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Toyota Q2 Profits Jump 70 Percent; Raises Forecast

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Toyota Motor Corporation (NYSE:TM) (TYO:7203) reported strong second quarter results amid robust U.S. sales. The Japanese automaker raised its full year earnings forecast to 1.67 trillion yen ($16.95 billion) from the previous estimate of 1.48 trillion yen. That’s close to Toyota Motor Corporation (NYSE:TM) (TYO:7203)’s all-time record profit of 1.72 trillion yen that the company booked in FY2008. Analysts polled by Thomson Reuters were expecting 1.79 trillion yen in profits for the year ending March 2014.

Toyota Q2 Profits Jump 70 Percent; Raises Forecast

Toyota raises capital expenditure estimate to 940B yen

The world’s largest automaker said weakening yen helped improve its profit margins. The company credits solid U.S. sales growth and its conservative strategy for soaring profits when its competitors struggled with declining profits. During the July-September quarter, Toyota Motor Corporation (NYSE:TM) (TYO:7203) sold 589,390 vehicles in the U.S., up 12.2% from the previous year. The overall auto industry sales rose 9% during the quarter.

For the second quarter, Toyota Motor Corporation (NYSE:TM) (TYO:7203) profits rose 70% to 438.4 billion yen, compared to the consensus estimate of 441 billion yen. The company had planned capital expenditure equal to 4% of its revenue. On Wednesday, it raised its CapEx estimate by 2% to 940 billion yen. During the earnings call, Toyota Motor Corporation (NYSE:TM) (TYO:7203) revised its U.S. sales forecast to 2.63 million units, up from 2.61 million. However, the company lowered its Asia sales forecast from 1.7 million units to 1.64 million vehicles.

Toyota takes a breather from expansion

Analysts said Toyota Motor Corporation (NYSE:TM) (TYO:7203) is reaping the benefits of heavy expansion in 2009 that resulted in a net loss for the year. The company took a breather from expansion this year. Some analysts argue that if expansion is too slow, it will affect its future earnings and sales growth.

Its competitor Nissan Motor Co., Ltd. (OTCMKTS:NSANY) (TYO:7201) is focused on expansion. Nissan Motor Co., Ltd. (OTCMKTS:NSANY) (TYO:7201) aims to increase its market share from 6.2% last year to 8%. It is building eight new plants and expanding its manufacturing facility in Russia. It has also partnered with Mitsubishi Motors Corp. (OTCMKTS:MMTOF) to alleviate the burden of expansion.

Toyota Motor Corporation (NYSE:TM) (TYO:7203) shares jumped 1.21% to $130.16 at 9:35 a.m. EST. The stock has gained about 40% this year so far.

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