Toyota fourth-quarter earnings hit by U.S. settlement
World's largest automaker still manages record full-year profits
Editor’s note: An earlier version of this story had an incorrect dollar conversion for net income. This version of the story also has been revised with retail sales figures instead of the wholesale figures used in earlier versions.
TOKYO -- Toyota Motor Corp.’s settlement with the U.S. government over unintended-acceleration claims contributed to a 5 percent decline in net income during the January-March quarter, but that didn't stop the world’s largest automaker from achieving record full-year profits.
Toyota reported net income of 297 billion yen ($2.89 billion) in the company’s fiscal fourth quarter ended March 31, compared with 313.9 billion yen ($3.05 billion) a year earlier.
Global revenue grew 13 percent to $63.9 billion in the three months, as vehicle retail sales increased 6 percent to 2.58 million units, the company said today.
The $1.2 billion settlement of claims it misled the public about safety flaws combined with other charges, including costs for ending manufacturing operations in Australia, dented quarterly earnings by $2.17 billion.
North America was one of the few regions were Toyota reported a decline in fourth-quarter profits. Regional operating profit shrank 9 percent to $498.1 million from a year earlier.
North American retail unit sales, however, increased 6 percent to 581,261 vehicles.
The fourth-quarter stumble came at the end of a fiscal year in which Toyota had record net income and operating profits.
Net income nearly doubled to a record $17.73 billion in the year ended March 31, from $9.36 billion the year before.
Operating profit surged 74 percent to $22.30 billion. Revenue advanced 16 percent to $249.9 billion, as global sales rose 5 percent to 10.13 million vehicles.
The yen’s tumbling value against foreign currencies, including the U.S. dollar, ramped up full-year earnings. A weaker yen increases the yen value of overseas earnings repatriated to Japan and makes Japan exports more competitive internationally.
Toyota booked a foreign exchange gain of $8.75 billion in the period. The yen lost about 20 percent of its value against the dollar over the year, Toyota said.
In North America, Toyota reached the unintended acceleration settlement with the Department of Justice in March and booked the $1.2 billion charge in the fourth quarter.
The penalty was contingent on a rare admission of wrongdoing: an acknowledgment “that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration,” according to a DOJ statement.
Despite the charge, full-year operating profit in North America climbed 47 percent to $3.17 billion. Operating profit margin increased to 4.2 percent, from 3.0 percent the year before, as Toyota boosted sales and cut costs.
“Increased vehicle sales and cost-reduction efforts and other factors contributed to the growth of operating income,” Executive Vice President Nobuyori Kodaira said.
For the fiscal year, North American sales rose 5 percent to 2.52 million vehicles. Toyota forecast sales to advance 4 percent to 2.62 million vehicles in the current fiscal year.
Toyota said it expects the U.S. economy to remain relatively strong and the regional auto market to remain stable.
Toyota, which kept its title as the world’s biggest automaker in calendar year 2013 by selling a record 9.98 million vehicles, has already surpassed pre-financial crisis sales levels.
The record earnings underscore Toyota’s comeback from a string of tough years marred by the company’s first operating loss in seven decades, a worldwide unintentional acceleration recall crisis and the 2011 killer earthquake-tsunami in Japan.
Toyota’s previous record full-year net income of $16.71 billion came in the fiscal year ended March 31, 2008, right before the economic crisis hit.
That year, the company booked record operating profit of $22.08 billion and all-time high revenue of $255.73 billion.
Looking to the current fiscal year that began April 1, Toyota predicted a lull in sales and earnings growth.
Global retail unit sales are expected to only rise slightly to 10.25 million vehicles.
Meanwhile, Toyota forecast only a 0.3 percent increase in operating profit to $22.37 billion and a 2 percent decline in net income to $17.32 billion. A stabilizing foreign exchange rate is expected to undermine the big earnings growth rates logged last year.
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