TOKYO -- Booming North America powered Toyota Motor Corp. to a double-digit operating profit increase in the October-December quarter even as sales shrank in every other major market.
Citing higher expectations for U.S. sales, as well as advantageous foreign exchange rates, the world’s biggest automaker raised profit and revenue forecasts to new record levels, with the Japanese yen weakening faster than anticipated.
Net income jumped 14 percent to 600.03 billion yen ($5.00 billion) in the company’s fiscal third quarter ended Dec. 31, compared with 525.46 billion yen ($4.38 billion) a year earlier, the company said today.
Operating profit rose 27 percent to 762.88 billion yen ($6.36 billion), from 600.51 billion yen ($5.01 billion).
Global revenue grew 8.9 percent to 7.170 trillion yen ($59.78 billion) in the period, despite global vehicle sales falling 2.3 percent to 2.263 million units.
The robust results underscore Toyota’s continued sensitivity to exchange rates. Like other Japanese automakers, it has benefited over the past year from the yen’s retreat against other currencies, as the Japanese government pursues an ultra-loose monetary policy in an effort to jump start the country’s economy.
Third-quarter operating profit was lifted by a 145 billion yen ($1.21 billion) windfall gain from the weakening yen. The yen’s decline against the dollar and other currencies aids Japanese exports and boosts the yen-dominated value of overseas earnings.
Managing Officer Takuo Sasaki said the yen’s faster-than-expected weakening was a key reason the company lifted its profit forecast for the current fiscal year ending March 31.
Robust demand in the U.S. also helped. “The U.S. remains very strong,” Sasaki said.
Toyota expects the bigger profit even though it trimmed its full-year sales outlook for the second time this fiscal year because of worsening demand in Japan, Asia and Europe.
It now expects to sell 9.0 million vehicles in the current fiscal year ending March 31, 2015. That represents a decline from the record 9.116 million it sold the previous year.
It had originally projected sales of 9.1 million vehicles and later scaled that back to 9.05 million units in November.
U.S. sales surge
Sasaki said other factors, including aggressive cost cutting, also contributed to the quarterly profit jump.
Big sales gains in North America also offset declines elsewhere. North America was Toyota’s only bright spot, the sole region reporting a year-on-year sales increase.
Sales in Toyota’s biggest market advanced 7.2 percent to 712,000 vehicles, as volume fell in every other region. North America’s regional operating profit surged 37 percent to 167.9 billion yen ($1.40 billion) in the quarter, from a year earlier.
Sales in Europe slid 1.3 percent to 220,000 vehicles, even as regional operating profit there nearly doubled to 33.2 billion yen ($276.8 million), mainly through cost-reduction campaigns.
Toyota cut its sales outlooks for Japan, Europe and Asia. In its European markets, the company now expects to sell 840,000 vehicles in the current fiscal year. That’s down from the 844,000 units it sold last year and compares with an earlier goal of 870,000 vehicles.
Toyota, which kept its title as the world’s biggest automaker in calendar year 2014 by selling a record 10.23 million vehicles, has surpassed pre-financial crisis sales levels.
But the Japanese giant also forecast sales to slump 1 percent to 10.15 million in the current calendar year, on the back of slowing demand in Japan and emerging markets.
More record results
It would be the first time sales have fallen since 2011, when Japanese automakers were broadsided by the killer Japanese earthquake and tsunami that derailed production and sales.
Despite the lackluster sales forecast, Toyota still expects to ride the retreating yen to a second year of record earnings.
Net income is now expected to be 2.13 trillion yen ($17.76 billion) in the current fiscal year, up from a record 1.823 trillion yen ($15.20 billion) in the year ended March 31, 2014. In November, it forecast net income would increase to 2 trillion yen ($16.68 billion).
Operating profit is expected to climb to a record 2.70 trillion yen ($22.52 billion), from the previous all-time high of 2.292 trillion yen ($19.11 billion) booked in the last fiscal year.
In November, it predicted 2.5 trillion yen ($20.85 billion).
Revenue is expected to advance to 27 trillion yen ($225.13 billion) this year, just topping the previous record revenue of 26.289 trillion yen ($219.20 billion) logged in the fiscal year ended March 31, 2008, before the financial crisis.