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Toyota Heading Towards Another Record Year
World Economy

Toyota Heading Towards Another Record Year

Toyota Motor Corp lifted its operating profit guidance on Wednesday in a widely expected move, as a weaker yen increases the value of sales overseas and makes up for slumping demand at home.
The yen’s decline has been a boon for Toyota, which exports roughly half of its vehicles produced in Japan. Cost-cutting undertaken when the yen hovered at record highs in recent years has also helped the automaker’s bottom line.
The world’s biggest automaker now expects record profit of 2.70 trillion yen ($22.93 billion) for the year ending March 31. That is 8 percent higher than the previous forecast of 2.5 trillion yen and compares with the 2.762 trillion yen average estimate of 30 analysts polled by Thomson Reuters.
The revised guidance puts Toyota’s operating profit margin forecast at 10.0 percent from 9.4 percent based on the previous projection.
“This is the result of our efforts started during the strong-yen era to boost per-vehicle profitability and lower fixed costs,” Managing Officer Takuo Sasaki said of the margin.
 Profits Grow
For October-December, Toyota said operating profit grew 27 percent to 762.88 billion yen, versus the 690.21 billion yen estimate of 15 analysts. It also changed its dollar-yen exchange rate assumption to 109 yen for the current year, from 104 yen.
In the United States, Toyota’s biggest market, the automaker has outperformed Japanese rivals thanks to a line-up that spans all vehicle categories. Cheaper fuel has hit sales of the Prius and other green models but fanned demand for its Lexus luxury brand, pickup trucks and other high-margin vehicles where Japanese peers have fewer offerings.
On Wednesday, the company nudged up its annual sales forecast for North America to 2.75 million vehicles from 2.74 million, while trimming its projections for Japan, Asia and Europe.
Company watchers are now awaiting the end of Toyota’s three-year freeze on new factories through March 2016, aimed at preventing unchecked expansion. In the meantime, capacity constraints are widely expected to curb sales growth. Shares of Toyota ended 2.4 percent higher ahead of the earnings announcement, versus a 2.0 percent gain in the benchmark index.

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