Toyota earnings surge 26% as currency gains, cost cutting offset lower sales
TOKYO -- Operating profit at Toyota Motor Corp. surged 26 percent in the latest quarter, as cost cutting and foreign exchange rate gains offset declining global sales.
A shift toward higher margin vehicles such as trucks and SUVs also buttressed global profits even as volume retreated.
North America remained Toyota’s biggest market, but sales dipped slightly due to inventory adjustments. The Japanese home market kept its role as the company’s top profit center.
Operating profit rose to 827.4 billion yen ($6.91 billion) in July-September period, Toyota’s fiscal second quarter, Managing Officer Tetsuya Otake said while announcing results today.
The result was an all-time high quarterly operating profit. Japan’s biggest automaker also booked a record operating profit margin of 11.6 percent, its highest for any quarter.
Net income climbed 14 percent to 611.7 billion yen ($5.12 billion) in the three-month period, while global revenue increased 8.4 percent to 7.10 trillion yen ($59.29 billion).
The mammoth profit came despite weakening sales. Global retail volume dipped by 71,000 units to 2.16 million in the quarter, hurt by slow demand in Japan, Asia and the Middle East.
Favorable exchange rates helped: The yen’s tumble against the dollar and other foreign currencies pumped up operating profit by 160 billion yen ($1.34 billion) in the quarter.
Thanks to the currency effects, Toyota’s export-dependent Japan operations delivered a 37 percent surge in regional operating profit and a healthy 13 percent operating profit margin.
Lower N.A. sales
North America, by contrast, managed only a 5 percent operating profit margin, with regional operating profit inching ahead just 1 percent to 148.5 billion yen ($1.24 billion).
Wholesale deliveries in North America dipped by 1,000 vehicles to 684,000 in the quarter.
In the U.S. Toyota sales rose 5 percent to 2.1 million vehicles through October -- just under the overall U.S. market gain of 6 percent.
Toyota trimmed its sales forecast for the full fiscal year ending March 31, 2016, on concerns about falling demand in Japan, Asia and other markets including the Middle East.
Toyota now expects global wholesale volume to fall to 8.75 million vehicles, from 8.972 million last year.
Toyota had originally forecast wholesale volume of 8.9 million for the fiscal year. But in August, it lifted the goal to 8.95 million on higher hopes for Japan, North America and Europe.
The company sees retail sales declining to 10.0 million in the current fiscal year, from a record 10.168 million last year.
Despite the sliding sales outlook, Toyota kept its forecasts for operating profit and net income unchanged, thanks to cost cutting and more expected windfall gains from currency rates.
Both profit targets represent all-time records.
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