Toyota surprised analysts with its latest financial results

Toyota surprised analysts with its latest financial results

Toyota has posted a 7.2% jump in quarterly net profit (first quarter fiscal year, ended June 30) with net income at 657.3 billion yen.

The result beat analyst expectations and Toyota said cost reductions helped bring in the improvement. However, Toyota was cautious on the outlook and voiced concerns over the potential bottom line impact of future higher tariffs in key markets.

Consolidated vehicle sales for the first quarter totalled 2,236,131 units, an increase of 21,020 units compared to the same period last fiscal year. On a consolidated basis, net revenues for the period totalled 7.3627 trillion yen, an increase of 4.5%. Operating income increased from 574.2 billion yen to 682.6 billion yen, while income before income taxes was 813.8 billion yen.

Operating income increased by 108.3 billion yen. Major factors contributing to the increase included a decrease in expenses of 60 billion yen and an increase of 45 billion yen in marketing activities.

Commenting on the results, TMC Senior Managing Officer Masayoshi Shirayanagi said: "As for the fixed cost reduction activities, we are steadily making progress toward achieving our challenge-level target, which we are determined to achieve by the end of this fiscal year through further efforts across regions."

Sales were slightly down in Japan, but operating income there was still up by 76.2 billion yen to 396.1 billion yen.

In North America, vehicle sales totalled 746,135 units, an increase of 22,516 units, but operating income there decreased by 10.4 billion yen to 78.3 billion yen.

In Europe, vehicle sales totalled 252,639 units, an increase of 12,295 units, while operating income increased by 2.6 billion yen to 23.1 billion yen.

In Asia, vehicle sales totalled 394,229 units, an increase of 31,575 units, while operating income increased by 39.3 billion yen to 142.2 billion yen.

Toyota was cautious on the outlook though. For the fiscal year ending March 31, 2019, TMC revised its consolidated vehicle sales forecast from 8.95 million units to 8.9 million units, 'in consideration of the latest sales trends worldwide'.

Toyota maintained its consolidated financial forecasts for the fiscal year - there were no revisions since the last announcement. Based on an exchange rate assumption of 106 yen to the US dollar and 126 yen to the euro, Toyota forecasts consolidated net revenue of 29.0 trillion yen, operating income of 2.30 trillion yen, income before income taxes of 2.45 trillion yen, and net income of 2.12 trillion yen.

Toyota also warned of the potential negative impact of higher tariffs on its profitability, particularly if US tariffs on autos rise to 25%. 

"If we see a rise, it would raise the cost of locally produced vehicles by around $1,800 each, and increase costs for (models imported from Japan) by $6,000," Toyota senior managing director Masayoshi Shirayanagi told reporters at a results briefing."This would be a big impact," he added.