Aftershocks – Toyota Revenues Drop 10%, Profits Down 57.5%

AutoInformed.com

With annual capacity of 3.7 million units in Japan and the Yen at historic highs, it is very difficult to export Toyota admits. However, the factories are 90% depreciated, so look for only slow reductions in capacity since it provides flexibility.

Toyota Motor Corporation (TMC) today announced steep declines in financial results for the nine months ending 31 December 2011. Net revenues totaled ¥12,881.1 billion, a decrease of 10.2% compared to the same period last fiscal year. Operating income decreased from ¥422.1 billion to ¥117.1 billion. Net income decreased from ¥382.7 billion to ¥162.5 billion, a decrease of -57.5%.

Ongoing problems responsible for the decrease include the negative effects of marketing activities and incentives of ¥120 billion, as well as currency fluctuations of ¥200 billion, and production disruptions from earthquakes and floods. Combined, the effect is a breathtaking demonstration of leverage in operation in the automobile business, in this case negative leverage. The Yen is now under 79 to the U.S.dollar and shows no signs of weakening, which means any export oriented company faces challenges.

Consolidated vehicle sales for the nine months totaled 4,995,000, a decrease of 522,000 vehicles compared to the same period last fiscal year.

“Despite cost reduction from company-wide Value Analysis activities and a decrease in fixed cost and expenses, net income decreased, compared to the same period last year due to the impact of reduced sales by the effects of Great East Japan Earthquake, floods in Thailand and the continued Yen appreciation,” said Takahiko Ijichi, TMC Senior Managing Officer.

In Japan, vehicle sales totaled 1,357,000, a decrease of 131,000 compared to the same period last fiscal year. The operating loss from Japanese operations increased by ¥132 billion, to a loss of ¥306.4 billion.

In North America, vehicle sales totaled 1,268,000 vehicles, a decrease of 280,000 units. Operating income decreased by ¥99.3 billion to ¥151.8 billion, including ¥37.5 billion of valuation gains/losses on interest rate swaps. Operating income, excluding the impact of valuation gains/losses on interest rate swaps, decreased by ¥122.5 billion to ¥114.3 billion.

In Europe, vehicle sales totaled 580,000 thousand vehicles, an increase of 4,000, while operating income improved by ¥15.2 billion, to ¥8.5 billion.

In Asia, vehicle sales totaled 894,000 vehicles, a decrease of 16,000, while operating income decreased by ¥61.8 billion, to ¥171.0 billion.

In Central and South America, Oceania and Africa, vehicle sales totaled 896,000, a decrease of 99,000 vehicles, while operating income decreased by ¥21.2 billion to 96 billion.

In the financial services, operating income decreased by ¥45.6 billion, to ¥254.5 billion compared to the same period last fiscal year, including ¥28.1 billion of valuation gains/losses from interest rate swaps. Excluding valuation gains/losses, operating income decreased by ¥49.6 billion to ¥226.4 billion.

TMC has revised its consolidated vehicles sales for the full fiscal year ending 31 March 2012 from 7,380,000 to 7,410,000 million units, an increase of 30,000 from TMC’s forecasts announced in December 2011.

Consolidated net revenues and earnings forecasts for the fiscal year have also been increased to consolidated net revenues of ¥18,300 billion, operating income of ¥270.0 billion, and net income of ¥200.0 billion. (Last week Honda forecast it would earn ¥215 billion for the fiscal year through March, down almost 60% from ¥534 billion yen it earned the previous fiscal year. Through Q3 Honda earned ¥139.8 billion, with global auto sales of 2.1 million.)

“Even though the Yen has been further appreciating against major currencies lately, Toyota remains committed to pursuing an improvement of its earnings structure through various cost reduction activities as well as continuing the production recovery from the Japan Earthquake and floods in Thailand,” said Ijichi.

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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