 2015

Toyota Motor Corp. said Friday that it expects to ring up another year of record-breaking profits in the current fiscal year, backed by a weaker yen and strong U.S. sales of sport-utility vehicles and pickup trucks.

The world’s best-selling auto maker forecasts a ¥2.250 trillion net profit ($18.79 billion) in its business year ending in March 2016 on ¥27.5 trillion in revenue. That compares with the record ¥2.173 trillion net profit that the company generated in the just-ended fiscal year.

Toyota President Akio Toyoda attributed the robust results to “favorable foreign exchange rates and cost reduction efforts” that helped offset increased expenses such as investments to enhance the company’s competitiveness.

The company said that it expects to sell 10.15 million vehicles in the current fiscal year, falling short of the 10.168 million vehicles it sold last fiscal year.

In 2014, the Toyota group, including Daihatsu Motor Co. and Hino Motors Ltd., beat the Volkswagen group and General Motors Co., to remain the world’s best-selling auto maker. But for the financial year, Volkswagen topped its Japanese rival, selling 10.185 million vehicles.

Toyota’s U.S. sales in the first four months of the year grew 8.1% on year, and its market share rose 0.4 percentage points to 14.4%. Sales of light trucks, including the RAV4 SUV, have been particularly strong, backed by cheaper fuel prices.

Toyota is stepping out of a period that Mr. Toyoda has characterized as a “willful pause,” during which it froze investments in new plants and focused on developing new technologies related to vehicle architecture and manufacturing.

“This year is going to be a major turning point for Toyota on whether it can take a steady step toward stable growth or whether it will go back to its old ways,” Mr. Toyoda said at a briefing.

Last month, the company said it is investing $1.4 billion to build a new plant in Mexico and expand an existing plant in China. In March, it unveiled details about new vehicle platforms and manufacturing processes aimed at slashing costs.

Toyota is set to start rolling out models built under its revamped, cost-cutting manufacturing process called the Toyota New Global Architecture, an approach that shares a wider range of components among vehicles. The first vehicle fully built under the new process is expected to be the redesigned Prius gas-electric hybrid.

A big factor that has contributed to Toyota’s record profits has been the yen’s weakening over the last two years. But that landscape is gradually changing. The yen remains weak against the U.S. dollar, but it has been on the rise against other currencies such as the euro and the Australian dollar. Also, the U.S. dollar has been strengthening against the Mexican peso, the Canadian dollar and Brazilian Real. That is unfavorable for Toyota since many of the manufacturing-related costs for its plants in these countries are denominated in U.S. dollars.

 

wsj.com

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