Toyota lifts outlook despite fall in profit

 
City A.M. Reporter
TOYOTA has lifted its annual forecasts beyond market expectations as cost cuts and sales exceeded its plans, but a heavy reliance on exports will keep it a laggard as long as the yen stays strong.

The world’s top automaker posted a smaller-than-expected fall in third quarter profits and hiked its sales forecast for the year to 31 March by 70,000 vehicles to 7.48m, thanks to better than expected sales in Asia, Japan and Russia.

It kept its forecasts unchanged in North America, however, as uncertainty over the impact of its worst-ever recall lingers, and losses in its Japanese operations continue.

Toyota, which stayed ahead of General Motors as the world’s biggest automaker by a thinner margin last year, lifted its operating profit forecast for the year to 550bn yen (£4.2bn) from 380bn yen, well above the 489bn yen consensus in a survey of 23 analysts.

Toyota expects cost-cutting to add 170bn yen to annual operating profit, 30bn yen more than it had expected three months ago, and also expects to save 20bn yen by trimming research and development and other spending.

“Our efforts to improve our profitability came through faster than we expected,” said senior managing director Takahiko Ijichi. “Our break-even point has undoubtedly fallen and our earnings power is gradually improving.”

Underlining its exposure to the yen, which hit a 15-year high against the dollar in the October to December reporting period, the maker of the Prius hybrid and Corolla sedan built nearly 3.3m vehicles in Japan.