Toyota to treble profit this year as sales accelerate

With robust top-line growth likely this year, firm seeks to squeeze further cost cuts in a battle to offset the yen's renewed strength

Don't want to miss the best from Business Standard?

Toyota Motor Corp, Japan's top automaker, expects to treble its operating profit this year to more than $12.5 billion, its highest since the financial crisis sent the global car industry skidding.

Operating profit jumped more than five-fold in January-March to 238.5 billion yen (2.99 billion), beating a consensus estimate of 223 billion yen, as vehicle production recovers from disruptions caused by last year's natural disasters.

Fourth-quarter net profit jumped to 121 billion yen from 25.4 billion yen a year ago.

For the year to next March, Toyota forecast operating profit would rise to 1 trillion yen, ahead of recent consensus forecasts for 990 billion yen. It sees net profit rising to 760 billion yen from 284 billion yen in the year just ended.

The expected profit rebound comes as Toyota's sales recover strongly after supply chain disruptions from both the earthquake and tsunami in Japan and floods in Thailand last year. With robust top-line growth a given in the current year, Toyota is looking to squeeze further cost cuts in a battle to offset the yen's renewed strength.

Despite the pain of building cars at home with the dollar far below the 85 yen breakeven level in Japan, Toyota has committed to build at least 3 million vehicles a year at its domestic factories - roughly triple the output at local rivals Nissan Motor Co and Honda Motor Co.

Toyota last month unveiled a new scheme aimed at slashing development costs by more than a fifth, in part by using more shared components. It is also renewing efforts to step up its manufacturing efficiencies - something executives concede fell by the wayside when the company raced to add factory lines to meet soaring demand before the global financial crisis brought growth to a shuddering halt.

Toyota shares have gained more than a third since the broad market trough in late-November, outperforming local rivals Nissan and Honda, US competitors General Motors and Ford and Volkswagen, but lagging BMW's 41% jump. The main Topix share index is up by a tenth over the same period.

Toyota closed flat on Wednesday ahead of the earnings in a broader Topix market that fell 1.4%.