Sunday 22 April 2018

Toyota warns earnings may slide by 2.4pc this year

A worker performs a round of quality control checks on a Toyota Tacoma truck at a manufacturing facility in San Antonio, Texas
A worker performs a round of quality control checks on a Toyota Tacoma truck at a manufacturing facility in San Antonio, Texas

Yoko Kubota

Toyota warned earnings may fall this fiscal year as the export-boosting tailwind that it and other Japanese carmakers have received from the yen's sharp depreciation over the past 18 months runs out of steam.

For president and CEO Akio Toyoda, the "lull" in prospect offers a different challenge to the major events that have marked his five years in charge such as the massive recalls of 2010; Japan's 2011 tsunami; and the boycott of Japanese products by Chinese consumers following a territorial dispute in late 2012.

The world's best-selling carmaker said it expects net profit to fall 2.4pc to 1.78 trillion yen (€12bn) in the financial year to March 2015. That's well short of estimates.

While Toyota typically issues conservative guidance, the decline is a marked reversal of a near doubling in net profit to a record 1.82 trillion yen for the year ended on March 31, buoyed by exports.

As Mr Toyoda briefed reporters in Tokyo, he explained that this year's earnings may decline as Toyota rides out a shrinking Japanese car market, hit by a sales tax hike in April, and a hiatus in vehicle launches.

In future, he said, he wants a Toyota that can develop stable long-term growth rather than swinging between extremes of profit, like last year, or loss after major recalls or natural disasters.

"I want Toyota to be a company that can continue growing, and that can avoid sharp setbacks or even maintain growth during times of crisis such as the Lehman shock," Mr Toyoda said, adding that Toyota will invest more in training its employees as well as research and development to boost its competitiveness.

"Sustainable growth is our most important goal, so what is essential is how this lull will lead to growth in the future," he said.

In early reactions, observers described Toyota's projections in pallid terms.

"In their sales projections, they're showing some confidence in the North American market where they're projecting growth, but it remains a market where competition is tough," said Yoshihiro Okumura, general manager of the research department at Chibagin Asset Management. "

"The scaled-back plans for Japan probably have factored in the impact of the increase in the sales tax. However you look at it, there is little new here to make you want to buy the stock," he added.

Irish Independent

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