Toyota rebounds to post stronger-than-expected profit
TOKYO (Reuters) - Toyota Motor Corp (7203.T) on Friday posted its largest quarterly operating profit in four years and raised its 2012 global sales target on the strength of demand for cars like the Camry and Prius in key markets such as the United States and Japan.
The world's top automaker reported an operating profit of 353 billion yen ($4.51 billion), from a loss a year ago, a better-than-expected result that underscored its rebound from the natural disasters that blighted 2011.
Toyota, which regained its crown as the world's best-selling automaker in the first half of 2012, said it now expects to sell 9.76 million cars and light trucks globally in 2012, including the Daihatsu and Hino brands. That was up almost 2 percent from its previous forecast.
The stronger-than-expected performance by Toyota contrasted with its closest Japanese rivals Honda (7267.T) and Nissan (7201.T).
"This was a good result with a boost from good demand in Japan and a lift from recovery in the U.S. market," said Koji Endo, managing director of Advanced Research Japan. "In addition to the raising their sales forecast, they saw a contribution from their cost-streamlining efforts."
Toyota's profit for the quarter ending in June was higher than the average estimate of 314.1 billion yen based on eight analysts polled by Thomson Reuters I/B/E/S.
Toyota raised its 2012 output target for Toyota and Lexus to 8.87 million vehicles, an upward revision of 2.5 percent that shows the strength of its core brands.
But it retained its operating profit forecast for this financial year at 1 trillion yen, citing economic risks from the European debt crisis.
The results mark the strongest showing for Toyota yet under Akio Toyoda, the grandson of the company's founder, who took over as president in 2009 just as the company was sliding into crisis.
Toyoda, a driving enthusiast, is credited with having rallied morale among dealers, suppliers and employees after damaging and costly recall campaigns for 19 million vehicles and the lost production that followed a massive earthquake in Japan and flooding in Thailand in 2011.
But analysts and investors have questioned the cost of Toyota's commitment to keep making 3 million vehicles per year in Japan because the strong yen saps the profitability of exporting those cars, including the Prius.
Even after raising its global output target, Toyota still manufactures nearly 40 percent of its vehicles in Japan, compared with about 25 percent for Nissan and Honda.
"I want to see the company managed in a way that reduces its dependence on exports," BNP Paribas senior analyst Koichi Sugimoto said.
"It has been more insistent about maintaining a certain level of production within Japan and as a result, it is handcuffing itself on decisions such as developing next-generation vehicles or making new investments."
In its single biggest and most profitable market, the United States, Toyota sales have snapped higher by 28 percent through July, the biggest gain for any major automaker.
The U.S. sales gains have been combined with higher transaction prices, reflecting strong demand for the Prius and the Camry sedan, the top-selling car in the United States.
Toyota said it now expects to sell 2.38 million vehicles in North America in the financial year, an upward revision of just over 1 percent to its earlier forecast.
Despite its rebound, Toyota executives said the company was determined to manage its growth more carefully under Toyoda than it had in the boom years before 2008. Executives have said Toyota lost its focus on quality and came to underestimate the company's reliance on a weak yen in pursuing growth.
"Unless we operate based on a solid recognition that growing our business means new risks, we are at risk of going down the same path as before," Toyota senior managing officer Takahiko Ijichi told reporters.
Both Nissan and Honda, which released their quarterly earnings in late July, underperformed analyst expectations, citing the drag from the strong yen and costly sales incentives as they tried to shift older models before putting revamped models on sale.
Shares in Toyota have fallen nearly 15 percent in the financial year that began in April. On Friday, they ended at 3,065 yen, up less than 1 percent but outperforming the wider market .N225, which fell more than 1 percent.
($1 = 78.2150 Japanese yen)
(Writing by Kevin Krolicki; Editing by Alex Richardson)
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