Toyota trims full-year profit forecast

  • 02/08/2019
Toyota trims full-year profit forecast

Toyota Motor Corp. (7203.T) lowered its full-year earnings forecast on Friday by almost 6% as it was expected that a more powerful yen would hurt net income and dampen the best quarterly results in over four years.


Japan's largest automaker increased its operating profit by 8.7% to 741.9 billion yen ($ 6.93 billion) in April-June, the highest after September 2015, helped by a slight boost in car sales.

But it reduced the profit for the whole year to 2.4 trillion yen from 2.55 trillion yen earlier. That's up from an average of 2.61 trillion yen, according to analysts.

Toyota anticipates for the yen to trade around 106 per dollar and 121 per euro in the fiscal year, compared with the last presumption of 110 yen and 123 yen, respectively.

During the first quarter, Toyota sales were 2.71 million units, up 3.6% from 2.62 million a year ago. Sales in North America, its largest market and Asia, remained virtually unchanged, while sales in the domestic market grew by 8.8 percent.

The weakening demand for cars has led to a decline in the revenues of many Toyota competitors, including Nissan Motor Co. (7201.T) and Ford Motor Co. (F.N), which led to statements about job reduction and the closure of factories.

The escalation of the trade war between China and the United States, the two leading global automotive markets, and a slowdown in economic growth led to a large-scale decline in sales in the international automotive sector.

The downturn in the sector is emerging in the same way that it has to invest heavily in new technologies, involving electric cars, autonomous driving technologies, and travel sharing services, in order to survive a major shift in the industry from car ownership.

Toyota is investing heavily in travel sharing services, including Uber (UBER.N), Grab and Didi Chuxing, while deepening alliances with SoftBank Corp (9434.T) to develop on-demand transportation services in Japan to position itself as a provider of Mobile Services.

Investors supported this strategy by pushing Toyota shares by about 10% this year, well ahead of their domestic competitors.


Related articles