Posted by: Ian Rowley on May 9, 2007
Toyota delivered another set of bumper results today in Tokyo, comfortably beating targets set in February. The figures are startling. Sales for the year ended March (Toyota’s financial year) rose 13.8% to $199.9 billion. Operating profits grew even more, rising 19.2% to $18.7 billion. Net profits came in 20% higher at $13.7 billion, which works out at roughly $1,500 for every car sold. Nice work.
But perhaps of great interest is Toyota’s forecasts for the current 12 months. The automaker is projecting sales will by a mere rise 4.4% through March 2008, while operating and net income will increase by just 0.5% and 0.4% respectively. That’s not disastrous but it’s also not the kind of growth Toyota watchers have come to expect. One problem could be North American sales, which accounts for about 60% of Toyota’s profits. Despite new models, sales growth is expected to slow.
Still, there’s a couple of caveats to bear in mind. First, Toyota has a habit of under-promising and over-delivering. As recently as Feb. 6, Toyota had projected net income of $12.93 billion for the year—a chunky $785 million less than CEO Katsuaki Watanabe announced today. Something similar next year would surprise few.
Second, currency swings—or rather a lack of them—could add a nice cushion. Toyota’s earnings assumptions for the year ahead are based on a yen-dollar rate of 115, compared to 117 last year. Today’s yen-dollar rate is 119.8. Now, given that a one yen movement against the dollar has a $292 million impact on Toyota’s bottom line, if the yen stays the high side of 115, there will be a nice boost come next May’s results announcement.