TOKYO -- Toyota Motor Corp. posted a 19 percent jump in quarterly profit, its best quarterly performance in two-and-a-half years, on the back of higher sales and cost reductions in Asia.
Operating profit was 682.6 billion yen ($6.11 billion) for April-June, versus 574.3 billion yen a year earlier.
Global retail vehicle sales rose 1 percent to 2.6 million units in the quarter, boosted by an 8.5 percent lift in Asia.
For the first six months, demand for the remodeled Camry helped to increase Chinese sales by 5.4 percent, while Thai sales jumped 26 percent.
Together, sales in those countries helped drive a 40.2 percent rise in first-quarter profit in Asia.
N.A. incentives hit
In North America, Toyota's biggest regional market, sales rose 3.2 percent due to a rise in demand for its pickups, including the Tacoma and Tundra. Still, profit in the region fell 29 percent as sales incentives continued to weigh.
In Japan, sales fell 6.3 percent, but profitability rose 24 percent due to cost reductions and an increase in vehicles made in Japan and exported overseas.
The automaker maintained its full-year profit forecast to slip 4.2 percent to 2.3 trillion yen, though it is now factoring in one U.S. dollar being worth 106 yen, from an earlier forecast of 105 yen. Overall, it still anticipates a stronger yen to offset the benefits of cost cutting and record-high global vehicle sales.
Bracing for tariffs
Like its domestic rivals, Toyota is bracing for a possible rise in U.S. auto import tariffs, which could cloud its outlook as tariffs would raise the cost of selling vehicles in one of its biggest markets.
The U.S. in May launched an investigation into whether imported vehicles pose a national security threat, and President Donald Trump has repeatedly called for tariffs of up to 25 percent.
Toyota, which sells more cars in the U.S. than any other Japanese automaker, locally produces roughly half of all of the vehicles sold in the country. It imports the balance mainly from Japan, Canada and Mexico.
Its share of localized production is lower than the 75 percent of Honda Motor and 60 percent of Nissan Motor.
Toyota has been a vocal opponent of tariffs, arguing that 25 percent would increase the cost of its U.S.-made Camry sedan, Tundra pick-up truck and Sienna minivan by up to $3,000 per vehicle.
The Trump administration’s steel and aluminum tariffs lowered Toyota’s full-year profit outlook by 10 billion yen, Senior Managing Officer Masayoshi Shirayanagi said at an earnings briefing in Tokyo. Toyota hasn’t included the effect of any additional U.S. tariffs to its profit and vehicle sales outlook, but the impact would be very big, he said.
Toyota joins other carmakers in preparing for challenges ahead as sedan sales cool in the U.S. and the country’s trade war with China threatens to boost prices and weigh on demand. The Japanese company reduced costs by 60 billion yen ($540 million) in the first quarter and said it’ll continue to push for savings across its regions.
"We need to have a sharp focus on cost savings, even if it’s saving just one pencil," Senior Managing Officer Masayoshi Shirayanagi said at an earnings briefing Friday in Tokyo. "We’re still only halfway through our cost cutting efforts."
Separately, Toyota said that it plans to sell its 5.89 percent stake in partner Isuzu Motors Ltd., ending a capital tie-up that’s lasted more than a decade. The companies will continue to cooperate.
Bloomberg contributed to this report.