Toyota's 'Wounds' Heal - Profits Quadruple

Feb. 8, 2011
For nine months to December, net profit soared 293.7%

Toyota said on Feb. 9 that its net profit for the nine months to December nearly quadrupled and upped its outlook. Net profit for the period soared 293.7% to 382.7 billion yen and the car giant raised its annual net profit forecast to 490 billion yen ($5.95 billion) from an earlier 350 billion yen.

In the nine months to December, Toyota sold more than 910,000 units in China and Asia excluding Japan, a 30% increase on the same period a year earlier.

"I think half of the wounds (from the recalls) have been healed," said senior managing director Takahiko Ijichi, adding that cost cuts and efforts to improve profitability were bearing fruit.

"We are achieving large profit gains and are on a steady recovery path by more than offsetting the negative effects of the rapid rise of the yen," he said.

However, the maker of the popular Prius hybrid saw a 39% fall in third quarter net profit year-on-year as sales slipped and operating profit tumbled at a time when the yen hit 15-year highs versus the dollar. Net profit fall to 93.6 billion yen from 153.2 billion yen a year earlier, a result that nevertheless beat expectations of an 89.7 billion yen profit, according to a Nikkei poll of analysts.

In the three months ended December, sales fell nearly 12% to 4.6 trillion yen while operating profit tumbled 48% to 99 billion as a stronger yen made its exports vulnerable.

Japan's automakers have returned to profitability since the financial crisis but a pick-up in demand has been overshadowed by the impact of the strong yen, making their products more expensive overseas and eroding profits.

The expiry in September last year of Japanese government subsidies to encourage consumers to buy more environmentally friendly cars has also weighed on the nation's automakers, hitting domestic demand.

In 2008 Toyota ended General Motors' 77-year reign as the world's largest automaker but the road has been a bumpy one for the Japanese giant as it faces the impact of the economic crisis, recalls and recently a strong yen. Analysts say the automaker is under pressure to regain consumer trust overseas, particularly in the United States -- its second largest market by volume -- where it has lost market share to rivals even as overall sales recovered.

But Toyota's Ijichi said the automaker was recovering. "As we see our sales share is not falling much but is staying at 14%-15%," Ijichi said.

In January Toyota announced global sales of 8.42 million vehicles in 2010, just ahead of General Motors' 8.39 million, confirming its position as the world's biggest carmaker for the third year running but with GM closing in.

Copyright Agence France-Presse, 2011

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