Toyota Motor Corporation (NYSE:TM) has swung back with a vengeance. It has risen from its troubles with the twin calamities last year, of the Japanese earthquake and the Thailand flooding, and posted its highest quarterly profit in four years.
Toyota beat estimates for its first quarter, by reporting a net profit of 290 billion yen ($3.7 billion), a far cry from the lowly $1.16 billion yen in the year-ago quarter. On an operating basis it turned from a loss year to an operating profit of 353 billion yen ($4.51 billion). Profit was higher than the analysts’ estimates of 314.1 billion yen.
The results are a shot in the arm for Akio Toyoda, who took over as president in 2009, just around the time of the global financial crisis. This was followed by problems of massive recalls, the natural disasters in Japan, and the Thai flooding in quick succession. Toyoda has come out of his baptism by fire with flying colors. The company has clawed back its position as the top selling auto maker in the first half of 2012. In the U.S., its July sales are up 28 percent, the highest of all the automakers. “In all regions, vehicle sales increased significantly, due to strong recovery of demand, which had suffered last year from the lack of supply caused by the Great East Japan Earthquake,” said Toyota Motor Corporation (NYSE:TM) Senior Managing Officer Takahiko Ijichi.
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The company also boosted its global sales outlook and guided for sales of 9.76 million cars and light trucks globally through 2012, better by almost 2 percent over the previous forecast. It left profit guidance for the year unchanged, even though net profit for the first quarter accounted for almost 40 percent of the full year guidance. It anticipates earnings of 760 billion yen on sales of 22 trillion yen.
However, the company continues to be buffeted by currency headwinds. The strength of the yen is a negative for the vehicle exporter, which still makes about 40 percent of its autos in Japan. Japanese sales are also humming well, but are expected to taper off later in the year, as subsidies put in after last year’s calamity are withdrawn.
“This was a good result with a boost from good demand in Japan and a lift from recovery in the U.S. market,” said Koji Endo, managing director of Advanced Research Japan, and cited by Reuters. “In addition to the raising their sales forecast, they saw a contribution from their cost-streamlining efforts.”
In comparison to Toyota Motor Corporation (NYSE:TM), other Japanese automakers such as Nissan Motor Co., Ltd. (TYO:7201) (PINK:NSANY) and Honda Motor Co Ltd (TYO:7267) (NYSE:HMC) were affected to a greater extent by the rising yen and missed analysts’ expectations. They also had to pay costly incentives that were a drag on profits. Toyota seems to have weathered these problems rather well.
In America, Toyota’s rivals General Motors (NYSE:GM) and Ford Motor Company (NYSE:F) were both hurt by their European operations. The former has announced major management changes in Europe.