Toyota annual net profit drops by a quarter

Japanese car giant Toyota said today its annual net profit fell by a quarter, despite record sales. — Reuter pic
Japanese car giant Toyota said today its annual net profit fell by a quarter, despite record sales. — Reuter pic

TOKYO, May 8 — Japanese car giant Toyota said today its annual net profit fell by a quarter, despite record sales, blaming investment losses — but it forecast an upturn in the year ahead. 

Toyota’s bottom line for the past year was pushed down by some ¥294 billion (RM11.1 million) in book losses on its investment portfolio.

The maker of the Camry sedan and Prius hybrid said net profit was down 24.5 per cent, from its best-ever result the year before, at ¥1.88 trillion (US$17 billion) in the year to March 31.

The firm forecast net profit to rise 19.5 per cent in the coming year to ¥2.25 trillion.

Senior managing officer Masayoshi Shirayanagi blamed “the deterioration of the stock market in the current period” for the investment losses. He added the figures suffered in comparison with previous year’s ¥250-billion boost from US tax reform.

Sales rose 2.9 per cent to a record ¥30.23 trillion, leaving an operating profit of ¥2.47 trillion, which was up 2.8 per cent year-on-year.

According to local media, it was the first time a Japanese company had ever logged sales over ¥30 trillion.

Toyota expects operating profit for the current year to March 2020 will increase 3.3 per cent to ¥2.55 trillion. Sales forecast to sag 0.7 per cent to ¥30 trillion. 

“Toyota has cruised steadily, compared with its rivals,” said analyst Satoru Takada at TIW, a Tokyo-based research and consulting firm.

“The firm largely showed a reasonable performance around the world at a time when the global market is slowing down,” he said.

Brexit ‘relocation talks’

Takada was not so optimistic about the outlook of the auto industry.

Japanese carmakers have enjoyed a heyday in recent years with the North American market steadily recovering from the financial crisis of the late 2000s and China growing into a mammoth market, he noted.

“But the outlook for the two biggest markets is now murky, while material costs are rising,” he said.

“Also, they can’t expect the one-time impact of US tax cuts, which temporarily boosted their profit before. Tough factors outnumbered positive ones,” he told AFP.

The business environment for companies like Toyota has also been clouded by the US-China trade war and continued uncertainty from Brexit.

Toyota executives have said previously there would be no way to avoid a negative impact in the event of a no-deal Brexit.

Its assembling plant in Burnaston in central England, which produces 600 vehicles per day, would be affected.

The plant operates under Toyota’s famous “just-in-time” system, holding limited stock on site and relying on flexible imports of millions of component car parts from the EU.

“If Britain finally leaves the EU, automakers are likely to accelerate relocation talks. It is natural for them to move to a profitable place,” Takada said.

Toyota shares were down some 2 per cent late in the morning but trimmed the losses by around half after the results and guidance were announced.

This was mainly due to the announcement it would buy back shares for up to ¥300 billion, boosting the price. — AFP

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