Rebounding Toyota Posts $3.6 Billion Profit

Nov. 5, 2010
Company attributes success to marketing and cost-cutting

Toyota said on Oct. 5 that it had returned to a profit in the fiscal first half, despite the twin challenges of a strong yen and a global recall crisis. The world's biggest automaker booked a net profit of 289.16 billion yen (US$3.6 billion) for April-September compared with a net loss of nearly 56 billion yen in the same period a year earlier, when the sector was tanking.

The Japanese currency has been trading at 15-year-highs against the dollar, hurting exporters such as Toyota by making their products relatively more expensive abroad and cutting into repatriated earnings. Executive vice president Satoshi Ozawa acknowledged the "very tough business environment" with a "seriously appreciated yen in recent months".

He also noted "the risk of slowdown in demand recovery in the United States and Europe and falling demand following the end of the eco-car subsidies" introduced by the government to boost the sector during the global downturn.

The maker of the popular Prius petrol-electric hybrid posted a second-quarter net profit of 98.7 billion yen, a four-fold rise year-on-year, and raised its annual net profit forecast from 340 million to 350 billion yen.

At an operating level, it returned to a 323.12 billion yen profit in the six months to September from a loss of 136.86 billion yen in the same period last year, attributing the rebound to marketing and cost-cutting.

Operating profit "improved significantly despite the substantial negative impact from the strong yen," said Ozawa, as the firm reported better figures in all global regions.

In its home market, the Prius stayed the top selling car for a 17th month in a row in October, according to industry bodies quoted by Kyodo News. The hybrid sold 21,769 units despite the end of the subsidies, in part due to a large backlog of orders, the Japan Automobile Dealers Association and the Japan Mini Vehicle Association said.

Eiji Hakomori, analyst at Daiwa Securities Capital Markets, said the rebound "is not surprising at all" to market, but he added that the impact of the safety recalls may yet come back to affect the automaker.

Copyright Agence France-Presse, 2010

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