Toyota, the world’s largest carmaker, raised its full-year profit forecast as sales in Asia grow more than expected and demand in the US recovers following the recall of more than 8 million vehicles.
Toyota may post net income of $3.98 billion in the year ending in March, compared with an earlier estimate of $3.63 billion, it said in a statement today. For the fiscal first quarter, the company swung to a $2.23 billion profit from a year-earlier loss.
The automaker raised its sales outlook for all regions except Europe amid a rebound in demand that prompted rival Honda to also lift its earnings forecast last week. Sales in Japan, Indonesia and Thailand are helping President Akio Toyoda, grandson of the company’s founder, counter the impact of a stronger yen and the lingering effects from the record recall of vehicles for problems related to unintended acceleration.
“Toyota is now at a point where they feel comfortable giving good news,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management in Tokyo. “The recall issue has settled down in the US and China.”
Toyota’s first-quarter sales gained 36 per cent in North America, its biggest market. While deliveries fell 3.2 per cent in July, the North American market may improve from the third quarter, Toyota’s Senior Managing Director Takahiko Ijichi said today.
Shares in Toyota fell 1.6 per cent to close at 3,090 yen in Tokyo trading before the earnings announcement. The stock has declined 20 per cent this year, compared with an 11 per cent drop at Honda and a 23 per cent gain at Hyundai.
Toyota raised its global vehicle sales forecast to 7.38 million units for the year ending in March 2011 from an earlier estimate of 7.29 million.
The company left its forecast for the yen against the dollar unchanged at 90 yen, 5 per cent weaker than the rate of 85.52 as of 9:29 am in London. A stronger yen, which traded near an eight-month high against the US dollar today, may erode profit gains by reducing the repatriated value of overseas sales.
Toyota revised its assumption for the Japanese currency against the euro to 112 yen from 125 yen and cut its forecast for Europe to 770,000 units, about a tenth of its global sales, from 860,000 units.
Consumer sentiment in Europe is weakening after the Greek debt crisis, and the difficult situation in the region will continue for some time, Ijichi said.
First-quarter profit
Toyota’s profit in the three months ended June 30 compared with a loss of $912.5 million a year earlier. Sales rose 27 per cent to $56.97 billion from $44.9 billion.
Sales in Asia, particularly in Thailand and Indonesia, “are growing with great momentum,” Ijichi said. Government subsidies for fuel-efficient models in Japan have also made the Prius, the world’s best-selling hybrid model, the most popular car in Japan so far this year.
“In Japan, Prius sales are solid because of subsidies,” said Mamoru Kato, a Nagoya, Japan-based analyst at Tokai Tokyo Research Center. “Sales in emerging countries are also doing well.”
Toyota is posting profit gains after the global recession hammered earnings a year earlier and after the recalls that began late last year.
Lexus recalls
Last month, Toyota said it was preparing a global recall of about 480,000 Avalon sedans and Land Cruiser sport-utility vehicles to repair steering parts after other recalls of Lexus SUVs and sedans in April and May.
The automaker, which said in July it added 1,000 engineers to an expanded quality assessment group, is extending vehicle development time by about four weeks on average and is opening new regional offices in the US and Canada to more quickly investigate customer complaints.
