Japan’s Toyota Motor raised its full-year operating profit forecast by nearly nine per cent, on Tuesday, after its third-quarter earnings raced past analysts’ estimates. This is thanks to a weaker yen and strong sales of high-margin cars and hybrid vehicles.
Toyota shares surged after the announcement of early losses and closed 4.8% higher – the biggest one-day gain in nearly eight months.
The improved outlook from the world’s best-selling automaker contrasts with a downbeat forecast from many rivals that have warned of tepid sales growth and announced output cuts amid high interest rates and slowing demand for electric vehicles.
The Japanese automaker, a laggard in battery-powered EVs, is expected to outperform competitors this year, helped by robust demand for hybrid vehicles, which it pioneered more than a quarter century ago with the Prius model.
Toyota is likely to benefit from relatively higher margins on hybrids and the fact that some models tend to be costlier, said analyst Seiji Sugiura from Tokai Tokyo Research Institute.
Earlier, Toyota CFO Yoichi Miyazaki said that efforts to adjust production to better respond to demand for popular models had helped the automaker sell vehicles without resorting to the usual discounts and incentives.
The Japanese firm raised its profit forecast for the year ending March to 4.9 trillion yen ($33 billion) from 4.5 trillion expected previously.
That is well above an average analyst forecast of 4.6 trillion yen, according to LSEG data.
Toyota’s operating profit for the third quarter ended Dec. 31 was 1.68 trillion yen, beating the average 1.3 trillion yen profit estimate in a poll of nine analysts by LSEG.
Hybrid sales soared 46 per cent, contributing to an 11 per cent rise in overall vehicle sales. Hybrids accounted for around a third of the total sales of more than 10 million vehicles of its Toyota and luxury Lexus brands last year.
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A weaker yen currency, which has tumbled around 10% against the dollar since end-2022, bolstered the impact of Toyota’s robust global sales.
By geography, North America, Toyota’s biggest market by volume, reported the strongest growth with a 28 per cent sales surge.
Sales of hybrid vehicles have been rising in the U.S. as consumers baulk at high EV prices and are anxious about the range of electric cars.
Demand for hybrids is so strong that buyers have to wait for about a year to get deliveries of some models such as the Toyota Sienna multi-purpose vehicle, according to some U.S dealers.
CFO Miyazaki said the share of hybrids in sales improved across all markets including China, where Toyota and many other foreign automakers are struggling due to growing competition from local EV makers.
But warned that Toyota was not optimistic about conditions in the world’s biggest auto market.
Its home market Japan saw sales grow just 5% but reported the highest earnings and margin among its major markets.
Japan contributed two-thirds of Toyota’s quarterly profit and generated a 20 per cent operating margin, well above the company’s overall margin of 14 per cent and North America’s 3.4 per cent (Reuters).
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