Toyota Improves Profit Outlook on Weaker Yen, But Warns of Production Risks

By Tim Kelly

TOKYO (Reuters) – Japan’s Toyota Motor Corp raised its earnings outlook on Thursday on favorable exchange rates, but warned the global semiconductor shortage still posed risks to its production plans for the year whole.

Like other global automakers, Toyota has been forced to cut production due to chip shortages and lockdowns that have slowed component production at factories in Malaysia and Vietnam, even as demand for vehicles around the world bounce back from a pandemic crisis.

It has already reduced its production target for the year through the end of March once to 9 million vehicles and last month cut its November production plans by 150,000 vehicles.

“Even if we operate our factories at full capacity from December, it will be difficult to meet the production target, but we will try to achieve it,” CFO Kenta Kon said at a press briefing .

After a better-than-expected jump in profits in the second quarter, the world’s largest automaker by volume raised its forecast for full-year operating profit by 12% to 2.8 trillion yen (24 , $ 5 billion), which would mark a peak in six years.

But Kon said that without the impact of a weaker yen inflating the value of overseas profits, it was “in essence a downward revision” due to rising costs of materials.

The outlook for annual profits was lower than Refinitiv’s consensus estimate of 2.9 trillion yen.

For the three months to the end of September, Toyota reported operating profit of 750 billion yen, a jump of 48% from the same period a year earlier and 26% better than market expectations.

It also announced a share buyback of up to 150 billion yen, or 0.86% of the shares, and increased its first-half dividend from 15 yen to 120 yen.

Although Toyota stuck to the production target announced in September, it lowered its full-year sales target from 260,000 vehicles to 10.29 million units.

Toyota’s vehicle sales edged up 0.9% in the second quarter to 1.9 million units, as sales in Asia jumped 24%, while sales declined in most other markets, especially Japan, North America and Europe.

In general, however, demand for cars in key markets, such as China, the United States and Europe, rebounds after an earlier pandemic-induced slump, with demand for electric vehicles (EVs) in particular experiencing a boom. healthy growth.

Like its peers, Toyota is investing heavily in technology and production capacity to build electric vehicles as countries around the world impose tougher rules to reduce carbon emissions.

It has announced plans to bring 15 models of battery-electric vehicles to market by 2025 and will spend $ 13.5 billion by 2030 to develop electric vehicle batteries and their supply system.

Toyota shares ended up 0.7% after the results.

($ 1 = 114,700 yen)

(Reporting by Tim Kelly; Editing by Miyoung Kim and Edwina Gibbs)

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