Caution underpins Toyota's Q1 profit
- Source: Shanghai Daily
- [08:01 August 05 2010]
- Comments
Toyota Motor Corp's biggest quarterly profit in two years and a rise in its annual forecasts failed to allay concerns about the strength in the yen, weak margins and a faltering United States market.
Toyota joined rival auto makers from Ford Motor Co to Hyundai Motor Co in posting forecast-beating quarterly results, but executives have been united in their cautious view of the global economy for the rest of the year.
Toyota's new guidance for operating profit to total 330 billion yen ($3.85 billion) in the year to March 31, 2011, is still far short of a consensus 526.5 billion yen in a survey of 21 analysts by Thomson Reuters.
"The prospect of an economic slowdown in North America is the biggest concern for Toyota," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"Its first-quarter results were solid but its upgrading of its fiscal year forecast was below consensus, so they are keeping a cautious stance."
Toyota, the world's largest auto maker, said earnings were boosted by strong profits at its finance division and warned it was anticipating a tough second half for sales, while costs would also rise.
After the financial crisis hammered car demand globally, Toyota has been plagued with excess production capacity, putting pressure on margins.
The crisis that forced Toyota to recall more than 10 million vehicles for problems with unintended acceleration and braking issues compounded those woes, costing the company billions of dollars and tarnishing its image.
President Akio Toyoda has vowed to put the recall debacle that has monopolized his first year as chief executive behind him, calling 2010 a fresh "starting line" for the 73-year-old company founded by his grandfather.
But in the coming quarters, Toyota will face crumbling domestic sales and a stronger-than-assumed yen, which makes exports less competitive and reduces the value of profits made overseas.
Toyota expects to export around 60 percent of its Japan-made vehicles this year - a higher ratio than at rivals Honda Motor Co and Nissan Motor Co.
First-quarter net profit, which includes earnings in China, was 190.5 billion yen, compared with a loss of 77.8 billion yen a year earlier.
Shares of Toyota have fallen about 22 percent in the year to date, faring worse than Tokyo's main TOPIX index, which lost 17 percent in the same period.
Toyota's shares closed down 1.6 percent before the results were announced Wednesday.
