Toyota Motor Corp.’s quarterly profit exceeded estimates as improvements in supplies of semicondcutors and a cheap yen helped the carmaker capitalize on a global rebound in demand for new vehicles. The stock closed at a record after the results.
Operating profit for the period ended June was a record ¥1.1 trillion ($7.7 billion), the world’s No. 1 carmaker said in a statement Tuesday. That compared with the ¥880 billion projected by analysts. Toyota kept its outlook for operating income for the fiscal year to March 2024 intact at ¥3 trillion.
Demand for automobiles is staging a robust recovery from the pandemic downturn, helping global carmakers boost production and raise prices. Toyota produced and sold a record number of vehicles in June, the company said last week. The carmaker is on track to increase production between August and October, according to recent reports.
“When considering exchanges rates, production and the market environment, Toyota keeping its outlook was a bit of a surprise,” Bloomberg Intelligence analyst Tatsuo Yoshida said.
Net sales for the fiscal first quarter rose 24% to ¥10.6 trillion, topping the prediction for ¥9.8 trillion. For the full year, Toyota kept the revenue outlook the same at ¥38 trillion.
Toyota said it was able to command higher prices for the vehicles it sold, helping to “reduce the impact of the sharp rise in materials prices.”
Japanese carmakers’ sales in 2023 could rise 19% in Japan and 18% in the US but fall 4% in China, according to Yoshida. On Monday, Toyota announced plans to strengthen its competitiveness in China by, among other things, accelerating the development of an electric powertrain with its two biggest suppliers, Denso Corp. and Aisin Corp.
“Toyota’s declining business in China is a point of concern,” Yoshida said. “The impact is industry-wide but concerning for a company like Toyota.”
As pressure builds on manufacturers to phase out fossil fuels and embrace the shift to electric vehicles, Toyota has promised to expand EV production while continuing to offer a broad selection of hybrid and gasoline cars.
Soon after former Lexus chief Koji Sato became chief executive officer, the company pledged to sell 1.5 million battery EVs annually by 2026. Further out, it promised to sell 3.5 million by 2030, halve its carbon dioxide emissions by 2035 and become carbon neutral by 2050.
In May, Sato said Toyota would produce 200,000 BEVs in the current fiscal year. He also said it would invest ¥3.1 trillion on sustainable growth, including efforts to decarbonize and electrify.
Toyota sold 29,000 battery EVs during the last quarter, mostly in Asia and Europe, a fivefold jump from a year earlier. Toyota will increase BEV sales heading into the second half, according to a spokesperson.
(Updates with share price record in first paragraph.)
