the republic logo

Toyota's profit up nearly 5 percent on sales growth, forecasts fewer vehicle sales for year

bug
Share/Save/Bookmark

TOKYO — Toyota Motor Corp. reported a 5 percent jump in quarterly profit Tuesday, outpacing expectations as vehicle sales grew in North America and Europe, offsetting a drop in Japan.

The Japanese maker of the Prius hybrid, Camry sedan and Lexus luxury model said April-June profit totaled a record 587.77 billion yen ($5.7 billion). Quarterly sales rose 2 percent to 6.39 trillion yen ($62.3 billion).

Both were better than projections by analysts surveyed by FactSet, who had expected a 1 percent increase in quarterly sales and a 12 percent drop in profit compared with a year earlier.

Toyota Managing Officer Takuo Sasaki credited cost reduction efforts and a weak yen, which helps Japanese exporters such as Toyota, for the positive results.

But Toyota lowered its vehicle sales forecast for 2014, saying it now expects to sell 110,000 fewer vehicles worldwide than the plan announced in January. Even then, it will still reach the 10 million vehicle industry milestone at 10.22 million vehicles, up 2 percent from 2013.

For the first half of the year, Toyota remained the world's top-selling automaker, although Volkswagen AG of Germany beat U.S. manufacturer General Motors Co. to become No. 2 in global vehicle sales.

Toyota's results outshone General Motors, which last month reported a $190 million profit for the April-June quarter after incurring $1.5 billion in recall expenses. The U.S. automaker is grappling with the cost of repairing nearly 30 million cars and setting aside compensation for crash victims.

For the latest quarter, Toyota's vehicle sales dipped in Japan, where sales got artificially inflated ahead of an April 1 tax hike as buyers sought to avoid the higher tax.

PHOTO: A visitor checks out Toyota 86 model at Toyota showroom in Tokyo, Tuesday, Aug. 5, 2014. Toyota Motor Corp. reported a better-than-expected rise in quarterly profit as vehicle sales grew in North America and Europe, offsetting a drop in Japan. (AP Photo/Shizuo Kambayashi)
A visitor checks out Toyota 86 model at Toyota showroom in Tokyo, Tuesday, Aug. 5, 2014. Toyota Motor Corp. reported a better-than-expected rise in quarterly profit as vehicle sales grew in North America and Europe, offsetting a drop in Japan. (AP Photo/Shizuo Kambayashi)

Vehicles sales also dropped in the rest of Asia, but it gained in North America, Europe, the Middle East, South America and Africa.

Demand was strong in the key U.S. market for the RAV4 sport-utility vehicle and the Corolla subcompact. The Corolla was also a hit in Europe, according to Toyota.

Toyota notched up a 30 billion yen ($293 million) operating income gain from a favorable foreign exchange rate, and added another 40 billion yen ($390 million) from cost cuts.

Despite the relatively pessimistic projections, Scott Kuensell, portfolio manager at U.S. investment company Brandywine Global, was excited about Toyota, calling its stock "ridiculously cheap."

Kuensell said Toyota has plenty of cash and boasts a green reputation with a stake in electric carmaker Tesla Motors.

Toyota shares finished flat on the Tokyo Stock Exchange at 6,042 yen ($59), shortly before earnings were announced.

Toyota stuck to its financial forecasts for the fiscal year through March 2015 at a profit of 1.78 trillion yen ($17.4 billion), down 2 percent year-on-year, on 25.7 trillion yen ($251 billion) sales, unchanged from the previous year.

The weak yen was a perk for other Japanese automakers as well, including Honda Motor Co. and Nissan Motor Co., which have both reported solid results.


Follow Yuri Kageyama on Twitter at https://twitter.com/yurikageyama

Think your friends should see this? Share it with them!

All comments are moderated before posting. Your email address must be verified with Disqus in order for your comment to appear.
View our commenting guidelines and FAQ's here.

Story copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


Photo Gallery:
PHOTO: A visitor checks out Toyota 86 model at Toyota showroom in Tokyo, Tuesday, Aug. 5, 2014. Toyota Motor Corp. reported a better-than-expected rise in quarterly profit as vehicle sales grew in North America and Europe, offsetting a drop in Japan. (AP Photo/Shizuo Kambayashi)
Click to view (3 Photos)
We also have more stories about:
(click the phrases to see a list)

Category:

Follow The Republic:

All content copyright ©2014 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.