Toyota posts record first-half profit
Associated Press
November 7, 2007 at 1:09 PM EST
TOKYO Booming overseas sales and a favourable currency exchange rate helped send Toyota Motor Corp.'s [TM-N]first-half profit to a company record on Wednesday, and the world's No. 2 auto maker raised its forecast for the full fiscal year.
The news from Toyota struck a sharp contrast with rival General Motors Corp.'s report, also out Wednesday, that it lost a company record $39-billion (U.S.) for the July-September quarter because of a charge involving unused tax credits.
Toyota appears to be on track to surpass GM as the world's top auto maker for a full year as soon as this year.
The Japanese auto maker has been flourishing as soaring gas prices boost the appeal of its gas-electric hybrid Prius and popular smaller models, such as the Camry and Corolla. Although sales were stagnant in its home market, Toyota sales were strong in North America, Europe, Asia and emerging overseas markets.
"First, it has succeeded in reducing costs at a time when material costs are rising. Second, its global sales are growing," said Tsuyoshi Mochimaru, auto analyst at Lehman Brothers in Tokyo.
Toyota's profit for the July-September rose to ₯450.9-billion ($4-billion), up 11 per cent from ₯405.7-billion in the same period the previous year. Quarterly sales also rose 11 per cent to ₯6.490-trillion ($57-billion) from ₯5.834-trillion.
Worries about consumer spending in the U.S. amid a credit crunch don't seem to have hurt Toyota's momentum so far. Toyota has built a brand image as an ecological innovator by beating rivals to the commercial mass market with hybrids a decade ago.
As other auto makers rush to develop hybrids, Toyota has promised other experimental models such as plug-in hybrids and advanced batteries.
For the fiscal first half, Toyota sold a record 4.3 million vehicles worldwide, up 3.8 per cent from the same period a year earlier.
It earned ₯942.4-billion for the April-September period, up 21.3 per cent from the previous year, as sales surged 13.4 per cent to ₯13.012-trillion.
Toyota said a weak domestic currency during the six-month period added ₯150-billion to the final result, while cost reduction efforts added another ₯50-billion.
Toyota raised its forecast to a profit of ₯1.7-trillion for the full fiscal year ending March, 2008. Earlier, it had projected a profit of ₯1.65-trillion.
It also raised its sales expectations to ₯25.5-trillion from an initial estimate of ₯25-trillion.
The auto maker said it now expects to sell 8.93 million vehicles during the fiscal year through March 2008. In May, it had said it would sell 8.89 million vehicles this financial year.
But even amid rising expectations, Toyota has had its share of bad news.
The manufacturer, based in its namesake central Japanese city, has been hit with quality control problems in recent years resulting in massive recalls. Toyota has promised to beef up quality checks.
Another emerging concern has been Toyota's ability to cope with internationalizing management. In just the last three months, three senior U.S. executives have left for rivals.
Jim Press, the former head of Toyota's North American operations, and the first non-Japanese board member at Toyota, became president and vice-chairman of Chrysler LLC. Jim Farley at the Lexus division is joining Ford Motor Co. And Deborah Wahl Meyer, also at Lexus, jumped to Chrysler LLC.
On Tuesday, Toyota promoted company veteran Jim Lentz to president of its U.S. sales, marketing and distribution operations. Mr. Lentz, 52, who joined Toyota in 1982, had been executive vice-president at Toyota Motor Sales U.S.A.
Toyota's U.S. sales have been robust, selling 1.497 million vehicles in North America during the first six months of fiscal 2007, up 2.3 per cent from 1.464 million a year earlier on demand for the Tundra pickup and the Prius.
In Europe, strong sales of the Corolla, Lexus luxury models and the Camry helped boost vehicle sales to 635,000 vehicles, up nearly 8 per cent from 589,000 a year ago.
Sales in Asia burgeoned 18 per cent from the previous year to 452,000 vehicles, with Indonesia and China posting particularly healthy numbers.
Takeshi Suzuki, a senior managing director, said Toyota's Asian business will become a "new pillar" for earnings growth.
"We'd like to aim for higher levels of earnings with increasing sales volume and further cost-reduction," he told reporters.
