Toyota's Earnings Hit Record High On Fuel-Efficient Cars

Toyota Motor Corp said May 10 annual net profit jumped 17.2% to a fourth straight record high as it won customers from U.S. rivals with its fuel-efficient vehicles. Toyota announced net earnings of 1.37 trillion yen (US$12.35 billion) for the year to March on revenue which rose 13.4% to a record 21.04 trillion yen.

In the fourth quarter alone, net profit rose 39% to 404.1 billion yen.

Toyota, which is on track to overtake General Motors Corp as the world number one in terms of output, also posted better than expected operating profit of 1.88 trillion yen, up 12.3% at a sixth consecutive record.

For the current year to March 2007, however, Toyota forecast a drop in net profit to 1.31 trillion yen as the group invests heavily in developing new technology and expands its global production facilities.

Toyota has been spending billions of dollars to boost global production to keep up with record sales as sky-high oil prices drive unprecedented interest in its gas-electric hybrid models. The firm spent 1.53 trillion yen over the past year on capital investment and another 813 billion yen on research and development. For the current year to March 2007, the company will plough 1.55 trillion yen into its plants and factories and spend 920 billion yen on research.

For the next three years, the company also plans to build new factories in North America, China, Russia and Asia, while increasing the capacity of existing overseas plants to meet growing demand.

"We expect a high cost for building new factories and to maintain existing ones. We expect our research costs to rise, particularly related to development of new vehicles and hybrid models," Toyota president Katsuaki Watanabe said. "In addition to being ecological, we will make our hybrid models powerful to make them more attractive as driving machines," he added.

For the year to March 2006, the company sold 7.97 million vehicles over the year, up from 7.41 million. Overseas markets drove demand, with North American sales rising 285,000 to 2.56 million, Asia up 47,000 to 880,000 as Europe jumped 44,000 to 1.02 million. Domestic sales, however, dropped 17,000 to 2.36 million vehicles, reflecting a saturated Japanese market that is affecting all major producers.